Presentation to the 2016 NAMA Annual Conference

Thursday, October 6, 2016

Public Finance Matters –The Story of Louisiana

Financing Today for a Better Tomorrow!

Presentation to the2016 NAMA Annual Conference

LPFA is a Non-Profit Public Trust

• Created by a private corporation in 1974.

• State and its citizens are beneficiaries of the Trust.

• No State appropriations for operations

• LPFA operates on self-generated revenue

• Bonds are not obligations of the State


LPFA Bonds Issued

$25 BillionSince Inception in

August of 1974


What Experience Does Louisiana Have With

Disasters?


Hurricane Katrina


Hurricane Katrina


Other Events Since Katrina• Hurricane Rita

• Hurricane Gustav

• Hurricane Ike

• Coastal Erosion

• Entire Community Relocation

• Baton Rouge Area Flooding (2016)


THE IMPORTANCE OF DATA

Katrina Hit New Orleans on

Monday, August 29th

Here is the Best Data in the World!


Adv. 1, Tues. 23rd, 5 p.m., TD 12, 35 mph


Adv. 2, Tues. 11 p.m., TD 12, 35 mph


Adv. 3, Wed. 5 a.m., TD 12, 35 mph


Adv. 4, Wed. 11 a.m., Trop. Storm, 40 mph


Adv. 5, Wed. 5 p.m., TS, 45 mph


Adv. 6, Wed. 11 p.m., TS, 50 mph


Adv. 7, Thur. 5 a.m., TS, 50 mph


Adv. 8, Thur. 11 a.m., TS, 60 mph


Adv. 9, Thur. 5 p.m., Hurricane, 75 mph


Adv. 10, Thur. 11 p.m., HK, 75 mph


Adv. 11, Fri. 5 a.m., HK, 75 mph


Adv. 12, Fri. 11 a.m., HK, 80 mph


Oops - Adv. 13, Fri. 11 a.m., HK, 100 mph


Adv. 14, Fri. 5 p.m., HK, 100 mph


Adv. 15, Fri. 11 p.m., HK, 105 mph


Adv. 16, Sat. 5 a.m., HK, 115 mph


Adv. 17, Sat. 10 a.m., HK, 115 mph


The Weeks that Southeast Louisiana Stood Still

• Even the best data in the world can be misleading or wrong!

• On a scale of 1 – 10, the evacuation of New Orleans was an 11

• Everything in the Region is Shut Down• Cannot Get In or Out of the City or the

Surrounding Parishes


Logistics Nightmare

• Baton Rouge is 75 Miles from New Orleans

• My 20 minute commute becomes an hour and one-half to two and one-half hour commute

• No Long Distance Telephone Service• No Cell Phone Service• We Discover Skype


Logistics Nightmare –Even 12 Days Later - Sept. 10th

• Baton Rouge is 75 Miles from New Orleans

• My 20 minute commute becomes an hour and one-half to two and one-half hour commute

• No Long Distance Telephone Service• No Cell Phone Service• We Discover Skype


Bridge Loan Programs –Cash is King

• Everything in Southeast Louisiana is Shut Down or Destroyed

• No Cash Flow for Businesses or Governments

• Small Businesses and Governments Need Cash to Survive


Bridge Loan Programs – Phase I

• Louisiana Department of Economic Development

• Louisiana Governor’s Office• LPFA• Louisiana Banker’s Association• Collaboration to Design the Best

Program for Small Businesses



• $10 million in State Funds Available• Use Funds to Guarantee Loans to Small

Businesses• Also Use Funds to Pay Interest to Banks• Interest Free Loan to Small Business

Borrowers


Revise Your Disaster Plans – Hur. Rita Hits Sept. 24



• Monday, August 29, 2005 Katrina Hits Southeast Louisiana

• Saturday, September 24, 2005 Rita Hits Southwest Louisiana

• September 30, 2005 COA Signed• October 9, 2005 Program Announced to

Banks via Email• October 18, 2005 Applications Accepted



• Last Application November 10, 2005• Loan Size of $5,000 to $25,000• 180 Day Term• 4% Interest to Banks• 570 Minimum Credit Score• 2 – 100 Employees



• $8,820,765 In Loans Made• 370 Loans ($23,840 Ave. Loan)• 25 Loans Defaulted• $615,000 Defaults Paid (7%)• 41 Days and a Second Hurricane to:• Develop the Program• Have the Program Approved• Draft All of the Documents


Bridge Loan Programs – Phase II• Funded With CDBG Money Already

Received by Louisiana• Redirected for Phase II Loans• $30 million in Funds Available• $5,000 to $100,000 Loans• 6.5% Interest Rate• Interest Free to Borrower• 580 Minimum Credit Score• 180 Day Loan


Bridge Loan Programs – Phase II• Feb. 17, 2006 COA Signed and Email

Sent to Banks• March 2, 2006 Follow Up Email to Banks• March 13, 2006 Official Announcement

and Applications Accepted• By March 31, 2006 All Funds Were

Committed• 144 Days After Phase I• 185 Days After the Hurricane


Bridge Loan Programs – Phase II• $28,396,080 Loans Made• 322 Loans ($88,187 Average Loan Size)• Only 14 Had More Than 35 Employees• 29 Loans Defaulted• $2,628,180 in Defaulted Principal (9%)• Two 180 Day Extensions Granted


