New Orleans Six Flags redevelopment in jeopardy as landowner, developer disagree on lease terms
The revival of the former Six Flags site in New Orleans East is in jeopardy amid a dispute over lease terms between the New Orleans Redevelopment Authority, the public agency that owns the site, and the Bayou Phoenix development group. In letters sent between the redevelopment authority and Bayou Phoenix over the past two months, the two sides have traded allegations of mismanagement of the project. NORA told Bayou Phoenix in a letter sent in April that it had failed to meet required development milestones and set a June 30 deadline to cure the alleged default. Bayou Phoenix, a partnership of Henry Consulting and construction firm TKTMJ, Inc., argued in a reply that NORA is misconstruing the lease terms in a veiled attempt to tank the deal. Bayou Phoenix also claimed the redevelopment authority has misappropriated $1 million in federal grant money allocated for the project. The allegations represent the latest stumbling block in the long-running attempt to revive the New Orleans East site which flooded during Hurricane Katrina and never reopened. On April 23, NORA Executive Director Brenda Breaux outlined the initial alleged default in a letter to Henry Consulting business owner Troy Henry and TKTMJ Vice-President Michael Tubre and requested a meeting to discuss a path forward. Breaux told reporters on Thursday that a meeting had been scheduled the previous day, but Henry didn't show up. "I'm hopeful they will move forward with attempting to cure," Breaux said in a media briefing with Mayor Helena Moreno about blighted properties. Moreno said NORA needs to ensure Bayou Phoenix is meeting all the requirements of the lease. "We want this property redeveloped, but we also need to ensure that those that have the right to the property at this point are following all of the guidelines," Moreno said. Henry replied to the default letter on May 13, claiming that Breaux ignored the lease terms and "has caused us and our investors to question the motivations of the City of New Orleans and its Redevelopment Authority and if there is any true desire to see the former Six Flags blight returned to commerce." "Their letter is their latest attempt to undermine the project," he said in a text. Trading allegations The lease between NORA and Bayou Phoenix, signed in 2023, was the result of lengthy negotiations that came after Bayou Phoenix successfully won the right to develop the site after a disputed bidding process. NORA has the right to terminate the lease for default after allowing Bayou Phoenix a chance to meet the deal’s terms. The lease also requires the parties to seek third-party mediation prior to litigation. If they can’t agree on a mediator, either party can take the dispute to court. The lease required Bayou Phoenix to submit a construction contract, financing documents and a final development budget by October 2024. Breaux said in the default letter that Bayou Phoenix had failed to meet those deadlines, and also did not provide required progress reports or seek approval for changes to its master plan. The alleged default also followed Bayou Phoenix's request in February for the return of a $250,000 deposit it submitted as part of the bidding process. NORA declined, claiming it is entitled to keep the deposit as liquidated damages. Bayou Phoenix has denied any default and has not indicated that it will comply with any of NORA’s demands. Bayou Phoenix’s Tubre requested mediation in a June 3 letter, and recommended mediators. NORA Executive Director Brenda Breaux suggested different mediators in her reply on Wednesday. Breaux also said she didn’t think mediation was necessary and that Bayou Phoenix would need to pay for it. Asked by text on Wednesday night if he thinks mediation will proceed, Henry responded with an emoji indicating he didn’t know. Since it took control of the site, Bayou Phoenix has demolished old roller coasters and subleased a portion of the park to E. Ross Studios, led by film composer Elvin Ross, with plans for the film studio. In March, Henry announced tentative deals with national operators to build the sports complex and hotels, along with preliminary agreement with unnamed investment bank for $300 million in private financing. Henry has said the deals are contingent on a site assessment that NORA was to complete with $1 million in federal pandemic recovery funds allocated by the city in 2023. He said in an interview on June 5 the assessment still hasn't been completed. NORA's in-house counsel, Charmaine Thomas-Johnson, disputed that claim in an email to The Times-Picayune. She said the assessment was substantially completed and delivered to Bayou Phoenix in March, with the final surveys delivered on May 13. In the interview last week, Henry said he expected to close on the $300 million financing deal in September, representing about 60% of the expected development cost. He said he did not envision “any major showstoppers at this point in time that we can’t work through.” In his letter to Breaux three weeks before the interview, Henry accused NORA of trying to block the financing deal with baseless default allegations. “This seemingly intentional interference in our business dealings with no legitimate justification threatens our entire project,” Henry wrote in the letter. Henry said in his response that the master plan, which NORA approved, calls for phased development with extended timelines, which he said NORA had agreed to. Henry also accused NORA of misappropriating $500,000 from the federal grant to “overhead” and “line items other than the program itself.” Breaux did not address those allegations in another letter on May 27, in which she reiterated that Bayou Phoenix had defaulted on the lease agreement. “NORA and the City have an obligation to monitor and ensure the Project development is progressing in accordance with the requirements,” Breaux wrote. “Verbal reporting provided by BP to date has been inconsistent and insufficient to allow NORA and the City to evaluate the Project progress.” Breaux declined comment on Henry's allegations. Troubled relationship The project has appeared close to falling apart on multiple occasions over the last five years, as NORA and Bayou Phoenix have worked through numerous disagreements. During lease negotiations in November 2022, Henry accused NORA and the Cantrell administration of demanding approval over tenants, which he said he was a deal killer. A Cantrell administration official, Jeffrey Schwartz, said at the time that Henry was misrepresenting local officials' position, which was merely that Bayou Phoenix needed to present its plans and show progress. “He wants us to throw him the keys and see him in two years, and if he hasn't put a project together, then he'll toss the keys back to us. That's unacceptable,” said Schwartz, who is now the community development director in Mayor Helena Moreno's administration. Bayou Phoenix and local officials eventually resolved their differences, but another argument came up six months later, when Breaux criticized the group's master plan for lacking financing and other key details. The parties again came to terms and NORA approved the master plan in August 2023. A year later, NORA and Bayou Phoenix argued over who was entitled from post-demolition scrap metal proceeds, but that dispute was quickly resolved when Bayou Phoenix was allowed to use the money to help pay for the demolition. Hurricane Katrina laid waste to the Six Flags park more than two decades ago, and several attempts to redevelop or dispose of the property since then have flopped. Former Mayor LaToya Cantrell granted Bayou Phoenix development rights in 2021. At the time, the group promised a youth sports complex, hotels, water park, a film studio and retail. Henry said last week that his group’s failure to receive $50 million in state funding this legislative session would probably diminish the scale of the project.
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