News

October 9, 2019 | From City of New Orleans

City Updates Residents on Spending Priorities for $500M Bond Sale and 3 Mill Maintenance Proposition

NEW ORLEANS – Ahead of the Nov. 16 election, the City of New Orleans today announced its proposed spending priorities for the $500 million bond proposition and 3 mill maintenance proposition. The $500 million bond proposition funding would be appropriated broadly into categories that align with our residents’ priorities and simultaneously ensure that the City can regain its tax-exempt status for issuing bonds. The 3 mill maintenance proposition would be allocated into categories to maintain our capital infrastructure investments.

"This breakdown of how funds would be used demonstrates our commitment to invest in maintenance and repairs of our aging infrastructure. This is too important to kick the can down the road." said Mayor LaToya Cantrell. "The City is taking steps to ensure we can maintain what we have, and build what we need – from affordable housing to road repairs – this is the most fiscally responsible way to use our bond and millage revenue to set ourselves up for success."

"The Cantrell Administration is focused on understanding the causes and measures to prevent our city’s flooding and addressing the issues in our drainage system," said Ramsey Green, Deputy CAO for Infrastructure. "That is precisely why we are not only making historic infrastructure improvements with our Joint Infrastructure Program, but also committing substantial dollars toward drainage and storm water management and to maintaining our upgrades. Our infrastructure improvements contributed in significant part to the city’s recent credit upgrade from Moody’s."

[VIDEO: Ramsey Green explains spending priorities here.]

The following is a breakdown of how revenue would be used:

 

$500M Bond Proposition

With voter approval on Nov. 16, the City of New Orleans will move forward with its plans to sell $500 million in General Obligation (GO) Bonds beginning in 2020, continuing to issue bonds during subsequent years to fund its long-term capital projects. These bonds play an important role in allowing the City to fill in funding gaps for projects that are receiving a majority of funds through the FEMA-funded Joint Infrastructure Recovery Response (JIRR) Program or other restricted sources, as well as ensuring that projects are both fully funded and completed on time.

 

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Here are the Bond Sale benefits/goals

  • Does not increase millage rate to the public
  • Closes gap on unfunded FEMA capital infrastructure projects
  • Every bond dollar and associated project requires city council approval
  • Reduces payroll requirements on the city’s general fund
  • Provides additional business development / job opportunities
  • Achieves tax exempt status

Here is the language for Bond Proposition, Resolution No. R-19-285:

“Shall the City of New Orleans, Louisiana (the "City"), incur debt and issue up to $500,000,000 of bonds, in multiple series, each series to run not exceeding thirty (30) years from the date thereof and bearing interest at a rate not exceeding eight percent (8.00%) per annum, for the purpose of making capital improvements in the City permitted by the City's Home Rule Charter, including constructing, renovating, acquiring, and/or improving (i) roads, streets and bridges; (ii) public buildings, affordable housing facilities, libraries, and parks and recreational facilities; (iii) surface and subsurface drainage systems and storm water management facilities; and (iv) public safety equipment, including acquiring all necessary land, equipment and furnishings for each of the foregoing, which bonds will be general obligations of the City, payable from ad valorem taxes to be levied and collected in the manner provided by Article VI, Section 33 of the Constitution of the State of Louisiana of 1974 and statutory authority supplemental thereto, with no estimated increase in the millage rate to be levied in the first year above the 22.5 mills currently being levied to pay General Obligation Bonds of the City?”

3 Mill Maintenance Proposition

In November 2018, the Board of Liquidation voted to reduce the mills levied for the payment of general obligation bond debt service in 2019 to 22.5 because the City was not spending its bond revenue fast enough. Since coming into office, the Cantrell Administration has been more efficiently managing and spending its bond proceeds. The proposed 3.00 mills fills that gap between the 22.5 mills levied in 2019 and the 25.5 mills levied from 2010-2018. The intention of this millage is to dedicate the revenue to maintain the infrastructure that has been built since Hurricane Katrina as well as the upgrades the City is making now.

 

The estimated annual revenue ($10.25 million) would be allocated as follows:

 

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Here is the language for Bond Proposition Resolution No. R-19-286

“Shall the City of New Orleans, Louisiana (the “City”) be authorized to levy a special tax of 3.00 mills on all property subject to taxation in the City ("Tax") for a period of twenty years, beginning January 1, 2020 and ending December 31, 2029 ($10,250,000 currently estimated to be collected from the Tax for an entire year), with the proceeds to be dedicated solely to public infrastructure in the City and to be used for the purposes of repairing, improving, maintaining and operating (i) roads, streets, and bridges (ii) surface and subsurface drainage systems and storm water management facilities, and (iii) public buildings and public safety facilities of the City, including purchasing related equipment and vehicles for any of the foregoing, provided that a portion of the monies collected shall be remitted to certain state and statewide retirement systems in the manner required by law?”

Here are the millage benefits

  • Funded by transferring a reduction of 3.00 mills from bond debt service to this millage –  the City is essentially paying down its debt and using tax dollars to more wisely fund your priorities and maintain the city’s infrastructure.
  • A dedicated revenue source for maintaining our capital infrastructure investments.