New Orleans expands bonds' uses to ease financial crisis

The New Orleans City Council expanded the use of public improvement bonds sold in June to address the city's financial shortfall.

The council unanimously approved two resolutions allowing proceeds of the bonds to be used for an additional 12 capital projects, freeing up $36 million in operating funds for the current fiscal year it feels it desperately needs for other purposes. Money for these projects was coming from the city's general fund, some from special revenue funds or American Rescue Plan Act grants.

"This is one of the measures to deal with the cash flow issues that the city is currently experiencing," Kyle Homan, capital budget director and acting director of the Project Delivery Unit in the New Orleans Chief Administrative Office, told the city council Thursday.

The $146.8 million Series 2026A bonds, which voters approved in November, will now be used for 130 projects. It was sold with a $30 million taxable Series 2026B.

New Orleans last fall found itself unable to meet expenses for the remainder of the year due to overspending and delays in receipt of federal money. The State Bond Commission approved a $125 million revenue anticipation notes, which were issued that fall and paid back earlier this year. 

The city planned to return to the bond commission last month for approval of $110 million RANs but Mayor Helena Moreno withdrew the request, saying she heard there was inadequate support on the Republican-dominated commission for the notes. Moreno and all city council members are Democrats.

The inability to issue RANs led the city to scramble to find money to cover expenses for the rest of the year.

The city recently collected $103 million in an upfront lease payment from Caesar's Casino and Hotel. The city has a $35 million rainy-day fund. 

The city is looking for ways to retain the lease payment money as a cushion against future crises. 

The government is also discussing various approaches to what it believes will be a difficult fiscal 2027 budget, which will cover the calendar year.  

The Series 2026A bonds have serial maturities from 2028 to 2051 and a term maturity in 2055. The 2055 maturity was priced at 5.75 to yield 5.05%. 

New Orleans is rated Baa2 with a negative outlook by Moody's Ratings, BBB-plus with a negative outlook by S&P Global Ratings and A-minus with a negative outlook by Fitch Ratings.