Preliminary Convention Center hotel deal could be done by end of month, but details won’t be immediately available for board or public
21st January 2020 · 0 Comments
By Michael Isaac Stein
The Lens
A timeline is starting to materialize for the Ernest N. Morial Convention Center’s publicly subsidized $675 million hotel project. Convention Center President and General Manager Michael Sawaya told The Lens on Tuesday that he wants to sign a memorandum of understanding, or MOU, with the private development team by the end of January.
But the details of that MOU will not be presented to the board — a 12-member board appointed by the governor and New Orleans mayor — and it’s unclear when they will become publicly available. Sawaya said that he will inform the board when the MOU is signed, but said he will not present the actual document because he is authorized to negotiate the MOU without board approval.
Sawaya said the board will still have to approve the final, closing documents that will make the deal legally binding. He said he expected that to happen in June.
“The MOU is the spirit of it,” Sawaya said. “All that the MOU does is that it lays out all the deal points in the documents that the board will eventually approve. It’s somewhat nonbinding. It frames the following documents, and those require board approval.”
It wasn’t immediately clear whether the MOU will be made available through public records requests. Sawaya said he needed to discuss the question with legal counsel.
Either way, Sawaya said that the central points of the MOU will reflect a preliminary proposal that he presented to the board last year. Under that proposal, the project would receive $114 million in public funding and incentives. The Convention Center would have to spend an additional $27.5 million to build a 900-spot parking garage adjacent to the hotel.
The 1,200-room hotel would be constructed on the center’s upriver side and include a bridge directly into the convention center for visitors. The Convention Center is also working on an “entertainment district” to surround the hotel, which would include residential housing, restaurants and other commercial entertainment enterprises.
Taken together, the two projects are the biggest development the convention center has contemplated in years. Yet the governing board, at least publicly, has played a limited role as the project advances.
The Convention Center is a publicly funded agency, expecting to bring in $66.4 million in 2020 from locally generated tax revenue. Its board, the Exhibition Hall Authority, is a public body. Nine of its members are appointed by the Governor of Louisiana while three are appointed by the Mayor of New Orleans. Some of those picks have to come from short lists created by tourism and hospitality industry groups.
The board granted Sawaya and his staff the ability to negotiate the MOU on its behalf at its December meeting.
In October, the board held a special meeting to discuss preliminary details of the development deal. Negotiations on either the hotel deal or the entertainment district development have not been discussed at length at any other board meeting The Lens has observed since then.
At least one former board member believes that the board is routinely left in the dark about what the convention center staff is doing.
“Decisions were made where there wasn’t full disclosure to the board,” New Orleans Councilman Jay Banks, who served on the board from 2008 to 2018, told The Lens. “There are other board members that share the frustration that I shared while I was there.”
Sawaya said that outside of public meetings, the only board member that’s been engaged in the negotiations is Exhibition Hall Authority President Melvin Rodrigue.
“The negotiating team is myself, [general counsel] David Phelps and our consultants,” he said. “And then Melvin. Melvin is the only board member involved in that.”
Sawaya stressed that the central points of the deal, those that he presented at the October meeting, remain the same and that they are by far the most important pieces of the deal. For a development of this magnitude, there is a laundry list of legal contingencies that need to be accounted for, issues that are tedious and less important for the board to be involved in, he argued.
“What I reported in that public meeting, those deal points are still the deal points,” he said, referring to his October presentation.
Updating how dedicated taxes are collected and spent
Also on Tuesday, the Convention Center board’s finance committee voted to advance a resolution that redefines how its dedicated taxes are collected and how the money can be spent. The resolution is in large part a reflection of legislation passed by the Louisiana Legislature last year that allows the center to spend tax revenues on the $675 million hotel project and the entertainment district development. The bill was sponsored by then-state Rep. Walt Leger, who now works for New Orleans & Co., formerly the New Orleans Convention and Visitors Bureau.
“This is kind of a procedural thing that you have to do when you update a law,” Sawaya told The Lens. “So it’s a housekeeping thing.”
The resolution still needs to be approved by the full board, which is scheduled to meet this week.
One of the most immediately impactful aspects of the resolution and law is redefining what the Convention Center can spend public dollars on. Before the act, much of the center’s revenue was dedicated to its ‘Phase IV’ expansion, which was scrapped in 2007.
The new law makes it possible for the convention center to use that money on certain ‘projects,’ which specifically includes “a convention center hotel with a multi-story parking garage and bridge connecting the hotel and the south end of the convention center.”
It also clarified the lifespan of several convention center taxes. Three one percent sales taxes on hotel room sales, as well as a .5 percent city-wide tax on food and beverages, are set to expire when all bonds financed by the tax are retired. The act specifies that those bonds need to be paid back within 40 years after they are issued, and that the convention center cannot issue bonds backed by those taxes after mid-2029.
The above article originally appeared in The Lens on its website (www.thelensnola.org). The Louisiana Weekly enjoys a partnership with The Lens.
This article originally published in the January 20, 2019 print edition of The Louisiana Weekly newspaper.
