The city of New Orleans moved to terminate its lease agreement with Six Flags Inc. on Friday in what it hopes will be the first step toward redeveloping the shuttered eastern New Orleans theme park
In a special board meeting, members of the Industrial Development Board, the agency that acts as the park's landlord, voted unanimously to end its lease agreement with Six Flags. Six Flags, which operated the park from 2002 until it flooded in August 2005, has said it does not plan to reopen the site. The company filed for bankruptcy protection in June, listing $2.4 million in debts.
The lease termination agreement will be presented to the bankruptcy court in Delaware on Oct. 8 for approval. In addition to terminating the lease, an agreement signed Friday by Mayor Ray Nagin and IDB President Walter C. Flower III calls for Six Flags to make a $3 million cash payment to the city. The company will also give New Orleans 25 percent of its net Hurricane Katrina-related insurance proceeds if the recovery amount exceeds $65 million.
The agreement also calls for all litigation between the parties to be dismissed
. The city of New Orleans had filed a temporary restraining order against Six Flags, barring the company from removing rides from the site.
"Since Hurricane Katrina, the city and IDB have worked diligently to bring closure to the issues surrounding the Six Flags site," New Orleans City Attorney Penya Moses-Fields said in a statement. "Our goal has always been to positively resolve these issues not only for the city, but specifically for the residents of New Orleans east."
New Orleans owes $15.2 million on a $25.3 million loan used to build the park through the U.S. Department of Housing and Urban Development's Section 108 loan program. The first loan for $15 million was taken out in 1995 to build the original Jazzland Theme Park that preceded Six Flags. A second loan was taken out in 1998 when Six Flags took over the site. Payments on the loan had been $2.4 million a year until 2017, of which the city and Six Flags each paid a portion. When the agreement is finalized, the city, alone, will be responsible for that payment, which was lowered in August as part of a refinancing deal to take advantage of lower interest rates.
Six Flags bought Jazzland out of bankruptcy protection for $22 million. The park operated for three seasons, generating revenue of 24.5 million in 2003, $18.1 million in 2004 and $15 million in the hurricane-shortened 2005 season, but never reached anticipated attendance or revenue numbers.
In its June 2006 proposal to the city asking to get out of its 75-year lease, Six Flags wrote that "the marketplace never embraced the park" even before Katrina flooded it.
Six Flags' outstanding lease agreement has been a barrier to plans to redevelop the site. There are currently two public proposals for the area: a sports complex and another theme park.