Louisiana Opens GO Zone Bond Pool

DALLAS — Another $641 million could be added to Louisiana’s $1.5 billion of remaining authorization for Gulf Opportunity Zone bonds if already-allocated bonds are not sold by mid-August.

State Bond Commission director Whit Kling Jr. told the panel at its January meeting Thursday that the two separate bond pools established in 2007 collapsed into a single pool on Jan. 1 with $1.5 billion of GO Zone bonds unallocated.

In addition, Kling said more than $640 million of approved but unissued GO Zone bond projects will revert back to the pool if not issued within 270 days of the commission’s final approval. GO Zone bonds must be issued before the program expires on Dec. 31, 2010.

“There are $641 million of projects with allocations that are pending that will be turned back between March 27 and Aug. 14 if they are not issued within the time period provided,” Kling said.

Before the separate pools expired, projects in the 11 parishes most affected by hurricanes Katrina and Rita in 2005 received allocations from a $3.54 billion dedicated pool, while 20 parishes with less damage sought allocations from a $4.3 billion competitive pool. Now, projects within the 31 designated parishes will compete equally for the remaining capacity.

House Speaker Jim Tucker, R-Algiers, who sits on the Bond Commission, expressed frustration that Orleans Parish turned back $750 million of unrequested capacity reserved for the New Orleans area.

“Do you expect a mad dash for this remaining capacity?” Tucker asked Kling. “I just hope there are some opportunities for projects in the metropolitan area, especially New Orleans.”

In response, Kling said he expects “a quickened pace but no mad dash.”

“There are still some credit concerns,” he added,

The commission established the pools program to allocate the state’s $7.84 billion of the tax-exempt private-activity GO Zone bond capacity authorized by Congress in 2005 after the hurricanes devastated the region.

Kling said there is also $329 million of bonds remaining from a similar program that provided tax-free debt opportunities following Hurricane Ike in September 2008. Louisiana received an allocation of $381 million of the bonds for projects in 16 parishes affected by the storm.

Proceeds from the post-Ike bonds must be used to rebuild uninsured losses, with no new construction allowed.

The bond program was part of the federal Emergency Economic Stabilization Act of 2008. The tax-free debt must be issued by Dec. 31, 2010.

The Bond Commission also approved a preliminary request for $35 million in revenue bonds to finance projects at Loyola University in New Orleans. The bonds will be issued by the Louisiana Public Facility Authority.

The commission gave final approval to a request for $100 million of GO Zone bonds for a crude oil storage project in St. James Parish.

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