DALLAS — The Federal Emergency Management Agency will make a $1.8 billion lump-sum payment to public school districts in Orleans Parish to rebuild or replace facilities damaged five years ago by Hurricane Katrina. The parish has the same boundaries as the city of New Orleans.

The payment will finance a rebuilding program approved in November 2008 by the Orleans Parishwide School District and the state-operated Restoration School District, which is operated by Louisiana. The FEMA grant considers the school rebuilding efforts as a single project rather than specifying how much money is allocated to each facility.

U.S. Sen. Mary Landrieu, the sister of New Orleans Mayor Mitch Landrieu, revealed the grant Wednesday. The official announcement is expected this weekend, when President Obama will visit the city on the fifth anniversary of Katrina.

FEMA had pledged $700 million for the first phase of the school rebuilding program, but the total amount of the recovery grant had been unclear until Wednesday’s announcement.

The districts plan to rebuild or renovate 85 of the 128 existing campuses, with the remainder being torn down.

“This $1.8 billion lump-sum settlement is one of the great victories in our fight for a smarter recovery,” Sen. Landrieu said. “It was a battle worth waging and while we would have liked to have received the money sooner, it was worth the wait.”

Mayor Landrieu called the grant a victory for the children of New Orleans.

“For too long our children have been learning in temporary, unsatisfactory buildings,” he  said. “This settlement will help make schools the center of neighborhood renewal.”

Landrieu said he would press FEMA for a similar lump-sum settlement over the city’s claims for hurricane damage to municipal facilities.

Stan Smith, chief financial officer for the parish school district, said the FEMA grant will provide funding for the rebuilding program’s $310 million second phase and $179 million third phase. Smith said in July that FEMA funding would allow the district to not issue bonds until at least 2018 or 2020.

The parish school board issued $104.5 million of general obligation refinancing bonds in July that reduced maturities on outstanding debt to 10 years from 12. The district realized net present-value savings of about 10%.

The bonds, which were the first issued by the district in more than 10 years, are rated Aa3 by Moody’s Investors Service and A-plus by Standard & Poor’s.

Woody Koppel, president of the parish school board, said the district’s bond refunding helped recovery efforts by reducing the money that goes to debt service.

“That refunding will allow us to pay off our existing debt two years early, and make us debt-free by 2020,” he said.

Koppel described the FEMA grant as being “huge for the city of New Orleans.”

“At no other time in history have public schools seen so much money for redevelopment,” he said. “And it comes at no extra cost to the taxpayers. We don’t have to sell bonds or ask for a millage increase.”

Following the 2005 storms, the school district serving Orleans Parish was divided, with the restoration district taking over the underperforming schools.

Total school enrollment is about half of pre-hurricane numbers.

The Orleans Parishwide School District has slightly more than 10,000 students at its four traditional schools, 12 charter schools, and two program facilities.

The restoration district, which is operated by the Louisiana Department of Education, has almost 26,000 students. The facilities are owned by the parish school district.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.