Landrieu poised to tear down World Trade Center building

26th March 2012   ·   0 Comments

By Christopher Tidmore
Contributing Writer

Fourteen years after local architect Stanley Muller saw his $5 million bid to turn the World Trade Center Building into a five-star Peabody Hotel rejected in favor of a politically connected insider—offering a smaller sum and a less ambitious plan—the city has given up any desire to redevelop the X-shaped building on the Mississippi.

Instead, Mayor Mitch Landrieu suggested last week that the city should just demolish the 45-year-old structure at the foot of Canal Street.

“I mean if it was up to me, I would tear it down,” Landrieu told WWL-TV. “I think we have to figure out what works and what looks. But if you think about that iconic space, there is no other space like that in most cities in America on the riverfront, and we ought to take it to its highest and best use that invites the most people to participate in it.”

The city signed a $2.3 million deal last week with the WTC Corporation that gives the Lan­drieu Administration full control over the redevelopment plans for the 33-story building. Next, the mayor will make a Request For Proposals, completed by mid 2013, that hopefully will propose new life for the Riverfront property.

Landrieu argued, “We’ve tried a couple different hotels. That building doesn’t really work for it. That building has served its useful purpose. And I hope the future of the city involves an open space that invites other things that ties the river completely together.”

However, a decade and a half ago, the city may have missed a chance to indeed have a four star hotel occupying the riverside skyscraper that would have achieved Landrieu’s hopes. In 1997, architect Stanley Muller proposed a $5 million bid to the World Trade Center board to build a 5-Star Peabody Hotel in the WTC. He wanted all but four floors of the building. The WTC sought to only turn over half of the building to the hotel developers.

At the time, Muller predicted to The Louisiana Weekly that the effort to convert only half the building into a hotel would reap failure. “It is just not cost effective to do what they [the WTC board] wants. You need almost all the building to make a profitable hotel,” the architect outlined. “Otherwise, you’ll fail…In the end, I bet you that the city is going to have to bail out this project.”

Muller’s prophecy ultimately proved all too true.

The Hotel Deals

The World Trade Center Complex sits upon one of the choicest pieces of real estate in New Orleans, overlooking the river and sitting at the apex of the city’s main streets of Canal and Poydras. Once called the International Trade Mart, the city constructed the skyscraper in 1963 as a vehicle to draw and develop international trade and high paying jobs.

By the mid-1990s, though, the building sat half-empty. The bustling office complex had dwindled into see-through floors with just a few international consulates and the city’s famous Plimsoll Club remaining.

The private board that operated the building hit upon the idea of opening a bidding process to develop a hotel in the lower 18 floors as a way of drawing needed rents and providing structural upgrades to the complex. Any additional funds from the venture would go to fulfilling the WTC’s original mandate of providing jobs though augmenting the port and international trade.

In a March 24, 1997 letter, the World Trade Center announced its intentions. After the release of a Request For Qualifications (RFQ), it received three reliable bids for the property. Politically connected local financier Larry Sisung bid in partnership with the Holiday Inn Crowne Plaza chain. He competed against the French Sofitel consortium and local group called MKL Consulting working on behalf of the Peabody chain. Stanley Muller, the architect and developer behind the MKL proposal offered $5 million a year rent to the WTC, nearly $3 million more than either Sofitel or Sisung.

Yet, Muller’s bid was denied – for two reasons. The local architect said the project was unviable unless the entire property was developed, excepting the upper two floors where the WTC offices lay. Moreover, he argued that the use of state industrial development board bonds were critical to construct the hotel, paid for out of a TIF, tax inducement funding that would have lowered the city’s tax returns from the project.

Critics at the time pointed said that tax benefits should not be a requirement to redevelop the property, and rejected Muller’s bid. Eventually project consultant John Keeling of PFK recommended Sisung partially on the basis that he wanted no direct state aid. (He had also pledged to spend several hundred thousand dollars doing needed repairs of the upper floors, an attractive proposal to the relatively impoverished WTC, which helped him prevail over his French competitors.)

Muller cried foul as 1997 drew to a close, questioning the Crowne Plaza proposal, and their ability to fulfill their promises. In some ways, his criticisms of in­adequate funding vehicles prov­ed prescient as Sisung sought legislative financing almost five years later, in April 2002, echoing many of Muller’s original comments.

Sisung justified his change of position by pointing out that September 11 changed many of the dynamics of hotel financing, drying up once readily available sources of revenue. He claimed that the tax money (and potentially state bonds) would help guarantee a five-star chain for the property, having lost Crowne Plaza as a backer. By June 30 of that year, Sisung’s period of development expired, and the WTC board began exploring new bids.

While the building took little damage during Hurricane Katrina, the economic impact of the storm-delayed redevelopment indefinitely. Subsequent falling pieces of concrete off the building’s exterior hardly made developers more eager.

Interestingly, the WTC board had rejected Muller’s bid on the basis of his demand that the upper floors of the building be included in the project. However, just over a decade later, the WTC was willing to entertain a special tax status and to lease all but two floors of the city-owned tower to New York-based developer Full Spectrum.

That deal fell apart after the local watchdog group the Bureau of Governmental Research objected. They noted that under the proposal the city would lease the property to the World Trade Center authority for 99 years and then the non-profit organization then leases all but the 29th and 30th floors – locations of their offices and the Plimsoll Club – to Full Spectrum to create a mixed use facility that would include hotel rooms and apartments. The price tag would be $30 million upfront and 60 percent of the taxes that would be owed on the riverfront property if it was not tax-exempt.

Under that deal, the annual payment as well as $24.25 million of the one-time payment would have gone to the New Orleans Building Corp., the landlord of city-owned properties and developer of the publicly-owned riverfront that surrounds the mostly empty office building, with the balance committed to the non-profit trade group to reimburse them for past expenses. Yet, as Janet Howard, president of the Bureau of Governmental Research, urged on June 19, 2008, as a private venture, the city should have required the developer to pay the full 100 percent of the taxes that would otherwise be due.

The deal ultimately also fell apart. The World Trade Center of New Orleans moved across the street. Originally, the rejection of the Muller offer, in part, was due to a desire to maintain the upper stories of the skyscraper for consulates, international trade businesses, the Plimsoll Club, and the WTC offices themselves.

In the corresponding decade and a half, numerous foreign governments closed their local consulates and most of the remainder moved out of the deteriorating building. The Plimsoll Club gave up its panoramic perch, moving to the nearby Canal Place, closely followed by the WTC’s 3,000 square feet of office space.

Despite the questions of tax liens, New Orleans’ Single Asses­sor Erroll Williams noted to this newspaper that the mayor may very well be on the right track, in advocating demolition, “It is a question of the condition of the building. Is it more cost-effective to rip it down and start over or to renovate it?”

This article was originally published in the March 26, 2012 print edition of The Louisiana Weekly newspaper