[StBernard] Recovery bonds earmarked for hurricane-ravaged parishes still have not been exhausted

[Westley Annis]

By Ed Anderson, The Times-Picayune
<http://connect.nola.com/user/eanderso/index.html>  


November 20, 2009, 6:41PM

BATON ROUGE -- The parishes hardest hit from hurricanes Katrina and Rita
have until the end of this year to apply for more than $1.2 billion
remaining in a special pool of recovery bonds or face the prospect of losing
that capacity to lesser affected storm areas, the director of the State Bond
Commission said Friday.

Whit Kling said that unless the bond panel changes its rules, the 11
parishes that were penciled in for $3.54 billion in Gulf Opportunity Zone
Bonds after the 2005 storms may see the remaining $1.2 billion gobbled up by
20 other parishes not as badly hit by Katrina or Rita.

The largest share of the unused bond capacity is in Orleans and St. Bernard
parishes, which account for almost $1.1 billion of the unused $1.2 billion
in bond allocation.

In the aftermath of the 2005 hurricanes, Congress made available $7.84
billion in GO Zone bonds to Louisiana. The bonds were designed to promote
recovery through private economic development through the use of
low-interest, tax-exempt financing.

The state divided the $7.84 billion into two pots of money: $3.54 billion
for the 11 hardest hit parishes that included Jefferson, Orleans, St.
Bernard, Plaquemines and St. Tammany parishes as well as the southwest
parishes ravaged by Rita, such as Calcasieu and Cameron; and $4.298 billion
for the 20 lesser affected parishes, including Livingston, East Baton Rouge,
St. Charles, St. John the Baptist, St. James and St. Mary.

The 11-parish pot is known as the "dedicated pool" aimed specifically at the
needs of those parishes; the other 20-parish pool is known as the
"competitive pool" where projects must vie against one another on a
parish-by-parish basis.

The competitive pool has about $170 million in bond capacity remaining out
of the $4.29 billion allocated to it.

If the bond panel does not change its rules, the $1 billion-plus for the 11
hard-hit parishes will be up for grabs by all parishes New Year's Day, Kling
said. 

The remainder of the $7.8 billion bond capacity must be eaten up by the end
of 2010 or will be lost, unless Congress extends the program, Kling said.
"It all falls off the table on Dec. 31, 2010," he said.

Kling said any project can qualify for bond use by developers except
brothels, race tracks, gambling establishments and single-family homes.

State Treasurer John Kennedy told members of the commission at their
Thursday meeting to think about the policy or ways to change it because the
end-of-year deadline is looming for use of the "dedicated pool" by the 11
parishes,

Kennedy did not return calls seeking comment for this story.

"The activity is happening in the competitive pool," he said. "The activity
is not happening...in the dedicated pool," especially in New Orleans.

Earlier this year, then-New Orleans recovery czar Ed Blakely told the Bond
Commission that the city "firmly intends. . .to meet the allocation we
have," roughly a $1.3 billion total.

Blakely's comments came on Jan. 15 when the city still had more than $1
billion of its allocation left. Blakely has since resigned the position.

Kling said that out of the $1.3 billion allocated to New Orleans, the city
still has almost $849 million unused. 





***St. Bernard, Kling said, was allocated about $300 million and still has
not applied for $248.4 million.***

Jefferson has about $68.7 million left, and Plaquemines Parish received an
allocation of $300 million, all of which has been dedicated to develop Sea
Point, a proposed container cargo transfer terminal that would operate in
the Mississippi River near Venice.

Kling said that the money in the dedicated pool will not be lost if the
rules are not changed because that money would be up for grabs by any of the
31 parishes. But all the money goes away after Dec. 31, 2010.

"You have an economic slowdown, a financial crisis that has dried up easy
access to capital" and problems in getting insurance to sell bonds and
insure property, he said, all possible reasons why some of the money is not
moving as fast as expected.

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What would be some of the reasons the parish has not applied for these
remaining bonds?  Are these under the parish's control so that something
like the apt. complexes couldn't be done?  What else could they be used for?
Port development possibly?

JY