The 8th of May dawned dark for Stephen Perry, the President and CEO of the tax-funded, non-profit tourism marketing organization New Orleans & Company. As viewed from the front page of NOLA.com, it would seem that Mayor Cantrell’s office leaked to the news outlet a string of Perry’s vitriolic text messages sent to the mayor’s chief-of-staff John Pourciau, making Perry the latest perpetrator in a string of public relations blunders from the inner circle of the tourism industry’s elite members. The text exchange reveals an explosive Perry railing at the mayor’s office for creating health and safety guidelines for the city’s businesses without consulting him or his colleagues first. “You guys have no idea what you have unleashed,” Perry’s message reads. “We are beyond flabbergasted. You just undercut over 20 negotiations worth over $100 million. You blew them up by keeping us in the dark.”
New Orleans & Company is the recently rebranded company formerly known as the New Orleans Convention and Visitors Bureau. Tourism organizations like New Orleans & Company are non-profit corporations that promote tourism; and like other convention center and visitors’ bureaus, they are funded by hotel taxes (which is the third most lucrative of New Orleans city taxes, after property and general sales taxes). In most U.S. cities, only a small portion of a hotel tax goes to tourism promotion companies, leaving the rest for city funds. For example, San Francisco gives 72% of their hotel tax to fund general municipal purposes. But in New Orleans it is the other way around. In 2018, the City received only 9.5% of the total hotel tax. New Orleans & Company takes in $21.1 million a year from the hotel tax, which is about $1 million more than the City itself. New Orleans & Company is also considerably more powerful than its counterparts in cities like Portland or San Francisco; Perry makes almost half a million dollars a year as president.
Of the three major tourism entities, New Orleans & Company is paid the least. In first place is The Louisiana Stadium and Exposition District (LSED), which runs the Superdome, Champions Square, Smoothie King Center, the Saints Training Facility, the TPC Louisiana Golf Course, the Shrine on Airline (formerly Zephyr Field), and the Alario Center in Westwego. They receive $60.5 million annually on the hotel tax, or 31%. Next is the Convention Center, run by The Ernest N. Morial New Orleans Exhibition Hall Authority, which receives $51.2 million in hotel taxes, or 26%. Together with New Orleans & Company, these three organizations represent the most powerful business interests in the New Orleans tourism industry. And if you are wondering who Perry is referring to when he says “we” in the texts above, it is almost certainly himself and his colleagues who run these organizations. But what we don’t know: exactly which 20 negotiations worth $100 million Mayor Cantrell allegedly “blew up,” and who ultimately will be paying for them.
The View From Below
While Perry was going berserk at the mayor’s chief-of-staff, things weren’t looking too bright for hospitality industry veterans like Ernest Hawkins either. Like Perry, Hawkins plays an integral role in operating the city’s tourism engine. Until the mandatory stay-at-home order was issued, Hawkins was working on his fourth consecutive decade at the Hilton New Orleans Riverside as a window washer in the housekeeping department. Now he is on furlough from a job he loved and relied on to feed his family and pay his bills. “We was laid off and given no accommodations,” he tells me, “except for two food drives with the food they had left in the coolers. They didn’t accommodate us financially, just sent us letters that we were on furlough and that was it. Last month I had to pay $600 to pay my health insurance. I have preexisting conditions.” Unlike Perry, however, Hawkins has no direct line to the mayor’s office through which he could air his grievances.
What Hawkins does have is a union. UNITE HERE Local 23 hit the ground running immediately after post-pandemic mass layoffs left the majority of its members without work, organizing to get information and resources to those in need. Hawkins notes the stark relief between the response of his employers and the response from his union. “The union is providing for us,” he says. “We are all working together now, because the Convention Center [Exhibition Hall Authority] has $200 million, and we are asking them to take care of their employees.”
