In The News › Debate on the World Trade Center’s future is renewed

Debate on the World Trade Center’s future is renewed

Sunday, October 25, 2009
By Rebecca Mowbray
The Times-Picayune

The litigation involving the latest failed bid to redevelop the World Trade Center building has been settled, raising questions about whether the city and trade club will continue with the same approach that they’ve been trying since 1998 to redevelop the building, which remains largely empty.

On Sept. 14 a federal judge in New Orleans signed an order resolving disputes over the fate of the $627,313 deposit placed by Full Spectrum of N.Y. LLC, the developer who pulled out of the deal to redevelop the riverfront building at the foot of Canal and Poydras streets in August 2008.

In a deal that each of the parties involved described as a good settlement because no one’s happy, Full Spectrum got back 55 percent of the deposit after administrative expenses, while the New Orleans Building Corp., the city agency that owns the property, and the World Trade Center of New Orleans Inc. organization, which leases the building, got to keep the remaining 45 percent of the money.

“What’s next is that all things are possible. At this point it’s not encumbered by any development rights, and the city and the WTC are free to jointly discuss possible alternatives. They’re saying, literally, ‘What are we going to do?’¤” said Gary Elkins, an attorney for the building corporation.

In the mid-1990s the World Trade Center, a nonprofit economic development group, promoted a plan in which the club, which pays $1 a year in rent in the city-owned building, would keep its office space in the top floors of the 33-story building and share with the city the proceeds from redeveloping the property into some combination of hotel rooms, residences and office space. The idea was that the 1967 building would be modernized, the city would earn tax revenue, and the trade group would secure a long-term revenue stream.

Despite a location that is arguably the best in the city, redevelopment of the world’s first World Trade Center has proven difficult because of the complexity of the deal between the city and trade organization. The building remains off the tax rolls as one development effort imploded in 2006, and Full Spectrum pulled out on the eve of the financial crash in August 2008.

How to proceed is likely to become a hot topic as the city faces a budget shortfall and needs to see as many properties contributing to the city’s tax base as possible. Local real estate market and national credit conditions aren’t conducive to a major downtown redevelopment right now, but new research in the tourism industry suggests the World Trade Center location — but not necessarily the building — might be a good spot for a new tourism attraction.

Upon the news of the settlement, the Bureau of Governmental Research renewed its calls for “a clean sale” of the building, opening up the possibility that the building could be used in any number of ways or even torn down if a developer had a completely different land use in mind.

“The city should seek to buy out the master tenant and sell the property instead of continuing to own it and act as the developer, which is not one of its strong suits,” said Janet Howard, president and chief executive of the nonpartisan watchdog group. “It’s been overly convoluted and it’s been overly complicated.”

Sean Cummings, who has led the trade center redevelopment efforts for the Nagin administration and is leading the riverfront redevelopment efforts as director of the New Orleans Building Corp., said he’s ready to try something new.

“The World Trade Center still has a lease on the property, so that’s really its call,” he said. “But just as we are reinventing the riverfront, it seems like an opportune time to reimagine this real estate in a fairly profound way as we look to the city’s 300th birthday and an economy in the 21st century that is fundamentally different than it was when the World Trade Center was built.”

So far the World Trade Center organization, which has a lease on the building through 2019, appears keen to continue pursuing the building’s redevelopment.

“I think that the building would still be of interest to developers,” said attorney Constance Charles Willems, who is president of the trade organization and also an honorary consul of the Netherlands. “I think this is a unique opportunity and a unique building. The location is fantastic.”

What to do with the building potentially places the World Trade Center organization at a crossroads. The trade center lost money in 2007, according to its most recent tax return on file, and its financial position probably didn’t improve last year as the stock market imploded, businesses faced recession, and tenants in the trade center tower continued to defect because of the uncertainty over the building’s fate.

Gene Schreiber, who has served as the club’s managing director for trade for three decades, announced his retirement the same week in September that the settlement with Full Spectrum was reached. Though Schreiber is continuing to work through the end of the year and the club still boasts 1,700 members, the club is searching for a replacement when the port’s role in the economy is not what it was a generation ago. And as the City Energy Club showed when it folded in 2003 after losing its lease and suffering membership declines in the face of oil industry consolidation in Houston, shifts in the local economy can be dire for business-social clubs.

Willems acknowledged that the building’s redevelopment is supposed to be a key source of revenue for the organization in the future but said the trade group is not in jeopardy. “It is not something that otherwise we would not continue to exist,” she said.

But local market conditions aren’t conducive to redeveloping the building right now, said Hayden Wren, director of commercial/investment brokerage at Corporate Realty.

The city doesn’t need any new office space or hotel rooms, he said, and because the 42-year-old trade center building isn’t old enough to qualify for historic restoration tax credits, the numbers are unlikely to work for apartments, either.

Wren said he thinks the best move simply might be to mothball the building. “I don’t know what the next step is. Maybe it’s just a timeout.”

Adding attractions to the central waterfront area where the World Trade Center is located would have a big payoff for the city, according to the Boston Consulting Group. A hospitality master plan committee assembled by Lt. Gov. Mitch Landrieu and co-chaired by developer Darryl Berger hired the national consulting firm to conduct detailed research on the needs and opportunities facing the tourism industry.

Though the study’s aim is not to solve the World Trade Center conundrum, its finds reaffirm the critical nature of the site and could support a completely different use for the location than what’s been discussed so far.

“There’s no question that there’s some strong confluence of the idea to do something wonderful with the World Trade Center site and trying to turbocharge tourism in New Orleans,” said Berger, principal of the Berger Cos.

Fair Use Notice

This site occasionally reprints copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We make such material available in our efforts to advance understanding of issues and to highlight the accomplishments of our affiliates. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is available without profit. For more information go to: US CODE: Title 17,107. Limitations on exclusive rights: Fair use. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.