Louisiana bond panel holds funding for New Orleans plant over abortion stance

It’s been a busy year for the Louisiana Bond Commission as it deals with a host of controversial issues, from guns to abortion, and this month has been no different.

At its latest meeting, on Aug. 18, the panel once again put New Orleans’ request for funding for a power plant on hold due to the city’s pro-abortion stance, which conflicts with state law.

At the request of state Attorney General Jeff Landry and other commission members, the panel delayed a vote until its next meeting on New Orleans’ request for an up to $39 million line of credit for the Sewerage and Water Board’s power plant project, estimated to cost $106 million.

A tornado touched down in the New Orleans area in March, damaging homes and knocking out power to thousands.

Bloomberg News

After the U.S. Supreme Court overturned Roe v. Wade, ending the federal government’s role in abortion policy and leaving the issue to the states, Louisiana moved quickly to tighten restrictions on the availability of these procedures.

The New Orleans City Council has approved a resolution “to reiterate that equal access to abortion care is essential for social and economic equality and reproductive autonomy and to condemn any action intended to abrogate the fundamental liberties of the people of the city of New Orleans while affirming the City Council’s commitment to protecting the rights of its residents to make reproductive health decisions, including abortion care.”

The resolution also requests city funds not be used to solicit, catalog, report, or investigate abortions.

“The officials in New Orleans took an oath of office to support and enforce the laws of our state, yet they have decided that some laws are not worthy of enforcement,” Landry, a Republican, said in a statement on his Facebook page after the meeting. “In light of the city’s open defiance of the will of the people of Louisiana, I continue my efforts on the State Bond Commission. Today was another step toward ensuring the parishes and municipalities of our state comply with the laws of our state.”

New Orleans had asked the commission to grant a $39 million non-cash line of credit for the next fiscal year for the city’s new sewerage and water board power plant.

The committee did approve the city’s request for a $32.7 million bond deal to be done next year to fund the planning and construction of the Sewerage and Water Board’s power plant.

The panel also okayed a request by Orleans Parish in New Orleans for a $135 million sale of general obligation bonds — to refund Series 2012 refunding GOs and Series 2013A and 2014A taxable public improvement bonds — not exceeding 6% and maturing no later than Dec. 1, 2042. It is expected to provide around $12 million in gross savings.

It is wrong to use the panel as a political sounding board, Gov. John Bel Edwards said during a press conference on Monday.

“It was a misguided effort from the beginning to ever use the Bond Commission and any of the work that it does, to send a political message to anyone for any reason. Those projects have been approved by the legislature and I signed the bill and we need to move them forward,” said Edwards, a Democrat.

On Tuesday, the state Supreme Court denied a challenge to the state’s abortion laws.

“Abortion remains illegal in Louisiana. I am pleased with the court’s decision and will continue fighting to end this legal circus,” Landry said in a statement after the ruling.

The Bond Commission next meets on Sept. 15 and will take up the issue again.

“I believe that next month we are going to see that project move forward,” Edwards said. “And when we do that next month it won’t result in a delay in funding to get those projects built.”

He added, politics should not come into the state’s actions when it comes to infrastructure.

“The idea that you should ever hold up such an important project that deals with power generation, that deals with getting floodwaters out of New Orleans and making sure that we have drinking water that is distributed through the city — that’s just misguided.”

The latest action against the city came after the Commission acceded to Landry’s first request at the July 21 meeting to postpone approval of a $32 million bonding deal for New Orleans.

Emily Andrews, state Deputy Attorney General, who was representing Landry, made the motion to delay in July. She said it was about sending a message to the city that defiance of state law was unacceptable.

“This motion is being made in response to New Orleans’ adoption of a formal policy to defy state law,” she said at the time.

After the July meeting, New Orleans Mayor LaToya Cantrell blasted the delay in funding for the project.

“It is disappointing and appalling that the Louisiana Bond Commission decided to halt funding for one of the most vital and valuable infrastructure projects,” she said last month.

“What also remains is the fact that we are in the middle of another above-average hurricane season in which this city needs its entire Sewerage and Water Board system performing at its peak in order to protect vital assets, businesses and residents from flooding,” Cantrell said.

The project, which is scheduled to be completed in 2025, is part of a federal consent decree to repair and rehabilitate the city’s sewer system.

Separately, Louisiana Citizens Property Insurance Corp. asked the Commission for an increased line of credit that could be used to issue municipal bonds to back claims that would have to be paid out in the event of a catastrophic hurricane or tornado.

The corporation requested an increase in its line of credit to $125 million from $50 million that wouldn’t exceed a 6% variable rate, mature no later than June 1, 2023, and would pay insurance claims in the event that sufficient funds were not available. The Commission approved the request.

Abortion is only the latest hot button issue to spur action in Louisiana.

In November, the Commission disqualified J.P. Morgan Chase from underwriting a bond refinancing due to unanswered questions about its gun policies.

Schroder noted at the time that J.P. Morgan was only being disqualified from that offering and was not being removed from the state’s list of approved underwriters for negotiated deals. Competitive deals remained unaffected.

The legislature tried again this year to implement a pro-gun litmus test for firms but was unable to get final approval.

The state’s GOs are rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

Since 2011, the state has sold more than $10 billion of debt, with the most issuance occurring in 2012 when it offered $1.8 billion. The state was not in the market in 2018.


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