Facing a collapsed tourism industry due to the coronavirus pandemic, two publicly-funded tourism agencies in New Orleans have cut funding for supplemental security and infrastructure improvements in the French Quarter. And one of them is trying to take back millions of unspent funds it’s contributed in years past.

The agencies in question are the Ernest N. Morial New Orleans Convention Center — a public body — and New Orleans and Company, a private nonprofit group that serves as the marketing agency for the city’s tourism industry. Both organizations had signed agreements with the city that will expire in a few months.

New Orleans and Company, however, has already cancelled one of its contracts with the city. 

With the end of the agreements, the city stands to lose roughly $5.7 million that it had in 2019 for French Quarter security and improvements. The biggest chunk of that money, $2.5 million per year, has gone to pay for Louisiana State Police patrols in the French Quarter. Another $1.2 million per year went to the French Quarter Task Force — an initiative originally created by entrepreneur Sidney Torres that pays off-duty NOPD officers to patrol the quarter in blue-light Smart Cars. 

The remainder of the payments — roughly $2 million last year — has gone to the French Quarter Improvement Fund, a special fund created in 2015 that has paid for a wide variety of projects including drainage improvements, a sobering center, sidewalk improvements, streetlights and extra NOPD officers to enforce code violations. As of late last year, the city had more than $3 million sitting in that fund unspent. New Orleans and Company hopes to get that money back, but the city has not complied with its requests thus far.

City officials did not respond to requests for comment on this story. But in a public meeting in June, one city employee said that the tourism agency has not lived up to its obligations and, in fact, it owes the city $2 million.

Structure of the agreements

Under one of the agreements, the Convention Center has paid the city $1 million per year for State Police patrols in and around the French Quarter. Over five years, the Convention Center has contributed $5 million. New Orleans and Company has contributed $1 million a year to the State Police patrols under the same agreement. That agreement expires at the end of this year.

“The [Convention Center] has fulfilled its obligations related to the French Quarter supplemental security,” said a statement from Tim Hemphill, Director of Sales and Marketing with the Convention Center. 

New Orleans and Company has a separate agreement that has sent $1.2 million per year to the French Quarter Task Force, $500,000 a year to State Police patrols and somewhere between $1.5 million and $2 million to the French Quarter Improvement Fund per year.

That agreement also expires at the end of 2020. But instead of simply letting the contract expire, New Orleans and Company cancelled the agreement in June. 

“Given the nature of the global pandemic and the impact it has had on the hospitality economy, New Orleans and Company was placed in the difficult position of notifying the City that it would no longer be possible to make the payments associated with supporting these efforts as occupancy rates plummeted to historic lows,” said an emailed statement from Walt Leger, senior vice president of strategic affairs at New Orleans and Company.

The funds that New Orleans and Company have provided through its 2017 agreement with the city all comes from a hotel “self-assessment” — a 1.75 percent fee on hotel room bookings that hotels voted to levy in 2014, after the State Legislature authorized the charge the previous year. 

Leger said that under the terms of its agreement with the city, cancelling the contract should allow the organization to reclaim all unspent funds it’s deposited into the French Quarter Improvement Fund. That appears to be true, according to a 2017 agreement. 

But it’s not clear whether the city will actually return those funds. In a recent meeting of the French Quarter Management District — a state created body that administers the French Quarter Task Force program — board members said the city had yet to return leftover funds. Meeting notes from a July FQMD meeting say that board member Jeremy DeBlieux “noted that the City has refused to comply with the CEA with New Orleans & Company in returning funds.”

“We are engaged in an ongoing conversation with the City of New Orleans to ensure that dollars in the French Quarter Improvement Fund are efficiently and effectively used to enhance the economy recovery of our city, region and state,” the statement from Leger said.

It’s unclear exactly how much money is left in that account. In November 2019, city analyst Eric Smith told the FQMD board that the fund balance was $3.3 million, according to meeting notes. 

“The concern was always that the city wouldn’t spend the money,” FQMD Executive Director Karley Frankic said. “Well, the city didn’t spend the money. And so COVID happened, and there’s no hotel revenue because there’s no hotel guests. The CEA was cancelled because New Orleans and Company couldn’t keep contributing to the fund, and they said ‘OK, give us the money back that you haven’t spent.’ I can’t tell you what the status of that is.”

While New Orleans and Company believes that the money should be returned, the city has recently argued that New Orleans and Company actually owes additional money to the improvement fund. At a June FQMD board meeting, Smith stated that “the City is still missing the New Orleans & Co. 2019 remittances that came to about $2,000,000.00 and they have been attempting to collect these since February,” according to meeting notes.

“The City will continue in their efforts to recover the 2019 missing remittances,” the meeting notes said. 

The city wants to use nearly $600,000 from the fund to help jumpstart its new Ground Patrol Division within the city’s Department of Homeland Security and Emergency Preparedness. As The Lens reported last week, the city wants the Grounds Patrol to take the place of the State Police and French Quarter Task Force Patrols. 

According to the June meeting notes, the city also wants to use the funds to pay for street light installations, graffiti removal and drainage and road improvements on Conti and Decatur streets.