St Charles Hilton
Address
New Orleans, LA 70130
Census Tract
Poverty Rate
Median Income
Total Project Cost
Federal NMTC Financing
Project Completion
May 2007
Overview
The St. Charles Hilton is a historic hotel located in New Orleans, LA. The renovated hotel has 250 rooms, a 500-seat Jazz theater, 2 restaurants, 15,000 sq ft of meeting space, and 100 parking spaces. This historic Masonic building was built in 1926. In the 1940s, it was converted to an office building for use by the United States Government. It was closed in the 1960s and remained vacant for over 30 years until acquired and converted to a hotel in 2002. It remained a hotel until the facility was closed following Hurricane Katrina when the first floor and basement flooded. The principal operating equipment, situated in the basement of the hotel, was flooded as a result of the hurricane. Most of the building sustained damage due to the associat- ed damp conditions. When the previous owners were not able to reinvest in the hotel, UDF agreed to provide financing for the acquisition and rehabilitation of the property. Over $12 million was spent to renovate the property. This included moving the mechanicals to the second floor to prevent damage in the case of any future flooding and converting the hotel to a Hilton. The renovation also included restoring many of the historic architectural elements to the building to fully reflect its rich history.
Project Financing
UDF provided the project sponsor first and second mortgages totaling $30.5 million to purchase and renovate the property. Both loans are interest-only for the entire 7-year term. UDF’s loans included many flexible features including: a higher than standard loan-to-value, a below market interest rate, longer than standard period of interest only payments, debt with equity features, subordinated debt, and lower than standard origination fees.
The project faced a myriad of obstacles in obtaining financing, including the high cost of rehabilitation, the unwillingness of most investors to place funds in the New Orleans hotel market following hurricanes Katrina and Rita, high construction costs, including materials, permits and labor, and a general sense of nervousness of behalf of financiers to invest in the GO Zone.
Community Impact
St. Charles Hilton is located in the GO Zone, a HUB Zone, and an area with unemployment greater than 1.5 times the national average. It is located in a census tract that has a 43% poverty rate and a median income which is 84.2% of area median income.
This project created at least 75 construction jobs and 200 new, full time jobs. All full time employees receive benefits such as health, vision, and dental insurance, prescription drug coverage, 401(k), and access to on-the-job training and tuition assistance. An on-site laundry facility was created at the hotel to create additional jobs for community residents. Additionally, the community benefited from the renovation of a vacant, historic building that was in desperate need of rehabilitation. The reopening of the hotel will provide the city and state with increased property and sales tax generated at the property. The reopened Hilton will help to revitalize New Orleans’ tourism and convention industry, which is the major source of revenue for the local economy.
The St. Charles Hilton is a historic building which had sat vacant for several decades prior to being converted to a hotel in 2002. Without UDF’s financing, it was at risk of being abandoned once again.
