DALLAS - The Louisiana State Bond Commission on Tuesday deferred action for at least a week on more than $1 billion of Gulf Opportunity Zone bond applications in hopes that a lawsuit filed by a disgruntled applicant will be resolved by then.
The commission will meet in regular session on May 15.
The bond commission gave its final approval to a plan by Gulf States Entergy and Entergy Louisiana to raise more than $1 billion through taxable bonds issued by the Louisiana Public Facilities Authority. The proceeds will reimburse the utilities for their costs in restoring electrical systems following the 2005 hurricanes.
The delay in GO Zone bond applications is the result of a lawsuit filed by Tiger State Ethanol LLC, which is seeking $200 million of the tax-exempt bonds to build a large biofuels facility in St. James Parish. In the suit filed in state district court, the project sponsors contend they were promised an allocation at the commission's meeting on Dec. 20, 2007.
Tiger State's application has never been heard by the commission, and therefore was never rejected nor approved, because of its low score in the process used by the state to rank GO Zone bond projects. However, sponsors came before the commission on Dec. 20, 2007, to plead their cause.
The commission voted to consider Tiger State's request for GO Zone bonds "upon availability of allocation in the competitive pool," according to the minutes of the Dec. 21 meeting.
Assistant attorney general Richard McGimsey told commissioners he expected the state to win a quick judgment in the case, possibly as early as a hearing set for Thursday.
"There's a good chance we'll have a resolution by then, but there's no guarantee," he said.
The judge in the case issued a protective order allowing the bond commission to proceed with the process of awarding GO Zone bond capacity, McGimsey said, but the order stipulated that at least $200 million in capacity had to remain unallocated until the lawsuit is resolved.
Whitman Kling Jr., director of the bond commission, said the judge's order meant that commissioners could either take no action on the pending requests or allocate only $800 million of the $1 billion-plus of bond applications on agenda for the special meeting.
Because there is only some $20 million in remaining capacity for projects outside the parishes most affected by hurricanes Katrina and Rita in 2005, Kling said, setting aside $200 million of capacity would delay or possibly even deny funding for projects within the hurricane-affected areas of Orleans, St. Bernard, Cameron, and Washington parishes.
"That could wipe out some projects in the hurricane-affected region that have complied with all the rules and regulations," Kling said. "There's no perfect way out of this. Either you have to approve some, or do nothing."
Kling said the ethanol project's request would have been included on the agenda if sponsors had submitted a fully refundable deposit of 0.5% of their allocation by April 21 as required under rules adopted by the commission on April 3.
The Tiger State project is outside the most-affected area, and the proposal to draw upon the most-affected area's bond capacity drew an objection from House Speaker Jim Tucker, R-Algiers, a member of the bond commission.
"That remaining capacity has been dedicated to hurricane recovery in the most affected area, and that is where it needs to go," he said.
Commissioner of Administration Angéle Davis suggested approving the applications by going down the agenda until $800 million had been allocated, noting that the agenda order was based on the project's priority ranking.
Treasurer John Kennedy, who serves as chairman of the bond commission, said he hoped the commission could proceed with the process next week.