NEW ORLEANS - In his 2020 budget priorities letter, District "D" Councilmember Jared C. Brossett provided the Cantrell Administration with a proposal to leverage Gulf of Mexico Energy Security Act (GOMESA) of 2006 revenues to expedite the construction of hurricane protection and coastal restoration projects including related drainage projects. He also encouraged the Administration to implement 2018 City of New Orleans Disparity Study, which he has championed since 2015, and to create a workforce development and training program for the City's middle-aged and senior population. 

The following is an excerpt from the letter provided by Councilmember Brossett to the Administration:

Gulf of Mexico Energy Security Act (GOMESA) of 2006

"First, I congratulate Mayor Cantrell on securing a multi-million dollar infrastructure improvement agreement that redirects funding streams to address the City's aging and obsolete infrastructure. Infrastructure is our City's backbone, but every day, we see examples of the growing number of infrastructure challenges and vulnerabilities. As New Orleanians are regularly inconvenienced by boil water advisories, low water pressure, persistent potholes, drainage issues, and water leaks, we must continually seek innovative ways to address the City's infrastructure issues. Leveraging GOMESA revenues will put the City in a better position to address hurricane protection, coastal restoration, and drainage issues.

The Gulf of Mexico Energy Security Act of 2006, which was co-sponsored by Sen. Mary Landrieu, requires the federal government to share 37.5% of federal oil and gas leasing revenues from the Gulf of Mexico with four states (Alabama, Louisiana, Mississippi and Texas) and several of their coastal parishes/counties. GOMESA revenues may be used for hurricane protection and coastal restoration, including related drainage projects for the City. Beginning in 2018, the City received $1.1 million and then $1.3 million in 2019. The payments are expected to grow, but are subject to an annual sharing cap of approximately $2.3 million for the City.

GOMESA bonds would allow New Orleans to borrow against its annual GOMESA revenues on a non-recourse basis. The City has no obligation to repay the bonds other than from GOMESA revenues received by Orleans Parish. The bond investor assumes all of the risk if Congress eliminates or reduces the funds provided by GOMESA.

When the GOMESA bonds are paid off, future revenues revert back to the City.  How quickly revenues revert to the City depends upon the level of GOMESA funding. The City may incorporate those into its annual budget or issue additional GOMESA bonds. GOMESA bonds do not affect the City's credit rating or regular bonding capacity. To move forward, the City Council must adopt a resolution to apply for approval to issue the bonds. The approval is only preliminary, and the City is not obligated until it adopts an ordinance authorizing the bonds.

The City will need to identify projects which are eligible for GOMESA spending, but flexibility exists to change projects at a later date. The bond proceeds may be used to fund Sewerage and Water Board projects through a cooperative endeavor agreement with the City. Again, infrastructure is our City's backbone. Leveraging GOMESA bonds will put the City in a better position to address and fortify our hurricane protection system, restore our disappearing coastline, and fix a drainage system with pipes over hundred of years old."

To view the letter in its entirety, click here.

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Contact:

Domonique Dickerson
Chief of Staff
Councilmember Jared C. Brossett, Chair of Budget/Audit/BoR Committee
504-658-1040
dcdickerson@nola.gov