NEW ORLEANS – In its latest lawsuit over losing its bid to develop the World Trade Center, Two Canal Street Investors criticize the real estate consultants who advised the city leaders, despite praising the development in one of three emails approximately a year ago.
"Greg," began an email dated March 25, 2015 from Les Melcher, an original member of Two Canal Street Investors, to Greg Hartmann, a consultant Two Canal Street Investors is suing in its latest lawsuit. "Just wanted you to know that I think you did an outstanding job for the city regarding the WTC selection process. Disappointed that our team was not chosen but respect the diligence and the process you led. On to the next deal !! Best regards Les"
The lawsuit Two Canal Street Investors filed last week in Orleans Civil District Court condemns the selection process that Melcher praised in his email. In addition to Hartman, other members of the real estate consulting team who advised the city in the process and now are named defendants in the lawsuit are the Stone Pigman law firm, attorneys Scott Whittaker and Angela Crowder, consulting firm Jones Lang Lasalle, and consultant Judd Stensrud.
Melcher's email is one of three that recently came to light as work by the winning bidder, Four Seasons New Orleans, moves ahead at the World Trade Center, and the Oct. 24 court date set by Orleans Civil District Judge Tiffany Chase is much anticipated.
That lawsuit filed by Two Canal Street Investors claims the process by which New Orleans accepted Four Seasons' proposal was too secretive, biased and a clear violation of public lease law.
Last winter, a city-appointed committee, New Orleans Building Corp., considered proposals from five national and local hotel-residential developers. Acting on analyst reports that said the Four Seasons' proposal would provide the city with the greatest economic benefit, they selected Four Seasons New Orleans' $360 million proposal for the riverfront property. The proposal includes a Four Seasons hotel and condominiums by Carpenter & Co. of Cambridge, Massachusetts and New Orleans-based Woodward Interests.
The proposal by Two Canal Street Investors, partnered with Woodbine Development Corp. of Dallas, Monday Properties of New York and Washington D.C., and Valencia Hotel Group, was for a $228 million renovation of the World Trade Center. That proposal would have included a 318-room Hotel Alessandra and 240 apartments.
Two Canal Street filed suit the following April against the city and New Orleans Building Corp. in Orleans Parish Civil District Court claiming it should have prevailed. For its part, the city claims New Orleans Building Corp. is exempt from public lease law, and that Four Seasons' proposal will bring in greater economic benefit above and beyond rents paid to the city.
In October, the Four Seasons New Orleans filed its own petition, claiming damages against Two Canal Street.
During a hearing in November, Chase ruled that Two Canal Street won't be awarded the lease even if they prevailed in their lawsuit. Chase said she had the authority to require New Orleans Building Corp. to scrap the 99-year lease with Four Seasons and start the selection process anew.
The other two emails sent last year by Two Canal Street Investors officials, before any litigation was filed in the development, suggests those officials were not initially troubled by losing the bid. In an April 9, 2015 email, Al Thompson, another original member of Two Canal Street Investors, applauded New Orleans Mayor Mitch Landrieu and his administration, stating he didn't feel the selection process was flawed.
"Picking winners and losers in any venture is a thankless task," Thompson's email said.
"Everyone on the losing side finds fault with some aspect of the process. I want to applaud you and your administration for making every effort to get it right and I wish the 4 season group, including my wonderful new neighbors, the leventhal's, all the best in converting that eyesore into something we can all point to with pride. I wish my partners shared my outlook. As they do not I have withdrawn from the two canal street entity. Though we disagree we remain on good terms and I will do all within my ability to persuade them to move on and find other opportunities in New Orleans as there are many."
That email has a yellow "EXHIBIT A-191" sticker attached, which means it likely is part of litigation in the multiple lawsuits filed in this case, though it isn't clear which one.
"If you see an article about filing a suit in New Orleans, it is because the investors wanted to exert some pressure to see if they could recapture some of their investment," Peer's email said. "I sold them Two Canal Street Investors for $10 and got an indemnity for any claims going forward, which should close out my involvement. Daniel Davillier will be filing suit."