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Company behind proposed redevelopment of Six Flags fail to post $500,000 by deadline
By Ed Anderson
October 28, 2009, 6:27AM
Officials of a Louisiana company partnering with the Nickelodeon TV network to re-develop the abandoned Six Flags amusement park in eastern New Orleans asked the State Bond Commission on Tuesday to withdraw its request for $100 million in Hurricane Katrina business development bonds after they failed to post $500,000 with the state treasury by Monday's deadline.
Chris Granger / The Times-PicayuneNickelodeon and Southern Star Amusement say they need more time to come up with the cash needed to apply for GO Zone bonds to revitalize the old Six Flags site, pictured here in August.However, Dan Kyle, the new chief financial officer of Southern Star Amusement Co., said that the developers will return to the November commission meeting and will have the money needed. Under commission rules, an applicant for a Gulf Opportunity Zone bond must post .5 percent of the amount of the GO Zone bonds sought to "show good faith," commission Director Whit Kling said.
In this case, he said, developers had until Monday evening to post the refundable $500,000 in escrow but failed to do so.
"We didn't have everything in a row," Kyle said. The company will be back at the Nov. 18 meeting ready to seek approval, he said.
The Industrial Development Board of the city of New Orleans is seeking $100 million for the amusement park project in the form of Gulf Opportunity Zone bonds, a limited edition bond approved by Congress as a way to make cheap money available to developers to help stimulate the business climate in areas hit hard by Hurricanes Katrina and Rita in 2005 and Ike in 2008.
The board, the city agency that acts as the park's landlord, voted weeks ago to end its lease agreement Six Flags, the park's operator from 2002 to 2005. The company filed for bankruptcy in June, listing $2.4 million in debts.
"We are very optimistic this thing can be done," Kyle said.
Bond Commission analyst Cassie Berthelot said that the project -- if it goes forward -- is expected to create about 1,650 temporary construction jobs and about 735 permanent ones. Department of Economic Development Secretary Stephen Moret said the average payroll would be about $30 million with the average salary being $23,343.
Moret said the proposal meets the state's "target industry" guidelines for use of the GO Zone bond money.
As proposed, Nickelodeon would lend its name, marketing strength and cache to the park through a licensing agreement with Southern Star. The company is not making any financial commitments to the park now.
State Treasurer John Kennedy said after the meeting that if Nickelodeon, a division of media giant Viacom, "steps up to the plate (with finances), it may have a greater impact" in winning the $100 million in bonds.
House Speaker Jim Tucker, R-Algiers, said he would like to see the project done to give eastern New Orleans a shot in the arm. "It's grand on its face, like the Trump Towers," he said, referring to a commitment by developer Donald Trump to invest in New Orleans after the hurricane, a project that remains on the drawing boards.
In an Aug. 13 letter supporting the $100 million request, New Orleans Mayor Ray Nagin said the proposal "will return the dormant Six Flags site to commerce and create an entertainment destination in one of the city's most devastated areas. .Â¤.Â¤. There is no doubt that a project like this would revitalize a site that has been vacant since Hurricane Katrina and will create many more new permanent jobs in the private sector in an area of the city that could use another major development.
"This is a key project to continue stimulating the city's recovery in eastern New Orleans."
Despite the withdrawal of the project Tuesday, Nagin spokeswoman Ceeon Quiett said the city "remains committed to the Nickelodeon project. That has not changed."
Southern Star attorney Stephen Juge said in a statement that the company is "fully committed to bringing the Nickelodeon park to New Orleans."