Plaza Tower
Plaza Tower to be sold at auction next week
July 20, 2007
The aging and empty Plaza Tower, which had been scheduled to undergo renovation
into a luxury condominium complex, is in default on a $24 million mortgage and
will be sold at public auction Thursday.
Civil Sheriff Paul Valteau said the 44-story tower, one of the first 1960s-era
modern high-rises to tower above New Orleans, appraised recently at $100,000, an
amount he believes is amazingly low.
Plainfield Direct Inc., the Cayman Islands lender that issued the mortgage, is
expected to bid fiercely for the property in an effort to hang on to it as
collateral, Valteau said. In addition to the $24 million, Plainfield is owed $6
million in penalties.
The building, which is at 1001 Howard Ave. and towers above the elevated
Pontchartrain Expressway, was designed as an office building with apartments in
upper floors, but the residential aspect never took off. The building opened in
1969.
The Plaza Tower's last office tenants moved out in 2002 after years of
complaints about the physical condition of the building, including rampant
window, roof and pipe leaks that resulted in mold growth, faulty elevators that
trapped workers, and asbestos that could easily be jarred loose and allegedly
fell onto work spaces.
The building is currently owned by 1001 Howard Properties LLC, a partnership
consisting of former NFL Ravens player Michael McCrary, Glen Rushton of the
Rushton Development Group in New York, and investor Robert Katz.
McCrary has been associated with the Plaza Tower for several years. He first
became involved in trying to redevelop the site in 2005, when he partnered with
Edward Giannasca II under a partnership known as Crescent City Estates LLC. The
two planned to carve the building into spacious condominiums. After Hurricane
Katrina damaged the Plaza Tower and reshaped the local condominium market, new
partners joined the project, leading to the new partnership called 1001 Howard
Properties.
McCrary has since filed suit against Giannasca, charging that his original
partner failed to tell him about $12 million in insurance money the Plaza Tower
collected because of damage it sustained as a result of Katrina. Also named in
the suit are Neil Fisher, a Palm Beach developer who brokered McCrary and
Giannasca's purchase of the Plaza Tower, and Fisher's wife, T.J. Fisher.
In his suit, McCrary alleges that Fisher used the Plaza Tower's insurance
proceeds to invest in other real estate deals in the New Orleans area,
specifically one involving the redevelopment of the Market Street Power Plant
purchased from Entergy New Orleans earlier this year.
In an e-mailed statement Friday, T.J. Fisher maintained that no insurance
proceeds from the Plaza Tower were used to purchase the Market Street Power
Plant.
"That is a total fabrication by McCrary and his lawyers," she wrote.
Neil Fisher has countersued McCrary in Orleans Parish Civil District Court
alleging his allegations are false. In his countersuit, Fisher said McCrary has
defamed him, cost him $25 million in participation in an unspecified deal, and
ruined his reputation for future deals. Fisher also seeks unspecified damages.
Lewis Unglesby, an attorney representing Neil Fisher, said McCrary almost
"doubled" his investment through the deal and said he has no right to the
insurance proceeds that Crescent City Estates received.
McCrary's suit seeks $20 million in actual damages, $40 million in punitive
damages and any properties that Fisher or Giannasca have invested in.
July 14, 2004
Plaza Tower Case Settled Out Of Court
Real estate broker denies wrongdoing
A local real estate broker has reached an out-of-court settlement with the
owners of the Plaza Tower office building, who alleged in a high-profile dispute
that he conspired with state officials to move lucrative state offices out of
the building.
Michael Siegel of Corporate Realty reached the settlement Wednesday with the
owners and managers of the building, Schumann and Mondona Rafizadeh of Houston
and Bahram Arjmandi of Stillwater, Okla. Terms of the settlement were not
disclosed.
Robert Kutcher, Siegel's attorney, said Friday the settlement was based "purely
on economics" and not on any wrongdoing by Siegel. A trial in Dallas would have
taken weeks and driven up legal fees for Siegel and his firm, Kutcher said.
Kutcher and Siegel have maintained there was no credence to the allegations and
were confident they would prevail in court.
"The settlement in no way contains any admission of liability on behalf of Mike
Siegel or Corporate Realty," Kutcher said. Citing confidentiality agreements,
Kutcher said, "I can tell you that under the circumstances, the settlement is
fair."
Settlements often are for less that the projected cost of a trial. A trial could
have cost roughly $100,000, lawyers said.
