Legislation allows Convention Center to own proposed headquarters hotel

June 6 2019 | Latest News

Legislation allows Convention Center to own proposed headquarters hotel


A proposed 1,200-room hotel adjacent to the Ernest N. Morial Convention Center can be owned by the center under a bill passed by the Louisiana Legislature this session.

House Bill 617 effectively clears the way for Convention Center officials to move ahead with negotiating a contract to build the estimated $558 million Omni-branded Convention Center headquarters hotel. The development would be located on the upriver end of the Convention Center on land owned by the Convention Center and would also include 150,000 square feet of meeting space and various retail options.

According to the bill, sponsored by Rep. Walt Leger, D-New Orleans ownership would revert to the Convention Center once the bonds are paid off by private developers. The legislation also permits the New Orleans Exhibition Hall Authority, the entity that runs the Convention Center, to set aside money for its $557 million, five-year capital plan, which includes modernizing the 1984-era facility as well as adding a linear park, retail and residential space.

The Convention Center collects its funding from revenue generated at the facility and taxes collected at hotel rooms generated throughout the city. According to the previous legislation that dated back to 1978, it permitted the Convention Center to collect hotel taxes to construct buildings that are directly related to the Convention Center, except for a hotel.

“In that era, hoteliers who are collecting the hotel taxes and who are leaders in the hospitality industry would not have wanted a competitive hotel owned by the public entity,” said Michael Sawaya, the Convention Center’s president and general manager.

In exchange for owning the hotel, the Convention Center would provide $28 million in one-time money for the Sewerage & Water Board along with money to the city instead of property taxes when land adjacent to the hotel is developed.

The bill will be sent to Gov. John Bel Edwards for his signature. A spokesman with the Convention Center said the signing of the bill is tentatively set for Friday at 2 p.m. in Baton Rouge.

Sawaya said the goal is to have a deal in place and the hotel open when Super Bowl LVIII comes to town on Feb. 4, 2024. Negotiations will continue with a team of developers that includes Texas-based Matthews Southwest Hospitality and local businessman Darryl Berger.

Convention Center board chairman Melvin Rodrigue confirmed that local developer Joe Jaeger, who was once part of the development group, is no longer part of the team. Jaeger backed out of the partnership in late April amid news that the New Orleans Exhibition Hall Authority was negotiating with golf entertainment facility Topgolf to build on Convention Center-owned land. The Dallas-based company wanted to put a high-tech driving range at the intersection of Tchoupitoulas and Euterpe streets, upriver from the Pontchartrain Expressway.

Jaeger is one of the owners of the site of the former Times-Picayune headquarters at 3800 Howard Ave., where Topgolf’s competitor Drive Shack is in the process of building a $29 million venue on the property. Demolition of the iconic structure is underway.

Developers of the property have said that the Convention Center was not transparent and did not use a public bidding process for the Topgolf project, according to media reports.  Edwards has said the deal is on hold for now.

Convention Center officials have said the hotel project would infuse $280 million per year into the state and city economies and an additional $24 million in new tax revenues. The hotel is expected to generate 1,900 permanent jobs.

Critics have been vocal about the proposed hotel, as it will require heavy subsidies to finance the project, According to a report by the Bureau of Governmental Research released in 2018, the development would require an estimated $738 million in property and sales tax exemptions and other subsidies over 40 years.

Besides building the hotel, the Convention Center’s master plan allocates $15 million for technology, project capital, equipment replacement and LED lighting. It would spend $25 million on site infrastructure for retail and residential projects.

A linear park would cost $79 million for construction and landscaping, as well as a multi-modal center connection.

Meeting room renovations would include new digital signage and cost $195 million. Upgrades to restrooms would cost $16 million, while $109 million would go toward major capital equipment replacements for elevators and escalators, roof and heating, ventilation and air conditioning.

“It’s a huge win for the city,” Rodrigue said.