Judges explore hiring nonprofit to build new court, then lease it back to them

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Judges at Orleans Parish Civil District Court remain determined to replace their aging courthouse, even though they are getting no help from state or city officials, don’t yet have a location and are less than six months from a critical deadline.

So the judges have chosen an unusual Plan B by selecting an out-of-state development company that would build and own a new courthouse and then lease it back to them.

“We’re thinking out of the box,” said Judge Kern Reese, co-chair of the Judicial Building Commission, which is overseeing the effort.

The developer that the judges chose last month is Minnesota-based Community Facility Partners, a nonprofit that “helps find ways to make difficult-to-finance projects ‘do-able,’” according to its website

The judges selected Community Facility Partners over two other bidders.

They offered “the best package, the best personnel and the best price,” Reese said. “We are moving forward.”

The company said on page 27 of its 40-page bid that the courthouse would cost $112 million to $132 million, not counting the purchase of the land. Reese said he believes they can build it more cheaply, for a  total cost of only $101 million, including the land. The company said it would issue tax-exempt bonds “on the best possible financing terms.”

“Using a new paradigm for management and construction of government and nonprofit projects, CFP has developed an attractive new approach to nonprofit conduit financing,” the company said on page 13 of its 125-page bid.

Since the judges don’t have a site, Community Facility Partners included four different design concepts in its presentation.

The project would be managed locally by Joseph Williams, a senior executive at Hibernia Bank in New Orleans before serving as executive director of the New Orleans Redevelopment Authority after Hurricane Katrina. Local companies involved include the Billes Partners architectural firm, Gibbs Construction and Yates Construction.

Reese said the Judicial Building Commission would repay the bonds with revenue from higher court filing fees as well as from retail stores and a parking garage that would be part of the courthouse. He said he thought the judges would lease the courthouse for as long as it takes to repay the bonds, probably 30 years. The Judicial Building Commission would then own the courthouse.

No other courthouses in the New Orleans area appear to be privately owned, although the 4th Circuit Court of Appeal rented space on Poydras Street for nearly 15 years before  moving a decade ago into the publicly owned French Quarter building that also houses the state Supreme Court.

Community Facility Partner’s website lists several buildings it leases to governments in Michigan and Indiana.

“Lease structures are very common across the United States, although perhaps not in Louisiana,” said Marcy Block, a senior director of public finance at Fitch Ratings.

The judges’ plans face numerous obstacles, including a looming deal-breaker deadline.

In 2010, the state Legislature approved a measure that allowed the judges to impose higher filing fees to create a courthouse construction fund. But under that law, judges have to begin construction by Aug. 15.

If they don’t, they would have to use the money collected so far to renovate their current home,  next to City Hall — a facility Reese has described as cramped, dirty and unfit for the 21st century. Reese told The Lens in October that he believes the Landrieu administration is trying to hold up the project so the judges can’t meet the deadline.

Their coffers are not overflowing. Reese said the court has collected $2.5 million so far, an amount that rises by about $100,000 per month.

Another major problem: The judges have yet to find a suitable site. They want one near their current home and for a time eyed  an empty patch of state-owned land in Duncan Plaza, across Perdido Street from City Hall. But the administration of Gov. Bobby Jindal has withheld the state approval needed to give the land to the judges. The judges believe he is doing so at the behest of Mayor Mitch Landrieu, Reese said.

Landrieu got the board of the BioDistrict New Orleans, a state entity, to refuse the judges’ entreaty to help them raise money for a new courthouse.

Instead, Landrieu has been pushing the judges to join in his plan to transform the vacant Charity Hospital into a government complex whose tenants would include City Hall and Civil District Court. The state owns the abandoned hospital. Emails obtained by The Lens show Landrieu and Jindal administration officials working together to turn it over to the city.

Counting on Jindal’s support, Landrieu is seeking $100 million from the state Legislature this year to convert Charity into a civic center. The mayor has only $13 million for a project that could cost $300 million.

Issuing bonds backed by Civil District Court fees could help Landrieu finance the civic complex. But Reese said the judges believe that the 2010 law requires them to use the money for a new building, not for renovating an existing structure.

“A substantial case has not been made for going there,” Reese said of Charity.

The Landrieu administration’s continuing interest in the judges’ plans can be seen in a public records request filed Thursday by Sharonda Williams, Landrieu’s city attorney. It requests information related to the judges’ selection of Community Facility Partners, as well as how the judges would finance the construction.

An email request for comment from Landrieu spokesman Tyler Gamble went unanswered.

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