BioDistrict president finds creative way to raise money — build a courthouse

How do you solve the problem of being the unpaid president of a state-created, but unfunded economic development district? If you’re James McNamara, you build a courthouse.

In an inventive attempt to unearth money to support the cash-strapped BioDistrict New Orleans, McNamara is trying to broker a partnership with New Orleans Civil District Court to construct a new justice building at Duncan Plaza, the site of a former state office building.

The two groups, along with the state — which owns the Loyola Avenue property — are in the early stages of discussion and McNamara must still convince his wary, 15-member board that this is a good idea. But should they all come to terms, McNamara and the judges behind the push believe it not only will produce the new courthouse they have long desired, but it could give the BioDistrict a much needed source of revenue.

“It’s a viable means of developing a staff here,” McNamara told his board at a meeting this month. “It moves us along.”

The parties envision an agreement where the BioDistrict would issue bonds for the building’s construction and then act as either its developer, co-developer or financier. The district would also manage and operate the building and possibly share in revenue generated from a parking lot, eating establishment or copy center, if those were built.

Civil District Court judges have long been pushing for a new building. The current courthouse has an inadequate heating and cooling system and isn’t conducive to the needs of a modern judiciary, Judge Michael Bagneris said. There are no private rooms for attorneys to meet with clients or for juries to deliberate. The former huddle in busy, public hallways and the latter assess divorce and foreclosure cases in empty courtrooms, Bagneris said.

“This building leaks expenses,” Bagneris said. “It leaks money.”

The move, so far, has been met with serious skepticism. The BioDistrict’s board was largely cold to the idea upon its introduction at a meeting on June 19, with some board members questioning whether the district was overstepping its boundaries and operating outside its level of expertise.

“This is just not something this commission should be doing,” board member and real estate developer Roger Ogden said. “It’s just too fraught with issues. We are not supposed to be developing courthouses.”

What’s more, City Hall has bristled at the thought of having to maintain a building it did not conceive and a courthouse it would rather see move into the currently shuttered Charity Hospital.

McNamara will formally present his proposal at a BioDistrict board meeting next month, where board members are expected to vote on steps forward.

The BioDistrict was created by the legislature in 2005 to help grow the bioscience industry in New Orleans, within the area bounded by Earhart Boulevard, Iberville Street and Carrollton and Loyola avenues. The district wants to increase and commercialize bioscience research in New Orleans by connecting universities, medical centers, research centers and corporations. Economic developers point to it as an industry on the rise, especially as the U.S. population ages.

But neither the state nor city has found money to fund BioDistrict New Orleans. Gov. Bobby Jindal has twice vetoed an appropriation for it. The district survives on grants and revenue generated by hosting events.

The 2013 budget — which projects expenses of $961,000 and revenue of $975,000 — includes $725,000 in anticipated revenue from the Judicial District Court Building Commission for pre-development fees to build the courthouse, money that has not yet been promised.

McNamara, hired as president in 2008, has not taken a salary in two years. He said he was in no position to pass up the unconventional courthouse offer.

“I had to look at every source of possible revenue,” McNamara said. “Will this by itself be the cure? No. Would it be in the mix to getting us to sustainability? Yes.”

The Judicial Building Commission, created in 2010 to plan for new construction, has been collecting money to build a courthouse since it was formed. Bagneris said the commission has been collecting $100,000 to $125,000 a month for construction, through an increase in court fees. That money would cover 65 percent of the cost to build the $105 million to $110 million to build the courthouse building, according to the commission’s website. The rest would come from other fees, new market tax credits and any revenue generated from ancillary services, like a snack bar, once a new building opened.

The building commission has long had its eyes on the Duncan Plaza site, determining with the help of outside consultants, Bagneris said, that it would be superior to both the World Trade Center and Charity Hospital. For a time, the city agreed. In 2010, Mayor Mitch Landrieu wrote a letter to the Louisiana Supreme Court in favor of the civil district court’s application to raise its fees to pay for a new building and identified the plaza across from City Hall as the preferred location.

“Act 768 of the 2010 Regular Session of the Louisiana State Legislature permits the city an opportunity to build a municipal complex and courthouse on the Duncan Plaza site,” Landrieu wrote in a letter to Judge Catherine Kimball on Nov. 22, 2010. “I support this concept, and establishing a definitive funding mechanism and a specific revenue source is essential to this vision becoming a reality.”

The city has had dibs on building at that location for three years. But in that time, its focus has shifted to Charity Hospital as the future home for a municipal complex to include Civil District Court and City Hall. There has been no plan for Duncan Plaza.

So the building commission pushed legislation in the most recent legislative session that essentially extracted the city from the driver’s seat and gave the reigns to the BioDistrict. The legislation, now Act 227, gives the state the authority to enter into a cooperative endeavor agreement with the BioDistrict New Orleans to allow the site to be used as the new Civil District Court. The BioDistrict was handpicked, in part, because it is a state agency that can issue bonds, said Bagneris, chairman of the building commission’s New Courthouse Building Committee. It also rose to the top of the pile because Duncan Plaza, at 325 Loyola Ave., falls within its boundaries and the site’s redevelopment as a courthouse is part of the BioDistrict’s master plan, Bagneris said.

The building commission is anxious to get a deal done, Bagneris said, because by law, construction on a new building must begin by August 2014, or any money the commission has raised for construction will have to go only to repair the current court building.

“We can’t really afford to allow this thing to linger,” Bagneris said. “All of the preparatory work has been accomplished. And as soon as everybody gets out of our way... we would have a courthouse in 2016.”

Already that is proving to be a tall order.

BioDistrict board members, at a recent meeting, questioned both McNamara’s authority to begin negotiating with the Judicial Building Commission without their approval, and also whether the BioDistrict was capable of acting as a developer on such a massive project.

Pushing forward would mean committing the BioDistrict to a project that isn’t in coordination with the city’s plan for development of a municipal complex, said Ogden, who also questioned whether the revenue generated from the courthouse would be enough to sustain the BioDistrict’s operation.

Landrieu’s Chief Administrative Officer Andy Kopplin, who sits on the BioDistrict’s board, also expressed reservations. His chief concern was that the city would have a responsibility to maintain a building that it had no say in constructing. The building’s size and maintenance costs are concerns, Kopplin said. The city is required by statute to provide and maintain a home for the courts.