Could New Orleans Business and Industrial District sell state-funded property to raise cash?

Plain-English summary

A state representative asked what the New Orleans Business and Industrial District (NOBID) could do with property, especially property acquired with state capital-outlay funding, while the district needed cash. In Opinion 03-0270, the AG said the district had statutory authority to sell, lease, or transfer property, provided the disposition was consistent with its objectives and enabling law. It expressly questioned whether selling property just to improve cash flow, rather than for economic development, satisfied those objectives.

The opinion also explained that a cooperative endeavor agreement funded by state tax-exempt bonds very likely barred disposal while the bonds remained outstanding; bond counsel included that clause in all such agreements. Whether NOBID had signed one required reviewing the actual documents. If it had, the AG said it could not sell the property. The AG also noted statutory authority for a voter-approved district property tax as another funding option.

Currency note

This opinion was issued in 2003. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant at issuance

District board

The AG recognized property-disposition power under R.S. 33:4703, but tied it to NOBID's statutory purposes. It left the proposed cash-flow sale's consistency with those purposes unresolved and made any agreement-based restriction conditional on the actual funding documents.

State funding officials

The opinion said state capital-outlay appropriations to non-state entities required a cooperative endeavor agreement. It said a bond-funded agreement very likely contained a no-disposal clause while the bonds remained outstanding.

Common questions

Q: Did NOBID have legal power to sell its property at all? A: Yes. The AG quoted statutory authority to sell, lease, transfer, or dispose of property, subject to the district's purposes and enabling law.

Q: Did the opinion approve selling property solely to raise operating cash? A: No. It questioned whether a sale for cash flow rather than economic development was consistent with the district's purposes.

Q: Did state capital-outlay funding automatically forbid a sale? A: The AG said a bond-funded cooperative agreement very likely barred disposal while the bonds remained outstanding. Whether NOBID had such an agreement required reviewing its documents; if it did, it could not sell the property.

Q: Did the AG identify another funding power?
A: It cited a voter-approved special property tax for district purposes under R.S. 33:4702(H).

Background and statutory framework

R.S. 33:4703 defined NOBID's property powers in relation to its development purposes. The AG also discussed possible restrictions in cooperative agreements for state capital-outlay appropriations and the voter-approved tax authority in R.S. 33:4702(H). It gave a conditional analysis because the specific agreement had not been reviewed in the opinion.

Citations and references

Statutes quoted or cited: R.S. 33:4702; R.S. 33:4703.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/03-0270

Original opinion text

One American Place
301 Main Street, Suite 600
DEPARTMENT OF JUSTICE
P.O. Box 94005
CIVIL DIVISION
TEL.: (225) 342-7013
BATON ROUGE
FAX: (225) 342-2090

RICHARD P. IEYOUB
70804-900-5
ATTORNEY GENERAL

AUG 0 7 2003
OPINION NUMBER 03-0270

90-A-1 PUBLIC FUNDS & CONTRACTS
Honorable Cedric L. Richmond
R.S. 33:4702; R.S. 33:4703
House of Representatives
Discussion of Sale of Property Owned by New
District 101
Orleans Business & Industrial District
5437 Crowder Boulevard, Suite 2000
New Orleans, LA 70127

Dear Rep. Richmond:

You advised that the New Orleans Business and Industrial District ("NOBID") is in need of financial assistance. Your question is what NOBID can do with its property, especially if the State funded the acquisition of the property through the Capital Outlay Act.

NOBID is created as a special municipal district and constitutes a body corporate with all the powers and rights of a political subdivision as provided by the constitution and laws of this state. The objectives and purposes of NOBID are to provide for the acquisition, construction, improvement, maintenance and operation, of special projects, additional municipal services, capital improvements, and facilities within the district. Except as inconsistent with their enabling legislation, NOBID is given the power to "acquire, purchase, lease and hold and use any property, real, personal, or mixed, tangible or intangible, or any interest therein necessary or desirable for carrying out the purposes of the district, and to sell, lease as lessor, transfer, or dispose of any property or interest therein acquired by it." R.S. 33:4703.

Thus NOBID has the statutory authority to sell, lease, transfer or dispose of any of its property, unless to do so would be inconsistent with their objectives and purposes. We question whether the sale or transfer of NOBID’s property for cash flow purposes, as opposed to economic development purposes, is consistent with NOBID’s statutory objectives and purposes.

Furthermore, State appropriations to "non-state entities" funded through the annual capital outlay act require a cooperative endeavor agreement. (See Section 8 of the annual capital outlay act). If the source of funding the appropriation is through the issuance of tax exempt bonds of the State, it is very likely that the cooperative endeavor agreement provides that NOBID cannot dispose of the property while the bonds remain outstanding. This clause is included in all such cooperative endeavor agreements by bond counsel in an attempt,

Page 2

HONORABLE CEDRIC L. RICHMOND
OPINION NUMBER 03-0270
Page -2-

we believe, to ensure compliance with the federal regulations on tax exempt bonds. If NOBID has indeed entered into such a cooperative endeavor agreement, which can only be determined by a review of the agreements, NOBID cannot sell that property.

As to other funding options, R.S. 33:4702(H) authorizes the board, with voter approval, to levy a special ad valorem tax, not to exceed twenty mills, for a term not to exceed fifty years, upon all taxable real property situated in the district, the proceeds of which shall be used solely and exclusively for the purposes and benefit of the district.

Trusting this adequately responds to your request, we remain

Yours very truly,

RICHARD P. IEYOUB
Attorney General

BY:

Attorney

RPI/MSH