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Sunday, August 25, 2019

Proposed legislation could cost Two Canal Street Investors millions

By Karen Kidd | Apr 20, 2016

Sen. Conrad Appel

BATON ROUGE – The state senator who introduced a bill that could cost the losing bidder suing the city over the former World Trade Center development millions of dollars said in an interview he is holding out hope for the legislation. 

"All I can say is that I am optimistic that this will pass," Sen. Conrad Appel (R-District 9) recently told the Louisiana Record. "It did pass committee, but it has a long way to go."

Senate Bill 447 would require a developer to post millions of dollars in cash or security to maintain a lawsuit against the city and the New Orleans Building Corp., the public benefit corporation responsible for developing city-owned property.

Following a favorable report on Monday, S.B. 447 came up for consideration the next day. It was read by title, then ordered engrossed, and passed on for third reading and final passage. Should it pass the Senate, the bill would require passage in the House before it could be sent to the Governor for signature.

Two Canal Street Investors, which is suing the city of New Orleans over its losing bid to develop the former World Trade Center, maintains the mayor's office is attempting an end run around the judiciary by orchestrating the bill.

For its part, a spokesman for New Orleans Mayor Mitchell J. Landrieu was quite candid about the mayor's part in developing the new legislation.

"We’re working with Sen. Appel on this legislation, which intends to clarify the process for public benefit corporations to select a developer," Landrieu's press secretary said in an email earlier this month to the Louisiana Record. "It also clarifies the appeal process in the event a party challenges the selection of a developer so as not to permit an unreasonable delay of an approved project."

S.B. 447, introduced on April 5, does not name Two Canal Street Investors. 

The required bond "shall be required to furnish security to assure the satisfaction of any damages, costs or expenses, or losses to the public benefit corporation, political subdivision, state, lessee or sublessee which may result, directly or indirectly, from the filing of the appeal or suit, in such amount as may be fixed by the court," the bill says.

The bond amount would be based on two sets of calculations, depending on whether leases were for more than 25 years or 25 years or less. For leases of more than 25 years, a suing developer would have to post an amount equal to the first 10 years of the rent. For leases 25 years or less, a suing developer would have to post an amount equal to the first five years of rent.

The bill also would change rules pertaining to the process public benefit corporations may award leases. Current law does not require public benefit corporations to use a standard public bidding process to award a lease, but does require a lease award "provide for a fair and equitable return of revenue." In another change, the bill also would remove the current "fair and equitable return of revenue" language for such awards.

The bill initially was referred to the Committee on Judiciary A before being recommitted to the Committee on Transportation, Highways and Public Works.

Late last month, Two Canal Street Investors filed suit in Orleans Civil District Court against members of the real estate consulting team who advised the city in that process. The named defendants in that case are the Stone Pigman law firm, attorneys Scott Whittaker and Angela Crowder, consulting firm Jones Lang Lasalle, and consultants Greg Hartmann and Judd Stensrud.

That case was an addition to Two Canal Street Investors' lawsuit filed last spring against the city and New Orleans Building Corp. That lawsuit is scheduled to go to trial in Oct. 24.

The development of New Orleans' 33-story World Trade Center, located on the riverfront, was leased last year to the development team led by Carpenter & Co. of Massachusetts and Woodward Interests of New Orleans.

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