What gives? Too broke to fund schools, Plaquemines cuts risky deal with oil exporter

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Kendall Dix

The oil export company would effectively own the land,  but the Port — and Plaquemines taxpayers — would still be on the hook financially.

Plaquemines Parish’s budget relies on oil and gas revenues. Oil prices have been free- falling since we started producing so much of it for export, so schools and other essential services, like cutting the grass, have been starved. The new parish president ran a campaign focused on fixing budget shortfalls.

Yet the Plaquemines Parish Council recently voted to divert millions of dollars from its schools and sheriff to its powerful and unaccountable Port, Harbor, and Terminal District. They did this by approving a convoluted and questionable 72-page Cooperative Endeavor Agreement and Lease Agreement between the Plaquemines Port Authority and Plaquemines Liquids Terminal LLC (PLT). PLT is looking to build a crude oil export terminal in the Myrtle Grove/Ironton area, a site previously targeted as a coal export facility until environmentalists defeated it.

If this were a normal industrial project, PLT would own the land, and the Parish would collect taxes that go to its essential services. But this is no normal industrial project.

Of many problematic provisions of the unusual deal, perhaps the worst is that the Port is not required to share its rent payments with the schools and other taxing bodies. The Port and the Parish are currently embroiled in a power struggle, so Plaquemines taxpayers have no reason to think that the Port will share the wealth. The council recently directed the Port to sue the Parish to determine whether the Port is even under the authority of the Parish. To the casual observer, it might seem the Port is less interested in benefiting the Plaquemines taxpayers than working with industry to further enrich itself.

To make matters worse, the Port paid $30.5 million for the land at the center of the deal that its own assessor says has a market value of only $21 million.** Why would the parish pay extra millions that it doesn’t have for some vacant industrial land? It helps to know the history of the land in question.

In April 2007, this same property sold for $5.5 million to TKS Ventures LLC, a business owned by a Plaquemines developer named Kenny Stewart with a history of dubious environmental practices. Just four years later in May 2011, Stewart flipped the land to a company called RAM Terminals LLC for a whopping $25 million. Stewart must have had incredible foresight about the economic potential of the land or be an extremely gifted salesperson to make that kind of quick profit.

RAM Terminals wanted to build a coal export terminal on top of a large sandbar that is crucial to rebuilding wetlands under the Coastal Master Plan and protecting the area’s drinking water from salt-water intrusion. After a lengthy battle with local residents and environmental groups, RAM abandoned its project in 2017.

So why did the Port buy this land for $30.5 million when the parish has fallen on hard times? The answer is Plaquemines Liquids Terminal LLC (PLT), an energy company looking to build a crude oil export terminal on the site, gave the parish the money to do it.

PLT is a joint venture between Tallgrass Energy, a Kansas pipeline company, and Drexel Hamilton, a New York hedge fund. But why would PLT be interested in land with serious environmental baggage and a history of opposition to a similar project? Anyone familiar with Louisiana energy dealings would wager it was not out of concern for the parish’s budget crisis. Tallgrass is worth $7 billion, so it’s not fresh off the turnip truck.

PLT has the final say over every decision that could be made with respect to the land: the rights to use, to sell, to mortgage, to lease, to give away, and to enter the property. Traditionally, these are referred to in property law textbooks as the “bundle of rights,” but because the parish has none of them, its ownership of the property is in title only. It’s an illusion.

PLT also somehow got the Port to take on nearly all of the financial risk of buying the land. A number of provisions in the lease make sure PLT will get repaid for its investment in the property.

In some scenarios — most notably if the state needs the land for the Mid-Barataria Sediment Diversion — Plaquemines taxpayers could be on the hook to guarantee repayment. In other scenarios, the land could be tied up by PLT indefinitely, with no property taxes going to the Parish.

A cloud of secrecy has surrounded this land deal from the beginning. I reached out to Ken Rathburn, the Port’s attorney who worked with PLT to write the deal, but he refused to answer any clarifying questions about how the deal would work or the rationale behind certain provisions.

The Plaquemines Parish Council did discuss the PLT deal at its October 25 meeting about Port business. The contentious hearing featured then Port Chairman and Parish Council member Charles Burt,* angrily cutting off the acting Plaquemines Parish president and parish attorneys after just a few minutes of them asking questions and voicing concerns about the risk to taxpayers. The newly elected council, featuring new members who weren’t at the October meeting, then approved the unusual deal without any debate on January 24.

A deal this unconventional should be looked at more closely by anyone with an interest in a prosperous Plaquemines. The Parish is too broke to be taking money from its schools and sheriff and giving it to a Port that doesn’t seem to be acting on behalf of the Plaquemines taxpayers.

Kendall Dix is the fisheries organizer for Healthy Gulf, formerly called Gulf Restoration Network.

*Correction: As originally published, this column incorrectly identified former Port Chairman Charles Burt as Port President Maynard Sanders. (May 7, 2019)

**Correction: The assessed value was $2.1 million, as stated correctly in the column as originally published. But the market value was estimated by the parish at $21 million.

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