The Port of South Louisiana has agreed to buy the former Avondale shipyard site for $445 million from the Virginia-based terminal operator that bought it five years ago, a deal port leaders argued will help the site reach its potential for economic development and job creation.
T. Parker Host purchased the 254-acre site, now known as the Avondale Global Gateway, for $60 million from shipbuilder Huntington Ingalls in 2018. Company officials said last year they invested $150 million into the facility that had been idled since the last shipbuilding project ended in 2014.
The original pitch made by port and government officials included eventually hiring up to 2,000 workers. At the official re-opening of the revamped industrial site in October, the company said its 300 workers were working for 50 clients and dealing with two to three ships per week.
That put T. Parker Host ahead of the target agreed with the Jefferson Parish Economic Development Commission of 100 full-time jobs by 2023. But CEO Adam Anderson said that the pandemic, high river levels and other complications created delays, and the company hadn't yet landed an "anchor tenant" to attract other related firms.
Despite those setbacks, Paul Matthews, who took over as Executive Director of the Port of South Louisiana just over a year ago, said the latest deal will mean that Avondale can be developed with a focus on the long-term that a private business might not be able to have.
"At the end of the day, the fact that we own it will make it an economic development arm of the state in perpetuity," he said. "We're talking a Louisiana icon here."
The deal is dependent on taxpayer borrowing. Port officials said they will make a full application with the State Bond Commission next month to issue bonds covering the full purchase price. The port said that servicing those bonds will be covered by income from existing tenants at Avondale.
Meanwhile, the port is aiming to keep the current owner on the site. Officials said they will negotiate with T. Parker Host on a long-term deal to manage the industrial facility, Matthews said.
They want to keep the company in its role managing stevedore services at the four (soon to be six) river berths, as well as marketing to new clients for Avondale's industrial sites, he said.
The port and Avondale are both keen to develop the site as the center of the nascent offshore wind and alternative energy sector.
"We are confident this public-private partnership with the Port of South Louisiana positions the site at the forefront of the new frontier of renewable energy development, propelling the State of Louisiana into this new economy,” said Anderson in a prepared statement.
When the company formally re-opened Avondale three months ago, Anderson said that as well as the four operational berths, there was capacity to run 30 rail cars a day through the site.
Potential for thousands of jobs
The latest economic impact study for Avondale sees it attracting $1 billion in private-sector investment over the next five years, along with more than 2,000 direct new jobs and close to $1 billion in new tax revenue.
Jefferson Parish President Cynthia Lee Sheng, as well as Jefferson Parish Economic Development Commission CEO Jerry Bologna, and Jefferson Chamber of Commerce President Ruth Lawson, welcomed the deal in a joint statement.
Matthews said the deal should help bolster the efforts of port and economic boosters who are trying to have a more "joined up" strategy for the state's ports. He said it should complement, for example, developments going on elsewhere, including plans to develop the new downriver Port of New Orleans container facility in St. Bernard Parish.
West bank berths
"Now we can have multiple berths on the west bank to attract ships and keep cargo in Louisiana that is currently having to move overland to ship from Houston," Matthews said. "Currently, there are no public docks on the west bank from Plaquemines Parish all the way to St. James."
The Port of South Louisiana includes facilities along a 54-mile stretch of the Mississippi River, from Waggaman in Jefferson Parish to Convent in St. James Parish. It has seen a long period of volume decline because of the events of the last few years, including trade wars that saw its gross tonnage drop by one quarter.
The port is the second largest in the Western Hemisphere and the largest in the country for agricultural products.
Compete with Texas
Matthews said he had instigated talk of the deal last summer and the port's board voted unanimously in favor. An independent firm had been engaged to come up with the valuation and purchase price for Avondale, which takes into account all of the improvements made by T. Parker Host in the last five years.
With the deal, "Avondale can become the nexus of economic development all along the entire river," Matthews said. "The only way to compete with Texas is to have a regional focus on what is best for the people of the region."