Four Seasons dramatically downsizes World Trade Center hotel project by almost 40 percent—$139 million slashed from construction costs in one of the ‘priciest deals in New Orleans real estate history’—no penalty for ‘bait and switch’ tactic from project partner the City of New Orleans

Mayor’s office forced to hand over 10,000 hush-hush documents and emails city sought to shield in lawsuit filed against ‘illegal’ RFP lease with public-bid ‘winner’ Four Seasons group
(PR NewsChannel) / January 28, 2016 / NEW ORLEANS 
Famed architect Edward Durell Stone designed the X-shaped World Trade Center contemporary high-rise in the 60s. The 33-story building with nautical associations was conceived as an enormous compass and an anchor to a landscaped plaza adjacent to the Mississippi River. The structure’s four wings align with the cardinal directions. The hallmark of Stone’s modernist style are grilles, which he often used like signature veils over the glasswalls of his buildings, and white, romanticized classic forms. Stone used his grilles and classic trimmings as decoration. Some critics said that he "gift wrapped" his buildings.

The city-owned (World Trade Center) 60s-era office building on the waterfront is considered one of the city’s most prime pieces of real estate.

Last year, the Four Seasons development team set out to capture a City of New Orleans public-bid process for redevelopment rights to the Mississippi Riverfront World Trade Center (WTC) skyscraper. They proposed a $364 million makeover, touting a construction budget to dominate and dwarf the spending plans of four other developer/luxury hotel finalists vying for the site. Four Seasons’ WTC-redevelop construction budget pitch surpassed rival project budgets by over $100 million. The media floated their numbers, and Four Seasons’ principals attested to and certified the over-the-top construction costs. The huge disparity in Four Seasons’ flashy construction costs was never fully vetted because, after all, the brand has a certain gold halo luster, shiny and bright as an eye-trick mirror. Everything they do is hailed as “better and bigger,” so they say. The city awarded Four Seasons the massive 99-year contract on city-owned property last May in a deal tied to their inflated now-proven-false construction budget proposal, but an immediate lawsuit began to unmask the charade last April. Now the view widens and deepens. Four Seasons’ sham construction numbers plunged faster than falling concrete and cement—tumbling to “$225 million.”

It’s open season in New Orleans.

The City of New Orleans already faces the hot seat in a courtroom scorcher set to unfold at trial later this year. The high-wattage lawsuit against the city contests the “illegal” 99-year lease deal Mayor Mitch Landrieu signed with the Four Seasons group to redevelop the WTC tower into a luxury hotel-and-condo project, according to court testimony and exhibits. Now more of the masquerade continues to unwrap with a new twist.

The latest. Duplicity. The bevy of billionaire developers and investors behind the Four Seasons Hotel and Private Residences New Orleans project do hard math the old-fashioned way. How? By making $139 million vanish from the nuts and bolts of the project from the get-go. Even before a construction shovel hits the dirt. The term “bait-and-switch” describes the ploy of offering something desirable to gain favor (i.e. political support, public opinion, or to win a bidding war) then thwarting expectations with something less desirable. Here the sleight-of-hand bargaining chips are $364 million vs. $225 million = $139 million windfall gone missing from the Mississippi Riverfront. But there is much more in this Crescent City tale of what may be called brazen “capital cronyism” passing as standard fare.

The Four Seasons group [whose co-developer partner Paul Flower’s Woodward Design+Build has been plagued by persistent Disadvantaged Business Enterprise (DBE) scandals] recently issued a double-whammy online document seeking a “third-party DBE monitor” for the World Trade Center project AND disclosing the real “construction budget of $225 million.” The problem? This is a bombshell revelation. The group “won” a competitive public procurement bid process last May based on a proposed $364 million construction budget.

Two Canal Street Investors, Inc. (TCSI), a finalist in the competition to lease out the 33-Story WTC building, filed suit in the Orleans Parish Civil District Court last April seeking a judicial ruling to overturn the city’s secretive selection process, slanted toward the winning Four Seasons developers. The legal action concerns transparency and fairness in public procurement and clear violations of the Public Lease Law by the city. TCSI argued they should have been awarded the project because their proposal included a $65 million upfront payment, and the largest overall offer to the city. The suit claims the process was rife with favoritism, improper influence and backdoor dealings. Consultants hired by the city manipulated the proposals to subjectively select a lease, TCSI claims in legal proceedings.

Meanwhile, the city must also fork over to the TCSI legal team 10,000 secret emails and documents prepared and exchanged between city employees and representatives and the Four Seasons group during the WTC bidding process. The discovery production is court-ordered. City attorneys unsuccessfully argued to declare the staggering volume of cryptic correspondence as attorney-client-privilege confidential.

TCSI attorneys prevailed in making their case to the court that the vast majority of these materials involve communications directly relating to the procurement process for the WTC lease; that is the exact subject of the lawsuit, and those communications are public records as well.

