DALLAS — The Louisiana State Bond Commission is expected to allocate $600 million of Gulf Opportunity Zone bonds to a single project at its Thursday meeting.
The allocation would exhaust most of the $700 million of remaining capacity from the $7.8 billion of Louisiana’s tax-exempt, private-activity GO Zone bonds authorized by Congress in 2006.
The Department of Economic Development asked the commission to reserve $400 million of the bonds at its July meeting, and raised the reserved amount to $600 million at the August meeting. The Bond Commission voted to reserve the requested allocations, but directed the staff to continue taking applications from sponsors of other projects.
Officials from the department declined to identify the proposed project at both meetings. However, the commissioners said last month they wanted a definitive request for a specific project or direction from the state on how to allocate the remaining capacity at Thursday’s meeting.
Economic Development Secretary Stephen Moret said late last week that he expects to provide information Thursday on which project would receive the allocation.
Moret told the editorial board of the Baton Rouge Advocate that negotiations on state incentives with the project sponsors are continuing.
Moret said that in addition to the GO Zone bonds, Louisiana would provide tax incentives based on the number of jobs that would be created and also assist with infrastructure work.
“At this point it looks likely that we will be requesting that [the Bond Commission] allocate the funds to that project,” Moret told the newspaper.
Moret said the project is a major effort that would be located in the Baton Rouge-New Orleans area of southeast Louisiana. He said he could not identify the project before the meeting because state law requires that economic development negotiations be private.
State Treasurer John Kennedy said he did not know the project being considered, but added that he believes it is a pig-iron mill in St. James Parish. Kennedy said he would vote to award GO Zone bonds for the effort.
Nucor Corp. recently received an air quality permit for an industrial facility on a 4,000-acre site along the Mississippi River.
Gov. Bobby Jindal included $65 million of economic development funding in the fiscal 2011 state construction budget for the project, which would produce iron used at small steel mills.
GO Zone bonds must be issued before the end of the year, when the program will expire.
The Bond Commission will also receive an update on the state’s planned $500 million restructuring issue that has been delayed since April by what officials said was a routine audit by the Internal Revenue Service of several of the issues to be refunded.
The commission in March approved a sale of up to $600 million of debt to refund outstanding state general obligation bonds. Agency director Whit Kling Jr. said the refunding would save the state $40 million in debt service through 2022.
Freda Johnson, president of Government Finance Associates Inc., the commission’s financial adviser, recommended the delay in April because removing the audited issues from the refunding schedule would reduce the the state’s savings. She said it would be better to wait until all the issues that meet the threshold for refunding can be included.