Soon after the shutdown, UNITE HERE and the Workplace Justice Project at Loyola Law Clinic wrote an open letter to the Exhibition Hall Authority and New Orleans & Company, asking them to release $100 million of their reserve funds to keep hospitality workers fed and safe throughout the crisis. The letter points out that these two groups had not joined the many organizations mobilizing to provide for the city’s jobless and vulnerable service workers. “Notably absent,” it says, “are the two anchor institutions of New Orleans’ tourism industry, the Exhibition Hall Authority and New Orleans & Company.” In the view of UNITE HERE and the Workplace Justice Project, along with 19 other signatories that together form the Coalition to Create a Fair Fund for Hospitality Workers (a.k.a. the GNO Fair Hospitality Fund), the $100 million proposed relief fund wouldn’t be charity. “When public money is used it should benefit the public. Knowing that the Convention Center is sitting on this pile of money and workers needed relief, it seemed obvious,” says Erika Zucker, policy advocate with the Workplace Justice Project. The reserve fund was collected by the Convention Center from local food and beverage and hotel taxes generated by the New Orleans hospitality industry. “It’s been described as a rainy day fund,” says Zucker. “Our industry has completely shut down. This is that rainy day.”
When furloughed window washer Ernest Hawkins talks about the future, he admits he is afraid—and not just for himself. “I have two kids, a house, a car note, bills to pay. Unemployment don’t last forever, and these companies never once thought about employees. I’m concerned not only for me but for my fellow employees. Some people have to pay more than I do for health insurance because they got their whole family on their insurance.” The fear rising from this vast sector of the city is palpable, at least to those who are among or willing to see and hear those who have been affected. But if New Orleans & Company CEO Stephen Perry has strong words for the mayor, he is conspicuously silent on the concerns of Hawkins and the thousands like him. He and his colleagues—the elite sector of the tourism machine—don’t acknowledge the hunger, the anxiety, the sickness and even the death of their very own employees.
On April 14, two weeks after the hospitality workers coalition published their open letter, an article by Michael Isaac Stein in The Lens reported that the Convention Center planned to move forward with development deals, long in the works, with a combined worth of over $1 billion. “Despite the known and unknown economic impacts of the coronavirus crisis,” Stein writes, “the Convention Center board’s finance committee advanced a $5.4 million contract to hire an executive architect for the center’s five-year, $557 million capital plan.” Convention Center general manager Michael Sawaya reportedly said during a meeting that “one of the most important things we can do today and for the future is improve our facilities and make sure they are more competitive going forward.” In the post COVID-19 reality, large public meetings have been indefinitely put on hold. Most people aren’t traveling anywhere for the foreseeable future. Who exactly, according to Sawaya, is competing, and for what?
This bold move on the Convention Center’s part was met with outrage from the public and disbelief from city officials. Councilmember Kristin Gisleson Palmer pointed out in an interview with Stein that even before COVID-19 struck, the Convention Center’s plans were essentially to create a curated tourism destination centering around itself that would not generate new revenue, so much as divert existing tourist revenue away from smaller businesses throughout the city. In other words, after an unprecedented $800 million in public contributions over 40 years, the public would see almost no economic benefit. Others, like Councilmember Jay Banks, have pointed out that none of us know when, if ever, New Orleans will see the kind of tourism necessary to fill the city’s existing hotels and entertainment venues, let alone build new ones. In response to the outcry, the Convention Center reluctantly agreed to pause the project, and donated $1 million to worker relief funds. According to the hospitality workers coalition’s calculations, that donation comes out to about $10 for every service industry worker in New Orleans.
Get Out Of Paying Rent With This One Crazy Trick!
“I am enraged,” Andreanecia Morris tells me when I ask her how she thinks the situation is being handled. Morris is executive director for HousingNOLA, one of the member organizations of the GNO Fair Hospitality Fund. After years in the trenches of the New Orleans housing crisis, she has seen her fair share of ugliness from people in power. But if you ask her, in the last couple months the city has taken it to a whole new level. “This is about to get worse from a housing perspective. We’ve sent letters to the governor, to the mayor, public officials—and it’s all fallen on deaf ears. Trying isn’t acceptable given the available resources.” Morris watched workers in the tourism sector struggle mightily to pay their rent even when they still had jobs. And now? “People aren’t sure they can keep their homes,” she says. “The unkept promises over the years have told us that our leaders were indifferent on this issue, but I’m shocked at how deep the barriers run. How can you order people to shelter-at-home and take no steps to guarantee that is possible for everyone?” Morris signed on with the coalition because she believes the existing power is in desperate need of a reality check. “They think we’re going to go back to the same broken system. But the pre-COVID model just isn’t going to work.”
