DALLAS — The Louisiana State Bond Commission allocated the state’s remaining $232.7 million of Gulf Opportunity Zone bonds Thursday to three applicants that had sought the right to issue $700 million of the tax-exempt private-activity debt.
The amount of bond capacity available for allocation can change significantly as sponsors of large projects return authorized but unsold allocations to the state. For example, the commission previously exhausted its allocation by handing out $187 million of GO Zone bond capacity earlier this month.
“We’re monitoring the capacity daily,” said state Treasurer John Kennedy, who chairs the commission.
The federal legislation that authorized the GO Zone program allocated $7.8 billion of GO Zone bond capacity to Louisiana. More than $6 billion of the bonds have been issued, but the $1.4 billion of authorized but unsold capacity must be sold before the program expires at the end of 2010.
Thursday’s allocations included $177.9 million of bonds for the expansion of Westlake Chemical Corp.’s plant in Calcasieu Parish, $27.4 million for ExxonMobil’s refinery in East Baton Rouge Parish, and $27.4 million for an IMTT liquids logistics center in Ascension Parish.
The Westlake project had sought $300 million of the bonds, with the other two projects each asking for $200 million of GO Zone bonds.
Stephen Moret, director of the Department of Economic Development, said the three projects had received GO Zone bonds at previous commission meetings. The new allocations will bring the total GO Zone bonds for each project to $427 million, he said.
Moret said he expects a decision by Nov. 8 from Valero Energy Corp., the nation’s largest independent refiner, on whether it will proceed on a project in St. Charles Parish that has received an allocation of $300 million of GO Zone bonds.
If Valero returns $100 million or more of its authorization, Moret said, the Bond Commission should hold a special meeting to reallocate that unused capacity to viable projects for which bonds could be issued before the end of the year.
“GO Zone bonds are an important tool in our economic development efforts,” he said.
The Louisiana Office Facilities Corp. received permission to issue $145 million of bonds to refund lease revenue bonds sold in 2001 and 2003.
Lela Folse, assistant director of the commission, said the state expects $8 million in savings from the refunding.
The lease-revenue refunding bonds should be issued before Thanksgiving, according to financial adviser Freda Johnson of Government Finance Associates Inc.
A November sale will avoid a market rush later in the year that she expects due to low interest rates and the Dec. 31 expiration of the Build America Bond and GO Zone programs.
“We’ll move rather quickly,” Johnson said. “We want to avoid the December deluge.”
The commission declined to take action on a request by Louisiana Correctional Facilities Corp. for $25.5 million of lease revenue bonds to build a juvenile correctional facility. The proposal was sent to the Joint Legislative Committee on the Budget for review by lawmakers.
House Speaker Jim Tucker, a member of the Bond Commission, said he was not familiar with the correctional project and wanted further study of the proposal before authorizing debt for it.