Bond commission approves Nucor funds

Published 12:00 am Saturday, October 23, 2010

By ROBIN SHANNON

L’Observateur

BATON ROUGE – State officials on Thursday approved the use of state and federal money to help fund construction of the first phase of Nucor Corp.’s Iron and steel manufacturing facility slated for St. James Parish.

The State Bond Commission unanimously agreed to give the North Carolina-based company $30 million from the state’s construction budget, as well as allow use of $600 million in Gulf Opportunity Zone recovery bonds for the upcoming project.

The first phase of the five-phase project, which is expected to be up and running within the next two years pending acceptance of modified air and water permits from the Department of Environmental Quality, is a $750 million direct reduced iron facility that would create 150 jobs.

If all five phases of the $3.4 billion facility are constructed, it would be one of the largest industrial deals in the state’s history, creating more than 1,250 jobs.

In order to come up with the state funding, Gov. Bobby Jindal’s administration was forced to slash an assortment of pending construction projects statewide. The cuts drew complaints from legislators, including some who sit on the Bond Commission, but no one voted against approval.

A few lawmakers did raise questions as to why the state could not use money out of the economic development fund, which currently holds about $136 million, instead of cutting pending projects. Economic Development Secretary Stephen Moret said the funds have federal regulations that would have increased the total cost of the Nucor project. He also said the state is in competition for an assortment of projects that would utilize most of the money in the fund.

The state has a cap on annual borrowing that puts a limit on construction spending. The limit is $320 million for the 2010-11 budget year. The budget was passed with enough projects to consume all of the available cash and did not include the Nucor project. The state prioritized projects large enough to make a dent in the funding needed for Nucor.

Projects set aside to make room for Nucor include a training academy for state police, a new dormitory at LSU’s fire and emergency training institute, state museum upgrades, road work, parish drainage improvements, recreational complexes and courthouse renovations.

The Bond Commission also unanimously approved use of the Go Zone bonds for the Nucor project. The low-interest, tax-free bonds are part of funding set aside by Congress following hurricanes Katrina and Rita. The bonds are designed to help generate economic development in southeast Louisiana following the two storms. Nucor is on the hook to repay the $600 million loan.