Levee bonds sold

Terrebonne levee officials have succeeded in their attempt to sell $100 million worth of bonds to pay for home-grown solutions to flooding risks, after strategically timing the sale to take advantage of lower interest rates that will make for savings in the long run.

“The bonds have been sold,” said Terrebonne Levee and Conservation District Director Reggie Dupre. “It was a gamble because the market was in disarray. We delayed the sale for a week.”

The strategy proved out when higher interest rates eased briefly last month, leaving a brief window for a better outcome for taxpayers. Within days of the sale, according to district officials and financial analysts, the bond markets changed and interest rates, which the district is required to pay, rose yet again.

“The district took the correct steps,” said New Orleans and Baton Rouge bond attorney Jerry Osborne, who helped midwife the bond issue.

The decision means that the levee district will have $95.8 million in proceeds, after the cost of paying bond interest off is deducted. Had they sold the week before, the payoff would have been $95.4 million.

The bonds were sold in varying denominations for various spans of time, making it impossible for Dupre or others to immediately determine what interest rates might apply to specific purchases.

Bond raters noted in investor reports that “the sales tax securing the bonds received strong voter support for its authorization,” which is seen as an important aspect of whether certain bonds are seen as a good investment.

The bond money will be used to close gaps in the district’s Morganza-to-the-Gulf project seen as crucial for protecting communities from hurricane flooding.

An important component is a portion of Lake Boudreaux, which would affect both Cocodrie-Chauvin and Dulac.

Voters approved the tax in December, for a period of 28 years. The projects will total $330 million, with repayment of the overall debt spanning 25 years.

The Fitch Group, a global bond-rating agency, extensively reported on Terrebonne’s economic and social history in its report for investors, noting that “sales taxes collected by Terrebonne Parish demonstrated economic sensitivity to the national recession and also major hurricane and oil spill events. In the years following Hurricane Katrina sales tax collections spiked as retail and recovery activity resumed.”

Although the recession and the spill resulted in a 12 percent decline in sales taxes collected from 2008 to 2010, the report states, the picture for continued performance and an upward swing in Terrebonne’s economics were forecast as good.