NEW ORLEANS – As the City of New Orleans moves this week to sell a portion of its future Caesars casino lease payments for $102.6 million in cash for emergencies, the Bureau of Governmental Research (BGR) says the deal is a creative response to a severe fiscal crisis. But in a report released today, BGR warns that without safeguards to protect the proceeds, the city risks repeating the same financial decisions that led to the crisis in the first place.
The New Orleans Building Corp. board plans to vote Tuesday, May 5, and the City Council plans to vote Thursday, May 7, on the deal to sell approximately nine years of casino lease payments (June 1, 2026 through July 31, 2035) to private equity firm TPG Angelo Gordon in exchange for immediate funds to rebuild the City’s depleted emergency reserves.
Note: The Orleans Parish School Board’s $3.8 million annual share from the casino lease is not affected by this transaction.
“This deal can help restore the financial cushion New Orleans desperately needs before hurricane season and reassure rating agencies ahead of upcoming bond sales,” said Rebecca Mowbray, BGR President and CEO. “But the ordinance as introduced has no restrictions on how the money gets used. The City learned that lesson painfully when it built a $100 million emergency fund in 2023 with no guardrails, and then most of it disappeared into City spending.”
The city’s fund balance has collapsed from $344 million at the end of 2022 to just $35 million today, triggering credit rating downgrades from all three major agencies. After closing costs, the City would net roughly $100 to $101 million, bringing total reserves to about $136 million — the minimum two months of budget expenses recommended for city governments.
BGR is urging the City Council to amend the ordinance before Thursday’s vote to include two critical protections:
- Spending guardrails: The money should be used only for emergency reserves, not ordinary operating expenses. (Note: After BGR raised this issue with the city in a draft of this report, the administration said it is preparing such an amendment.)
- Public transparency: The administration must provide regular updates to the council and public on the reserves and how the casino revenue is being used.
The City Council should also adopt a comprehensive reserve management policy before the mayor proposes the 2027 budget. The city has already hired a consultant to develop this policy, which should define the appropriate reserve level, permitted uses, procedures for appropriations and replenishment, and guardrails against using reserves for recurring expenses.
With all these protections in place, this deal can meaningfully strengthen the City’s financial stability.
BGR’s full report, Playing Our Cards Right: Key Steps to Safeguard Casino Cash for the City’s Fiscal Recovery, is available at bgr.org