NEW ORLEANS — The Louisiana State Bond Commission unanimously approved key financing agreements for the planned Omni headquarters hotel at the New Orleans Ernest N. Morial Convention Center on Sept. 17, clearing a major state hurdle for the approximately $600 million, 1,000-room project.
The commission approved two related items covering the Convention Center Authority’s financial obligations under its development agreement with Omni and a cooperative endeavor agreement involving tax revenues generated within the hotel subdistrict.
“State Bond Commission approval is a very significant win for Louisiana and moves the Omni Headquarters Hotel substantially closer to beginning construction,” said Jim Cook, president and CEO of the New Orleans Ernest N. Morial Convention Center.
Cook said the approvals allow the Convention Center to move forward with its financial obligations under the Omni development agreement and enter into a cooperative endeavor agreement pledging certain Authority and Headquarters Hotel Subdistrict tax revenues to the project. He emphasized that the applications did not seek a direct financial commitment, tax dedication or guarantee from the state.
“We appreciate the commission’s careful review and recognition of the jobs, economic activity and long-term opportunity this investment will create,” Cook said.
New Orleans & Company also welcomed the approval, arguing that the headquarters hotel would make New Orleans more competitive for convention and meeting business.
“Today’s State Bond Commission approval of the Omni headquarters hotel development at the New Orleans Ernest N. Morial Convention Center is an important step forward for New Orleans and for Louisiana’s economy,” said Walt Leger III, president and CEO of New Orleans & Company. “A headquarters hotel connected to the Convention Center will strengthen our ability to compete for major meetings, conventions and events that generate tax revenue, support jobs and bring economic activity to businesses throughout our city and state.”
“Meeting planners have consistently told us that a headquarters hotel is an important piece of the infrastructure New Orleans needs to remain a leading destination for meetings, conventions and events,” Leger said. “Cities across the country continue to invest aggressively in their convention districts, hotels and visitor infrastructure, and this project will strengthen New Orleans’ ability to compete.”
“The Omni project represents a significant private investment in our future and strengthens one of Louisiana’s most important economic engines,” Leger said. “New Orleans & Company strongly supports this project and the opportunity it creates to attract more business, more visitors and more economic opportunity to Louisiana.”
Financing Package Revised
The approval follows an Aug. 26 restructuring of the hotel’s financing package aimed at reducing the amount of public support over the life of the deal.
The Convention Center board revised a financing structure that would have provided Omni an estimated $836.7 million in hotel-generated tax revenues over 45 years, replacing that portion of the package with a guarantee of up to $120 million in tax-incentive payments, less amounts resulting from tax rebate agreements. Other public support for the project remains part of the financing package, including certain Convention Center and hotel-subdistrict tax revenues that will be rebated to the developers for 45 years.
The change followed recommendations from the Bureau of Governmental Research (BGR) to reduce the project’s long-term public cost. BGR had modeled a similar financing alternative and estimated it could save the public $471.7 million over 45 years, or $98.8 million on a present-value basis, although the organization cautioned that the savings under the Convention Center’s revised agreement would depend on how the $120 million commitment is funded.
Together, the Convention Center’s commitments total up to $200 million, including the $120 million tax-incentive guarantee and an $80 million investment toward the development, construction and operation of the hotel. Omni would fund the remaining construction and development costs.
A separate agreement approved by the commission allows the Authority and its Headquarters Hotel Subdistrict to pledge certain taxes generated within the hotel subdistrict for 45 years to reimburse project costs and support hotel operations. Those include the Authority’s 3% hotel occupancy tax, 0.75% food and beverage sales tax and $2 tax per occupied hotel room per night, along with the subdistrict’s 2% sales tax and 2% hotel occupancy tax.
The earlier financing proposal had been scheduled for consideration by the Bond Commission Aug. 20 but was withdrawn before the meeting after Senate President Cameron Henry, a commission member, said he opposed the deal as it was then structured. Convention Center officials subsequently said lawmakers had asked them to consider alternative financing options.
Project Moves Closer to Construction
The approximately $600 million hotel is planned for the former Sugar Mill site across from the Convention Center. Plans call for a 27-story hotel with approximately 1,000 rooms.
The New Orleans City Council gave final approval to zoning changes for the project in August, establishing a Convention Center Hotel Overlay District that allows the planned hotel and removes certain height restrictions at the site.
The project also includes a payment in lieu of property taxes, or PILOT, and commitments related to local hiring, property tax payments and participation in the Convention Center’s Small and Emerging Business Program.
Convention Center officials have previously said the hotel is expected to open in 2030.
