DALLAS – Kenner, La., may pay an additional $2 million in interest costs on a $47 million bond issue due to a delay caused by a lawsuit, the city’s chief financial officer said Thursday.

The New Orleans suburb received permission for the refunding and new money issue in April from the State Bond Commission.

Kenner had hoped to issue the sales tax bonds in May, but had to postpone the sale after the lawsuit challenging the bonds was filed.

With interest rates increasing recently, city finance director Duke McConnell told the Kenner City Council on Thursday that the delay could raise costs by $1.5 million to $2 million.

The lawsuit filed by Walt Bennetti will heard July 9 by Judge Michael Mentz of the 24th Judicial District Court in Gretna.

Bennetti, president of Citizens for a Better Kenner, contends that city violated its charter by not calling a referendum on the bonds.

The city charter requires an election on revenue bonds, Bennetti said in the suit.

"Approving an ordinance which obligates taxpayers to repay bonds (both refinanced debt and new money borrowed) cannot be done by the vote of the council," he said in the filing.

Kenner followed state law and the city charter in the process, said city attorney Keith Conley at Thursday’s council session. The city expects to prevail in the case, which he called “a speed bump” that would not stop the bond issue.

The plan proposed by Mayor Mike Yenni includes $14.5 million for refunding sales tax bonds issued in 2003 and $32.5 million of new money.

Proceeds from the bonds will fund 10 infrastructure and beautification projects in Kenner. Kenner’s sales tax bonds, supported by the city’s 1% sales tax, are rated A-plus by Standard & Poor’s.

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