Merger election casts cloud over strategy

Thursday, September 07, 2006

By Frank Donze

With two informal offers to develop its waterfront property already in hand, the Orleans Levee Board took steps Wednesday to find out who else might be interested in doing business with the cash-strapped agency.

On the advice of its real estate consultant, the board accepted drafts for requests for proposals to lease a pair of dormant Lake Pontchartrain tracts: a 15-acre man-made peninsula just north of South Shore Harbor marina and a 12.5-acre site east of Franklin Avenue between Lakeshore Drive and Leon C. Simon Boulevard .

In recent months, developers have presented the board with preliminary plans to launch separate $200 million projects. In an effort to ensure that they get the best possible deal, board members have decided to solicit formal bids from all comers.

But before it advertises the RFP, the board will seek comment on the draft proposal from area neighborhood associations, the three New Orleans City Council members whose districts include parts of the Lakefront, the City Planning Commission and Gov. Kathleen Blanco's administration.

The board also plans to hold a public hearing to discuss the RFP at the Oct. 3 meeting of its Planning, Engineering and Construction Committee. Barring any unforeseen complications, the full board will vote to issue the RFP at its Oct. 18 meeting.

The move to put the property into commerce comes just weeks before voters consider a proposal that would fold the Levee Board into a regional authority next year.

If voters approve the Sept. 30 constitutional amendment to consolidate local levee boards, it is unclear what branch of government would oversee future development of Levee Board property.

Under the merger initiative, the board's myriad assets that are unrelated to flood control, such as Lakefront Airport and South Shore Harbor , would be moved to the state's Division of Administration while local and state officials decide what to do with them.

Even if the board moves expeditiously to launch negotiations with one or more developers, there is no guarantee that the agency as it now is configured -- six commissioners appointed by the governor and two by City Hall -- will be in a position to close any of the deals on the table.

Despite those uncertainties, board President Mike McCrossen said Wednesday that he and his colleagues would be ignoring their fiduciary responsibilities if they failed to pursue the development proposals.

"It's our obligation to investigate," McCrossen said.

He said rental income from currently unused property may be critical down the road as the board, or its successor, struggles to find money to pay for flood protection work.

At this point, McCrossen said, the agency has no way to replace property tax revenue that has been eroded as a result of the widespread damage caused by Hurricane Katrina or the $4.6 million in annual lease payments that were lost when the Belle of Orleans riverboat casino fled its berth at the storm-ravaged South Shore Harbor for St. Mary Parish.

Last month, McCrossen asked Blanco to make the state's lone remaining riverboat casino license available to an operator willing to lease dock space from the board.

The RFP for the two Levee Board parcels calls for developers who enter into lease negotiations to provide the agency with a "good faith" payment of $100,000.

If a deal is struck, the money would be applied to the initial lease payment. The payment would be returned to the bidder if environmental tests show that development of the site in question "would not be prudent."

The RFP also states that a developer would be required to win City Hall approval for any needed zoning waivers and would be responsible for any infrastructure improvements on the site.

Board engineers estimate that the cost to bring utilities to the South Shore Harbor peninsula could run as high as $13 million. Currently, the zoning for the site allows for only park space.

Last month, board members heard from representatives of NOLATOWN, a partnership between a local businessman and a California construction company looking to invest $200 million in high-rise condo and recreational developments inside and near the marina.

That offer came a few weeks after Atlantis Internet Group Corp. proposed a separate, $200 million project that would include a hotel and -- if a casino license was available -- a gambling complex at the board's dormant marina, and 60 waterfront town homes along Hayne Boulevard.

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Frank Donze can be reached at fdonze@timespicayune.com or (504) 826-3328.