Joining New Orleans-based Paul Flower and his Woodward Interests are Four Seasons’ “Team NOLA” development and equity investors Richard L. Friedman, Carpenter & Co.; Alan Levanthal, Beacon Capital Partners; Robert Merrick, Latter and Blum; and Sherry Marcus Levanthal. Friedman is the corporate director of Four Seasons Hotels and Resorts, a Canadian company co-owned by Bill Gates and Saudi Prince Al-Waleed Bin Talal. The project’s ownership partnership entity is now known as Delaware Corporation Two Canal Owners, Inc.

TCSI’s eye-opener lawsuit accuses the mayor’s office and others of decisively orchestrating a “sweetheart deal” scheme to hand the WTC property to the Four Seasons-Carpenter-Woodward Group. Even before the latest revelation of a massive 38 percent construction budget cut, the “preferred” group “won” the competitive procurement process to gain control of the iconic building by offering the actual lowest rent to the city of five pre-vetted and short-listed development teams vying for the right to redevelop the 33-story WTC. Now matters are made worse with published proof that the “$364 million” development deal was an apparent fake financial plan, a shell game.

The city’s Request for Qualifications/Proposals (RFP) to reinvigorate the WTC and waterfront was in part based on each proposal’s potential economic impact and stimulus but TCSI says the Four Seasons group was the predetermined winner from the onset of the RFP bid process, regardless of which proposal actually offered the highest monies to the city.

Four Seasons’ own project description provides the starkest proof yet of the real truth behind the master development’s deceptive plans. This “current” budget equates to the fast shuffle of a substantially trimmed down and scaled back project. The difference between a $225 million and $364 million project may have all the fluid and slippery consistency of oil and water, infused with hot air.

The Four Seasons group hawks its commitment to the “Golden Rule: do unto others as you would have them do unto you.”

TCSI’s court case against the city details a disturbing pattern of basic RFP arithmetic errors, favoritism, secrecy, improper communications, deceit, crazy-math numbers crunching…and the apparent steamroller handprint of Mayor Landrieu written clear across the entire selection process…in a supposedly “fair” and “impartial” forum designed to match the biggest open-checkbook developer with the 670,000-square-foot Edward Durrell Stone landmark office building at the foot of Canal Street in New Orleans’ CBD.

“There’s no place like New Orleans,” people say. Open to interpretation.

TCSI contends the “very flawed” public bid process of selecting a WTC lease award “winner” cuts deep to involve a plot to give preferential treatment to the Four Seasons group by complicit city consultants, the law firm of Stone Pigman and Jones Lange LaSalle (JLL), NYSE. JLL is a professional services and investment management company specializing in real estate.

Court documents evidence city consultants Stone Pigman attorney Scott Whittaker and Managing Director of JLL’s Hotels & Hospitality Group Greg Hartmann and JLL Associate Judd Stensrud hatched and gave form to the distorted “construction budget” mathematics that culminated in a “recommendation” that the Four Seasons group receive the lease. “Although its [Four Seasons] rent…is substantially lower than the other bidders, the size, quality and structure of the development would produce the most direct economic benefit to the city,” the consultants’ report to the committee said.

TCSI pre-trial discovery filed into the court shows Four Seasons-Carpenter-Woodward’s own team member knew JLL was using an unsound methodology based on construction/project costs in an improper tax analysis. “It is more likely that an income approach would be used for calculating RE tax,” a Carpenter & Co. associate said in a recovered email. The associate’s bio states he holds a Harvard Business School MBA.

The consultants both counseled and guided the selection committee. These “fiscal analysts” consultants were charged with the public-benefit responsibility of making an assessment that has a considerable financial impact on New Orleans taxpayers for the next 99 years.

At the time of the Four Seasons selection, the city’s consultants tried to validate their skewed actions by noting that the Carpenter development team calculated to spend between $95 million and $130 million more than their competitors in construction, therefore giving the property potential for higher real estate tax payments to the city over the life of the lease. But even then, before the Four Seasons-Carpenter-Woodward group slashed $139 million from their budget once awarded the WTC contract, that false blueprint of a formula didn’t fly.

Charline Gipson, one of the lawyers representing TCSI, said “a fatal flaw” in the city’s consultants’ calculations occurred when they estimated potential property tax revenues based on Four Seasons’ higher construction budget, rather than net operating income.

Court filings indicate city consultants evaluated and openly presented advice and recommendations based on incorrect information in a ploy to ensure the selection of the Four Seasons. They utilized and construed an uncustomary construction budget formula to estimate “property taxes” that favored the Four Seasons group—not how the Orleans Property Assessor’s office actually determines taxes for New Orleans hotel projects.

TCSI’s lead counsel in the lawsuit against the city Daniel Davillier said the city’s RFP methods and formulas used for calculations were “completely improper in a public procurement process.” He adds, “All this manipulation of the data has just allowed for a predetermined outcome to be justified on a post hoc basis.”

