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Thu July 18, 2013
Debt on Bridge to Grand Isle, Port Fourchon in Danger of Default
In December, the forecasted revenue for the LA1 toll-bridge will be less than the bill the state owes that month on the borrowed money it took to build it. Toll revenue is by statute bound to pay off the bonds. If the state defaults on the bridge, it could negatively effect the entire state's credit rating.
The LA1 bridge is the only way to access Port Fourchon and Grande Isle by car. The bridge was built after hurricanes wiped out parts of the unelevated road now called "Old LA1."
The Louisiana Transportation Authority (LTA), a board made up of lawmakers, governor appointees, and officials from the Department of Transportation and Development, met Thursday in the Capitol to discuss options for avoiding default.
The federal agency that must give the state clearance to move forward on these financial plans has twice denied options to refiance the bridges' debt.
Michael Bridges, an Undersecteraty with DOTD, suggested a third option to the LTA this afternoon, which the LTA approved.
LTA could enter into a Cooperative Endeavor Agreement with the Division of Administration (DOA), an organizational arm of the state executive branch. That's the same kind of agreement between private entities and the state for the privitization of LSU's hospitals. Bridges said this is a common practice for debt reorganization deals in state government.
The bonds would be replaced with three sets of more bonds, which the DOA would pay off. In exchange, toll revenue would go to the state general fund.
DOTD would continue paying for toll collection operations.
The deal will have to be approved by a federal agency, the Joint Legislative Committee on the Budget, and the State Bond Commission.