The New Orleans City Council opened a formal investigation into Mayor LaToya Cantrell’s “smart cities” project on Thursday following the revelation that the official in charge of it — Director of the Mayor’s Office of Utilities Jonathan Rhodes — has been running two businesses that claim to develop similar “smart cities” projects across the country.
“It is a very unfortunate day we are in, that we even have to precede in this manner,” City Council President Helena Moreno said. “This resolution now opens an official council investigation into whether anyone improperly financially benefited, or planned on financially benefitting, from companies wanting to do business with the city.”
The Times-Picayune reported Wednesday that one business founded by Rhodes and another city employee, Christopher Wolff, has also worked as a “pro bono” consultant for wireless giant Qualcomm, one of the businesses that was selected by the city for the “smart cities” project. The city selection committee included Wolff, and the public bid process was overseen by Rhodes’ office.
Cantrell’s office did not immediately respond to a request for comment on the council vote.
“This is really bad,” Councilman JP Morrell told The Lens in an interview Wednesday. “I was completely floored by the fact that we had a full-time employee that was maintaining a side gig directly related to the work he’s doing.”
A subpoena from the council issued last week directs Rhodes to answer questions under oath at the April 27 council meeting. Moreno said on Thursday that the council would formally invite the city’s Office of Inspector General to attend, and would be be forwarding all the evidence the council has compiled so far.
The council also approved a resolution on Thursday to stop the Cantrell administration from moving forward with the project without a council vote. Both measures were approved in 5-0 votes. Council members Oliver Thomas and Freddie King were absent.
“This particular contract should not be executed, and we need to go back to the drawing board,” Moreno told The Lens on Wednesday. “Because this needs to be re-bid. I think all trust has been lost with this project. I think there are way too many red flags. And I don’t think it’s in the best interest of the people of this city.”
Even before they learned about Rhodes’ businesses, Morrell and Moreno were already skeptical of the multimillion-dollar project, which was originally pitched as a way to create a private, but “city-directed” internet provider to compete with Cox Communications and AT&T. It also would include the installation of thousands of “smart” city devices, like street lights and traffic signals, that could collect and transmit data to improve city services and raise revenue through advertisements and selling data.
Following a series of articles from The Lens on the plan’s ambiguity and contract-fixing allegations involving an outside consultant, Moreno and Morrell sent a subpoena to Rhodes last week, demanding a wide array of documents related to the project.
The initial contract-fixing allegations originated with Cox Communications, a rival bidder on the project, which accused the city of conspiring with the “pro bono” consultant to rig the public bid process in favor of the winning respondent — Smart+Connected NOLA, a business consortium led by Qualcomm and JLC Infrastructure, an investment firm cofounded by NBA legend Earvin “Magic” Johnson.
The Chicago-based consultancy, Ignite Cities, helped the city develop and write the public bid documents, called a request for proposals, or RFP. It appears the firm was involved in drafting the original scope of services for the project and got an advanced look at the final version of the RFP before it was made public.
Ignite Cities isn’t listed as an official member of Smart+Connected NOLA, but it has had a partnership since 2020 with Qualcomm and JLC to develop the exact type of project they’re proposing in New Orleans. And a report from Illinois TV station WCIA earlier this month showed that Ignite’s managing director, Reyahd Kazmi, is a lobbyist for IKE Smart City, a kiosk manufacturer and official member of Smart+Connected NOLA.
The Cantrell administration handed over hundreds of pages of documents on Monday in response to the subpoena, which showed how Ignite Cities, rather than acting as a neutral consultant writing a public bid, was actively advocating for and connecting its partners to city officials, especially Rhodes.
“It’s so clear they knew Burciaga was really a representative for Qualcomm and JLC, and then brought those parties to the table,” Moreno told The Lens. “It was shocking to see just the closeness and the relationship between our IT folks, the guys with Ignite and how they became close with the folks from Qualcomm and JLC.”
In September 2020, months before the RFP was released in April 2021, Rhodes emailed Burciaga to set up a meeting about “keeping momentum going on public wifi with Qualcomm and partners.” Rhodes, Burciaga and representatives from JLC and Qualcomm began meeting on what appears to be a weekly basis for the rest of 2020.
