WASHINGTON — The New Orleans Exhibition Hall Authority disclosed yesterday that the Internal Revenue Service has initiated an audit of $300 million of bonds it issued in 2003 to finance an expansion of the city’s convention center.
But the NOEHA claimed in a material event notice filed with the Municipal Securities Rulemaking Board’s EMMA system that the examination is random.
“The NOEHA believes the audit is a random audit that does not involve the examination of a specific problem, and the NOEHA is not aware of any concern with the Series 2003A bonds,” the authority stated in the notice.
The authority has hired Kutak Rock LLP and Foley & Judell LLP to represent it before the IRS during the audit, according to the notice. Foley & Judell also served as bond counsel on the deal, according to bond documents.
The bonds were issued in 2003 to finance an expansion to the Ernest N. Morial Convention Center in New Orleans.
Specifically, bond proceeds were to finance the construction of an 1.5- million-square-feet building across the street from the original center, which would have included meeting rooms, food service areas, building service areas and other facilities. The building would then be connected to the original convention center site by a pedestrian bridge.
The total cost of the project was estimated to be $455 million. The authority received $12 million from the state of Louisiana for the construction and had spent about $59.7 million of its own funds on the project when the debt was issued. Bond documents indicate the NOEHA would rely on its own funds to cover costs if bond proceeds were insufficient.
The bonds are senior-subordinate special tax bonds, meaning they were subordinate to $212.9 million of outstanding debt issued by the authority between 1996 and 2000 across four deals.
Citi was the underwriter on the 2003 issue, and Ambac Assurance Corp. provided bond insurance for the deal.
Representatives for the authority, Kutak Rock and Foley & Judell could not be reached for comment yesterday.