The New Orleans City Council gave LaToya Cantrell initial approval to seek up to $100 million in loans at its Thursday virtual meeting. The Cantrell administration argued that the loans would be a short-term tool of last resort to help cover a hole the coronavirus is expected to punch in the city’s budget. The administration predicts that gap will be anywhere from $130 million to $170 million.
Also on Thursday, the council approved a rebrand of the New Orleans Tourism and Marketing Corporation, which included a new name for the public body: the New Orleans Tourism and Cultural Fund. The mission of the new fund is still largely undefined, but broadly, the organization will change from a marketing agency for the city’s tourism industry to a support fund for “culture bearers” and cultural institutions.
But the two items on Thursday’s agenda that received the most public attention had no legal weight. Both were non-binding resolutions. The first called on the city’s courts to suspend evictions until August 24. The second established the city’s formal opposition to the Ernest N. Morial Convention Center’s proposed hotel and other developments, and calling on the center to give more of its reserves to help struggling hospitality workers during the coronavirus crisis.
While the City Council doesn’t have the authority to force either of those decisions, the resolutions together received nearly 100 public comments. And council members argued the resolutions were important to make clear to the courts and Convention Center where the council stood.
“We understand this is a non-binding resolution,” Councilwoman Helena Moreno said while considering the Convention Center resolution. “At the end of the day, while we are not the governing authority of the Convention Center, we’d like more information coming from the Convention Center. We’d like more transparency. We’d like them to come to us in a collaborative way.”
$100 million borrowing authority
The initial approval for Cantrell to borrow up to $100 million won’t have a huge immediate impact either. The resolution gave the administration the ability to apply with the state bond commission, engage financial institutions and hire bond counsel and advisors. Before the city actually takes out a loan, the administration will have to come back to the City Council with much more detailed and specific information.
The city’s Chief Administrative Officer Gilbert Montaño and Chief Financial Officer Norman White were at the virtual meeting to answer questions, but the discussion was limited. That’s because the council’s budget committee meeting on Tuesday was largely dedicated to presentations from Montaño and White on the city’s financial situation and need for a line of credit.
City departments are working on plans to cut their budgets in response to a projected shortfall of between $130 million and $170 million. Those have not yet been made public. The city has also implemented a hiring freeze and plans to cut overtime. But it’s as yet unclear whether officials can cut their way to a balanced year-end budget and still maintain vital services.
The $100 million line of credit, Montaño explained, was about having enough cash on hand to meet existing financial obligations the city cannot cut — such as unpaid but completed contracts — and maintaining vital government services like EMS and the Fire Department.
“This is only a tool in the toolbox,” Montaño said on Thursday. “We hope that this becomes the last resort and that in some way our revenues increase or we are able to squeeze, in quicker time, some of the expenditures. Again, this is important to protect vital government services.”
The city’s projected budget hole is mostly the result of lost sales taxes due to business closures and a huge hit to tourism from the COVID-19 crisis. Right now, the city is projecting that it will collect about 58 percent of what it planned to collect in sales tax revenue in 2020. But that number is very much a moving target. It’s still unclear when New Orleans businesses will be able to open, how quickly tourists will start traveling again and whether there will be resurgences of the virus that force the city and state to reinstate restrictions.
One major questions is whether federal funding will be available to fill part the gap. Currently, federal coronavirus aid is available for state and some local governments, but only for expenditures directly related to the virus, not revenue losses. Cantrell and Gov. John Bel Edwards have repeatedly called on Congress to make funding available to cover lost taxes, a much more serious problem for the city than the relatively small amount of money it has spent on dealing with the crisis.
In the meantime, however, the city is planning for the worst and is making projections with the assumption that no federal aid is provided.
Council opposes the Convention Center hotel
The City Council unanimously passed a resolution on Thursday that formally opposed the Convention Center’s planned hotel development and urged the center’s governing board — called the Exhibition Hall Authority — to provide more financial assistance to hospitality workers struggling through the coronavirus crisis.
“Rather than focusing on costly and unnecessary long-term developments, the Authority should instead use should instead use any available funds to create and maintain financial assistance options for New Orleanians in the hospitality and tourism industries — whether employees, gig workers, or independent contractors — whose income has been severely impacted by the COVID-19 crisis,” the resolution says.
