Friday, April 07, 2017

Totally validated

Remarkably, the city has had little difficulty identifying some companies willing to suck profits out of a public asset
New Orleans could stand to make as much as $55 million upfront and another $76 million over a 40-year term under one of five proposals submitted by companies interested in leasing the Public Belt Railroad.

In fact, all five firms that have expressed interest in taking over the city-owned railroad crossed an initial hurdle this week in the city's nearly two-year effort to reach a long-term deal that could net tens of millions of dollars for the city.

The Public Belt includes 26 miles of track that connect six major rail lines serving the port and industrial facilities.

The companies that responded to the city's request for qualifications include Illinois-based Anacostia Rail Holdings; New York-based MidRail; Colorado-based OmniTrax; and Watco Companies, a Kansas-based transportation firm. Another response came from a joint team of Connecticut-based Genesee & Wyoming and Oaktree Capital Management, a California global asset management firm.
That's kind of a funny lede.  One would get the impression from the opening paragraph that it's all great news.  It's much more complicated than that. AZ has been on this story for months. Do take a look at that for background, for coverage of the public meetings, and even an interview with the mayor.  There a several issues and concerns involving labor contracts, agreements with warehousing and port services companies, long term development strategies, etc. Jason sums up the fundamental question here.

Probably the biggest question mark with the RFQ is the nature of the current agreement the NOPB has with the Port of New Orleans. Right now, because the structure of the NOPB is designed to solely serve the Port (not necessarily generate a profit), the Port has a $1/year lease agreement with the railroad. If a private entity takes over the NOPB, that agreement will most likely be renegotiated...if the Port even chooses to do business with the new entity.
Whatever way you slice it, this is a proposal to turn a public asset into a profit vehicle for a private third party. So it's really no wonder the city would find at least five bidders ready to leap at the opportunity.  Ryan Berni says the mere fact of this "totally validates" the decision to privatize in the first place.
"It totally validates that there is a lot of interest from major players to invest in this asset and to give the taxpayers a greater return on their investment," said Ryan Berni, a top aide to Mayor Mitch Landrieu. Berni attends Public Belt board meetings as the mayor's representative.
LOL at that "greater return" to taxpayers.  The Landrieu Administration is stuck in the conservative ideology of the early 90s. Everything is better if it's run like, for, and preferably by a private business. The logic validates itself just like it always has.

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