A rendering of the proposed 1,200-room Omni Hotel, to be built by developers Matthews Southwest and Darryl Berger on vacant upriver land owned by the Ernest N. Morial Convention Center.
Courtesy Matthews Southwest
The Ernest N. Morial Convention Center is looking for ideas to develop a large portion of this 47-acre area for an "entertainment district" adjacent to the Convention Center in New Orleans, La. It will draw up a short-list from contenders who've submitted initial proposals by deadline on Friday, October 18th, 2019.
The Ernest N. Morial Convention Center is looking for ideas to develop a large portion of this 47-acre area for an "entertainment district" adjacent to the Convention Center in New Orleans, La. Wednesday, Sept. 11, 2019.
STAFF PHOTO BY MAX BECHERER
The Ernest N. Morial Convention Center is looking for ideas to develop a large portion of this 47-acre area for an "entertainment district" adjacent to the Convention Center in New Orleans, La. Wednesday, Sept. 11, 2019.
Morial Convention Center leaders propose new terms for financing of 1,200-room hotel
BY ANTHONY MCAULEY | Staff writer
Tony McAuley
Oct 15, 2019 - 3:53 pm
Ernest N. Morial Convention Center officials said Tuesday they have negotiated new terms for financing of a $558 million, 1,200-room hotel planned as part of a multibillion-dollar development of upriver land the center owns into a vibrant new "entertainment district."
Michael Sawaya, the center's president and general manager, told the Finance Committee of the facility's governing board that he and his team had negotiated a reduction in the upfront cash contribution to the hotel project that will come from public funds to $7 million, down from a previously proposed $41 million.
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The hotel is being developed by Matthews Southwest Hospitality, together with local developer Darryl Berger, and will operate as an Omni Hotel on land adjacent to the upriver end of the Convention Center that is currently used for parking.
Besides the center's contribution, other public money is to come from the state; the Louisiana Stadium and Exposition District, which oversees the Mercedes-Benz Superdome and Smoothie King Center; and New Orleans & Co., the city's main tourism promotion body. All receive tax money.
The Morial Center also has agreed to fund construction of the hotel's $27 million parking garage, which the center will own and lease back to the hotel for a base rent of $300,000 a year plus 2% of parking revenue.
"What we're doing is taking our contribution and investing it in the parking garage, which is a more positive impact for us and the public," Sawaya told the committee.
The other main terms of the revised agreement include: a PILOT, or payment in lieu of taxes, to the city of between $3 million and $5 million a year, depending on a formula related to revenue from nearby hotels; a ground lease payment by the hotel developers to the center of $250,000 a year, rising by 2% a year; and hotel tax and non-room sales tax rebates to the hotel of 8.42% and 4%, respectively.
Convention Center leaders said they plan to hold a public meeting Monday and have invited local business leaders and other interested parties to hear about the latest proposals and express their views.
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The center's effort to get the hotel and entertainment district rolling has been beset with difficulties, including initial pushback from city officials who argued for and subsequently won a financial contribution from the Convention Center to help pay for general infrastructure improvements in New Orleans — the so-called "fair share" deal sought by Mayor LaToya Cantrell.
"The concessions we have been able to obtain represent a sizable win for the people of Louisiana and for our city and state governments," said Melvin Rodrigue, chairman of the center's board.
The Convention Center estimates that under the terms of the deal an additional $18 million a year in tax revenues will be generated for the city and $6 million a year for the state once the hotel opens in early 2024.
It also estimates that the total value of public incentives to build the hotel will represent about 17% of the project's costs, compared with what it said is an average of 37% for other such projects around the country.
How should New Orleans develop land near future Convention Center hotel? Board asks for ideas
The deadline for developers to express interest in creating a master plan to turn the rest of the vacant 47-acre tract into a mixed-use district focused on entertainment, which will also include retail and residential, is Friday. The Convention Center will then draw up a short list of those it wishes to submit proposals.
The Convention Center has been under pressure from some local business interests and residents to be more open about its plans. A recent City Planning Commission meeting to discuss the closure and rerouting of streets in the proposed development area met resistance from various quarters, and the Convention Center leaders have promised to be more open.
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Besides the public meeting on Monday, center officials said they plan to meet with Cantrell and other city officials to discuss the new financial terms and other aspects of the development.
This story was corrected to show that the deadline on Friday, Oct. 18, 2019, is for potential master plan developers to express interest in doing the plan, not to submit the plan.
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The project is a mixture of residential, retail and entertainment facilities on 20 acres owned by the Convention Center, which currently are either parking lots or not in use.
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