The vacant and dilapidated former World Trade Center building at the foot of Canal Street would be transformed into one of the most prestigious luxury hotel brands in the world under a deal the city will soon begin negotiating.
The development team of Carpenter & Co. and Woodward Design + Build beat out four other teams Tuesday for the right to begin talks with the city on the terms of
a lease agreement that would call for the 33-story 1960s office building to be converted into a Four Seasons hotel and condominiums.
A five-member selection committee appointed by the mayor announced the decision at the conclusion of a three-hour meeting during which it evaluated the proposals based on their overall quality, construction and management plans, financing plan and financial resources, terms of their proposed lease agreement, benefits to the city, and their commitment to disadvantaged business participation.
The Four Seasons proposal was the clear favorite, according to committee scoring sheets released after the meeting. The proposal was awarded 467 points, or an average score of 93.4 from the five evaluators.
Coming in second was 2 Canal Street Redevelopment, which proposed turning the building into a Conrad Hotel and residences; it received an average score of 80.12. HRI Properties, which proposed a luxury hotel by Starwood Hotels and Resorts, scored 72.82. Oxford Capital Group, which wanted to turn the building into a Godfrey Hotel, received an average score of 67.92. Two Canal Street Investors, which proposed a Hotel Alessandra, averaged 60.28 points.
All of the proposals also included plans for residential units.
The Four Seasons proposal calls for the X-shaped, Edward Durell Stone-designed tower to be converted into a 350-room Four Seasons hotel with 76 hotel-serviced condominiums on the 21st through 30th floors.
The building would be flanked by two new low-rise structures, one containing a restaurant and the other a parking garage.
The main building would feature a two-story rooftop cupola, including a public observation deck, plus new lighting and a spire.
A “new urban park” is to be built at Canal Street and Convention Center Boulevard.
Plans also call for a digital “cultural attraction” to be curated by Harvard University African American studies professor Henry Louis Gates and focused on New Orleans food, music and cultural elements.
A consultant’s report prepared for the selection committee indicated that one strength of the proposal was its plan to immediately sell the residences as condominiums, instead of leasing them as apartments.
“This is significant as luxury condominium development is considered more ‘risky’ than apartment development but adds considerable impact in terms of increased property value, tax base and resident net worth, particularly in light of a Four Seasons affiliation,” consultants Scott Whittaker and Greg Hartmann wrote.
The $364 million project is expected to be financed with $238 million in debt, $86 million in equity and $40 million in private capital. The team said it also will pursue historic tax credits for the project but that they are not necessary to completing it.
Cascade Investment Group, a holding and investment firm controlled by billionaire Microsoft founder Bill Gates, is an investor in the project.
The developers have proposed paying the city $3.25 million per year in rent for the first 10 years of operation, $3.75 million annually for years 11 through 20, and after that an amount equal to the base rent of $3.75 million times the percentage increase in the consumer price index in the preceding five years. The latter figure would be capped at the base rent times 50 percent of the percentage increase in hotel room revenue.
The team also is offering the city a share of the gross revenue from the cultural attraction and a share of the proceeds from the sale of any component of the project.
It has asked for a credit on its rent if its property taxes exceed certain established amounts.
At $364 million, the Carpenter and Woodward project is nearly $100 million more expensive than the second most costly proposal the committee considered.
The consultants’ report calculated the project’s fixed rent payments to the city at $58.4 million — the lowest of any of the five proposals. However, the potential economic benefit to the city over the 99-year life of the project was pegged at $405 million, the second highest of the five proposals.
The Four Seasons proposal, according to the consultants’ evaluation, would produce the largest amount of taxes for the city and would have “higher economic multipliers” than the other projects because it would increase property values and bring luxury travelers to New Orleans. The hotel also would employ more people because of its premium service requirements, the consultants said.
Carpenter is a Cambridge, Massachusetts, real estate developer and hotel operator. Woodward is a local construction, architectural and engineering firm. Both companies have experience redeveloping historic properties.
The proposal will be presented to the New Orleans Building Corp. board for approval March 31. A proposed lease will be finalized and submitted to the City Council at its April 9 meeting. The city and developer are expected to sign a lease agreement by May 7.
The developers then will have 60 days to close financing on the deal and another 15 days — for a total of 75 — to decide whether they want to renegotiate or terminate the lease.
The city received 10 responses last year to a “request for qualifications” from those seeking to turn the long-vacant office tower into a “first-class commercial and/or mixed-use project.”
The riverfront property at 2 Canal St. is widely considered to be one of the most valuable sites in New Orleans, but the city has struggled for years to find someone to redevelop the old building, with repeated efforts coming to naught.
The five finalists delivered formal presentations to the selection committee late last month and submitted their “best and final” offers last week.
Before making its decision, the committee heard reports from Whittaker, Hartmann and the director of the city’s Office of Supplier Diversity, Arkebia Matthews.
The proposals were evaluated on: overall quality, 10 points; project characteristics including construction and management, 15 points; quality of financing plan and financial resources, 20 points; terms of the proposed lease agreement, 20 points; benefits to the city, 25 points; and DBE participation, 10 points.