NEW ORLEANS — The board that oversees New Orleans’ bonded indebtedness has agreed to sell $40 million in public improvement bonds, more than half of which will be used for street repairs and the rest for upgrading playgrounds, libraries and other public buildings.
The city will get the money March 1.
The Board of Liquidation, City Debt accepted on Wednesday the bid of 4.678 percent “true interest cost” from Raymond James & Associates. It was the lowest of five bids, which ranged as high as 5.16 percent.
City officials said most of the money from a $40 million city bond issue will go to badly needed street repairs.
David Gernhauser, secretary of the board, said the winning bid was “an excellent rate,” one of the lowest the city has received in years. Over the 30-year life of the bonds, ending in 2042, the city will have to pay $74.8 million in principal and interest.
The rate would have been lower if the bonds had been tax-exempt, but the city had to sell them as taxable. As a result, the city will end up getting about $200,000 less than the bonds’ $40 million face value, Gernhauser said.
As explained at an earlier Board of Liquidation meeting, everyone would have liked to make the bonds tax-exempt, but the board’s legal adviser, Jason Akers of the firm Foley & Judell, said he was worried that the Internal Revenue Service might question the city’s right to issue such bonds because of the large amount of money the city still has on hand from earlier bond issues.
As of November, the city had more than $60 million left from bond issues dating as far back as 1988, mostly from projects that ended up costing less than budgeted. Most of the sums were fairly small, but there was $24 million left from a $75 million issue sold in 2007. That was the first installment in $260 million in bonds authorized by voters in 2004.
The IRS generally wants the proceeds from tax-exempt bonds to be used in three years.