DALLAS - New Orleans would transfer ownership of its international airport to the state in exchange for $500 million in bond proceeds to rebuild a major portion of downtown under a plan being considered by the Louisiana Legislature.

The bond proceeds would be used to develop five areas in downtown New Orleans between the Mississippi River and Broad Street. Proponents said the money could serve as leverage to generate up to $2 billion in private investment and $750 million in federal funds.

The areas include a sports and entertainment district adjacent to the Louisiana Superdome, a government complex around city hall, a medical district that includes the new federal Veterans Administration hospital, a theater district, and new parks and commercial space along a six-mile stretch of the Mississippi River.

The bonds would be supported by state gambling revenues from the New Orleans area and issued by the new Southeast Regional Airport Authority established under HB 1272. The authority would take over operational control of Louis Armstrong New Orleans International Airport from the New Orleans Aviation Board.

The plan calls for the Legislature to appropriate debt service for the airport bonds of $40 million a year for 20 years. The state's gambling revenue from the area currently totals $215 million a year.

Mayor Ray Nagin and Gov. Bobby Jindal have been briefed on the proposal, but declined to say whether they support it. Nagin proposed a similar plan during his successful campaign for mayor in 2002.

House Speaker Jim Tucker, R-Algiers, filed the airport measure last week on the last day that new bills could be introduced in the regular session of the Legislature. Tucker also introduced HB 1199, which would create a nine-member Global New Orleans Authority to allocate the bond proceeds and oversee the projects.

Rep. Jeffery J. Arnold, D-New Orleans, said the airport authority measure will be considered tomorrow by the House Commerce Committee, which he chairs.

"The plan would give the city some upfront money, and allow the state to develop the airport into a facility that can support the type of international tourism that New Orleans is capable of," he said. "The New Orleans airport was at one time a model of excellence, but it has fallen behind."

Arnold said he believed state control would result in a better-run airport.

"There has been some history at the airport over how concessions are awarded and who gets them," he said. "The state should be able to make sure the airport is run better, more efficiently, and more conducive to expanded tourism traffic."

Federal law prohibits the city from selling the airport, but the transfer of ownership with a compensation package of approximately $500 million should satisfy the legal requirements, Arnold said.

"If the city sold the airport, it would have to reimburse the Federal Aviation Administration for millions of dollars in facility grants," he said. "That's out of the question, but we can do a transfer from the city to the state."

The $500 million in compensation is a preliminary figure that is subject to negotiation, according to Arnold.

"This is a Catch-22 for the New Orleans delegation," he said. "As elected representatives from New Orleans, we want to make sure the city is well compensated for its assets, and as state legislators we want the best deal possible for the state of Louisiana."

"I think we'll have a better idea of the value of the airport by the time the Commerce Committee meets Tuesday," Arnold said. "It could be more than $500 million or it could be less, but I think we'll have a number that everyone can agree on."

Orleans Parish legislators were briefed on the airport plan last week.

"I didn't see any immediate opposition," he said. "Obviously, there will be questions as it goes through the Legislature and rightfully so, but I think we all agree this is a tremendous opportunity."

Arnold said he expects the airport deal to be approved by the Legislature before the regular session ends June 22.

Tucker's bill calls for the governor to name the nine members of the regional airport authority board within 45 days of the end of the current session. The board must hold its first monthly meeting within 60 days of the session's end.

The downtown redevelopment plan calls for the current city hall to be demolished and the site offered to developers. City offices would be moved across the street to the 36-story Dominion Tower, which suffered wind damage from Hurricane Katrina in 2005.

The state also would move its New Orleans operations into the Dominion Tower, and shelve plans to spend $75 million to rebuild a storm-damaged nine-story state office building.

Bond proceeds would also finance construction of one new downtown streetcar line and extension of another one.

Sponsors said the state, with its ability to issue more bonds than can the city, would be better able to finance improvements that Armstrong Airport needs to increase flights to Central and South America, expand the level of freight service, and serve as a hub for additional airlines.

A group of business leaders in southeast Louisiana developed the proposal, which they call Global New Orleans, a Vision for Change.

Members of the group include Jay Lapeyre, president of the New Orleans Business Council, Ron Forman, the recently appointed chairman of the Louisiana Stadium and Exposition District, and Adam Knapp, president of the Baton Rouge Area Chamber of Commerce.


Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.