New Orleans officials are trying to orchestrate an elaborate swap that would turn over the city-owned Public Belt Railroad to the Port of New Orleans, and in turn would give the city the last two working wharves along the downriver end of the French Quarter, according to sources familiar with the talks.
The deal, if achieved, would accomplish two things: It would ease concerns among port officials about the future of the railroad, which is crucial to their operations, and which Mayor Mitch Landrieu's administration has been considering privatizing.
And by giving the city control of the last bit of working riverfront between the Central Business District and Bywater, it could potentially open up uninterrupted access for the public to a two-mile stretch of the riverfront in the city's historic center.
Ryan Berni, a top Landrieu aide who attends Public Belt board meetings as the mayor's representative, declined comment Tuesday.
Port spokeswoman Michelle Ganon could not be reached for comment.
Other sources declined to discuss the negotiations for attribution because talks are ongoing.
The two port-owned sites at the center of the discussions are the Gov. Nicholls Street and Esplanade Avenue wharves.
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.
Complicating matters, the wharves are leased to the Jensen Companies, a logistics and transportation firm, which has 12 years remaining on a 15-year lease, founder and CEO Jack Jensen Jr. said Tuesday. Terms of the lease were not immediately available.
Jensen declined to discuss whether he had been briefed on a possible swap.
It's not clear what would happen to Jensen's operations if the deal were to go through.
The Public Belt Railroad, which is owned by the city, includes 26 miles of track connecting six major rail lines, which serve both the port and nearby industrial facilities. The Landrieu administration has for nearly two years been exploring the possibility of leasing the railroad to a private firm as a means of generating cash for the city.
But talk of privatizing the railroad has sparked concern on the Dock Board and among clients of the railroad, who fear a private firm would be more concerned about bringing in revenue than in keeping costs down for users. A takeover of the railroad by the port would presumably allay those worries.
Discussions over the future of the 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 owns The Advocate along with her husband, John Georges.)
Landrieu previously urged the Public Belt's board to consider selling the railroad, seeing it as a way for the city to realize a major infusion of cash. But the prospect drew vocal opposition from local trade groups and maritime leaders.
Late last year, the city took the idea of a sale off the table and began moving ahead with plans for a public-private partnership. Five firms responded to a bid solicitation in March.
Under the most lucrative of those arrangements, submitted by New York-based MidRail, the city would receive as much as $55 million upfront and another $76 million over a 40-year lease term.
Though a deal is far from done, it's possible that port officials could try filling the void left by loss of the two French Quarter wharves by acquiring the former Avondale shipyard, the idle West Bank facility that was once Louisiana's largest employer.
As part of the port's extensive master planning process, officials have studied what role the Avondale site might play in the port's growth plans for the next decade.
Among the ideas considered is whether a break-bulk dock at Avondale is feasible or whether it could become a logistics and manufacturing hub populated by shippers, manufacturers, terminal operators and other users.
The Avondale facility, which includes nearly 200 acres and more than 7,900 feet of riverfront access, offers potential maritime users a key advantage: deepwater access.
In late 2011, defense giant Northrop Grumman Corp. shocked the region when it announced plans to shutter Avondale and consolidate its shipbuilding business in Mississippi. The company later spun off its shipbuilding division into Huntington Ingalls Industries.
Huntington Ingalls has enlisted the commercial real estate services firm Colliers International Group to try to sell the property.
Gary LaGrange, until recently the president and CEO of the New Orleans port, has 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.
But developing a site from scratch to handle the capacity of the two wharves near the Quarter could cost $120 million to $180 million, he said, citing figures that were gathered a decade ago.
But to some local observers, it makes sense that the port would look to the shipyard site as a potential replacement for the wharves.
In fact, in recent months, 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, who acknowledged that most potential buyers feel the price is still too high.
"I couldn't comment as to whether that's something that the port is looking toward in the future," Bologna said, "but I think it makes sense. I think the Avondale facility is uniquely set up so that they could pull the trigger on that without missing a beat."
Staff writer Gordon Russell contributed to this report.