Mayor Mitch Landrieu has asked commissioners of the Public Belt Railroad to consider selling the city-owned freight rail line, with one potential buyer already expressing keen interest.
But the plan could face significant resistance from trade groups including the Port of New Orleans, the entity the Public Belt was originally designed to serve, and potentially from board members who have already taken a dim view of selling the line.
The proposal to sell the Public Belt was sparked by interest from Thomas Coleman, a New Orleans businessman who served for four decades as the CEO of International-Matex Tank Terminals, a company — owned by his family until last year — that runs terminals and storage facilities in Louisiana and other states and a rail line in New Jersey.
Coleman is the father of Dathel Georges, who owns The New Orleans Advocate along with her husband, John Georges.
Landrieu pushed commissioners to consider a sale in a letter last month after Coleman privately expressed interest in purchasing the Public Belt.
“I encourage the board to hold open, public hearings, where those who support and those who oppose selling the Public Belt can make their case,” Landrieu said in the letter. “I look forward to your input and your recommendation. I am open to any option that is in the best interest of the city.”
Coleman, through the law firm Adams and Reese, formalized that position Tuesday with a letter to the nine members of the Public Belt’s board, the City Council and the Landrieu administration.
Although the letter does not cite a specific price, it says the sale would allow the railroad to have access to money needed for improvements while providing an “immediate and significant cash infusion to invest back into basic city services, as well as ongoing tax revenues on property currently untaxed.”
The Public Belt Railroad, created in 1904, was designed to put all the tracks feeding the city’s ports under a single, public entity. The railroad — unique in that it is owned by a city government — owns and is responsible for about 100 miles of track and the Huey P. Long Bridge over the Mississippi River in Jefferson Parish.
The agency does not receive any taxpayer money or pay any money to the city. It is funded by revenue from the railroads that use the tracks.
Landrieu press secretary Brad Howard said in an email Tuesday that no one other than Coleman has expressed interest in the rail line. He also noted that the idea of selling the Public Belt was discussed as a way to reform the agency in the mayor’s first term.
“Now that the issue has been raised again, the mayor will be looking to the commission for a recommendation on privatization based on what is in the best interest of the city,” Howard said.
The Public Belt became a symbol of public waste and corruption in 2010, when a state Legislative Auditor’s Report detailed lavish spending by General Manager Jim Bridger. Landrieu, who had taken office a few months before the report was issued, called for and received the resignations of Bridger and all the commissioners who then made up the board.
An interim board appointed by Landrieu considered several options for restructuring the entity, including changes to the board structure and the possibility of selling the railroad to a private party. Eventually that board settled on changes to the railroad’s governance, reducing the size of the board, chopping down the 16-year terms that board members had served and requiring that members be nominated by local organizations.
Officials with the Port of New Orleans and the Board of Trade opposed a sale when it was floated in 2010 and 2011. At the time, the Landrieu administration suggested that a sale or lease could help bolster the city’s finances. However, opponents said a sale could negatively impact the way the railroad was run. Although the entity might need changes to prevent another scandal, they said, its day-to-day operations were largely well-run.
“Our position hasn’t changed. The Public Belt was created to serve the Port of New Orleans, and we think the current structure is best for that,” port spokesman Matt Gresham said Tuesday.
A sale of the railroad likely would need the approval of both the board and the City Council. It also likely would require a public bid process.
The value of the line itself is up for debate. When a sale was being considered a few years ago, railroad executives told the board the Public Belt was worth between $20 million and $40 million. At the same time, the then-interim general manager of the line pegged its value at about $75 million.
It also is unclear what would happen to the recently widened Huey P. Long Bridge if the bridge were to be placed in private hands.
Follow Jeff Adelson on Twitter, @jadelson.