City Chooses Four Seasons Developer for World Trade Center Project
24 March 2015
The development team comprised of Carpenter & Co. and Woodward Interests was selected as the city’s top choice to lease the World Trade Center for redevelopment. The project will consist of a Four Seasons hotel, luxury condominiums, and a cultural attraction/museum along with public space improvements.
New Orleans World Trade Center: Four Seasons Developer Picked as Top Choice for City Lease
NOLA.com | The Times-Picayune
24 March 2015
By Katherine Sayre, NOLA.com | The Times-Picayune
A development team proposing a $364 million Four Seasons hotel and residences at the World Trade Center building was picked Tuesday (March 24) as the city’s top choice to sign a long-term lease for the vacant riverfront tower.
Carpenter and Co. of Cambridge, Massachusetts, New Orleans-based Woodward Interests plan a 350-room Four Seasons with 76 hotel-serviced condos. Their design also adds two wings to the sides of the building.
A committee appointed by Mayor Mitch Landrieu’s administration picked the Four Seasons group among five finalists competing for a 99-year lease. It’s the fourth attempt by the city to get the building leased to a developer since the 1990s. Final lease negotiations will continue, and a deal must ultimately be approved by the New Orleans City Council.
The city’s consultants analyzed the developers’ final offers based on the value in present-day dollars.
One analysis included only the fixed rent being offered by developers — not including percentages in gross sales and income from cultural attractions, which is more speculative — along with potential tax revenues to the city. In that review, Four Seasons came out on top.
- Carpenter/Woodward with Four Seasons — $400 million
- Two Canal Street Investors with Valencia Group’s Hotel Alessandra — $375 million.
- 2 Canal Redevelopment with Conrad Hotel by Hilton — $347 million
- Oxford Capital Group of Chicago with independent brand Godfrey Hotel — $315 million
- HRI Properties with Crescent Hotel by Starwood — $266 million
After the committee announced its decision, Carpenter’s Richard Friedman said there’s no other hotel in New Orleans today like what the Four Seasons will be. “This will be a hotel that will be a game-changer for the city,” Friedman said.
The Four Seasons team offered a $5 million deposit, rent of $3.25 million per year for the first 10 years and $3.75 million for the next decade. After that, rent would increase by inflation.
Developers agreed to pay 5 percent of gross revenues from their cultural attraction and observation deck. That share would grow to include any other revenue-generating components after 10 years.
The developer also offered 2.5 percent of gross sale proceeds if any component of the project, including condos, are sold.
The city’s consultants noted that the Carpenter development team planned to spend between $95 million and $130 million more than their competitors in construction, giving the property potential for higher tax revenues to the city. The luxury brand also attracts wealthier travelers and creates higher payroll with more employees per room, the consultants said.
When looking at only rent payments to the New Orleans Building Corp., which holds the building on behalf of the city, Four Seasons ranked fourth out of the five at $58.4 million in present-day dollars. “Although its rent…is substantially lower than the other bidders, the size, quality and structure of the development would produce the most direct economic benefit to the city,” the consultants’ report said.
Developers are asking for a credit that reduces annual rent to no less than $2 million if the property taxes the building generates exceed a threshold, $3 million in the first decade of the lease and $3.5 million in the second decade.
The Four Seasons team also ranked highest with one other competitor for its plan on including minority-owned and women-owned businesses in contracting.
The Carpenter and Co. team plans a visitor attraction called “New Orleans: History at the Confluence of Cultures,” which would be developed with guidance from Henry Louis Gates Jr., a Harvard University professor of African-American studies, and Tulane University history professor Lawrence Powell. The attraction would be a digital, immersive experience, developers said.
The New Orleans Building Corp. board is slated to meet March 31 to either approve a lease or approve final negotiations, according to city officials. A lease could be introduced to the City Council on April 9 and be up for City Council vote on May 7.
During Tuesday’s meeting, Greg Hartmann with consultant firm Jones Lang Lasalle was skeptical of Two Canal Street Investors/Hotel Alessandra’s finances, which included revenues from a Tricentennial Tower visitor attraction proposed for ferry terminal property currently owned by the state Department of Transportation and Development. The 320-foot tower with gondola rides was outside the city’s request for proposals.
Overall, Hartmann said the five high-quality proposals in this selection process “is unprecedented in the lodging industry,” and he likened it to picking “an Oscar winner out of five very accomplished nominees.”
The Four Seasons group committed to meet the city’s 35 percent participation goal for women and minority owned businesses. The city estimated that $127 million of Four Season’s project budget would go to disadvantaged business enterprises.
Ashleigh Gardere, a committee member and Landrieu’s workforce initiative director, said she was excited to read through all five proposals, which included millions for disadvantaged businesses and higher average salaries. “We have not seen anything like this in terms of commitment to community benefits,” Gardere said.
The other proposals included a Conrad Hotel from New Orleans partners Darryl Berger, Joe Jaeger, Roger Ogden and Normal Francis, a Godfrey Hotel from Chicago-based Oxford Capital Group and a Crescent Hotel by Starwood from familiar local firm HRI Properties.
Committee member and Landrieu’s chief administrative officer Andy Kopplin said there was “a lot of concern and consternation” when the city ended financial negotiations with a chosen developer last year and decided to start over. But it’s clear there has been a “substantial improvement” in the rent and other income the city is getting this time around, he said.
“Our challenge is what is best for the city of New Orleans, not for today, not for tomorrow, but we are entering our fourth century, and what is the long-term best proposal for the city,” Kopplin said.
The five-member selection committee also included Cindy Connick, executive director of the Canal Street Development Corp. Bill Gilchrist, Landrieu’s director of place-based planning and Bob Rivers, executive director of the City Planning Commission.
The committee ranked the five groups by score, each member have up to 100 points to assign to a proposal: Four Seasons, 467; 2 Canal Street Redevelopment, 400.6; Crescent Hotel, 364.1; Godfrey Hotel, 339.6; and Hotel Alessandra, 301.4.
J. Allen Smith, Four Seasons president and CEO, told the selection committee in February that with 100 hotels in 38 countries, the company focuses on “picking the best cities and partnering with the best developers.”
“In our estimation, in this case, we have both,” Smith said. “I’m confident we will bring new visitors to the city and add to its already vibrant tourism.”