A 2020 decision by New Orleans Mayor LaToya Cantrell to permanently extend a 100-year-old city land trust — six years after it was supposed to terminate — was made in secret, in violation of city and state law and “with no discernible public purpose or benefit,” a lawyer for the New Orleans City Council argued in a recent court filing.
Early this month, the council announced that it would seek to join an ongoing lawsuit against the city over the Edward Wisner Donation, a 100-year land trust created in 1914 by philanthropist Edward Wisner. The land controlled by the trust includes tens of thousands of acres in Lafourche Parish, including valuable leased parcels on which Port Fourchon was built. In recent years, it has generated between $3 million and $9 million annually in revenues. About 40 percent of that money now goes to a group of private individuals, including Wisner’s descendants and the descendants of a group of attorneys who worked for Wisner’s widow, Mary Wisner. The rest has been split between the city, Tulane University, the Salvation Army and LSU Health Sciences Center, the successor to original beneficiary Charity Hospital.
The trust was supposed to expire in 2014, its 100th anniversary. Since the city is the trustee and the entity that is named as the owner of the land in the original trust agreement, many experts have argued that the earnings it generates should have gone to the city alone. But after the termination date, former Mayor Mitch Landrieu, and later Cantrell, repeatedly signed short-term trust extensions, maintaining the split.
Then in 2020, Cantrell quietly authorized a perpetual extension.
That agreement has already been challenged in court, as part of a lawsuit over disputed legal fees filed last year by a group of law firms that previously represented the Wisner Donation. In January, Cantrell filed a petition to intervene as a named defendant in that suit, asking a judge to dismiss the firms’ claims.
This week, Cantrell moved to withdraw her petition to intervene, which will leave the Wisner Donation as the sole defendant. But in early February, the administration’s petition prompted council members to authorize joining the suit themselves.
On Feb. 3, the council ordered its attorney to file its own petition to intervene as plaintiffs, seeking to invalidate the 2020 extension.
“To simply give this money away, just because, makes absolutely no sense,” Councilman J.P. Morrell said at the Feb. 3 council meeting. “There have been plenty of news articles on this issue, and I think it’s time for us to step up and say we are here to protect the resources of the citizens of New Orleans.”
Potential effects of invalidating 2020 agreement
The Council filed the petition on Feb. 8, arguing that Cantrell may have acted outside the scope of her authority when she signed the March 2020 agreement.
The Council says that Cantrell illegally signed the agreement without its approval despite language in city law and legal agreements made decades ago with other trust beneficiaries requiring the council’s sign-off on actions the mayor takes as trustee.
The Home Rule Charter requires that the City Council and the Department of Law must approve any modification of a trust, and the Council’s approval was not sought prior to Cantrell’s signing the agreement.
The council also argues that the agreement to extend the trust violates the Louisiana Trust Code in multiple ways. The code, they say, only allows the original creator of a trust to modify it, and only if he or she reserves the right to do so. Furthermore, it does not allow perpetual private trusts, and since the Wisner Trust has private beneficiaries, the attempt to make the trust perpetual is unlawful.
Finally, the petition argues, the Louisiana Constitution prohibits the donation of public assets “with no discernable public purpose or benefit.”
As a result, Cantrell’s agreement to extend the trust was “an illegal disposition of public property,” as it attempted to create a “new” trust to replace the terminated one, and transferring the thousands of acres owned by the city into the new trust.
According to the council’s filing, because the trust should have terminated in 2014, the city should have immediately become the full owner of the entrusted land. Cantrell’s office did not respond to repeated requests for comment on this story.
For more than a year after The Lens first reported on the March 2020 agreement, Cantrell remained largely silent on her reasoning for the extension. But Beau Tidwell, Cantrell administration spokesman, recently claimed that ending the trust agreement entirely would not work to the city’s benefit, The Times-Picayune reported early this month.
“If the council seeks to invalidate the extension, it will likely result in protracted litigation which could permanently end payments to all parties,” Tidwell said. If Cantrell hadn’t extended the trust, he said, the properties would have had to be sold, leaving the city with only a partial share of the proceeds.
But an expert on trust law who spoke to The Lens disagreed that the end of the trust means the property has to be sold and divided.
“It is hardly certain that invalidating the extension agreement would result in the Wisner property having to be sold, thus resulting in a permanent end to payments to the City,” Monica Hof Wallace, a Loyola Law professor who specializes in trusts, told The Lens in an email. Additionally, it does not seem to be the case that the oil and gas leases on the Wisner land would be affected if the trust were to terminate, she added.
There are several ways that the court could decide to divide up ownership interests in the Wisner property, if the City Council succeeds in its attempt to invalidate the trust extension agreement, thus allowing the trust to terminate. The sale of the property would not necessarily be a requirement.
“Based on my review of the original trust documents and extension agreement,” Wallace said, ”it is equally plausible that the City could be placed into possession of the corpus of the Wisner trust, which is what Mr. Wisner intended, or, given [a 1929 settlement agreement that first gave the Wisner heirs a cut of revenues from the land], the heirs may have rights along with the City.”
Additionally, if the Council does succeed in its attempt to invalidate the trust extension agreement, it would not likely affect the revenue the city receives from the oil and gas leases on the property.
“If the trust ended, and the City of New Orleans became sole owner of land that was in trust, the City probably would be entitled to all the payments due under the lease after the trust terminated,” explained Professor Keith Hall, who is the Nesser Family Chair in Energy Law at LSU Law school..
“As a general rule, the Louisiana Trust Code allows the trustee to grant oil and gas leases with terms that extend beyond the life of the trust. Assuming that neither the document that created the trust nor the oil and gas lease itself contains some unusual provision, the oil and gas lease could continue,” he continued.
Alternatively, if the court decided to give the Wisner heirs some ownership interest in the land after termination of the trust, it would not prevent the city from continuing to receive revenue from the Wisner land and the leases upon it, Hall said.
“If the trust terminated, with the city and Wisner heirs becoming co-owners of the land, the oil and gas leases probably would continue, with the city and heirs sharing lease revenue in proportion to their ownership shares in the land,” he said.
This would not be that much of a change from the current structure, which apportions trust revenue based on the percentage interest that each beneficiary was granted.
In any case, it appears that New Orleans could continue benefiting from the land that Edward Wisner granted to it.
“I do not believe the trust extension is in accordance with Louisiana law, and it seems to me that the entire matter is worth litigating because the city could end up in a more favorable position than it is now,” Wallace said. “I’m glad the Council is taking the issue back up again – the issues are truly complex so it’s easy for people to argue one side or the other, but it doesn’t appear to me that anyone has really gotten into the weeds of this.”
This story has been updated to reflect a recent filing by the Cantrell administration requesting to withdraw its January petition to intervene in the suit.