NEW ORLEANS— A new agreement to convert the majority of the World Trade Center building here into a Westin Hotel is expected to be approved by the New Orleans Building Corp. today with the measure being sent to the City Council tomorrow for approval. According to The Times-Picayune,the plan, revised from a 2000 initiative, calls for a $24 million payment to the city by the hotel developer— a group called Burk-Kleinpeter/Sisung/MHH II LLC— basically the total lease payments the city would have received over a 10-year period. Under the new agreement, the city also will receive 1% of gross hotel revenue annually, said the report. The deal will amend the existing lease between the city and trade organization to extend the lease 99 years, According to The Times-Picayune, Currently, the lease expires in 2019, at which time the city would take over the building and the trade group could be evicted. The World Trade Centers 40-member board of directors approved the new agreement May 12, night, and historically has been seen as a way of propping up the organizations budget and ensuring a continued stay at the site, where it has been located since the building’s opening in 1968. The deal leaves in place a sales-tax-based tax increment financing district (TIF) that will capture the 13% hotel-motel tax generated by the hotel, which has been criticized as robbing existing room-tax revenue from existing hotels, according to The Times-Picayune, adding hoteliers had criticized the deal, calling it government-subsidized competition. The deal, as outlined in the Times-Picayune report, showed: An amended lease would give the trade group control of 10 floors, including the groups 30th floor Plimsoll Club, for 99 years. Those floors generate about $428,000 annually in lease payments. The hotel would pay the trade group a 0.5% of total hotel revenue, or $250,000 annually, whichever is greater. The original deal would have split 4% of gross hotel proceeds 50-50 with the city. In addition, the trade group will be reimbursed $4.6 million at closing on financing for improvements it made over the years to keep the building up to code, including installation of a fire sprinkler system. The group no longer would have to split office lease payments from tenants with the city and can lease floors 20 through 28, now 80% occupied, to tenants, leaving floor 29 for its offices and 30 for the restaurant. The hotel may exercise an option to take over floors 20 through 28 for additional hotel rooms. If the hotel developer wants the additional floors, it would have to give the trade group two years notice after the hotel opens, said the report. The developer would have the right to add hotel rooms to the upper floors, but must pay the trade group a 0.5% of hotel revenue for that right. If it takes over floors 20 through 28, leaving the trade organization floors 29 and 30, the developer will pay the trade group 4%-6% of gross revenue generated by room rates from those floors above the 19th floor, according to The Times-Picayune. WTC members will retain free parking privileges in the 1,000-space garage, and the group also gets a new $1 million lobby on the ground floor, $600,000 in elevator upgrades and an estimated $5 million in new building mechanical systems. Under the agreement, the developer would: Pay $24 million to the NOBC, $8 million of which would be due at close of financing and $16 million when the hotel opens; Pay 1% of gross revenue beginning in year four of operations to the city and a 0.5% to the WTC group; Develop the hotel on floors one through 19, the latter being used for mechanical equipment instead of floors one through 18; Gain control of the garage and its $1.1 million annual revenue; Receive a restoration tax abatement on the hotel portion and n lieu of property taxes pay $558,000 annually to the city; Receive a nine-month extension— expected to be granted today— to finance the proj
