New Orleans city officials announced a proposed agreement with Caesars casino to secure approximately $100 million for the city’s fund balance on Tuesday (April 28).
Caesars agreed to pay the city the next nine years of rent in one lump sum — $103 million — at a discounted rate. The remaining 23 years of rent wouldn’t be affected. City officials said the discounted rate is standard practice for deals like these.
The money would go into the city’s fund balance, or savings account that’s only tapped in case of emergencies like hurricanes or pandemics. The money would not be used for the operating budget.
At a press conference announcing the deal, Mayor Helena Moreno said the cash infusion helps the city’s credit as it addresses a major budget deficit without having to ask taxpayers to contribute.
“This is not new debt,” she said. “This is not a new fee or a new tax. Yet we have found a way to replenish our fund balance with more than $100 million once this transaction closes.”
Operating procedure says the city should have 20% of its budget amount in its fund balance. The city would need $160 million to meet that threshold. Before the cash infusion, it had just $35 million.
City Chief Administrative Officer Joe Giarrusso said the move helps endear New Orleans to outside creditors, indirectly helping the city pay down its $220 million budget deficit.
“ We need to make this move in order to ensure that there is money in the bank to prove to our partners who lend us money that we are a good credit risk, and to show the outside world that New Orleans is doing business in a different way,” he explained.
The deal still needs approval from the city council.