Plans to convert the old Times-Picayune building on Howard Avenue into a Drive Shack high-tech driving range are in peril, according to an owner of the property, thanks to the proposed deal between Topgolf and the Ernest N. Morial Convention Center to build a rival attraction less than three miles away.
Joe Jaeger Jr., one of the owners of the property where a Drive Shack golf and entertainment complex was set for construction soon, said Thursday that the actions of the Convention Center had made it untenable for Drive Shack to move forward despite its lease for the site.
"It appears that the project is dead," said Jaeger. He said he is currently negotiating with Drive Shack about splitting the costs incurred so far and plans to let them out of their obligations.
"Holding their feet to the fire over the lease wouldn't be right. ... They've been duped by the leadership (of the Convention Center), and it's not fair, it's not right and I can't make them do something I don't believe in," Jaeger said in an interview.
Let the driving-range battle begin.
On Monday, The Advocate reported that the Convention Center board was about to vote Tuesday on a proposed lease to Topgolf of nearly nine acres of land for a golf and entertainment complex.
The Topgolf deal, which was negotiated without a public bidding process, would create a second, high-tech driving range attraction in New Orleans in direct competition with Drive Shack.
The Tuesday meeting of the Convention Center board was postponed, however, and no vote was taken.
Representatives for Drive Shack declined to comment Thursday. But on Tuesday, the company's head of real estate development wrote to Mayor LaToya Cantrell and other city officials to complain that the effect of the "no-bid (Topgolf) lease will be to compete with economic development in the Broad Street corridor," where the Howard Avenue site is located.
The $29 million Drive Shack project was announced just over a year ago and was lauded by then-Mayor Mitch Landrieu as an economic boon to an area along Interstate 10 that had remained vacant since the Times-Picayune moved its printing, editorial and other operations elsewhere in 2013.
In an echo of Drive Shack's letter, Jaeger on Thursday criticized the Convention Center for its apparent lack of transparency as well as the terms of the deal.
He said the land which is to be leased to Topgolf — an 8.78-acre site abutting Euterpe and Tchoupitoulas streets — has been appraised at about $90 per square foot, which he said doesn't chime with the lease rate that is being proposed of a little over $1.2 million a year for the first 10 years. He also questioned the proposed terms of a parking lot to be run jointly by the center and Topgolf.
At least two Convention Center board members have also voiced criticism of the proposed Topgolf deal.
Member "Tiger" Hammond questioned how a single bidder could provide the Convention Center with the best offer. "Why didn’t we at least have a competitive bid to see who was gonna give us the best bang for our buck?" he asked.
Ron Guidry, another board member, said it didn't make sense not to request proposals from competitors. "It may be a wonderful project and great for taxpayers. But for us to do a no-bid deal for something so significant based on the recommendation of one or two people is unacceptable," said Guidry.
City Councilman Jay H. Banks, whose district includes both sites, said he's all for both projects if they create jobs. "But the devil is in the details, and from what I'm hearing from several (Convention Center) board members, there are a lot of devils in that (Topgolf) deal)," including the apparent lack of transparency, he said.
"We'll have to see how it plays out, but if the only way the Convention Center one gets done is by killing the (Howard Avenue) one, then I'll oppose it" in the council, where zoning issues would need approval, Banks said.
Convention Center board President Melvin Rodrigue is the only person authorized to speak on behalf of the center about the driving-range deal, and he was said not to be available to comment because of his involvement in high-stakes negotiations with Cantrell administration officials over shifting some tourism tax dollars to city infrastructure.
However, a source involved in the process said the Convention Center board, at its March meeting, authorized Rodrique to negotiate terms with Topgolf.
The source said that Rodrigue is authorized to negotiate a lease deal without a competitive bid under the law that set up the Convention Center's governing authority, and that center officials only started to talk to Topgolf long after Drive Shack's deal was announced last year.
The Convention Center management team relied on Corporate Realty, a well-known New Orleans-based real estate consultant, to help negotiate the terms of the deal.
That included the parking joint venture, which calls for the Convention Center to fund the paving and provision of equipment for the lot, in return for which it is to get 62.5 percent of the revenue generated from an initial parking fee of $5 per space. Though that fee has been criticized as well below market rate for parking in downtown New Orleans, the source said Topgolf does not charge for parking at any of its other sites around the country; New Orleans would be the first to do so.
Dallas-based Topgolf is the leading player in the golf-themed entertainment business, which combines digitally driven golf driving bays with food and drink, as well as other gaming and entertainment options.
It has more than 50 sites in the U.S., including a bustling Baton Rouge operation that opened in January.
Upstart Drive Shack has just one outlet operating in Orlando, Florida, though it has another half-dozen set to open across the country over the next two years.
The New Orleans site had been scheduled to open next year.
The Topgolf deal, if it moves forward, would be the first to get Convention Center board approval as part of a long-discussed plan to develop 39 under-utilized acres upriver of the center into a new "entertainment district," featuring retail shops, entertainment offerings, residential units and a proposed 1,200-room hotel. Jaeger is among the local developers involved in planning the hotel.
The Convention Center's management, especially Rodrigue, has been under pressure from potential developers to make concrete progress on some of the proposed attractions, according to sources involved in the process.
Demolition of the graffiti-covered Times-Picayune building began earlier this month, but Jaeger said he halted that work Thursday and told the contractor to complete only the environmental clean-up part of the project.
"I don’t want to tear the building down and end up with just a piece of dirt," said Jaeger, adding that he believes "the market will only support one (golf drive-entertainment complex) and the better location is the Convention Center property."