Though this crisis has revealed the extent of the Convention Center’s self-interest, it is far from being a new problem. According to Morris, thanks to special interest development groups like New Orleans & Company, the “golden goose” of New Orleans tourism has completely run amok. “If you have a golden goose you don’t let it take charge,” she declares to me over the phone. “In New Orleans, the so-called golden goose of tourism has moved into the master bedroom, barks out orders, and doesn’t share its golden eggs.”
The metaphor is as accurate as it is colorful, and the dollar value of these eggs makes the $100 million that the coalition is asking for seem quite reasonable in perspective. In 2019, this tourism special interest bloc received over $150 million annually, flying past the RTA’s $73 million, to become the third largest recipient of public funds—with public safety (a category that includes policing and surveillance) first and public education second. Besides the hotel tax, these special interest tourism organizations receive a portion of the food and beverage tax, a convention and exposition tax, and a tax on all sightseeing tours. Consider also that under the City’s costly and unusual non-profit tax exemption, these tourism entities are not required to pay taxes on much of their property.
All of that public funding may seem like a hefty slice of the pie, but the tourism elites have a habit of finding ways to make it even bigger. Sometimes they do so by raiding the resources of other publicly-funded entities. Just last year, the Regional Transit Authority had to sue the Exhibition Hall Authority to get them to stop taking money that was earmarked for public transportation. The RTA successfully argued before a judge that the RTA should no longer be beholden to a 20 year long “agreement” in which the Convention Center took half of the transit authority’s portion of the hotel tax, amounting to a $31 million pot of money and $7 million in recurring annual tax revenue.
Sometimes the tourism elite simply refuses to pay its rent. In 2018, Mayor Cantrell demanded nearly $3.6 million in unpaid back rent, plus more than $488,000 in yearly lease payments for Champions Square, an outdoor event space near the Superdome that includes part of LaSalle Street. As City Councilmember Jay Banks told WWL-TV, “It used to be a street and it’s city property and the state law says that the city should receive fair compensation.” Without paying for the city-owned portion of the property, the LSED is essentially executing a land grab.
Hoarding public funds is another strategy in their unending quest to part New Orleanians from their hard-earned cash. The current $200 million reserve fund—a portion of which the hospitality workers coalition is hoping to have redistributed to workers in need—is public money that the Convention Center received for projects they never completed. In 2002 the state Legislature approved a 1% hotel tax and a 0.25% citywide food and beverage tax to fund a plan to expand the Convention Center complex. Though they never followed through with this plan, the Convention Center continued to receive roughly $15 million a year from these additional taxes. That surplus—coming to over $200 million—is over five times their annual operating budget.
Part of the problem is that though technically each publicly-funded tourism organization is a separate entity, the same group of people has been hopping from board to board for decades, like a game of musical chairs. Before Melvin Rodrigue stepped down as the chair of the Exhibition Hall Authority in early April, he helmed the Exhibition Hall Authority while also sitting on the board of New Orleans & Company. Having seats on both boards is far from unusual. Steve Caputo (Hotel Monteleone, Greater New Orleans Hotel & Lodging Association) is the treasurer of the Exhibition Hall Authority and was once chair of New Orleans & Company. Now he is an ex-officio member. Al Groos (Royal Sonesta) is Vice President of the Exhibition Hall Authority and a sitting member of the New Orleans & Company Board. Dottie Belletto (New Orleans Convention Company, Inc., or NOCCI), Ryan Berni, Ronald Guidry, and Robert “Tiger” Hammond are all members of both boards. Ron Forman of the Audubon Nature Institute is now just on the board of New Orleans & Company, but he used to be its chairman. More recently he was chairman of the LSED.
Forman’s primary work is with the Audubon Institute, which is more or less synonymous with his name. He first earned a reputation for elevating a formerly squalid Audubon Zoo, or as the Audubon Institute website puts it, turning an “animal ghetto” into an “Urban Eden.” The Audubon Commission, the Institute’s governing body, receives $11 million in tax funds a year. In addition to the zoo, the Audubon Institute runs (among others) Audubon Park, Woldenberg Riverfront Park, the Insectarium, and the Aquarium. Like New Orleans & Company CEO Stephen Perry, Forman’s annual salary (which as of 2014 was over $500,000) is paid for by our taxes. He is the third highest paid non-profit employee in the city.
