Lafourche council pushes $25M bond package

Lafourche Parish Government is pursuing up to $25 million in sales-tax bonds to be used on a bundle of infrastructure improvements in north Lafourche after the parish council unanimously authorized the administration to research the matter.

The decision comes on the heels of Hurricane Isaac, which threatened Kraemer, Choctaw and Bayou Boeuf with floodwater more than 24 hours after the storm had passed through the area. The parish still needs state bond commission approval.

“Grant money from Washington is not going to flow as it did in the past – I think that’s a reality,” Randolph told the council. “Secondarily, we have the vote of the people to be able to address the issues you consider a priority in your districts, so this is the first step.”

The bond agreement, similar to a loan, cannot exceed $25 million over 15 years at a 5.5 percent interest rate. In addition to still needing bond commission approval, the council would have to approve an ordinance locking in the details once the parish finds a lender.

Government entities are permitted to borrow against revenue streams in order to receive a lump sum of money that can be used within the revenue stream’s scope. The stream is then dedicated to paying down the debt.

Lafourche intends to borrow against Road Sales Tax District A, which encompasses unincorporated Lafourche Parish north of Valentine.

The voting public approved a 20-year, 1-percent sales and use tax for RSTD-A in 2007. The tax base was also structured to consolidate former sales tax districts 3, 5 and 6. The revenue can be used to maintain roads, bridges and drainage.

Because the tax is already in place, the bond issue does not need voter approval.

The consolidated district absorbed responsibility for paying the debts of its underlying districts. The parish is still paying off two bond arrangements from 2001, one from 2005 and a fourth from 2007 out of RSTD-A.

The issues from 2001 were for $3 million at 5.25 percent interest and $2 million a 5.1 percent. Both agreements are on schedule to mature in 2015.

Lafourche bonded $15 million against revenue for districts 3, 5 and 6 in 2005. The debt service expires in 2025. The parish bonded $9.7 million in 2007, a bond issue that expires in 2015, according to the finance department.

Jim Ryan, a financial consultant who formerly served on the bond commission, helped the parish draft its proposal. He was able to assuage Councilman Daniel Lorraine’s concern about what funding source would be used to cover the debt service should RSTD-A fall short.

State law prevents government entities from borrowing more than 75 percent of anticipated sales-tax collections, Ryan said. Lenders are also reluctant to loan unless projected revenue exceeds debt service by certain standards.

“State law and industry averages usually say that you need to have at least $1.25, $1.30, $1.35 in revenue to cover every dollar in debt service,” Ryan said, adding that Lafourche projects to collect $1.50 for every $1 in debt service, a ratio that includes the existing debts.

Lafourche Parish Government collected $3.4 million in 2010 and $3.7 million in 2011 from RSTD-A. This year, through June, parish government has collected $1.8 million, according to finance department figures.

Because each bond issue is revenue-stream specific, this will not affect the parish as it pursues other anticipated bond issues, such as financing a new detention center, Ryan said.

Money procured will likely be used to address some of the concerns in the parish’s drainage master plan, a prioritized list of $141 million worth of rainwater-drainage projects throughout the parish published this summer.

“(The drainage plan) is an opinion,” Randolph said, adding that some of the projects included have designated funding. “We’ll use it as a guide.”

Randolph told the tax district’s councilmen – all but Lorraine and Jerry LaFont – to submit a list by November of road and drainage projects they want to see addressed with the money.

All of the parish’s electric pumps will be replaced with the money, unless the parish can procure a grant for this purpose, the parish president said.

During Isaac, widespread power outages rendered an electric pump in the Bayou Boeuf area inoperable. It resulted in stagnant water inside the Kraemer-Choctaw levee system, which intensified the issue of rising floodwater from Bayou Des Allemands that briefly topped the community’s 4-foot protection levee.

Parish workers and residential volunteers were able to contain the waters and protect the system, which some will like to see addressed in the event the bond is approved.

The parish president cited the low interest rates available to borrowers in the current national economic climate as an additional benefit.

“Timing is everything,” she said.