In The News › City will buy lease on WTC
City will buy lease on WTC
Tower sits empty on prime riverfront site
Wednesday, January 12, 2011
By Bruce Eggler
In a move that officials hope will remove some of the obstacles from long-stalled efforts to redevelop the vacant World Trade Center building, New Orleans Mayor Mitch Landrieu’s administration has agreed to buy out a business organization’s lease on the building for $2.24 million.
The city and the World Trade Center organization have tried since 1998 to find a way to redevelop the 33-story, 670,000-square-foot office tower, such as by converting it into a hotel or condominiums, but the efforts all have come to naught.
Once it gains full authority, the city can make a new effort to sell or redevelop the aging building or decide to tear it down and market the empty site.
The building’s site at the foot of Canal and Poydras streets is considered one of the most valuable pieces of real estate in the city.
The board of the New Orleans Building Corp., a city agency that acts as the building’s landlord, voted Tuesday to approve the plan to buy out the WTC organization’s lease, which runs until 2019.
Landrieu is the president of the board, which also includes three City Council members and three private citizens.
The city plans to borrow the $2.24 million and then pay off the loan with the proceeds from the building’s 1,100-space garage, which is leased to the nearby Hilton Riverside Hotel. The garage and other minor revenue sources at the building generate about $750,000 a year.
Although the city owns the building and the land under it, the nonprofit World Trade Center organization built the tower in the 1960s with proceeds from city-issued revenue bonds. The trade-promotion organization has paid no rent for its lease in recent years, but it has been responsible for maintenance and insurance on the property.
The WTC organization and the city negotiated for eight years with developers Lane and Larry Sisung, who withdrew from the project in 2006. The WTC and the city then began negotiations with Full Spectrum NY, which backed out in 2008 after it could not secure financing for the deal, which would have given it a 99-year lease on the building.
The Full Spectrum lease would have required it to pay $30 million upfront for rights to redevelop the building, with $24.25 million of that going to the New Orleans Building Corp. and the remainder to the WTC organization as reimbursement for gutting and renovation work it did earlier in anticipation of a deal for a hotel development. The trade group also would have received an annual payment.
After Full Spectrum pulled out, the city offered in late 2008 to lease the building to local developers Darryl Berger and Pres Kabacoff, but they said the lease terms the city offered were not acceptable.
The Bureau of Governmental Research suggested in January 2009 that instead of trying to make a deal with another developer, the city buy out the trade organization’s lease and then sell the tower and garage outright to a private developer.
However, talks between the WTC and Mayor Ray Nagin’s administration, represented by former Building Corp. head Sean Cummings, about a buyout broke down, leaving the building’s future in limbo when Landrieu took office in May.
Most of the building’s few remaining tenants, including law firms, commercial offices, a few shops and foreign consulates, were told to move out in early 2009. The building’s management said the evictions were designed both to save money and to make the building more appealing to potential developers.
The trade group moved the building’s signature Plimsoll Club, a restaurant and bar with a panoramic view of the Mississippi River, to the nearby Westin Hotel in early 2010.
Cummings said in early 2010 that he had concluded that the land beneath the building would be more valuable and more attractive to developers if the aging tower were removed.
“I believe the World Trade Center site offers us the opportunity to create something at this nexus of two great boulevards that really is capable of inspiring everyone around us to greatness,” Cummings said.
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