Watchdog says reworking Omni Hotel deal could save taxpayers at least $100m

By Anthony Mcauley

Source: The Times-Picayune | NOLA.com

December 18, 2025

A public finance watchdog is calling on the Ernest N. Morial Convention Center and other public officials to overhaul the financing structure for the proposed $600 million Omni “headquarters” hotel, warning that the current deal would lock in decades of unnecessary tax subsidies while delivering little added value to the project.

A report released Thursday, authored by Bureau of Governmental Research CEO Rebecca Mowbray and analysts Stephen Stuart and Paul Rioux, argues that changes to the tax incentives could save the public roughly $100 million on a present-value basis — and about half a billion dollars over the full life of the agreement — without reducing Omni Hotels & Resorts’ expected profits or jeopardizing the long-planned development.

BGR emphasized that it does not oppose the hotel, which Convention Center leaders view as critical to competing for major national conventions. Instead, the report argues that the scale and duration of the public subsidies are poorly aligned with the project’s actual financial needs and far exceed common economic development practices.

“There is still time to recalibrate the public contribution,” the report said, pointing to a series of city and state approvals that remain outstanding.

In response, Convention Center CEO Jim Cook said the authority remains open to evaluating alternative financing approaches as the project moves forward.

“The Ernest N. Morial New Orleans Exhibition Hall Authority remains committed to defining a financing structure for Omni New Orleans that responsibly balances the project’s needs with the use of public resources,” Cook said via text. “Since the inception of this initiative, the Authority has continuously evaluated all available financing options and will continue to do so until the best possible option is determined.”

The Convention Center hopes to finalize a deal with Omni by March 2026. The company plans to build a 1,005-room hotel on the former Sugar Mill site along Convention Center Boulevard at the edge of the Warehouse District. The roughly 350-foot tower would be the city’s first hotel with at least 1,000 rooms built in more than 40 years and is scheduled to open in 2030 if approvals are secured.

A deal decades in the making

The project has been pursued for more than a decade and has undergone repeated redesigns. In November, the Convention Center board approved a new design and increased its direct cash investment by $10 million, bringing its total contribution to $80 million.

Beyond that investment, the bulk of the public support comes through tax incentives. BGR estimates Omni would receive $836.7 million over 45 years through rebates of hotel occupancy and sales taxes, along with a reduced property tax obligation through a payment in lieu of taxes, or PILOT, whose value has not yet been finalized.

The Convention Center will also spend an estimated $23.7 million to purchase the Sugar Mill site and part of John Churchill Chase Street. Omni would cover roughly $520 million in construction costs and be responsible for any overruns. Accounting for rent and profit-sharing payments, BGR estimates the net public contribution would still total about $669 million over 45 years.

Cook said Convention Center leaders believe the project’s benefits extend beyond the hotel itself.

“Our goal is to deliver the best project for the city, region and state,” he said. “We appreciate the analysts at BGR recognizing the strategic importance of the hotel and the significant value Omni New Orleans will bring.”

Where BGR sees the problem

BGR’s central concern is not that public subsidies exist, but that they last far longer than needed.

Using the Convention Center’s projections, the report found the tax rebates may only be necessary for the first 11 years of operation for Omni to meet its stated annual profit target of $57.2 million. After that, projected profits exceed the target, yet the rebates would continue for more than three decades.

Recommended practices generally cap incentives at 20 years, BGR noted. Omni told the watchdog it typically receives 20 to 25 years of tax rebates and has never before received incentives lasting 45 years, the report says.

Omni did not immediately respond to requests for comment.

The imbalance is amplified by how future dollars are valued. Omni applies an 11% corporate discount rate, while public entities typically use a lower rate closer to 5%.

As a result, BGR estimates the $576 million in tax rebates paid in the final 25 years would have a present value of just $20.7 million to Omni, but would cost the public about $105.8 million in today’s dollars.

“That gap creates a clear opportunity,” the report said, to reduce or restructure the subsidies with little or no impact on Omni’s returns.

BGR outlined four alternative approaches that could reduce public costs by roughly half a billion dollars over the life of the deal, including shortening the rebate period to 20 years, replacing rebates with a lump-sum payment, and limiting any PILOT to 20 years with a phase-in to full taxation.

The report urges officials to examine the incentives before final approvals are granted. To stay on schedule, the project must still secure city zoning and height variances, approval of a property tax incentive, and the sale of part of John Churchill Chase Street, along with agreements from state entities to redirect tax revenues.

“The hotel can still move forward,” the report concludes, “while preserving substantial public resources for other critical needs.”

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.