Mayor Mitch Landrieu’s administration has taken its courtroom spat with a losing bidder on the World Trade Center redevelopment project to the Legislature, working with a state lawmaker on a bill that could make lawsuits over such public development projects far more financially risky.
A bill filed this week by Sen. Conrad Appel, R-Metairie, would require any company bringing a lawsuit against a public-benefit corporation — a quasi-public city agency — over its choice of a contractor on a public development to put up cash or a bond equal to the rent the agency would have received over the first few years of its lease with that contractor.
That way, should the lawsuit fail and a judge decide to award the agency damages for the delay caused by the legal proceedings, the money already would be set aside.
Otherwise, a company may have “no assets at all” but still bring a lawsuit that costs a public agency “hundreds of millions of dollars,” Appel said. “That’s why we did this.”
The bill is specifically aimed at a legal challenge already brought by Two Canal Street Investors Inc. against the city’s selection of another team of companies to redevelop the former World Trade Center building at the foot of Canal Street. But it would apply statewide.
It also would let public-benefit corporations use their own criteria and business judgment to choose property developers, instead of having to select the project that would net the most in rent, as public lease law now requires.
Landrieu’s administration has argued that the city agency involved already is exempt from the lease law, but the proposed law more clearly grants autonomy to the city and extends that same autonomy to agencies across the state.
Charline Gipson, an attorney for Two Canal Street, said the bill would “eliminate protections for the public” designed to ensure that contract decisions are based on objective criteria and with an eye toward maximizing value. She said the bill would allow only those “with wealth and power” to challenge bad decisions.
“Since they are unable to win in court because they violated the law, now they want to change the law,” she said.
Two Canal Street sued the city in April 2015 after officials selected the development team of Carpenter and Co. and Woodward Design + Build to turn the long-vacant World Trade Center building into a Four Seasons Hotel and condominiums.
Two Canal Street said its own proposal, for a Hotel Alessandra, was the better deal financially for the city, even though city officials gave a far higher ranking to the Four Seasons proposal. They ranked Two Canal Street’s offer lowest of the five proposals received.
Two Canal Street said it offered the city up to $65 million at closing and more than $3 billion over a 99-year lease, while Carpenter and Woodward offered only $5 million at closing and $773 million in rent over the life of the lease.
Last week, Two Canal Street brought a similar lawsuit against a city selection committee’s consultants, the Stone Pigman Walther Wittmann law firm and the Jones Lang Lasalle real estate advisory firm, alleging bias in their advice to the committee.
City officials, who worked with Appel to draft the bill, said it will help protect residents from unnecessary delays in public redevelopments.
“When a losing bidder files multiple baseless lawsuits to disrupt redevelopment of public property, the public’s best interests must be protected,” City Hall spokesman Hayne Rainey said.
The bill would cover not only the World Trade Center revamp but also other important city projects, such as the development of two city-owned parking lots near the Piazza d’Italia monument on Poydras Street and the eventual redevelopment of Charity Hospital, he added.
The bill says for leases of more than 25 years with quasi-city agencies, challengers filing a lawsuit would have to put up an amount equal to at least a decade’s worth of rent the city would receive under the contested lease. For leases of up to 25 years, they would need to put up at least five years of rent the city is due to receive. For a lease of less than five years, they would have to put up the full amount of the expected rent.
If passed, the bill also would apply to pending court claims, meaning that Two Canal Street would have to front at least $32 million in rent that Carpenter and Co. and Woodward + Design Build are due to pay the city over the next decade.
Two Canal Street’s 2015 suit against the city over the WTC deal is not scheduled to go to trial until October — well after the legislative session ends.
Follow Jessica Williams on Twitter, @jwilliamsNOLA.