Convention Center’s ‘entertainment district’ plans delayed as coronavirus hits finances

By Anthony McAuley

Source: The Times-Picayune | The New Orleans Advocate

April 14, 2020

The Ernest N. Morial Convention Center will delay plans to develop a new, 20-acre “entertainment district” on some of its upriver land, according to the new chairman of its oversight board, as the finances of the massive facility continue to deteriorate amid the coronavirus pandemic.

Walter Leger III, who took over as chairman of the Convention Center’s board last month, said during Tuesday’s finance committee meeting that it is not appropriate to proceed with plans to pick a “master developer” for the project while the center is being used as a temporary medical facility to help local hospitals cope with a surge of coronavirus patients.

“The Convention Center is currently being called upon to serve as this medical monitoring facility on behalf of the people of the region and it is important that we focus on serving that emergency response role,” Leger said, adding that there was a “need to return to some normalcy before we proceed” with the development process.

The move to push back decisions on the entertainment district represents the latest delay in a years-long project aimed at developing the now-vacant lands upriver of the Convention Center into an area filled with shops, restaurants, and residences. Together with an adjacent 1,200-room Omni hotel, which is being developed separately and will cost an estimated $700 million to construct, and publicly-funded road and other infrastructure improvements, the project is expected to cost well in excess of $1 billion and be one of the largest in the city’s history.

The Convention Center had been scheduled to decide this month between three development groups vying to lead the entertainment district project. That decision had been postponed until May, but now Leger said it will be delayed indefinitely.

Leger said that the board had previously committed to a public process of deciding on the developer, which he said would be impossible in the current environment. He noted there were technical difficulties Tuesday to simply arrange the webinar meeting for the finance committee, delaying it by about an hour.

Convention Center officials have dealt with a complete upending of the event and conference business as business travel and tourism have come to a virtual standstill across the U.S. and in many parts of the world.

The finance committee heard on Tuesday that there had been more events canceled since it last convened two weeks ago: as of April 13, there had been 24 cancellations, five more than previously announced.

Operating revenue is now forecast to be $8.2 million below budget, compared to the $7.5 million shortfall forecast at the last meeting two weeks ago. The Convention Center gets the bulk of its revenue from a share in hotel and other taxes collected by the city and state. That share is now expected to come in at $35 million, down by nearly half this year.

The total financial impact of the pandemic is now expected to result in a loss this year that will require the Convention Center to dip into its reserves to cover more than $20 million in expenses.

Leger said he expects that once the crisis passes, the Convention Center will be able to revisit the planned development and its other capital projects.

“My expectation would be that in coming weeks and months, as we transition into recovery mode, we can fully get focused on, one, the implementation of the five-year capital improvement plan, and then secondarily the upriver development portion, including the master development proposal process,” Leger told the meeting.

The Bureau of Governmental Research, a public policy watchdog, had last week called for talks on the Convention Center hotel to be postponed until after it is clear what impact measures to mitigate the pandemic will have on the city’s hotel market.

BGR also argued that the proposed financing of the hotel development relied too heavily on public subsidy and should be reassessed.

Leger didn’t specifically address the negotiations around the hotel project.

Still, the finance committee said Tuesday that it had selected an executive architect so that it can proceed with major upgrades to the main facility.

Tuesday’s contract for nearly $5.4 million included sub-contractors Nano, a New Orleans-based firm that is owned primarily by women, including co-founder Terri Hogan Dreyer, and Landmark Consulting, also a DBE, owned by Keely Thibodeaux.

The finance committee heard on Tuesday that work on the linear park being built on Convention Center Boulevard resumed this week after a brief suspension to allow the medical facility to be assembled.

The Convention Center has budgeted to spend more than $86 million this year on the park and other elements of its $557 million upgrade, despite the severe hit to its finances because of the pandemic.

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