ATLANTA -- The Louisiana House of Representatives last week approved legislation authorizing the state's Stadium & Exposition District to sell $215 million of tax-exempt revenue bonds to refund its outstanding debt and finance various sports-related construction projects in the New Orleans area.
"This legislation is very important to the economy of New Orleans, and I think it will be passed," into law, the bill's sponsor, Rep. Sherman Copelin, D-New Orleans, said in an interview Thursday. "The bill is also important because it will completely leave the state off the hook for any payment of debt service."
Copelin said that he expects the state Senate this week to pass a version of the bill that may authorize a smaller amount of bonds. He noted that the Senate F Revenue Affairs Committee approved legislation earlier this month that would authorize about $205 million in debt, or $9.5 million less for building projects, than is included in the House's bill.
"But i think we will soon work out a version that both the House and Senate can live with," Copelin said.
House Bill 2013, passed by a 68-to-35 margin last Tuesday, would require that facilities built with proceeds of the bond issue be owned and operated by the stadium authority. The provision would permit the bonds to qualify as public-purpose debt, and thus to be sold as tax-exempts, said Barbara Goodson, assistant director of the State Bond commission. The Tax Reform Act of 1986 eliminated the use of private-activity bonds to finance sports facilities.
The bill also stipulates that the 4% hotel occupancy tax charged by Orleans and Jefferson parishes be the sole source of coverage for interest and principal on the bonds.
This levy has been used to back the authority's only outstanding debt issue, a $134 million revenue bond offering sold in 1976 to refund bonds sold to finance construction of the Louisiana Superdome stadium in New Orleans. The stadium, which seats 80,000 people, was completed in 1975.
Because Louisiana has appropriated money to help the authority cover operating expenses of the Superdome, which has freed up money for debt service, the state attorney general has ruled that the bonds are, in effect, full-faith-and-credit obligations of the state.
Under the proposed law, proceeds from the bond issue could not provide funds that would, by either "direct or indirect" means, pay for the stadium authority's operating expenses.
"This part of the bill addresses our main concern, which has been that the bonds be true revenue bonds, and not in any way be an obligation of the state," said Goodson.
She said the bond commission, which must approve the borrowing if authorized by lawmakers, has also insisted that the bill include a provision requiring a feasibility study for each project.
If approved by the Legislature, she said, the bonds would probably be issued over a three-year period.
According to Goodson, the bond commission estimates that the hotel occupancy tax will produce about $19 million in revenues this fiscal year, which ends June 30, and will grow at about 3% annually thereafter.
"I think what we will see, if the bond bill becomes law, is an initial offering to cover the authority's outstanding debt and the renovations on the Superdome," she said. "After that, bond issues would be sold as justified by revenues from the tax and the readiness of projects."
Under House Bill 2013, the bond issue would allot $60 million to refund the authority's outstanding bonds and $21 million to refurbish the Superdome.
The proposed bill would also provide for a slew of new projects: $85 million for a multipurpose 20,000-seat sports arena behind the Superdome, $20.5 million for a baseball stadium in Metairie, $7 million for recreation facilities at Bayou Segnette State Park, $6.5 million for a practice field for the New Orleans Saints football team, $1.5 million for athletic facilities at the Ponchartrain Center in Kenner, and $1 million for improvements to the Mel Ott Park in Gretne and the Skelly Park in Algiers.
About $10 million would be set aside for a debt service reserve fund.
According to Wayne James, staff attorney for the Senate's Fiscal and Revenue Affairs Committed, the Senate version passed out of the committee deletes the proposed Bayou Segnette, Pontchartrain Center, and Gretne and Skelly Park facilities.
"But even though there is some difference in the House and Senate's idea of projects to be included," James said, "there is a lot of support for the concept of the bonds, and it is my guess it will eventually sail through [the Legislature]."
Gov. Edwin Edwards has strongly endorsed the House's approach to the proposed stadium authority bond issue.