Louisiana Gov. Bobby Jindal vetoed a bill that would have authorized $92 million of tax-exempt revenue bonds for a New Orleans riverfront development.
House Bill 516 gave the Ernest N. Morial New Orleans Exhibit Hall Authority permission to issue bonds to fund half of a proposed $184 million hotel and commercial project along the Mississippi River. The proposal included a private hotel, retail, and restaurants on public land.
The other $92 million come from the state, through the capital outlay program funded with Louisiana general obligation bonds.
Jindal said the Authority’s bond financing plan could raise borrowing costs for the state.
“The bill would allow for the first time the Authority to use nontraditional tax-free bonds that would benefit any properties being developed by commercial, private entities and the bonded debt could count against the state debt limit,” Jindal said in his veto message Monday. “In addition, this project could be funded through the capital outlay bill.”
Bill sponsor Rep. Walter Leger, D-New Orleans, said the bonds would not count against the state’s debt limit. The Authority's bonds would be supported by local hotel tax revenues.
Louisiana’s constitution caps annual debt service on net state tax supported bonds to 6% of general fund revenues.
Debt service payable on net state tax-supported debt for fiscal 2012 was $540.6 million, or 5.45% of the estimated general fund and dedicated fund revenue certified by the Revenue Estimating Conference.
Debt service in fiscal 2014 is estimated at $554 million with revenues of $10.1 billion, leaving little capacity for additional state debt.
The Authority's $148 million of outstanding debt is rated A2 by Moody's Investors Service, A-plus by Fitch, and A-minus by Standard & Poor's.
The riverfront development is a key component of a five-year plan for tourism growth proposed earlier this year by a hospitality industry consortium. New Orleans will mark the 500th anniversary of its founding in 2018.