Over the past week, officials with the Ernest N. Morial New Orleans Convention Center have sent a clear message: They will push forward a trio of interconnected developments worth over $1 billion, despite the known and unknown economic impacts of the coronavirus crisis and opposition from community groups and local watchdog group the Bureau of Governmental Research.
On Tuesday, the Convention Center board’s finance committee advanced a $5.4 million contract to hire an executive architect for the center’s five-year, $557 million capital plan. The board shot down the contract twice earlier this year over complaints that the proposed contractor, Populous Architects, did not include any locally owned small or minority-owned firms as part of its bid.
Populous is attempting to address those concerns by adding two subcontractors, both of which are small businesses. The total contract amount increased from the originally proposed roughly $4 million for Populous alone, to $5.4 million for all three companies. The contract still needs approval from the full board, which is next scheduled to meet on April 22.
“This is the first step in getting that moving and making sure we reinvest in our facilities so that we can be part of the economic recovery from this current crisis, and certainly the right thing to do,” Morial Convention Center President and General Manager Michael Sawaya said during Tuesday’s meeting. “One of the most important things we can do today and for the future is improve our facilities and make sure they are more competitive going forward.”
Along with the five-year plan, the other two major Convention Center developments are a publicly subsidized $700 million-plus hotel and a new “entertainment district” on the center’s upriver end. All three developments were designed in conjunction with each other and rely on one another. The five-year plan has improvements to facilitate the hotel, for example, while the hotel’s success is dependent on the creation of a new “entertainment district” around the new hotel with new restaurants, bars and venues to attract tourists.
Together, the development’s have been sold as vital for the center to compete with other cities and reverse years of slumping occupancy rates.
Sawaya’s comments were reinforced by the Convention Center’s new board chairman, former-State Rep. Walt Leger III. Leger represented a portion of New Orleans in the Louisiana House of Representatives until his term ended at the beginning of 2020.
Leger was recently tapped to take over as Chairman this month. That appointment alone would indicate that the developments are moving forward. Leger sponsored a number of bills supported by the hospitality industry while in office. One of Leger’s major bills during his last legislative session in 2019 removed all remaining roadblocks and allowed the Convention Center to move forward with the hotel project.
Immediately after leaving office, Leger took a job as Senior Vice President with New Orleans and Co., a publicly-funded, private non-profit that acts as a marketing agency for the city’s tourism industry. Leger’s wife, Danielle Leger, works as the Director of Local Advocacy for the Louisiana Restaurant Association, an industry lobbying group.
Leger and Sawaya’s comments on Tuesday were consistent with messaging from Convention Center officials over the past several weeks. They have maintained that rather than prompting officials to reevaluate the plans, the economic fallout from the coronavirus crisis has made it all the more important to move ahead.
The comments appear to be a direct reaction to recent community opposition to the large, publicly-subsidized investments. Earlier this month, a coalition of 21 groups called on the center to release $100 million of its $215 million in reserve funds to support out of work hospitality workers. The coalition, called Greater New Orleans Fair Hospitality Fund, has since grown to 34 groups.
“Hospitality workers in this city are telling the Convention Center what they need right now,” said an emailed statement from the group. “The Convention Center needs to be ‘laser focused’ in supporting these essential hospitality workers pay their bills, feed their families, and stay in this industry via allocating $100 million of tax-payer supported funds to direct support of these workers.”
The Convention Center is a public body with a board appointed by the Governor of Louisiana and the Mayor of New Orleans. The Convention Center is publicly funded, and has been able to build such massive reserves due to annual tax revenue collections of roughly $65 million.
Earlier this month, The Lens reported about Convention Center board members, City Council members and residents who had concerns about the developments even before the coronavirus touched down in the US. The Lens reported that the proposed financing model for the hotel would send $3.15 billion in excess hotel revenues back to the out-of-state developers instead of the city.
Many of those existing concerns were exacerbated by the coronavirus crisis, officials told The Lens.
“When we’re having trouble making sure people can stay in their houses and feed their family, is this really the time we need to be focused on trying to build a new hotel?” City Councilman Jay Banks told The Lens last month.
Then, last week, the Bureau of Governmental Research released a report titled Conventional Wisdom: Pausing the Convention Hotel Deal to Assess the Pandemic’s Impact and Reduce Public Costs. The report expanded on many of the issues covered by The Lens, including the potential for a new hotel to siphon business away from existing hotels, which are deeply struggling right now.
“The Convention Center and its board should stop and take time to reassess the project’s feasibility as well as its place as a strategic priority among the community’s many pressing needs,” the report said. “Failing to do so would be an imprudent leap of faith for Convention Center officials who have been talking so much about the importance of avoiding risk.”
Days after that report was released, the Convention Center sent out a press release clarifying how it saw its role in the recovery from the coronavirus crisis.
“The Authority in 2018 approved a 5-year Capital Improvement Plan totaling over $500 million for the convention center, and is committed to making critical facility investments that solidifies its national competitiveness among the elite convention and meetings locations in the country,” the release said. “It will also include a plan for moving forward on a transformative upriver development, and the time for that discussion will be in the coming months.”
The press release included quotes from the Convention Center’s new board chairman, former-State Rep. Walt Leger III.
“The vision of transformational upriver development is one that’s very clear on the horizon,” Leger said on Tuesday, referring to the hotel and entertainment district. “My expectation would be that in the coming weeks and months as we transition into recovery mode, we can get fully focused on one, the implementation of the five-year capital improvement plan and then secondarily, the upriver development portion.”
The Convention Center started seeking a master developer for the entertainment district last year, and in December whittled its options down to three firms. Originally, the center planned to have a special public meeting where the three potential developers would present their proposals. On Tuesday, Leger said that the vote wouldn’t happen until there is “some return to normalcy” that would allow them to have traditional in-person meetings, instead of the virtual meetings the board is currently holding.
He didn’t give an update on the hotel development. The Convention Center has already chosen the development team for the hotel and is currently in negotiations with them over final contract language. The next step is for the center to sign a “memorandum of understanding” with the developers. That will be done without board approval. The board will get a final say when it votes on the final contract, but it’s unclear when that will happen.