In January 2021, Rhodes arranged for Burciaga to give a presentation on the project to Cantrell. Emails indicate that JLC and Qualcomm participated in the meeting, and that JLC’s logo was included in the presentation. Two days after the presentation, Burciaga told Rhodes that ”the team is working on a draft scope to present to you. Once it’s complete, we will review and adjust it as a team.”
Later in the month, Rhodes asked Burciaga to review a proposed scope of services for the RFP. And in March, Rhodes sent Burciaga a final version of the draft before it was officially released to the public weeks later.
Five firms submitted responsive bids. And Smart+Connected NOLA was selected as the winning bidder in June. Ignite has continued to participate in project meetings during the year since the project was awarded.
Cox protested the process, citing Ignite’s apparent conflicts, but the city dismissed the complaint, saying that because the consulting firm was working for the city for free and was not listed as a Smart+Connected NOLA member in the bid, it did not have a financial stake.
The city never provided an explanation for why Ignite, a for-profit consultant firm, was doing so much work with no financial incentive. Even after Kazmi’s interest as a lobbyist for a Smart+Connected NOLA partner was revealed, a Cantrell spokesman maintained that “to the City’s knowledge, Ignite has no financial stake in the RFP.”
Burciaga, Rhodes and Wolff didn’t respond to requests for comment. The Lens left a message for Kazmi, and in response received a call from Tilden Katz, vice president of strategic communications and crisis communications at the Chicago firm Smithbucklin, who said he was a “volunteer spokesperson” for Kazmi.
He told The Lens that Kazmi is a consultant hired by Ignite Cities, rather than an employee. And although Kazmi is registered in Illinois as a lobbyist for Orange Barrel Media, IKE Smart City’s formal business name, he claimed that Kazmi “has never represented or received any compensation from IKE Smart City.” He also denied that Kazmi had any role in writing RFPs for clients.
The Rhodes connections
The web of connections has only become more tangled with the revelations about Rhodes, who has been central in making New Orleans’ smart cities project happen, along with Ignite Cities founder George Burciaga.
“Originally, we were mostly talking about Ignite Cities and whether they had an ethical obligation to disclose a conflict,” Morrell said Wednesday. “This has expanded beyond that. Jonathan Rhodes absolutely had an on-its-face ethical requirement to disclose that he is in this field.”
In addition to his job with the city, Rhodes has his own law firm that, according to its website, works specifically on smart cities projects and “helps clients navigate complex public procurement processes to successfully bid on and procure technology services.”
And in 2020, while he was already working for the city, Rhodes and Wolff co-founded a company called Verge Internet. Wolff is a network technology specialist with the city, and the subpoenaed emails show he was frequently involved in the project and sat on the RFP selection committee that chose Smart+Connected NOLA.
According to Verge Internet’s website, the company is trying to bring low cost internet to cities built on 5G cellular networks, rather than cable or fiber-optic internet service that’s typically offered by large, existing providers like Cox and AT&T. It’s the exact technology that’s pitched in the Smart+Connected NOLA plan.
According to Rhodes’ LinkedIn profile: “At VERGE, Jonathan designs business cases for Smart City initiatives, including design for the City of Los Angeles WiFi project, City of Miami WiFi project, and broadband for public housing in Harlem, NY.”
The mention of Miami raised a red flag for Moreno and Morrell. Both noted that Ignite Cities brought similar projects to Miami and New Orleans in 2020 — a free pilot public WiFi program provided by a company called Mesh++. The city discontinued the pilot after a month after the technology was “determined not to be an adequate solution,” according to a timeline provided by the city.
“It failed here in New Orleans, I don’t know if it failed in Miami,” Moreno said Wednesday.
Morrell said he suspects that Rhodes’ Verge Internet may have been working with Ignite on the Miami project.
“Now we’re concerned that he has a previous financial relationship with Ignite Cities now because of Miami,” he told The Lens. “The whole thing is just so bizarre. I don’t know what universe these guys ever thought this was OK.”
It’s unclear how long the Cantrell administration has been aware of Rhodes’ prior consulting work with Qualcomm, or his other side business. But the administration is aware now, and they’re defending it saying that Verge, like Ignite, was working for free.
“Rhodes often provides pro bono assistance to help communities bridge the digital divide. Verge Internet is a private entity separate from any projects at the City that promotes digital equity and engages in pro bono assistance. Verge does not have any employees, revenue or compensation.”
