The Bond Issue: Part One

• By GREG GARLAND
• Advocate staff writer
• Published: Nov 1, 2009

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This is the first of a four-part series on the Nov. 14 bond issue:

• Sunday: Who pays the tab? How the 9.9-mill property tax and half-cent sales tax increase will affect people who live, shop and do business in East Baton Rouge Parish.
• Monday: A close look at plans for infrastructure improvements — drainage work, a new public safety complex, new Parish Prison and similar projects. What’s included in the tax package and why.
• Tuesday: Examining plans to expand the River Center and build parking garages to attract more convention business and promote economic development. Will the strategy work?
• Wednesday: The Alive project — the educational, recreational and scientific research venue on the Mississippi River. What are the potential benefits and potential costs for taxpayers.

A $901 million tax package that Mayor-President Kip Holden says is critical to the city’s future would have an impact on everyone who lives, shops or does business in East Baton Rouge Parish.

Some will feel the pinch more than others if voters, who go to the polls Nov. 14, approve new taxes to finance the parish’s most ambitious public improvements program since the mid-1960s.

The plans include building new facilities — replacements for Parish Prison and the juvenile detention center and new parking garages and a public safety complex — as well as consolidation of city-parish government offices, drainage system improvements, traffic light synchronization and downtown economic development projects.

Mike Futrell, Holden’s chief administrative officer, said a lot of thought went into crafting the tax package to make it fair and to spread the cost of paying the bill as widely as possible.

The package consists of a half-cent sales tax, excluding the purchase of food and drugs, and a 9.9-mill property tax. The sales tax would generate an estimated $41.5 million a year and the property tax about $31 million annually, said city-parish bond counsel Richard Leibowitz.

Futrell noted that the property tax would be “paid in large measure by the business community” while the sales tax burden would fall more heavily on consumers.

“We tried to have an equal share of costs for the business community and consumers,” Futrell said.

He said using different revenue streams also helps reduce financing costs when the city-parish goes to the bond market to borrow money needed to pay for many of the improvements.

Leibowitz said plans call for four bond issues from 2010 through 2015. The bonds would be repaid with annual revenue from the sales and property taxes.

He said officials expect to issue about $800 million in bonds in all, of which $736 million will go into a construction fund to pay for projects.

About $56 million would be put into reserve to protect bond holders if tax collections fall short, Leibowitz said. And about $9 million would go towards the cost of issuance — the professional fees paid to the underwriters, bond counsel and city-parish financial adviser.