The chairman of the New Orleans Public Belt Railroad said Tuesday that the city-run line is definitely not for sale, although Mayor Mitch Landrieu’s administration continued to appear open to considering the idea of privatization.
The prospect of selling the railroad, if it should happen at all, should be put on hold until a full valuation of the line, its assets and real estate holdings is completed sometime this year, Landrieu and Chairman David Schulingkamp said in a joint letter to Thomas Coleman, the New Orleans businessman who recently expressed interest in buying the railroad.
But the board that oversees the line, which feeds into the Port of New Orleans, is of the opinion that it should “not ever sell” the railroad, Schulingkamp said. The board rejected the idea twice in recent years.
“I think it would take something monumental to have the board change its mind,” he said in his first public comments since the idea of a sale was first floated publicly earlier this month.
The joint letter, sent Friday, stresses the importance of the Public Belt and prominently notes the board’s previous, unanimous votes against privatization. The first of the votes, which came in 2011 as city officials were considering how to restructure the board in the wake of scandals surrounding former General Manager Jim Bridger, came despite multiple offers to buy the line.
The letter also stresses the importance of the railroad to commerce in the city.
“The publicly owned and operated railroad provides quality and predictable service to the Port of New Orleans and local industry facilities,” according to the letter. “The board would reconsider the policy decision to maintain the existing governance structure only if it were in the city’s best interest.”
The public ownership of the railroad is key to its functioning and to ensuring it is accountable both to the other railroads that use it to transport freight in the city and to the residents who live in the neighborhoods through which its trains travel, Schulingkamp said. That is in keeping with its mission of improving trade and encouraging economic development, he said.
Before anything could be done about selling the railroad, officials must first determine its value, according to the letter. A process to do that is underway, though Schulingkamp said it was started before anyone knew there was a potential buyer for the railroad. He said the effort was for internal use, so officials could figure out the full extent of the assets owned by the railroad.
Some of that has been clouded by the 100-year-old system’s recordkeeping and potential issues with title and ownership claims over some of the property, he said.
The Public Belt is responsible for about 100 miles of railroad in the New Orleans area and is unique in that it is owned by the city. The railroad does not receive any public money, funding its operations through the fees it charges to the freight companies that use it. It also does not give money back to the city, though Schulingkamp said he could see the possibility for paying the city a “dividend” if the railroad’s finances continue on their current upward trajectory.
Landrieu spokesman Brad Howard referred back to the joint letter when asked about Schulingkamp’s statements.
“As the letter reflects, the mayor is open to privatizing the Public Belt only if it is determined to be in the best interest of the city,” Howard said. “A valuation is the first step toward responsibly considering this option.”
Before the railroad could be sold, the board would have to sign off on the plan. The City Council also would have to approve a sale.
A sale would have to involve a “well-managed, public, competitive process,” according to the letter.
Coleman set off a round of discussion about the sale of the Public Belt late last year when he began privately indicating he was interested in buying the railroad. Since then, other potential buyers have expressed interest, Schulingkamp said.
Coleman is the father of Dathel Georges, who owns The New Orleans Advocate with her husband, John.
In response, the Public Belt’s board voted unanimously in November against a sale, reaffirming the 2011 decision.
Shortly after that vote, Landrieu urged the board to hold meetings about the benefits or drawbacks of a sale, though Schulingkamp said he believed that letter was sent because the mayor had not heard of the board’s decision.
Coleman made his offer public shortly after that, noting his ties to the community, his prior experience running a rail line and the possibility for the city to get a significant infusion of cash through the sale. That offer has received little public discussion so far.
“I am pleased that the city has initiated the process of assessing the Public Belt Railroad and the value it can bring to the city, as it works through the financial needs that exist in the community,” Coleman said in an emailed statement. “I remain interested in the Public Belt and determining how this opportunity can generate much needed revenue and benefit the city as a whole. I look forward to offering any assistance the city may require through this process.”
Follow Jeff Adelson on Twitter, @jadelson.