But similar to Ignite Cities, Verge Internet is a for-profit business. And according to a company investment pitch document obtained by The Lens, revenue is part of Verge’s plan. One slide shows a plan to spend $100 million in annual expenses for 10 years in the hopes of gaining over 1 million internet customers and achieving over $720 million in annual revenue.
Rhodes bio in the document says he “leads startups to profitability in a range of industries including telecom.”
The Lens also asked the city about two tweets sent out from Verge Internet’s Twitter account. As of early Wednesday, two out of the account’s three total tweets mentioned New Orleans, including one that claims the company is designing and developing citywide free WiFi with a map of New Orleans pointing out nine of the city’s public housing developments.
“Verge has recently tweeted to promote digital equity and building new technology, but is not ‘doing business’ in New Orleans,” Newell told The Lens.
The tweets were deleted at some point on Wednesday after The Lens inquired about them.
What’s Next
Morrell said that the revelations about Rhodes brought the council’s existing inquiry to a new level.
“We’re putting him on notice,” Morrell told The Lens on Wednesday. “This has gone from fact-finding for the sake of fact-finding, to we think there’s something wrong here and we’re investigating it.”
Along with demanding a wide range of documents, the council’s original subpoena from last week also orders Rhodes to testify at an April 27 meeting and answer questions under oath regarding the smart cities project and contract-fixing allegations. Moreno said she would “point blank ask him if they’ve financially benefited from Ignite or any of these other companies.”
Morrell said he expected to get a lot of answers during that hearing, and that the council would also be seeking to more strictly enforce the original subpoena. He said he believed the administration only handed over a portion of the documents that should have been delivered under the council’s broad directive.
“We’re seeing all of these gaping holes in the documents,” Morrell said. “It’s a total red flag that there’s a tremendous amount of information that is purposefully being withheld from us.”
Along with enforcing the original subpoena, Moreno said that opening a council investigation allowed the council to expand its subpoena. Moreno and Morrell told The Lens they would be seeking more communications from Wolff, and more information regarding a previous relationship between Ignite Cities and Verge.
Morrell said it will also be important to establish when the administration became aware of these various connections, and why they were never disclosed to the council or public.
“Now that the investigation’s expanding, now we have to figure out whether the administration knew about all these conflicts when they pushed all this stuff,” Morrell said. “We are not satisfied. There is going to be a lengthy, voluminous follow up. And it’s being elevated to a level of investigation because there is plenty to suggest that none of this is above board.”
The other resolution approved Thursday was passed with the intent of blocking what Moreno has characterized as an attempt by the Cantrell administration to “circumvent” the council’s authority.
The smart cities project as pitched would be achieved through a multiyear agreement, which requires council approval. But recently, the Cantrell administration decided to move forward with a one-year pilot agreement with Smart+Connected NOLA, which does not require council approval, in order to jump start the smart cities project as it continues to negotiate and sell a long-term contract.
The resolution invokes the council’s authority as the city’s utility regulator to say that the smart cities contract has to be a multiyear agreement, meaning it has to get council approval first.
Both council members noted that although the Rhodes connections and the city’s attempt to fast track the project had taken priority, there was a long list of questions and dubious connections they needed to clarify based on the first set of subpoenaed records they received on Monday.
“My brain’s kind of exploding today,” Morrell said. “Every 15 minutes I have someone coming in and saying, ‘Look what else we found!’”
The new documents have revealed that the main portion of the one-year proposal the city released to the public — a $3 million upfront investment to provide WiFi at 10 NORD recreation centers at $300,000 per year — is actually being done through a contract signed independent of the smart cities RFP with a company called Frontera.
A city database shows that the city has signed a contract with Frontera, with an effective date of April 15. The contract itself isn’t available on the city’s website, and the city’s Procurement Office didn’t respond to requests for it. The Lens was also unable to find a bid announcement for the project.
“There will be questions about this contract with Frontera, which no one knew about and was signed after we sent the subpoena out,” Morrell said.
Moreno also obtained an unsigned, draft memorandum of understanding, or MOU, between the city and Ignite Cities from 2019 that was never signed, raising questions over how long Ignite Cities has been advising the city and why the city never moved forward with signing the agreement.
“It just keeps changing,” Moreno said, “Every day that goes by, more and more comes to my attention.”
This story has been updated to include comments and the vote results from Thursday’s council meeting.