The resolution comes in the context of weeks of tensions between the Convention Center and a broad coalition of local advocacy groups and a major national union called the Coalition to Create a Fair Fund for Hospitality Workers.
In March, the group came out with two central demands. First, the coalition wants the Convention Center to pay its contract workers through the end of the coronavirus crisis along with its direct employees. Second, it wants the center to release $100 million of its reserves to issue support grants to New Orleans hospitality workers, regardless of whether their work involves the convention center or not.
At its last meeting in April, the Convention Center board decided to put two of its larger developments, including the hotel, on hold. And it donated $1 million to two hospitality worker relief funds. That was insufficient in the eyes of the coalition then, and it was insufficient in the eyes of Councilwoman Kristin Palmer on Thursday.
“I also recognize the donation of $1 million, but I believe they can do more,” Palmer said. “Now is not the time for the convention center to focus wholly on itself and its own developments.”
The resolution says that if the center does want to go ahead with the proposed developments, it should commission a new feasibility study that takes into account the economic impacts of the coronavirus crisis.
“We have to be cognizant we have a new landscape here,” Palmer said. “We really have to ensure that we’re not creating something that could be in competition with our businesses that are going to be struggling for years.”
As a sister project to the hotel development, the Convention Center is also pursuing an adjacent “entertainment district” that would surround the hotel with new restaurants, bars, venues and other attractions.
The resolution also calls on Governor John Bel Edwards to use his authority to appoint a board member from “the Convention Center Workforce, to ensure that workers’ concerns are central to the Authority’s decision making.”
The council’s second major non-binding resolution of the day called on New Orleans courts to suspend all evictions until August 24 in light of the coronavirus and subsequent economic restrictions. Currently, evictions are only suspended until May 18.
Housing advocates have argued that evictions should be suspended citywide until August 24 due to federal restrictions on evictions passed through the CARES Act. The Act dictates that property owners with federally backed loans, or who participate in a range of federal programs, cannot send out eviction notices to tenants until July 25.
Advocates argued in a letter to the Council last month that the July 25 date would effectively prohibit evictions on those properties until August 24, since the CARES Act also forces those property owners to give 30 days notice for an eviction.
Not only should every New Orleans renter should have that security, housing advocates argued, but it would be impractical for the courts to separate out protected renters from unprotected renters. Renters won’t always know whether their landlords are covered under the CARES Act, the advocates said, putting the impetus on the courts themselves to make sure they aren’t processing evictions banned by federal law.
The resolution passed unanimously.
A new fund for “culture bearers”
Last year, Cantrell finalized what she called a “fair share” deal after negotiating for months with Gov. John Bel Edwards and tourism industry lobbyists. Her goal was to direct more tourism tax revenue towards infrastructure projects in New Orleans.
Part of the deal was an agreement to merge the city’s tourism marketing agencies: the New Orleans Tourism and Marketing Corporation, or NOTMC, and New Orleans and Co., formerly known as the Convention and Visitors Bureau.
The city has considered a merger of the two groups for years. But plans under former-Mayor Mitch Landrieu fell apart because the Landrieu administration wanted the new joint operation to be run under NOTMC, a public body, while the tourism industry wanted to consolidate under the Convention and Visitors Bureau, a private non-profit.
As part of the fair share deal, New Orleans and Co. is absorbing the majority of NOTMC’s funding and mission. NOTMC, however, is left with a small remaining budget of roughly $4 million. In 2019, former NOTMC CEO Mark Romig told the council the money could be used “for infrastructure or other purposes of the city.”
Instead, that money is being used to fund a rebranded NOTMC, called the New Orleans Tourism and Cultural Fund. The NOTMC board approved these changes in February. On Thursday, the council ratified those changes in an ordinance.
The new fund’s new mission, according to bylaws approved by the NOTMC board, is “to support the cultural economy and culture-bearers of the City of New Orleans through programs and projects, and to advance, promote and maintain tourism that is equitable and sustainable.”
The mission is still vague, but the council ordinance requires the board to submit a plan within 90 days that lays out the specific definition of “culture bearers” and describes how their funding will be used to help them.