New Orleans plan to sell casino lease payments needs guardrails, report says

(The Center Square) — New Orleans’ proposed deal to raise more than $100 million by selling rights to future Caesars casino lease payments would provide fast cash amid a fiscal crisis, but the ordinance authorizing the transaction does not restrict how the money can be spent, according to the Bureau of Governmental Research.The ordinance, introduced April 23 and sponsored by all seven City Council members at the administration’s request, would authorize the New Orleans Building Corp. to sell certain casino lease payments in order to reinforce city coffers. It sets a minimum purchase price of $100 million. The city is expected to receive $102.6 million upfront.The Bureau of Governmental Research bills itself as an independent, nonpartisan, nonprofit public policy research organization. “The proposed ordinance authorizing the deal places no restrictions on how the City can use the money,” the bureau wrote. “The ordinance also lacks a requirement for the City to report regularly on its emergency reserves and show how the City is using the deal proceeds.”Under the proposal, New Orleans would sell $148.8 million in future casino lease payments for $102.6 million upfront. Over the nine-year, two-month term, the city’s annual receipts from the Caesars lease would fall from $23.6 million to $7.3 million.The ordinance says the sale is needed because of the city’s “pressing need for additional financial resources” and states that the future payment stream is “not presently needed for public purposes.” It would also authorize Mayor Helena Moreno and the City Council president to execute documents needed for the deal, including an intercreditor agreement.The deal could help rebuild New Orleans’ depleted emergency reserves without raising taxes or taking on new debt. The group said the city’s reserves have fallen from $344 million at the end of 2022 to about $35 million today, while the city entered the 2026 budget cycle facing a projected $160 million deficit.But the organization warned that without guardrails, the one-time revenue could be used for ordinary spending rather than reserves. It pointed to a $100 million emergency fund created after the pandemic that had no formal spending restrictions and was largely depleted in 2025 on non-emergency purposes.“It is important that the council amend the ordinance to direct the $102.6 million only to emergency reserves, not regular spending,” BGR wrote.City administrators said the money would be used to restore reserves, not fund recurring expenses. They also said the administration is preparing an amendment to restrict the proceeds after the organization raised the issue in a draft report.The New Orleans Building Corp., a city-owned public benefit corporation that leases the casino site, is scheduled to vote on the proposal Tuesday. The City Council is expected to consider the ordinance Thursday.The Orleans Parish School Board’s $3.8 million annual share of casino lease payments would not be affected. The city would retain $7.3 million annually, including $6.1 million in casino support payments tied to public services and infrastructure around the casino.The group urged the council to require regular public reporting on reserves and use of the proceeds. It also called for a formal reserve policy before the 2027 budget process, including rules for how reserves can be used and replenished.“The transaction offers a creative solution to bolster emergency reserves without increasing debt or taxes,” the group wrote. “But it also highlights the urgent need for transparency and safeguards to ensure responsible use of these funds.”