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Exclusive: City diverted $40M away from old Navy base

The Landrieu Administration diverted at least $40 million in federal grants from the Navy base redevelopment to other projects.

NEW ORLEANS -- In the years after Hurricane Katrina, the Navy base at the junction of the Mississippi River and the Industrial Canal was being shut down. The city of New Orleans saw an opportunity to use its large, sturdy buildings and strategic location to establish a state-of-the-art regional disaster response center there.

But five years after the Navy transferred the property to the city in good condition -- using a special no-cost transfer that wasn’t done for any other base closure in the country -- the proud old Naval Support Activity center is an embarrassing eyesore, littered with graffiti, broken glass and rotting office furniture, and overrun by vagrants.

A WWL-TV investigation has found that the recently departed administration of Mayor Mitch Landrieu diverted at least $40 million in federal grants from Navy base redevelopment to other projects. And there is no prospect of getting any new federal aid as Mayor LaToya Cantrell’s team seeks to renegotiate terms with a development team that has been itching to start since the city selected it in 2012.

Belinda Little-Wood was the executive director of the city’s redevelopment authority, which was established to oversee the base redevelopment project under the federal Base Realignment and Closure (BRAC) process. She negotiated a no-cost property transfer with the Navy in 2013, which required the project to create jobs, provide housing and offer homeless services by 2028.

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Little-Wood helped craft a city use plan for the three 6-story buildings, which total 500,000 square feet. They all needed to be brought up to code and storm-proofed. Two of the 22 acres were also set aside for homeless services in an agreement with UNITY of Greater New Orleans.

The developers, EMDRC Partners, were selected in an open bid in 2012. They had a $90 million plan to convert the front building into mixed-income housing. And the city had a $173 million plan, financed with grants and tax credits, to establish an International Resiliency Center in the back and middle buildings.

The rear building closest to the Industrial Canal was going to include a new emergency operations center for the city, including offices for the Fire Department, Emergency Medical Services and various disaster response firms and nonprofits, along with equipment storage and medical facilities.

The middle building, a parking garage, would include food storage and a proposal from the Port of New Orleans to use it for cruise ship parking under its plan to move its port of embarkation from Spanish Plaza to the Bywater.

The city was awarded a $35 million Hazard Mitigation grant from FEMA to stormproof the buildings and windows. It also got $5 million from FEMA for replacing the flooded Fire Department headquarters with offices at the old Navy base. The city had another $45 million set aside to establish other city offices there, according to its application for the Hazard Mitigation grant.

Little-Wood also got the city a $1.5 million U.S. Energy Department grant to establish a solar power grid on the property, and the Navy left between $500,000 and $1 million worth of solid wood furniture in the rear office building.

All of that money is now gone, and the furniture was left to rot, developer Joe Jaeger confirmed.

Little-Wood’s position as head of the redevelopment authority ended in January 2015, but she later found out her old boss, then-Deputy Mayor Cedric Grant, went to FEMA in May 2015 and asked to redirect the $35 million in Hazard Mitigation grants to six drainage projects.

Grant was also serving as the executive director of the Sewerage & Water Board at the time. When he asked FEMA to cancel its aid for the Navy base, he sent the request on Sewerage & Water Board letterhead.

Two of the six drainage projects have since been canceled. The $35 million Grant diverted did go to four of them – to improve infrastructure and stormwater retention in the Broadmoor, Lakeview, Bayou St. John and St. Roch neighborhoods – but none of them has proceeded beyond the engineering and design phase.

“That money was repurposed to other projects that are critical to the city right now,” said Ellen Lee, the city’s Community and Economic Development director.

Indeed, drainage is a critical issue, especially after major infrastructure failures at the Sewerage & Water Board and the city’s Department of Public Works caused widespread flooding last summer.

Casey Tingle, who oversaw Hazard Mitigation projects for the state Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP), said it was FEMA that recommended the grant money be moved elsewhere. He said the federal agency was concerned the money wouldn’t be spent by certain deadlines if it stayed in the Navy base project.

“It was more difficult and time-consuming than anyone had initially planned or conceived,” he said.

But Little-Wood calls the sudden diversion of the money for the Navy base a “puzzlement,” especially given the large scope of the project and the Navy’s 2028 deadline for getting the property back into commerce.

She pointed out that the Navy could, under the transfer agreement, force the city to pay full value for the property -- based on its excellent condition in 2013 -- if it fails to create jobs and redevelop it.

She also says it was unfair to the developers when the city changed the funding plans in mid-stream.

“To force them to have to go out into the marketplace and find that so that it’s not a grant, it’s something that has to be financed, it makes the development much more difficult,” she said.

What’s more, Jaeger said he was not consulted, or even informed, about the decision to divert the federal grants. Jaeger said his company was selected as the developers in an open bid process in 2012, but it took until late 2016 to work out a development agreement with the Landrieu administration.

Some of the difficulty stemmed from the Port of New Orleans’ pre-existing agreement with the city to collect parking revenues from the middle garage building. Lawyers hired by the city wrote a letter in 2012 saying the Port would not be allowed to collect parking fees because the city’s transfer agreement with the Navy prohibited it.

But now, six years later, the Port is still trying to use the middle building for cruise passenger parking.

“We understand that the City and EMDRC Partners are working on plans for the Port of Embarkation, though specifics about the project are still taking shape,” Port spokesman Donnell Jackson said. “Parking at that particular location may not be ideal for the developer, as it is in the middle of the property. As EMDRC and the City refine their plans, we look forward to working with both entities on a viable project that drives economic development and meets the needs of the community, Port, City, and EMDRC.”

Asked if the cruise passenger parking is still on the table, the city’s Lee said: “I think everything is up for discussion and renegotiation. That's what we're working through.”

Jaeger said he’s optimistic about working with Cantrell's administration and is prepared to move forward without the federal aid.

Neighbors: Condition of old Navy base 'sad, tragic'

At this point, that's all 95-year-old neighbor Laura Swinney can hope for.

"This is a treasure that should be preserved and used," said Swinney, who lives directly across Poland Avenue from the old base. “It's so sad. It is a tragedy. Something so well built, something so historic. And now graffiti, and leakage and marauding groups. There's danger there.”

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