Siegel, citing the confidentiality agreement, declined to comment Friday. An
attorney for the Rafizadehs and Arjmandi, Jon Bohn, did not return phone calls.
The now mostly empty 44-story building at 1001 Howard Ave. once housed 700
employees of various agencies of the state's departments of Social Services and
Health and Hospitals. Such tenants pay millions of dollars in rent.
In 2001, complaints about working conditions inside the building became public,
and later a class-action lawsuit was filed on behalf of state employees and
others claiming they were made ill by exposure to mold in Plaza Tower and were
concerned about possible asbestos exposure.
In 2002, the state offices were moved to 1010 Common St. under emergency
procedures that allowed the state to bypass public bid laws.
The settlement does not mean the end of litigation over Plaza Tower. The
Rafizadehs and Arjmandi are still suing the owners and managers of the 1010
Common building.
Siegel, who had often attempted to find office space for the state, was paid a
$667,000 commission by the owners of 1010 Common for landing the long-term state
leases, which have a five-year term and options for five-year renewals.
The Rafizadehs, who have controlled operations of the Plaza Tower since they
bought it in 1992, allege that Siegel conspired with the owners of 1010 Common
and state officials to move the state agencies.
Siegel and all others have denied the allegations.
Because the owners of 1010 Common are in Dallas and the lease documents were
signed there, the Rafizadehs were able to sue in a Texas state court despite
numerous efforts by defendants to move the case to New Orleans.
The Rafizadehs also are suing the state and several officials, alleging they
conspired to break public bid laws in the case. One of their allegations is that
state workers sabotaged the building, planted mold on ceiling tiles and created
loose asbestos material that was discovered by investigators for the Louisiana
Department of Environmental Quality.
James Bolner Jr., who represents the state of Louisiana and some state officials
sued by the Rafizadehs, denied the allegations.
He also said he wasn't surprised at the settlement. "Siegel won't admit to doing
anything wrong and he didn't," Bolner said. Bolner added that "it makes sense
for Siegel, instead of incurring $75,000 (to $100,000) in more legal fees" for a
lengthy trial.
Schumann Rafizadeh declined to comment other than to say the settlement "was
fair" and that it allowed Siegel and Corporate Realty "to avoid trial."
Meanwhile, the state has counter-sued Plaza Tower owners and managers in an East
Baton Rouge Parish state court, alleging fraud. Bolner said that owners were
trying to move state workers out of the building to prepare it for sale to a
nonprofit group, while trying to create grounds for them to collect damages for
losing the state leases because of the alleged wrongful acts of others.
Other legal concerns for the Rafizadehs and Arjmandi include a temporary
restraining order preventing sale of the building. A group of investors says it
had a contract to purchase it but that the owners ignored the contract and
placed the building's debt up for public auction.
Building owners and management also face a $120,000 fine for violating asbestos
regulations.
Earlier this year, insurance companies for Plaza Tower owners settled in the
class-action suit by state employees and others against them, paying $4.25
million. Schumann Rafizadeh said he vehemently objected to the settlement.
Downtown High-Rise Building up for Auction
07-23-2007
(New Orleans, LA) The civil sheriff in New Orleans is preparing to auction
a downtown high-rise office building. The Plaza Tower on Howard Avenue will go
to the highest bidder. The Sheriff's Office says the 44-story building is
appraised at a value of one-hundred-thousand dollars. The skyscraper has been
vacant for five years. The last tenants moved out amid complaints of mold,
asbestos, and faulty elevators. The auction is Thursday.
New Orleans' first high-rise is going on the auction block
this week.
The Plaza Tower is for sale after the owner defaulted on his $24 million
mortgage.
The 44-story building is the first high-rise to be built in New Orleans.
It was recently appraised at just $100,000.
The Plaza Tower
800 block of Loyola Avenue, New Orleans, Louisiana
Location: N 29.94571, W 90.07616 (approximate)
The 41-story Plaza Tower located at the intersection of Howard and Loyola is a
reinforced concrete frame building with various setback up to the 16th level.
The mushroom top extends the square footage of the top three stories. The south
side of the building houses an eight level parking structure with sheet metal
cladding, where five of the metal sheets were missing, likely due to the strong
winds. On the north façade, at least one precast cladding panel had been lost.
Broken windows were spotted all around the building, with the majority
concentrated on the lower stories of the north and west façade. The building did
not appear to be in service.