Bill that could cost Two Canal Street Investors millions passes Senate, moves to House

By Karen Kidd | Apr 22, 2016

NEW ORLEANS – Legislation that could cost the losing bidder suing the city of New Orleans over the former World Trade Center development millions of dollars almost unanimously passed the state Senate earlier this week and is now in the House, over the objections of the losing bidder.

BATON ROUGE – Legislation that could cost the losing bidder suing the city of New Orleans over the former World Trade Center development millions of dollars almost unanimously passed the state Senate earlier this week and is now in the House, over the objections of the losing bidder.

Senate Bill 447 does not name Two Canal Street Investors, the losing bidder suing the city, but the development company would have to post millions of dollars just to maintain its lawsuit should the legislation ever be signed into law by the governor. The bill would require a developer to post cash or security to maintain a lawsuit against the city or the New Orleans Building Corp., the public benefit corporation responsible for developing city-owned property.

The legislation would have a chilling effect on any such legal lease challenges, Daniel E. Davillier of Davillier Law Group, the New Orleans firm representing Two Canal Street Investors, said in a statement to Senators before their vote Wednesday.

"This would effectively ensure that any violations of the public lease law could never be challenged, as it is unlikely that anyone would be able or willing to post such cost-prohibitive security to simply seek judicial review of an alleged violation of the public lease law," Davillier said in the statement. "Again, I don't see how such a requirement could be seen as good public policy.

The bill also would change rules pertaining to the process by which 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.

"Eliminating either of these requirements would be detrimental to the public interest and treasury," Davillier said in his statement. "In essence, the new law would allow a public benefit corporation to lease public property to anyone that it chose, in its discretion, using subjective criteria selected by the public benefit corporation. This change would effectively nullify the public lease law in New Orleans, as all the city would have to do is have a public benefit corporation lease its property to third parties, and there would be no requirement for any economic return to the city, or for the use of 'objective' criteria."

With 36 votes in favor, the Senate passed the bill one vote shy of unanimous. The only nay vote was cast by Sen. Karen Carter Peterson (D-District 5), chairwoman of the Louisiana Democratic Party. Sen. Jack Donahue (R-District 11) and Sen. Eric LaFleur (D-District 28) were absent from the vote. Peterson did not respond to Louisiana Record requests for comment.

The bill, which spent approximately two weeks in the Senate after its introduction by Sen. Conrad Appel (R-District 9), was received into the House on Thursday and awaits committee appointment.

Two Canal Street Investors has maintained the mayor's office is attempting an end run around the judiciary by orchestrating the Senate bill.

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 told the Louisiana Record shortly after the bill was introduced into the Senate. "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."

Davillier, in his statement before the Senate, said that the legislation clearly is aimed at his client, Two Canal Street Investors.

"This is a clear attempt to impact the currently pending litigation related to the lease of the former World Trade Center building in New Orleans," Davillier said. "In addition to the obvious attempt to abuse the powers of the state legislature to circumvent the entire judicial system, such an attempt to retroactively deprive a party of a vested property right in a pending suit would clearly be unconstitutional."

The mayor's office did not respond to requests for comment.

Late last month, Two Canal Street Investors filed suit in Orleans Civil District Court against members of the real estate consulting team that 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 on 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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