NEW ORLEANS — The New Orleans City Council has approved a deal to generate more than $100 million in immediate cash by selling a portion of the city’s future Caesars casino lease payments, aiming to rebuild depleted emergency reserves without raising taxes or taking on new debt. The Bureau of Governmental Research (BGR) called the move a creative response to the city’s fiscal crisis.
How the $103M Caesars Casino Deal Works
Under the May 7 agreement, the city will sell approximately nine years of casino lease payments (June 1, 2026 through July 31, 2035), or about $16.3 million annually, to private equity firm TPG Angelo Gordon for roughly $103 million this year. The Orleans Parish School Board's $3.8 million annual share remains unchanged.
The New Orleans Building Corp. board voted May 5 to advance the deal ahead of the City Council’s approval.
In its May 7 report, "Playing Our Cards Right: Key Steps to Safeguard Casino Cash for the City’s Fiscal Recovery," BGR warned that without safeguards on how the proceeds are used, the city risks repeating the financial decisions that contributed to the current crisis. The City Council adopted those safeguards as conditions of the amended ordinance, requiring the funds to be used exclusively for emergency reserves and mandating monthly public reporting.
"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.
The city’s depleted fund balance has been one of the central financial challenges facing the Moreno administration since taking office earlier this year. Reserves fell from $344 million at the end of 2022 to about $35 million, contributing to credit rating downgrades from all three major agencies after roughly $200 million was spent from reserves under the prior administration.
After closing costs, the city is expected to net roughly $100 million to $101 million from the sale of its casino lease payments to TPG Angelo Gordon, bringing total reserves to about $136 million. That would equal roughly 17% of the city’s approximately $800 million budget, the minimum level generally recommended for municipal governments. Credit rating agencies typically recommend higher reserve levels for cities like New Orleans which face frequent storms requiring disaster relief. BGR said officials should consider maintaining reserves above that threshold.
The tradeoff is that the City will forgo approximately $148.8 million in total revenue over the nine-year term, reflecting an estimated 8.75% annual return for the investor.
BGR Recommended Guardrails in Caesars Casino Deal
City Council members approved the deal with conditions requiring that the funds be used exclusively for emergency reserves and that the administration provide regular public reporting on the status of the fund.
Those provisions reflect recommendations from BGR, which had urged the City Council to amend the ordinance to include limits on how the funds can be used and requirements for greater transparency. BGR said the proceeds should be restricted to emergency reserves rather than routine operating expenses.
BGR also called for ongoing public reporting on the City’s reserves and the use of casino-related revenue, potentially through monthly financial reports or a public-facing dashboard, to allow both elected officials and residents to track how the funds are managed.
BGR also said the City Council should adopt a comprehensive reserve management policy before the mayor proposes the 2027 budget. The City has already hired a consultant to develop the policy, which would establish appropriate reserve levels, define permitted uses, and set procedures for appropriations and replenishment while discouraging the use of reserves for recurring expenses.
BGR, along with credit rating agencies Moody’s, S&P Global Ratings and Fitch Ratings, has called for such a policy for several years as a way to support consistent financial management across administrations.
With those protections in place, this deal is aimed at strengthening the City’s financial stability and the guardrails will help restore public trust in how reserves are managed.
