[StBernard] Little action follows New Orleans tower plans

[Westley Annis]

Little action follows New Orleans tower plans 
Aside from proposed Trump Tower, construction has stalled on high-rises
The Associated Press
Updated: 5:39 p.m. CT May 29, 2007
NEW ORLEANS - Lured by congressionally authorized tax credits and other
financial incentives after Hurricane Katrina, a procession of developers
announced plans to build high-rises.

But 20 months after the storm, most have fallen by the wayside. The slow
pace of the recovery gets much of the blame. New Orleans still has no
comprehensive rebuilding blueprint, and funding is falling far short of
planners' expectations.

Adding to the tension for commercial investors: Construction and insurance
costs have soared.

"There have been a lot of announcements, but you don't see a lot of cranes,
do you?" said Michael Siegel, executive vice president of Corporate Realty
Inc., a New Orleans-based brokerage. "I think we all underestimated how long
this (the recovery) was going to take."

At least one big plan - a $400 million proposal by Donald Trump to construct
the city's tallest building - is going ahead, although the only visible sign
at the planned site of the Trump International Hotel & Tower is the tycoon's
name painted on a brick-wall mural. Every weekday morning, cars fill the
parking lot where the 70-story building is to be built.

Not to worry, said Trump's son, Donald Jr. The city's slow recovery, he
said, hasn't derailed the plan to build more than 700 units of condos and
hotel rooms in the city's central business district. A sales office is
expected to open near the site in less than three months, he said.

But while the Trump proposal is making its way through the city approval
process, most other projects have seen more hype than hard hats. Many have
stalled or fallen apart.

David da Cunha, president of the commercial investment division for the New
Orleans Metropolitan Association of Realtors, said many developers are
waiting for government leaders to devise a clear rebuilding plan before they
invest. "I think that's what is slowing things down," he said.

Redevelopment proposals are making their way through the city approval
process, and the city's recovery director, Ed Blakely, hopes the pace of
reconstruction will pick up by fall. Blakely envisions a $1 billion program
of mixed-use redevelopment, but his funding source - the federal government
- has only $117 million available for the task.

Doubts about the strength of the city's flood protection system also are
weighing on developers' minds, said city planning administrator Arlen
Brunson. When Katrina struck on Aug. 29, 2005, levees broke and flooded
about 80 percent of New Orleans. The water extended well into the business
district, and hurricane-force winds blew out windows in many high-rises.

The Army Corps of Engineers is pumping billions of dollars into flood
protection improvements. But the Corps itself acknowledges some levees are
not up to federally mandated standards set before Katrina.

The Trumps, at least, have not been deterred. "This is going to be a big
statement for the city and its recovery," Donald Trump Jr. said recently.
"It's not charity, but we do think it's one of America's great cities and we
want to be there to support it any way we can."

The Trump project is one of eight new luxury condo complexes, totaling more
than 8,000 units, approved by the city planning commission since Katrina. At
least one of those projects, Vantage Tower, has fallen apart.

In January 2006, Trey Cefalu announced plans to build the 25-story condo
complex in the central business district. Prospective buyers reserved 105 of
219 units at Vantage Tower, but about half of them backed out after the
developers raised prices to offset a 30 percent increase in construction
costs.

Cefalu said he decided to shelve Vantage Tower in February.


"We're taking a wait-and-see attitude to see where construction costs go,"
he said.

Other developers say they aren't giving up on the market. The first
high-rise project to break ground could be Tracage (the French word for
"loft"), a 24-story condo complex planned for the Warehouse District.

Jason Voyles, the Jackson, Miss.-based developer of the $60 million project,
said he acquired rights to the property before Katrina, but didn't close the
deal until after the storm.

"We were committed to New Orleans and wanted to make it happen," Voyles
said.

Voyles said he has pre-sold 65 percent of 126 units, which range in price
from $266,000 to $2.5 million. Construction will begin sometime this fall,
he added.

"We believe in the project. We believe in the city. We are not scared to
take calculated risks," he said.

The city hasn't seen many commercially driven projects that match the scale
of the residential high-rises proposed by Trump and other developers. A
notable exception is a $715 million redevelopment announced last May by
Strategic Hotels and Resorts, Chicago-based owners of the Hyatt Regency
Hotel in New Orleans.

The company's blueprint called for opening a park, a National Jazz Center
and government offices along with repairing and renovating the hotel, which
is next to the Louisiana Superdome. The high-rise hotel was heavily damaged
by Katrina, and is expected to reopen next year. Strategic hasn't set a
timetable for construction on the rest of the project.

Company chief executive Laurence Geller, said plans for the jazz center have
been adjusted to reflect "all of the real estate hurdles we encountered." He
described New Orleans as "a challenging city in which to get things done."

The city's overall rebuilding hasn't moved at the anticipated pace, but
there has been progress, he wrote in an e-mail to The Associated Press.

"We remain optimistic that the local, state and federal governments will act
in concert and build momentum," Geller wrote.

Next to the Hyatt and across from the Superdome - the refurbished stadium
that's perhaps the most positive symbol of the city's recovery - is a
pockmarked office building that sends a very different message about
progress in New Orleans.

The storm-shattered windows on Dominion Tower seem out of place at the heart
of the city's bustling business district, where top-of-the-line high-rises
have more tenants than before the hurricane. Market watchers say that's
because many smaller or older office buildings have not been repaired.

The 26-story Dominion Tower, which includes the New Orleans Shopping Centre,
is one of several office buildings owned by Judah Hertz. The Santa Monica,
Calif.-based real estate investor said he will begin repairing broken
windows soon, but doesn't have any firm plans to reopen either the office
building or the shopping center. Macy's, the shopping mall's major tenant,
has said it will not reopen its downtown store or another in suburban
Kenner.

"We're just going over our different options," Hertz said.


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