DALLAS - The U.S. Marine Corps Reserve agreed last week to become the first tenant in New Orleans' Federal City Project, an effort to turn an old naval base into a high-tech campus with buildings housing federal, state, and local government agencies and related civilian tenants.

The Federal City complex will be located on approximately 150 acres of the 200-acre Naval Support Activity New Orleans base on the west bank of the Mississippi River in the Algiers section of the city.

The Industrial Development Board of the City of New Orleans Inc.will issue $150 million of revenue bonds for projects in Federal City as the state and local contribution to the project. The State Bond Commission approved the bonds at its July session.

State Rep. Jeff Arnold, D-Algiers, chairman of the city's Algiers Development District, which will sign the lease for the city and state, said the bonds probably would go to market in November.

The 30-year bonds will be supported by legislative appropriations, Arnold said.

"We've already appropriated $8.3 million for the first year of debt service," Arnold said, adding that the Algiers district, which is a sales tax-increment finance district, has spent almost $5 million on the Federal City effort.

Proceeds from the bonds will finance the first phase of the Federal City Project, he said, and "any future phases will have to stand or fall on their own merits."

The first facility in the district will be a Marine Force Reserves Headquarters building. U.S. Navy senior officials signed the lease terms last week and sent them to Congress for a 45-day review.

At a news conference in New Orleans, Louisiana Gov. Bobby Jindal said $110 million of the bond proceeds will be used to build facilities for the Marine Corps Reserve, with $33 million for infrastructure improvements and $7 million for amenity upgrades. The terms will serve as the framework for an official 75-year lease between the Navy and the Algiers Development District, which is expected to be signed in September.

"This is a critical investment that will help retain an estimated 1,660 jobs in the New Orleans area and add roughly 300 positions for a total of 1,960 jobs, in addition to spurring indirect economic development opportunities and investments throughout the region," Jindal said.

Most of the work is to be completed by June 2011.

The Department of Defense had put the 100-year-old base on the west bank of the Mississippi River near downtown on a list of facilities to be closed three years ago. However, the Base Realignment and Closure Commission overrode the Pentagon's recommendation after state and city officials promised to provide the military and federal agencies with a modern office complex at the site at no cost to the federal government.

"We got the notice that the base was off the closure list on the Wednesday before the weekend when Hurricane Katrina hit the city [in August 2005]," Arnold said.

Congress approved a bill authorizing the Federal City Project in 2005, but stipulated that financing had to be arranged and ground broken on the first facilities by Sept. 30, 2008.

Although the Federal City site is near the Mississippi River, Arnold said the area rarely floods.

"It's hard to say any land in the greater New Orleans area is flood-proof, but it is flood resistant," he said. "It's above sea level, and it did not flood as a result of Hurricane Katrina."

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