tiggerpolice

Friday, June 10, 2005
By Bruce Eggler
Staff writer
Scrambling to come up with the millions of dollars the state must pay the New Orleans Saints by early next month, the Superdome Commission voted Thursday to approve issuing as much as $14 million worth of "revenue anticipation notes," in effect borrowing from its expected revenue in the next fiscal year to have more money to spend this year.

Under the 2001 deal that committed the state to pay the Saints $186 million over 10 years, the state owes the team $15 million by July 5. The state's obligation grows to $20 million a year in 2006 and 2007 and to $23.5 million a year in 2008, 2009 and 2010.

Because of a downturn in hotel tax revenue since 2001, an inability to sell naming rights to the Dome and other factors, for the past three years the Superdome Commission, through which the state makes its payments, has come up well short of the money owed to the National Football League franchise.

In 2003, SMG, the private company that manages the Superdome and New Orleans Arena for the state, bailed out the commission, advancing the state $3 million in return for a six-year extension of its contract.

In 2004, Gov. Kathleen Blanco's administration and the Legislature borrowed about $7 million from the state's Department of Economic Development to complete the $15 million payment due to the Saints.

This year, despite an unexpectedly large upturn in hotel tax revenue, the Superdome Commission once again is millions short of having the money to make the Saints payment.


Back to the future

It had been expected that the commission would come up with the money by refinancing the Dome's debt, extending the bonds' payment term in return for a one-time windfall. But Chairman Tim Coulon said officials decided that method would not raise enough money to make it worthwhile.

Instead, the commission plans to issue the "revenue anticipation notes," backed by the hotel taxes and operating revenue the commission expects to get in the fiscal year starting July 1.

Coulon said the plan needs to be endorsed next week by the State Bond Commission, after which the Superdome Commission would need to hold a special meeting to ratify final terms of the sale, which would be handled by Merrill Lynch.

The resolution approved Thursday says the notes would carry a maximum interest rate of 6 percent and must be paid off by Jan. 1, 2007.

Coulon said Blanco might yet choose some other method of meeting the Saints payment, but it is unclear what other mechanism could be put in place in time.

Blanco has asked the Legislature to pass a package of new taxes on New Orleans hotels, rental cars and Superdome tickets that could raise $12 million a year to help meet the state's annual payments to the Saints.

Another possible revenue source is legalizing slot machines at Louis Armstrong International Airport. Estimates of the annual revenue from such a source range from $7.5 million to $28 million a year.

Neither Blanco's package nor the slot machines bill would produce new revenue in time to make the July payment. But they could generate enough additional revenue in the coming year to help pay off the $14 million in notes.


Hotel tax windfall

If no new revenue source materializes, Coulon acknowledged, borrowing against next year would make no fiscal sense, except for postponing the eventual day of reckoning.

Although the commission is less than $10 million short of what it owes the Saints, borrowing as much as $14 million would let it pay off some of the other debts it has run up, such as $2.5 million in insurance premiums it did not pay last year.

The commission also owes the National Basketball Association's Hornets $2.3 million by July 5: $1.6 million for not having sold the naming rights to the arena and $675,000 for the team's failure to hit attendance figures specified in its contract.

The only good news Thursday for the Superdome Commission was that revenue from the Dome's 4 percent hotel tax in Orleans and Jefferson parishes for the fiscal year ending this month was substantially higher than anticipated. A $5.8 million influx in April, the last month in which tax collections are included in this year's figure, brought the year's total to $36.1 million, a 17 percent jump from the previous fiscal year.

David Weidler, the Dome's top financial officer, said he could not explain the windfall.

The commission's hotel tax revenue was $34.1 million for the fiscal year ending in June 2001. Because of a drop in tourism and travel blamed on the terrorist attacks that fall and a general economic downturn, revenue fell to $32.7 million in fiscal year 2002, $30.6 million in 2003 and $30.7 million in 2004.

. . . . . . .


Bruce Eggler can be reached at beggler@timespicayune.com or (504) 826-3320.


http://www.nola.com/news/t-p/capital...0317104720.xml

WhoDat

Great plan. Now we're using money we don't have but expect to have in the future (assuming the Saints stay) in order to pay the Saints now. The State badly needs to get out from under the current deal.

Euphoria

Yes the state seems to be the one who is hurting and needs to do what it can to get out of it.