by CSB Staff •
August 25, 2014 •
Hotel & Hospitality, Public Development •
Comments (3) •
The proposed W Hotel & Residences.
A few months after the city’s potential deal with a Dallas-based developer to redevelop the former World Trade Center site fell through, the city said last week that it will seek new proposal to redevelop the site next month.
Mayor Mitch Landrieu spokeswomen Garnesha Crawford said the city is currently working on a new request for proposals that will be issued in September. Crawford said city officials have spent the past four months working on a more comprehensive document, but would not elaborate further.
The new request comes after negotiations with Gatehouse Capital Corp ended in April. Gatehouse had been selected by the city to redevelop the property in 2013, but negotiations, ongoing for over 6 months, reportedly fell apart over financing and the proposed deal structure.
Gatehouse, in conjunction with local development partner DAG Development, had proposed a 245-room W Hotel and 280 luxury apartments on the 13th through 30th floor.
In an April 22 letter, the Deputy Mayor Cedric Grant, interim CEO of the New Orleans Building Corp., notified Gatehouse CEO Marty Collins it was rejecting the development group’s “best and final offer” to rehabilitate the vacant office tower into a W Hotel with apartments on the upper floors. The letter stated that the terms Gatehouse proposed “do not provide an acceptable return to NOBC on this asset.”
Gatehouse had offered the city a $10 million upfront payment for a 99-year lease, which, according to the city, was far below the market value of the property. Gatehouse modified its offer and agreed to pay the city 105 percent of the fair market value of the building and land after an independent appraisal. Gatehouse had also offered unspecified “periodic ground lease payments and/or potential revenue sharing with the city, rather than a single lump sum prepaid 99-year lease, if preferred.”
What do you think, does the city actually want to redevelop this property?
It seems that developers came to the table ready to make things happen but without the full interest of the city as they’ve led everyone to believe. Negotiations are to be expected and there will be compromise on this property. The city must remember that unless it redevelops the property itself.
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