Bridge Loan Programs – Phase III

• Funded With CDBG Money NOTAlready Received by Louisiana

• August 11, 2006 COA Signed• US Inspector General Halts Program• Program Terms Restructured• October 13, 2006 Final Documents• November 6, 2006 First Application

Received (14 Months After Storm)


Bridge Loan Programs – Phase III

• $55 Million Available For Program• Same Terms and Qualifications as Phase

II• Except For • One Big US Government Requirement


Now A Bridge RAL Program• A borrower will be required to document a

source for the repayment of the loan (such dedicated repayment sources shall be limited to: SBA loan or loans applied for and approved, but not yet funded; and/or insurance proceeds for which a claim has been filed and is pending, but not yet paid. Repayment sources MUST be specified on the application. Personal funds or other business income or funds, or other bank loans are NOT acceptable sources of repayment for this Program).


Now A Bridge RAL Program

• Once Again $55 Million was Available For the Program

• $5,309,427 Loans Made• 56 Loans ($94,811 Average Loan Size)• 10 Loans Defaulted• $988,927 in Defaulted Principal (18.6%)• 225 days from Phase II• 369 days from Phase I


Our Friends at FEMA

• FEMA Assistance is a Reimbursement Program

• Again, FEMA Assistance is a Reimbursement Program


Our Friends at FEMA• Submit Repair Plans to FEMA for

Approval• No Improvements Allowed• Once Approved, Start Repairs• After Repairs are Finished and Paid For,

Apply to FEMA for Reimbursement• Pray that FEMA Has Not Changed its

Mind and You May Get Reimbursed


Once Again, Cash is King• Need Help from Public Finance Capital

Markets to Raise Cash• Communities Must Pay for Repairs –

Then Ask for Reimbursement• No Cash Flows for Governments or

Businesses• Discussed Various Pool Programs to

Raise Cash for Local Governments• GO Zone Bonds


Hurricane Recovery Bond Issue• City of New Orleans and Sewerage and Water

Board of New Orleans• Revolving Fund for Repair Costs• State Pays the Debt Service


Program Highlights• the strained financial situations of the city

and board have delayed the start of many post-hurricane rebuilding and recovery projects

• provide upfront funding to undertake projects that have been approved for full or partial FEMA reimbursement

• Bond proceeds will be used for a wide range of such projects, with about two-thirds going to the city and about one-third to the board.


Program Highlights• All subsequent FEMA reimbursement

monies will go to a trustee-held fund to pay for additional projects of the city and the board;

• these monies are not pledged to bondholders and are not expected to be used for bond repayment.

• The bonds are scheduled to mature through fiscal-year (FY) 2027.


Think Outside the Box –Utility Repair Bond Issues


Bond Issue Highlights• First Ratepayer Backed Securitizations

Issued as Municipal Securities• Taxable Bonds• Saved Ratepayers Over $185 Million• $239 Million Used to Set Up a Storm

Reserve Fund


Utility Repair Bond Issues


GO Zone Bonds

• All but $250,180 of $7.84 Billion Issued


GO Zone Bonds

• $7.84 Billion for Louisiana• Originally Allocated on a FIFO Basis• Requests Higher Than Expected• Established Set-Aside for Most Affected

Parishes• Allocations Granted by the Governor• Same as Normal Private Activity Bond

Allocations


GO Zone Bonds

• All but $250,180 of $7.84 Billion Issued• 128 Bond Issues• Largest $1 Billion (2 Issues)• Smallest $460,000• 311 Applications• Totaling $24.59 Billion• Significant Portion Went to Large

Corporations Due to Credit Concerns


August 2016 Flooding

• Office Closed for 6 Days Over a 10 Day Period

• About 2/3 of EBR Parish With Water• Worse Flooding to the East of BR• Denham Springs 95% Flooded• AT&T Cell Phone Service Out for Days• Over 50% of Flooded Area Not in A

“Flood Zone”



• “If it rains on your house, it can flood”• Blasts From the Past –• School Board Advance Funding Bond

Issue• Bridge Loan Programs• Plus Interesting Stories




“cemetery recovery

consultant”


• Mapping graveyards all over southern Louisiana

• “When I decided to map the cemeteries in Denham Springs, I got a little pushback because Denham Springs is not coastal,”

• She replied that it was a matter of when, not if.

• “Now in 2016,” she added, “here’s the ‘when’ moment.”


Conclusion - Be Prepared• Think About What Could Be Your Client’s

“When” Moments?• Have Ideas or Programs in Place• Plan for Logistics Nightmare• Start Communications With All Groups

Now!• Identify State and Local Funding Sources• Federal Assistance is Great – But

Understand How it Works and its Limitations


Thank You For Your Attention!Enjoy New Orleans!!

Please Contact me if You Have Any Questions


225-923-0020800-228-4755

[email protected] and www.lela.org