The City of New Orleans wants to monetize a cashflow stream of lease payments in order to refund a reserve fund for emergencies. As long as certain provisos are met, the highly-respected Bureau of Governmental Research is on board with this plan. Their limitations are that the funds be reserved for use only for a true emergency and that a high level of transparency is included.

Nolan Mckendry at The Center Square, whose post on this was picked up at The Hayride yesterday, has the story…

New Orleans’ proposed deal to raise more than $100 million by selling rights to future Caesars casino lease payments would provide fast cash amid a fiscal crisis, but the ordinance authorizing the transaction does not restrict how the money can be spent, according to the Bureau of Governmental Research.

The ordinance, introduced April 23 and sponsored by all seven City Council members at the administration’s request, would authorize the New Orleans Building Corp. to sell certain casino lease payments in order to reinforce city coffers. It sets a minimum purchase price of $100 million. The city is expected to receive $102.6 million upfront.

The Bureau of Governmental Research bills itself as an independent, nonpartisan, nonprofit public policy research organization. 

“The proposed ordinance authorizing the deal places no restrictions on how the City can use the money,” the bureau wrote. “The ordinance also lacks a requirement for the City to report regularly on its emergency reserves and show how the City is using the deal proceeds.”

Under the proposal, New Orleans would sell $148.8 million in future casino lease payments for $102.6 million upfront. Over the nine-year, two-month term, the city’s annual receipts from the Caesars lease would fall from $23.6 million to $7.3 million.

The ordinance says the sale is needed because of the city’s “pressing need for additional financial resources” and states that the future payment stream is “not presently needed for public purposes.” It would also authorize Mayor Helena Moreno and the City Council president to execute documents needed for the deal, including an intercreditor agreement.

Perhaps I am being cynical, or perhaps BGR is naive, but how easy would it be for the Council to declare the current budget shortfall an “emergency”? Further, whenever has city leadership been defined by its transparency? Afterall, these are generally the same Council members that claim that the last Mayor was hiding a budget disaster and that they didn’t have any idea it existed.

From a good government perspective monetizing a long term cashflow stream to build a depleted emergency reserve seems to be a good idea. But we must ask what happened to our previous reserves, and in order to protect a refilled reserve for true emergencies can this Council be trusted to not repeat the actions of the very much same people from previous Councils?

BGR is right, but whether the Council will listen to reason is another question. BGR’s points present important issues for the business and civic communities of the City to stand up for but standing up doesn’t mean sending a polite email to Council members suggesting they do the right things. These civic standouts have an important role to play if this city is to turn around. The practice of playing nice with politicians that they have followed for so long has to great extent contributed to the economic decline of our once magnificent city.

We can change, we can join the great southern boom, but only if we change our application of a culture of laissez les bon temps rouler, our form of culture that attracts so many for short visits, only for them to go home to growth and prosperity.