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Undaunted by questions about whether it will even exist five months from now, the Orleans Levee Board has added another project to its to-do list: the pursuit of a new riverboat casino to replace the gambling hall lost to Hurricane Katrina.
The agency, which could become part of a regional authority next year if voters approve a Sept. 30 referendum, is already entertaining offers from separate developers looking to launch $200 million real estate developments on its storm-ravaged waterfront property.
On Wednesday, only minutes after hearing details about the latest, post-Katrina proposal to bring commerce to the Lake Pontchartrain shoreline, board President Mike McCrossen told his colleagues that he has decided to ask Gov. Kathleen Blanco to make the state's lone remaining riverboat casino license available to an operator willing to lease dock space from the cash-strapped agency.
"I feel like we have no choice," McCrossen said, reminding board members that recent action by state gambling regulators has taken New Orleans out of the running for the one existing riverboat license without a home.
Penalty clause
The state Gaming Control Board on Tuesday approved Harrah's Entertainment's proposal to sell two Lake Charles licenses to a competitor that will keep one casino in the west Louisiana port city.
While the prospective buyer, Pinnacle Entertainment, has not decided where to use the other license, regulators allowed Harrah's to insert a penalty provision into the $70 million sale that requires Pinnacle to pay an extra $50 million per license if it places either casino in New Orleans.
Harrah's, which operates the state's only land-based casino in downtown New Orleans and one gambling boat in Shreveport, has seen its revenue climb since Katrina.
In an effort to keep the Levee Board in contention for the uncommitted Harrah's license, McCrossen had asked the gaming board to strip the penalty clause from the sale proposal. The board did not consider his request and approved the Harrah's proposal unanimously.
But on Wednesday McCrossen announced that he will petition the governor to offer a Levee Board lessee the last of the 15 riverboat licenses authorized -- but never put to use -- under a law approved by the Legislature in 1991.
The board's South Shore Harbor marina was home to a gambling enterprise from 1993 until Aug. 29, when Katrina wrecked the Belle of Orleans, whose owners recently won state approval to move the casino to St. Mary Parish.
Since the storm, the Belle's owner, Kentucky hotel operator Columbia Sussex Corp., has failed to make a single lease payment to the Levee Board, which has taken the company to court.
Under the agreement, Columbia Sussex paid the agency about $4.6 million a year, or nearly 18 percent of its annual operating budget. McCrossen said Wednesday that money "must be replaced" if the board is to sustain its flood control obligations.
Beyond the loss of the gambling dollars, the board has watched its lease payments from other flood-ravaged real estate holdings evaporate and property tax collections plummet in Katrina's wake. McCrossen said he wants to use those numbers to illustrate the board's plight for Blanco, whom he hopes to meet with soon to discuss the issue.
The plan to seek a gambling license received unanimous support from other board members, including Brenda Hatfield, the chief administrative officer in Mayor Ray Nagin's administration.
On the fast track
The gambling license discussion came on the heels of a presentation by representatives of NOLATOWN, a partnership between a local businessman and a California construction company looking to invest $200 million in high-rise condo and recreational developments on board property.
That offer comes a few weeks after Atlantis Internet Group Corp. proposed a separate, $200 million project that would include a hotel and -- if a casino license was available -- a gambling complex at the board's dormant marina, and 60 waterfront town homes along Hayne Boulevard.
In an effort to fast-track those developments, as well as any others that might be under consideration, board member Eugene Green suggested that the board immediately issue a formal request for proposals and set a three-week deadline for the offers to come in.
Al Pappalardo, the board's longtime real estate consultant, cautioned that such an accelerated schedule would leave little time to prepare a proper RFP featuring parameters such as how much the board expects to receive in lease payments and what types of developments would be allowed.
Pappalardo said slowing down the process also will allow the board to seek input from area residents about the solicitation.
In the end, the board asked Pappalardo to return on Sept. 6 with a proposed RFP, which could be advertised soon after with the hope of receiving proposals in October.
Uncertain future
Even as the board moves multiple initiatives along, it is unclear whether the agency as it is currently configured -- six commissioners appointed by the governor and two by City Hall -- will even be in a position to close any of the deals on the table.
If voters approve the proposed constitutional amendment to consolidate local levee boards, no one knows what branch of government would oversee future development of Levee Board property.
Under the merger initiative, the board's myriad assets that are unrelated to flood control, such as Lakefront Airport and South Shore Harbor, would be moved to the state's Division of Administration while local and state officials decide what to do with them.
Further complicating matters are permitting and zoning issues.
For example, both developers who have approached the board are eyeing a 17-acre man-made peninsula in the lake just north of the marina. Currently, the zoning for the site allows for only park space.
Accommodating the ambitious visions presented by the developers would require rezoning approval from the City Planning Commission and ultimately the City Council.
That process likely will be a long one.
After Katrina left the local economy in tatters, the Planning Commission, like many government agencies, suffered deep cuts in personnel. As a result, the commission's director said this week that her depleted staff is facing a backlog of work that will push hearings on new projects well into next year.
Despite those challenges, McCrossen urged the board to push forward.
"We know where we're going," he said. "And let's get going quickly."
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