With a small coterie of the tourism industry’s elite filling these board positions, these three organizations can support each other’s interests in a unified power bloc. Not only does this serve the organizations themselves, but also puts board members in a key position to protect the interests of the companies they work for. For example, the proposed $800 million hotel the Convention Center is still hoping to build would be an Omni Hotel. David Bilbe is the chair-elect of the New Orleans & Company board, and so his company stands to benefit whether or not tax payers see a return on their investment.
Laissez Les Têtes Rouler
Unlawful use of public funds may be the textbook definition of corruption, but proving criminal mismanagement in New Orleans would be very difficult. Many of the tourism special interest board members are also high profile lawyers; to catch one of these elite public figures in the act of nepotism, graft, subterfuge, or any other breach of Louisiana’s governmental ethics laws requires a skilled investigator. WWL-TV’s David Hammer took years to expose Irvin Mayfield, who was astonishingly flagrant in his misuse of public funds via The New Orleans Jazz Orchestra (NOJO), like when he rang up a $18,000 bill at the New York Ritz-Carlton and billed it to the New Orleans Public Library Foundation. As was the case with NOJO, the indictment of a board member or two does not mean the others will be implicated, which means the culture of the board itself is unlikely to change as a result. And powerful people are often quick to close ranks—Ron Forman was on the board of NOJO the whole time Irvin Mayfield was blatantly squandering public funds, and he went on record saying that it was “a very complicated issue… the documents say the money was spent properly.” But though Mayfield is set to face trial in July, Forman has not been implicated in any way, and remains on the NOJO board. When the Convention Center was exposed for doing business for over a decade with inmate labor contractors Prison Enterprises, board members Ronald Guidry and Robert “Tiger” Hammond—President of the Greater New Orleans AFL-CIO—claimed to have no knowledge of it.
If we expand our definition of corruption to include institutionalized exploitation of power and wealth, we don’t need to prove that the tourism elite is guilty of criminal activity to determine that they are corrupt. Their greed and bully tactics are a matter of public record. As Ethan Ellestad, Executive Director of the Music and Culture Coalition of New Orleans (MACCNO) said in an interview, “Stephen Perry doesn’t know what’s best for the culture of New Orleans; Stephen Perry knows what makes him the most money.” Though they may wax poetic about the culture of New Orleans being its “greatest strength,” tourism in New Orleans is an extractive industry; tourism elites have accumulated tremendous wealth by selling something to outsiders that they personally keep at arm’s length. Now, as the people who make up the culture of New Orleans face sickness, poverty, and desperation, the only thing visible to industry leaders is their own loss of income. As Ellestad puts it: “the tourism industry has utterly failed to take care of any part of the workforce, whether they don’t know how or don’t care.”
If you live in this city and you don’t know these people individually, it is because they have designed it that way. If you don’t cater their parties or drive their limousines, you may never even see them. But St. Charles Avenue is there for anyone to see. Its wealth glitters beneath the oak trees that a century ago were second only to the magnificent oaks of Claiborne Avenue. Today Claiborne is a block of concrete, and St. Charles’ oak trees are second to none. The well-maintained street is lined with pristine mansions that grow more opulent as you travel further uptown. The lawns get larger and the grounds more well-appointed, until you reach the gates of Audubon Place, whose mansions are guarded by private security. It is St. Charles economics that the Convention Center is practicing when it takes money away from our public transportation infrastructure. St. Charles economists have defined their priorities: in the midst of a pandemic they would rather build an empty hotel than spend a dime on the health and safety of the workers who facilitate their lifestyle. St. Charles economics is why so little of the cultural tourism money reaches the actual people who create the culture.
Even if the halt of our tourism economy is only temporary, the resulting loss of tax revenue means the city of New Orleans will be coming up dangerously short at the end of the fiscal year. Allowing the tourism elite to remain in power could have severe consequences for the rest of us; the way we divide our public resources requires immediate change. You can refer to that work as tax reform, redistributing the wealth, or, if you prefer, a citywide treasure hunt for public money. But whatever you call it, participation in this process is mandatory. It’s a good sign for those who are most in need when a man like Stephen Perry has a bad day on the front page of NOLA.com. It means that the St. Charles economists are scared, and losing footing in a world they increasingly struggle to understand. It is our job to decide what will take their place.
illustrations by Kallie Tiffau