Davillier goes on to say that TCSI’s offer was “the most lucrative for the city, including a $65 million upfront payment, and it should have been selected under Louisiana Public Leasing Law.” Instead the city appointees and consultants played behind-the-scenes favorites in picking Four Seasons, whose upfront payment was five million.


The New Orleans Building Corp. (NOBC) was created in 2000 to manage city-owned properties.

TCSI’s hotel proposal featured the world-class Valencia flag (luxury product), Hotel Alessandra. Condé Nast Traveler readers have named all four of Valencia Group’s urban hotels to the magazine’s 2015 Readers’ Choice Awards list. Each one was rated the best hotel in their respective cities. Even though there is a Four Seasons hotel in Houston, the Hotel Sorella CityCenre, a Valencia Hotel, was rated the best hotel in Houston.

Other competing developer/hotel flag teams included Hilton’s Conrad Brand, Starwood’s Luxury Collection and the Godfrey Hotel. While the Four Seasons group floated a onetime colossal “$364 million construction budget,” now proved to be utterly untrue, each of the other RFP contenders for the WTC property offered actual and specific upfront and annualized payments to the city (not speculative) that far exceeded and overshadowed Four Seasons lowball rent bid.

TCSI attorneys continue to uncover paperwork trails that undo flagrant and misleading falsehoods the Four Seasons group and city representatives peddled to the public and trumpeted in the media about the proposed Four Seasons project.

For more than a year, city spokespersons and media outlets have consistently reported the Cambridge, Mass.-based Carpenter and New Orleans-based Woodward’s proposal consisting of a 350-key Four Seasons hotel and a 76-room hotel-serviced condo component at an estimated value of $364 million, or alternately a $360 million price tag. Friedman gave a Bisnow publication December interview boasting a $350 million budget.

Shockingly, a simple review of public documents reveals that the city allowed the Four Seasons group to execute a final WTC lease with NO obligation for any minimum construction budget at all.

The Advocate recently ran another article chronicling Woodward’s most recent continuing DBE troubles at the Iberville housing complex revamp, still under investigation by the Housing Authority of New Orleans for funneling DBE work to non-DBE contractors. Ironically, Woodward and the Four Seasons group scored highest among the Mayor’s selection committee members in DBE participation. The December 25, 2015 coverage says Woodward’s work on the “$364 million” WTC deal continues. Again, the writer references a bogus WTC construction figure number.

Court records show that the city recently filed “Expert Report” opinions into the court of law, citing and relying upon the moot $364 million construction budget. One report reads, “The comparatively high construction cost associated with the [Four Seasons-Woodward-] Carpenter proposal, which at $364 million, was 53 percent higher than that of the TCSI proposal ($228 million).” Memo. Four Seasons hacked down their WTC project construction costs to $225 million. Confirmed in a dispatch sent straight from the desk of Two Canal Owner, LLC (“Owner”) and published on Woodward’s letterhead and website*.

The WTC redevelopment has been called an “urban catalyst” and “the most important real estate project in New Orleans since the Superdome.” Yet neither the city nor Four Seasons has been forthcoming to the public with an announcement or press conference about the dramatically downsized project, with $139 million lopped off the construction budget, which equally impacts economic benefits to the city.

Ordinary people may not know much about public affairs but the public is not stupid, court watchers say.

The Four Seasons group’s website claims that New Orleans is “a city without seasons.” However, a local joke has it that New Orleans really does have four seasons: Summer, Hurricane, Christmas and Mardi Gras. Whether or not the city ever has “Four Seasons” is yet to be seen.

To date, the city has not yet complied with the judge’s recent order to turn over to TCSI attorneys all emails and documents.

“The City and the NOBC [New Orleans Building Corporation] circumvented the Public Lease Law by awarding the lease of this valuable property to the lowest bidder at a cost of over $2 billion to the citizens of New Orleans, and now they are attempting to circumvent the Public Records Law and cover up their actions by wrongfully withholding over 10,000 documents and communications directly related to the public procurement process. There is no transparency or accountability in this Administration,” Davillier said.

Landrieu and his administration have garnered a reputation for plain power politics, critics say, and a history of controlling virtually all aspects of a “flawed” process. Insiders say, the administration makes decisions as a foregone conclusion and then maneuvers “stacking the decks” and forcing through decisions by assembling “committees” or “bodies” comprised of Landrieu appointees and city employees, civil servants who depend on the city for a paycheck. “Don’t mess with Mitch,” is a slogan.

Lawyers for TCSI say Landrieu will be deposed and called to take the stand in the TCSI case against the city, along with principals from the Four Seasons Group and others.

The TCSI lawsuit against the city remains “front and center” in New Orleans.

“To everything there is a season,” is one of the world’s oldest beliefs.

For now, the storied WTC skyscraper sits silent and frozen in time on the Mississippi Riverbanks.

*Download Screencap of Woodward Article: Project Budget


Adam Farragut
PR Firm: The Publicity Agency
Phone: 813-708-1220 ext. 7778

Direct link:

SOURCE:  Two Canal Street Investors, Inc.

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