The city plans to hold its first bond sale in two years next month though the outcome of three high-stakes meetings with rating agencies could push it back again.
Mayor Ray Nagin wants to use the proceeds from the $40 million sale to help keep New Orleans' street projects on track. Some of the highest profile city work since Hurricane Katrina has involved roads, with orange cones and blocked lanes now snarling traffic in some rebuilding neighborhoods. Nagin said there have been no "serious delays," outside of some design work, due to the pushing back of sale dates. But that could change with another postponement.
The City Council faces a Dec. 1 deadline for approving a balanced budget. Nagin has called for such things as city worker furloughs and more stringently enforcing parking and fee collections to help fill the hole. On Thursday, he said he hadn't yet heard of any "major adjustments" to his budget proposal by the council.
Officials plan meetings with Moody's Investors Service, Fitch Ratings and Standard & Poor's this month. Those meetings will determine whether the Board of Liquidation, City Debt can move ahead with a bond sale, possibly as early as Dec. 16.
The board approved a millage increase Thursday that anticipates a December sale and another $40 million sale in the second half of 2010. A city finance official said the increase, which would help cover debt service, would likely add less than $20 to property tax bills for houses valued at $100,000.
The city's Public Works director has estimated that bond funds account for about one-third of his rebuilding program. The program also includes projects that are federally backed.
The city in late 2007 sold the first $75 million from a $260 million bond issue approved by voters before Katrina for roads, public infrastructure and other work. It had hoped to sell another $80 million last fall but that was delayed due to sour market conditions and a below-investment grade bond rating from Standard & Poor's.
The city succeeded in getting its bond rating increased to investment grade earlier this year. But it now faces a projected $68 million budget deficit for 2010. And plans for a more robust reserve fund for emergencies, such as preparing for and responding to hurricanes, aren't expected to be realized next year. That will all likely factor in to whether the city retains its rating.