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Commission approves resolution to issue up to $400M in GO bonds to reimburse capital outlay expenditures; members raise bankruptcy concern
Summary
The commission approved item 68 authorizing a process to issue up to $400 million in general obligation bonds to reimburse capital outlay expenditures, after staff and counsel said federal and state law pose no barrier to reimbursement despite public comment raising bankruptcy concerns about two projects.
The State Bond Commission on Feb. 20 approved a resolution to begin the process of issuing general obligation bonds not to exceed $400 million to fund $378 million in lines of credit in the Capital Outlay Budget Act. Representative Johnson moved approval of item 68; President Henry seconded the motion and the item was approved without objection.
Commission staff told members that they had received public comment concerning two specific projects — Jefferson Parish’s preservation and restoration work at the Hope Haven Madonna Manor campus and a Comcare Corporation project that includes Windhoven Healthcare and St. Andrews Village — and had conducted additional review with bond counsel, the attorney general’s office and the facility planning division. Staff said the review raised no state-law or federal tax-law issues to block reimbursement of previously incurred expenditures.
An external commenter’s email — raised in the meeting by a commission member — asked whether the bond authorization could “tie up funds” in an ongoing bankruptcy proceeding because one or both projects had been associated with the Archdiocese of New Orleans. The commissioner asked if the bonds could create future problems if the projects were owned by an entity undergoing bankruptcy.
Roger Husser, director of facility planning, responded: “there doesn’t appear to be any issue at all.” Husser told the commission that the proceeds to be issued under the item are intended to reimburse the state for expenditures already made (staff said the transcript records a total bond-sale amount of “20,208,” with units not specified). He also said that Comcare had purchased its building, removing an ownership relationship with the Archdiocese, and that Jefferson Parish had placed the Hope Haven project on its agenda with a potential purchase under consideration — indicating, in Husser’s account, that future ownership complications were not evident at the meeting.
Staff and bond counsel told commissioners that the bonds would be sold competitively during a State Bond Commission meeting, with award to the lowest bidder; a tentative sale was scheduled for April 9 with a tentative closing on April 24, and staff said they would contact members’ staffs to ensure a quorum for the April sale.
The municipal advisor team for the financing was identified in the packet as including PRAG (municipal advisor), Butler Snow (bond counsel), and Aussing & Associates (co-bond counsel). The commission asked for the motion to begin the process and approved the resolution to proceed with the sale process.
The transcript records no roll-call voting tally; the item was approved after the mover and seconder were asked whether there were objections and none were heard.
