Louisiana Bond Panel Exhausts GO Zone Pool Outside New Orleans Area

DALLAS - The Louisiana State Bond Commission on Thursday awarded all of the remaining Gulf Opportunity Zone bond capacity set aside for parishes outside the New Orleans region with $271.7 million in allocations to three projects.

The state still has $1.3 billion in GO Zone bond capacity reserved for projects in the 13 parishes in the area most affected by the hurricanes of 2005, but now has no capacity for projects in southern and western Louisiana.

However, state Treasurer John Kennedy said additional capacity will become available because holders of existing allocations will find it difficult if not impossible to issue debt in the current market. Unused capacity must be returned to the state if sponsors are not able to sell the bonds within 90 days of final approval by the bond commission.

"My guess is that in this market we are going to have capacity returned to us," said Kennedy, who serves as chairman of the bond commission. "Some of our GO Zone deals just won't close.

"For the longest time, the lending institutions would give you money if you had a heartbeat, and it only had to be an occasional beat," he said. "Now it has gone to the other extreme, with the institutions so scared they just won't loan any money."

Commission director Whitman Kling Jr. said the GO Zone market is in a slump.

"There have been no closings of any significant size in a number of months," he said. "It just is not occurring. The way the market is right now, there is no relief in sight.

"If they haven't closed by now, I don't see anything happening in the near future."

The commission allotted $100 million of GO Zone bonds to renovate and update a closed pulp and paper plant in West Feliciana Parish, $100 million of GO Zone bonds to build a water-soluble polymers manufacturing facility in Iberville Parish, and $71.7 million of GO Zone bonds for a manufacturing facility near Lake Charles in Calcasieu Parish.

Economic Development Secretary Stephen Moret said the Lake Charles plant will be the first fabrication and assembly facility in the United States dedicated to constructing components for new and modified nuclear reactors and petrochemical plants. The facility will be operated by the Shaw Group Inc. and Westinghouse.

The commission approved a one-year contract to retain Government Financial Associates Inc. as the state's financial adviser. The current contract with GFA, which has been Louisiana's financial adviser since 1993, expires Oct. 20.

Kling said a request for proposals for financial services issued in March brought in four proposals. Others considered included Public Financial Management, Grigsby & Associates Inc., and First Southwest Co.

"Sometimes it is good to make a change," Kling said. "On the other hand, GFA has been responsive and professional, and is very well-thought of in the financial market."

The commission rejected a proposal by Rep. Karen Carter Peterson to have the four competitors make presentations at the October commission meeting.

The commission also approved a sale of $140 million of hospital revenue bonds by Tangiapahoa Parish Hospital Service District No. 1 for renovation and construction of facilities in Hammond, and of $75 million of single-family mortgage revenue bonds by the Louisiana Housing Finance Agency.

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