DALLAS - Louisiana Gov. Bobby Jindal met Monday with a number of state and local officials and bankers to try and stimulate sales of more than $1.3 billion of Gulf Opportunity Zone bonds allocated to New Orleans and the coastal parishes devastated by hurricanes Katrina and Rita in 2005.
The bonds must be sold before Jan. 1, 2011, when the federally authorized program ends. The state has imposed its own deadline of Jan. 1, 2010, when unsold GO Zone bonds allocated to coastal parishes are to become available for developers in other parishes.
"We must get moving on this funding now," Jindal said. "We have $1.3 billion still available today and only until 2011 to use these funds."
Participants in the meeting included state Treasurer John Kennedy, who is chairman of the State Bond Commission, New Orleans Mayor Ray Nagin, officials from several coastal parishes, and representatives from Fidelity Homestead Savings Bank, Chase Bank, Whitney National Bank, Hancock Bank, Capital One Bank, and Omni Bank of New Orleans.
Jindal said he stressed the importance of national banks underwriting the GO Zone bonds available for projects in the coastal parishes.
"During this national economic downturn, it is more important than ever that we use money already allocated to our hurricane-impacted parishes to inject more investment into our economy," the governor said. "We had a productive meeting today and we will continue to encourage national banks, especially those with branches here in Louisiana, to underwrite these GO Zone bonds."
"We shouldn't wait to make critical investments that can be a real shot in the arm to economic development in New Orleans and many of our coastal parishes," he said.
Potential solutions discussed at the meeting included asking Congress to extend the 2011 deadline, allowing banks to purchase the bonds and make loans to small businesses, and supplementing bond projects with other hurricane recovery aid programs.
So far, only 4% of the $1.3 billion of GO Zone bonds allocated for Orleans Parish have been actually been sold after being sought by developers and approved by the State Bond Commission.
The eight GO Zone bond sales for projects in New Orleans that have occurred raised some $55.6 million in proceeds. Another $261 million of as-yet unsold GO Zone bonds have been approved for New Orleans projects. That leaves Orleans Parish with $986.8 million in allocated but unused GO Zone bond capacity.
Other unused allocations include $248 million in St. Bernard Parish, $58 million in Jefferson Parish, and $22 million in Vermilion Parish.
After the hurricanes, Congress provided $7.9 billion of GO Zone bonds to Louisiana. In 2007, the Bond Commission divided the state's capacity between the dedicated pool of the 13 parishes in southern Louisiana hit hardest by the hurricanes, and a competitive pool of 18 less severely affected parishes.
To date, the Bond Commission has approved $6.9 billion in requests for GO Zone bonds. The entire allocation for competitive pool parishes has been approved by the commission. A total of $5 billion of Louisiana GO Zone bonds have been sold.
Jindal said the state is determined not to end the GO Zone bond program with unused authorizations.
At a news conference following the meeting, Nagin said he is confident a solution will be found to avoid losing the GO Zone bonds allocated to the city.
He said sponsors of projects in parishes in the most-affected zone have found it more difficult to make use of the bonds because of the extensive infrastructure damage in the region.
