New Orleans developer and hotelier Joe Jaeger announced Saturday that he is withdrawing from the team seeking to build a heavily subsidized and thus controversial hotel at the upriver end of the Ernest N. Morial Convention Center.
Earlier in the week, Jaeger ripped the Convention Center’s leadership after learning that board members were getting ready to vote on a proposed lease of land to Topgolf for a high-end driving range and entertainment center.
In a letter sent to The Advocate on Saturday, Jaeger said he couldn’t in good conscience continue as a developer of the hotel project at the same time he was criticizing the center’s leadership for other decisions.
“It’s only appropriate that I withdraw as a co-developer of the Convention Center’s proposed hotel project in light of my concerns with recent decisions by its leadership,” Jaeger wrote.
He stressed that he still supports the proposed hotel, which Convention Center leaders say is crucial for keeping the center competitive with rival facilities in other cities, and that he doesn’t believe his withdrawal will further imperil the project — though it still faces many other obstacles.
The proposed Topgolf range would be built on an 8.78-acre parcel owned by the center, part of the 47-acre site where the proposed hotel and other amenities would be built.
Jaeger complained that the golf-range deal, which has yet to be approved by the center's board, did not go through any bid process. Worse, according to Jaeger, the Convention Center’s leaders several years ago told Topgolf and Drive Shack, a leading competitor, that they were not interested in a driving range at that location.
In the meantime, Jaeger, with several partners, had joined forces with Drive Shack to build a high-end driving range on Howard Avenue at the site of the former Times-Picayune building, where demolition work began recently.
He said this week that the $29 million Drive Shack project — announced a year ago — is likely “dead” in the face of the planned Topgolf project, because there isn’t a big enough market for two such facilities so near one another. The sites are less than three miles apart.
In his letter to The Advocate, Jaeger acknowledged that he is “biased” against the Topgolf plan because of his competing project. But he said his real beef is that he thinks the Topgolf proposal could hinder rather than enhance the development of the rest of the land at the upriver end of the Convention Center.
Jaeger is also a co-owner of the former Market Street Power Plant, immediately upriver from the area to be redeveloped.
An earlier vision for the land now proposed for a driving range called for building workforce housing there, Jaeger said. “I think we can all agree that eliminating workforce housing for a second, new driving range makes no sense,” he wrote.
Jaeger had several other criticisms of the Topgolf project. The proposed terms of the lease — about $1.2 million a year for the first several years for a nearly nine-acre site — amount to a sweetheart deal for Topgolf, he said. And the split of revenue from a proposed parking lot that would be operated jointly by the center and Topgolf also appears to be generous to the firm, he said.
At least two members of the Convention Center’s board have also questioned the terms of the proposed deal, which has yet to be approved by the board.
In a phone interview Saturday, Jaeger was sharply critical of the Convention Center’s leaders over the Topgolf proposal.
“I don’t like the way the new leadership at the Convention Center, and the board leadership, is acting,” he said. “They’re acting like developers. There was master plan after master plan, designed by professionals and consultants, that didn’t have this (driving range) in there.”
“Personally, I think it’s the wrong use,” he added.
Melvin Rodrigue, chairman of the center’s board, did not return a call seeking comment Saturday.
Michael Sawaya, president and general manager of the center, said he could not respond to Jaeger’s critiques because he had not heard from Jaeger directly.
“I haven’t spoken to him,” Sawaya said. “He knows me; he has my number. … We’re very transparent. If he has questions or concerns, he’s welcome to call me and talk about it.”
Asked to respond to Jaeger’s specific criticisms of the Topgolf proposal, Sawaya said: “I’m not at liberty to discuss that deal at this time. We had to cancel last week’s board meeting,” when the matter was to be discussed. “I haven’t had an opportunity to discuss it with the board, and I don’t want to get in front of that.”
Jaeger’s abrupt withdrawal from the hotel project comes amid a simmering controversy over how tax dollars generated in the city are distributed.
Mayor LaToya Cantrell and others argue that the tourism industry — the Morial Convention Center in particular — gets too large a share of the proceeds. Her administration, and several members of the city’s legislative delegation, have been trying to confect a deal to redirect some of that money to help fix the city’s aging and often failing infrastructure.
But tourism leaders have pushed back, and so far, no deal has been reached. The debate has left the proposed hotel project — which would receive about $100 million in direct subsidies, plus other tax breaks — in limbo.
The proposed Omni hotel would have 1,200 rooms. The Bureau of Governmental Research, a critic of the project, has estimated the total value of the subsidies and tax breaks sought for the hotel at $330 million in today's dollars.
Jaeger said he didn’t think his exit would affect the likelihood the hotel will be built. Developer Darryl Berger, Jaeger’s local partner in the project, apparently remains in the deal, though Berger declined to discuss the project’s future Saturday.
“Joe is a great friend, a business partner and a highly respected member of the business community,” Berger said in a brief interview. “I respect his decision on this matter.”