WASHINGTON: After months of uncertainty, Port of New Orleans officials on Friday approved a resolution that paves the way for negotiations to begin on a blockbuster swap that would turn over the city-owned Public Belt Railroad to the port in exchange for two port-owned wharves at the downriver end of the French Quarter. The preliminary deal, which was announced Wednesday by Mayor Mitch Landrieu’s administration, would open up to the public the last stretch of working port space between the Central Business District and Bywater, creating uninterrupted access to a three-mile stretch of riverfront in the heart of the city.
The deal resolves uncertainty over the future of the Public Belt, which manages 26 miles of track connecting six major rail lines serving the port and industrial facilities. “This realignment allows the port and the Public Belt to achieve vertical integration and have greater control of a key element of the logistics chain,” the port’s president and CEO, Brandy Christian, said during Friday’s meeting of the Dock Board. Gaining control of the railroad also gives port officials the option of extending it to the site of the former Avondale shipyard, an idle West Bank facility that used to be Louisiana’s biggest employer. In the meantime, port officials are working with “hospitality partners” to find about $15 million to convert the Gov. Nicholls Street and Esplanade Avenue wharves into public park space. The Ernest N. Morial Convention Center, which brings in nearly $60 million a year from state-approved hotel taxes, a sales tax on food and drinks sold throughout the city and other sources, is expected to kick in the bulk of the money.
The two wharves lie between Crescent Park, the $30 million, 1.4-mile linear riverfront park in Bywater and Marigny that was completed in 2015, and the Moonwalk, the stretch of riverfront near Jackson Square that Landrieu’s father, former Mayor Moon Landrieu, helped open to public access in the 1970s. For nearly two years, Landrieu has explored the possibility of selling or leasing the railroad to a private firm as a means of generating cash for the city. This year, five firms expressed an interest in taking it over in a deal that could have netted the city as much as $55 million upfront and another $76 million over 40 years. However, port officials and railroad clients opposed the move, worried that a private operator would be more focused on pulling in more revenue than keeping costs down. Landrieu called the swap a “win-win-win for all involved,” saying that New Orleanians will benefit from a stronger port as well as the opening up of the city’s “special waterfront.” Ryan Berni, a Landrieu aide, said it was “a bit difficult” to assess the value of the riverfront property, but he estimated that the land, plus the cost of replacing the wharves, would amount to more than $100 million.
Last year, the railroad’s assets and business were valued at $61 million to $196 million by the consulting firm KPMG. “This is not something where you can do a dollar-for-dollar trade, because the economic impact long-term is going to be much longer for the city, and you weigh all of those benefits at the end of the day,” Berni said. Right now, the wharves are leased to the Jensen Companies, a logistics and transportation firm. Exactly when the wharves shift to city hands will depend in part on how quickly Jensen can relocate. Christian said the company has “aggressive growth plans” and could potentially end up along the Industrial Canal. Discussions about the possibility of privatizing the city-owned railroad began after Thomas Coleman, the former CEO of International-Matex Tank Terminals, announced an interest in buying it. (Coleman is the father of Dathel Georges, who with her husband, John Georges, owns The Advocate.) Not surprisingly, port and city officials praised the deal as a better alternative. “I think we ended up with something that works out better for everyone than what anyone was really talking about from the beginning,” Berni said. Christian agreed. “What really began as a threat, kind of a defensive move, has really turned into a strategic opportunity for the port and for the Belt,” she said.
Robert Landry, the port’s vice president of commercial operations, said acquiring the railroad would give the port a competitive advantage in the global trade market. “That’s critical to us as we grow our business, particularly on the container side,” he said. The Public Belt board is slated to meet Monday to “consider the framework” of the swap. The deal could take a year or more to finalize, officials said. Doug Campbell, the railroad’s interim CEO, is expected to continue at the helm in a permanent capacity, Christian said, and the railroad could be set up as a “subsidiary corporation” of the port. Extending the railroad to the Avondale shipyard, Christian said, would likely make the site more attractive to a private company interested in partnering with the port on potential developments there. Uses suggested for Avondale in the past include a break-bulk dock and a logistics and manufacturing hub populated by shippers, manufacturers, terminal operators and others.
The Avondale facility includes nearly 200 acres and more than 7,900 feet of riverfront access. In an interview last month, Gary LaGrange, until recently the president and CEO of the New Orleans port, said it could cost $30 million to $50 million to make repairs and improvements to the two Avondale berths so they could move break-bulk cargo, such as steel or rubber. The property’s owner, Huntington Ingalls, has dropped the asking price for Avondale to $95 million, down from $125 million, according to Jerry Bologna, president and CEO of the Jefferson Parish Economic Development Commission.
