ITT to present proposal for New Orleans casino

Thursday, March 21, 1996 | 11:59 a.m.

Lawyers for ITT met with attorneys for the state Wednesday to discuss its plans for taking over the New Orleans casino project that was shut down last November by the Harrah's Jazz partnership.

Neither side would give details about what went on in the closed-door meeting, except to reiterate an earlier promise: Caesars will abide by a 1992 state law that authorized the casino, including the part that requires gross revenue taxes of 18.5 percent or $100 million a year, whichever is greater.

"Their proposal did acknowledge there would be full compliance with the statute with respect to the minimum of $100 million or 18.5 percent annually," said John Campbell, a Baton Rouge attorney working for the state in the matter.

That was confirmed by Mark Thomas, a vice president with ITT Corp, which owns Caesars World.

Campbell said the state expects a written proposal from ITT in a week to 10 days.

The Harrah's Jazz partnership, led by Harrah's Entertainment Inc., was chosen by the state in 1993 to build and operate the casino. The other partners were resort developer Christopher Hemmeter and a group of New Orleans area investors.

After numerous delays, Harrah's Jazz opened a temporary casino at New Orleans' Municipal Auditorium in May while construction on the permanent building got under way on historic Canal Street at the edge of the French Quarter.

But the temporary casino drew much less money than expected. It was abruptly shut down on Nov. 22 and construction on the new building was stopped. The Harrah's Jazz Co. partnership filed for protection from creditors in bankruptcy court.

More than 3,000 workers lost their jobs and the city and state were left with the unfinished shell of a building on the downtown riverfront.

Harrah's Jazz is negotiating with various creditor groups and has asked the state to designate the permanent casino a temporary site for an unspecified period of time. That designation would allow the casino to pay 25 percent of its gross revenue in taxes rather than the $100 million minimum.

Campbell said attorneys in the case will analyze Harrah's Jazz's reorganization plan as well as the Caesars World proposal and make recommendations to the governor and the Louisiana Economic Development and Gaming Corp., the state agency that regulates the casino.

The city and the holders of the $435 million in junk bonds Harrah's Jazz used to finance the project also will have a say. And any plan the state likes would have to be approved in bankruptcy court.

Both Harrah's and ITT have said they believe they could have a casino up and running by the time the Super Bowl is played in New Orleans next January.