FORBES QUESTIONS CASINO'S FINANCING

Published: Wednesday, February 17, 1993
Edition: FIRST
Section: NATIONAL
Page: A1
Byline: By TYLER BRIDGES Staff writer

Text:

Mayor Sidney Barthelemy's top consultant said Tuesday that the city has not required casino developers Christopher Hemmeter and Daniel Robinowitz to detail their financial worth because it would be "an invasion of privacy."

The statement by Donald Zuchelli, the city's lead consultant on casino-lease negotiations, came on the day that Forbes, a respected national magazine, questioned the developers' ability to finance the $430 million casino deal. The article's headline was "Fantasyland." Zuchelli said letters from Hemmeter's bankers saying he was a good client satisfied him that the developers could finance the project. Hemmeter has told the city that he is worth more than $100 million, but has provided no documentation.

"I feel assured that the financing of this project is as sound as any project I've been involved in," said Zuchelli, a Maryland-based consultant who has worked on projects throughout the country for 30 years. Zuchelli was the city's lead consultant when the Hemmeter-Robinowitz bid was selected by Barthelemy in November.

Several municipal financial experts said the city needs stronger assurances that the developers have the money.

"In the absence of a performance bond, you need something showing the financial wherewithal of a developer, like a financial statement," said Forrest Claypool, who was chief of staff to Chicago Mayor Richard Daley. The city has yet to demand that the developers provide a performance bond, which would give financial and legal protection to the city in case they did not complete the project.

City Councilwoman Jackie Clarkson, in particular, has demanded that Hemmeter be required to post a performance bond.

The Forbes article questioned the financial projections of Hemmeter and Robinowitz, and suggested that they don't have the money to finance the development, which includes the world's largest casino, a nine-story parking garage, and a park and lagoon at the foot of Canal Street.

The article said Hemmeter was once worth more than $200 million but that his fortune "has since dwindled drastically."

It was revealed last week that Hemmeter's two major Hawaiian resorts are in serious financial trouble. Lenders for the $340 million Westin Kauai are negotiating to take the property back, while lenders for the $360 million Hyatt Regency Waikoloa are trying to sell it at a bargain-basement price, hotel analysts said.

The Forbes article said Hemmeter and Robinowitz have overestimated revenue and profit compared to casinos in Las Vegas and Atlantic City.

"It faces a hard sell," Forbes reported, referring to efforts by the developers' investment bank, Salomon Brothers, to raise the needed money.

Robinowitz could not be reached for comment.

Barthelemy released a letter Tuesday from Salomon Brothers dated Jan. 29 saying it had agreed to provide $32 million "of funding and financial commitments toward the development of the Grand Palais Casino." The letter said Salomon Brothers had previously provided $5 million to the developers.

Zuchelli said he was assured that the developers' investment bank would raise the additional money through a "public offering." He said the financing was contingent on the City Council approving the lease the mayor is negotiating with the developers, the City Council issuing a conditional-use permit to build the casino and the developers being awarded a license by the state gaming board.

The City Council is expected to consider the lease and permits in March, and the state gaming board, which is just getting organized is expected to choose a casino operator later this year. At least one other company, Jazzville, which consists of a group of politically connected businessmen and lawyers, has said it will seek the license.

While financial questions dominated Tuesday's press conference, Barthelemy called it to defuse public concern that he was not negotiating a good deal for the city, which owns the Rivergate casino site.

"This will create more jobs than we ever dreamed of, and it will give a real opportunity for women and minorities to participate in this important project," Barthelemy said. "This is the best thing that's come down for New Orleans since the Superdome."

Hemmeter and Robinowitz have promised that 80 percent of the casino's 5,300 jobs will go to New Orleans residents, and that a majority of the workers will be minorities.

The city's negotiators are Zuchelli; Ron Nabonne, an attorney with Wilkerson, Henry, Perez and a trusted Barthelemy adviser; Edward Markle, an attorney with Wootan, Saunders & Markle; and Wayne Collier, the mayor's director of economic development.

Collier said Tuesday he had not repaid Hemmeter for a four-day visit to Hemmeter's resorts in Hawaii in October 1991. Others who went on the trip - Barthelemy, City Councilman Lambert Boissiere, state Sen. Samuel Nunez - repaid Hemmeter to avoid violating state ethics law. Collier as a mayoral appointee is not covered by the law.

Collier said the free trip has not affected his lease work for the city.

Most of the negotiating sessions for the lease, sources said, have been held at a locked office a door down from Markle's office at 1515 Poydras St. The sign outside the door reads "Hughes Christensen," apparently the previous tenant.

Zuchelli said the developers' lead negotiator is Robinowitz. He said the negotiations involve 27 attorneys.

"The citizens of New Orleans would be proud to see the way the consultants and city officials involved hold our feet to the fire," Robinowitz said when he talked about the lease negotiations three weeks ago. "They have extracted more from us than we offered in (the bid to the city)."

James Robert Moffett, chairman of Freeport-McMoRan, appeared at the press conference to say that the Business Council is satisfied the mayor is negotiating a good deal for the city.

"We believe that you've shown us that you're acting in a business-like fashion," Moffett said.


Copyright The Times-Picayune Publishing Corp.