New Orleans competitors agree to Harrah’s hotel

Ed Mchale

Wednesday, Feb. 7, 2001 | 11:22 a.m.

NEW ORLEANS -- The Greater New Orleans Hotel-Motel Association on Tuesday withdrew its objections to the operation of a large hotel by Harrah's New Orleans Casino and also volunteered other concessions intended to keep the financially strapped downtown gambling house open.

"We can agree to allowing Harrah's to buy/build/or lease a 450-room hotel for the duration of the agreement with the statute enacted by the state legislature," said a statement issued by the association's board of directors.

"If additional rooms are needed, then Harrah's has the right to secure rooms from an existing hotel or hotels in the New Orleans area."

Additionally, the association said it was "prepared to forego the proposed $5 million contribution to the Phase IV Convention Center Project and reduce our proposed increase to the New Orleans Marketing Corporation to an additional $1 million per year."

"This is above and beyond the existing $1 million per year already in effect," the association said.

It also urged a continuation of negotiations.

Mayor Marc Morial issued statement in which he urged Harrah's "to quickly respond favorably." He also urged the association and casino owners and operators to continue discussions.

"We are encouraged by the association's attempt to find common ground," said a statement issued on behalf of Fred Berford, president and chief operating officer of JCC Holding Co., the casino's owner. "We are evaluating their proposal, after which we will respond to their suggestions for helping us resolve our need to ease restrictions on our hotel operations."

The concessions follow a Jan. 26 meeting in Baton Rouge among Burford; Philip G. Satre, chief executive officer of Harrah's Entertainment Inc.; and members of the association's board of directors.

The association had previously held out for a hotel with a maximum of 250 rooms with no meeting space. While it agreed to let Harrah's provide complimentary or discounted rooms for gamblers, the association also held out for the payment of taxes at the same rates charged for rooms at existing downtown hotels.

In addition to lifting the hotel's maximum capacity, the association offered to let Harrah's operate 15,000 square feet of meeting space in its hotel-casino complex and develop a "world class entertainment complex" on its second floor.

However, the association held out for the payment of prevailing rate taxes on complimentary or discounted hotel-casino rooms and a ban on the advertising of room rates on billboards, radio, television or the Internet.

While the association does not have the power to dictate how many hotel rooms the casino can operate, its operations will be considered instrumental in guilding the Legislature if it chooses to amend the state's four-year operating contract with JCC Holding, which has filed for Chapter 11 bankruptcy.

JCC Holding filed for Chapter 11 bankruptcy protection in early January to get more time to get a tax cut from the state, while also persuading creditors and bondholders to lift $500 million in debt from its balance sheet.

The casino remains open during bankruptcy but, if negotiations fail, it may have to close March 31 when the required third-party guarantee on its taxes expires.

Gov. Mike Foster said his office has worked out arrangements for a new contract that would keep Harrah's open, cutting the New Orleans casino's $100 million annual tax to $50 million the first year and requiring a "rolling guarantee" of $60 million for the next three years.

Foster has said he will ask the Legislature to approve the new deal for the casino -- at a special session, perhaps in March, but also said that he would present the revised contract a special session only if there is support for it.

Morial said the City of New Orleans also was prepared to restructure its agreements to keep the casino open.