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BGR evaluates proposals for redeveloping World Trade Center

BY JAQUETTA WHITE

The Advocate/New Orleans bureau

July 01, 2013

Before it selects a project to move forward with, the committee assigned to evaluate three proposals for redeveloping the World Trade Center should determine, among other things, the direct and indirect fiscal benefits of each proposal, the feasibility of the plans and the adequacy of the compensation the city will receive for leasing the distinctive building, the watchdog Bureau of Governmental Research said in a report released on Monday.

BGR, which did not issue a recommendation, evaluated the projects based on the plans themselves, the financing behind them, the developers’ experience and each project’s proposed payments to the city.

The report was released in advance of today’s meeting of a committee that will discuss the projects and ultimately make a recommendation to the New Orleans Building Corp., the city agency that would negotiate a lease with the winning respondent.

Three projects are competing for the right to redevelop the site of the vacant, X-shaped building at the foot of Canal and Poydras streets. Two of the respondents, James H. Burch LLC and Gatehouse Capital Corp., have proposed leaving the building intact and turning it into a mixed-use development of hotel and residential apartments. The Burch proposal also includes space for offices and a parking garage within the building’s current footprint. A third respondent, Tricentennial Consortium, proposes tearing the building down and putting an “iconic structure” that would attract tourists in its place.

The committee will need to decide whether the World Trade Center site should be redeveloped to increase tourism or for commercial use, the report said.

“The redevelopment plans present sharply different visions of the Tower site,” according to the report. “The proposals raise numerous important questions for the evaluation committee to consider.”

The report notes the varying levels of specificity in the proposals, which were submitted in April following a request for proposals.

Gatehouse revealed “detailed design plans, including floor plans showing the layout of hotel rooms, apartments and other facilities, as well as renderings of the site and the building’s exterior,” the report said.

The Burch plan, according to BGR, was “more conceptual with little in the way of design plans to support them.” That proposal did not include floor plans or renderings that would show how its proposed retail stores, music clubs, parking garage, business offices, hotel room and residential apartments all would fit into the space, the report said.

Even more fuzzy was the plan from Tricentennial Consortium, a group of tourism industry leaders, which BGR described as “purely conceptual.” The consortium has not yet decided what type of structure it will build when the World Trade Center is demolished.

On the positive side, BGR said consortium alliance members “bring extensive backgrounds to developing and managing public facilities.” Tricentennial Consortium is an alliance made up of leaders from The Audubon Nature Institute, New Orleans Tourism Marketing Corp., the Multicultural Tourism Network, the New Orleans Convention and Visitors Bureau, the Louisiana Restaurant Association, the Greater New Orleans Hotel and Lodging Association, SMG and the Mercedes-Benz Superdome and the Ernest N. Morial Convention Center.

Gatehouse, the report said, has “significant experience” developing projects like the one it has proposed. But the agency noted that the lead developer in the Burch plan hasn’t completed a project like the one it has suggested for the site, and its lead developer will be “relying on the experience of his development team.”

On the issue of financing, all of the proposals elicited questions from BGR. Each of the projects, for instance, suggests redeveloping property around the World Trade Center, but it is “unclear in most cases which entity would execute and pay for these improvements,” according to the report.

What’s more, the city’s request for proposals called for the projects to be “privately financed” and for respondents to “compensate (the New Orleans Building Corp.) for use of the site.”

The projects from Burch and Gatehouse both propose using equity from federal and state historic tax credits to fund a portion of costs. Though the equity is provided by private investors, the public will eventually bear the cost, according to the BGR report.

The agency also noted that the Tricentennial Consortium lost its “only firm revenue source” last week with Gov. Bobby Jindal’s veto of a measure related to convention center investments. The alliance is seeking other sources of funding.

Both the Burch and Gatehouse projects would add the building to the tax rolls, according to BGR, but it is “difficult to determine what types of tax revenues, if any, the Tricentennial proposal would generate,” because the group’s proposal is vague, BGR said.

The agency said it was also difficult to determine the adequacy of the payments each group has offered to the city. The Burch project offers a regular payment of $1.5 million annually for 99 years. Tricentennial offers an annual payment of $1.5 million for an unspecified period of time. Gatehouse offers a single payment of $10 million, which it suggests the city reinvest in the area surrounding the building.

BGR said it would have to obtain information on the building’s value in order to determine the adequacy of the payment offers. The city told the organization the building had not been appraised in the last five years.

The proposals will be evaluated by a committee led by Deputy Mayor Cedric Grant, and including Cindy Connick, executive director of the Canal Street Development Corp.; William Gilchrist, the city’s director of place-based planning; Chief Administrative Officer Andy Kopplin; and Jeffrey Hebert, executive director of the New Orleans Redevelopment Authority.

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