The New Orleans City Council on Thursday voted to hire an outside investigator to aid in its ongoing probe of Mayor LaToya Cantrell’s controversial and now-abandoned “smart cities” project.
Allegations of contract-fixing and self-dealing in the project have ramped up in recent weeks, after it was revealed that two city employees — who helped plan the project and develop a bid solicitation for a contractor to build it out — were at the same time building a private business in the smart cities industry.
Their business, Cantrell administration officials recently acknowledged, once consulted for one of the partner companies in the business consortium that the city ultimately selected as a contractor. The two officials, Director of the Mayor’s Office of Utilities Jonathan Rhodes and city IT employee Christopher Wolff, had not previously disclosed the business or the consulting work to the city.
The council on Thursday also approved “procedures for investigatory hearings” to guide the rest of the process.
Councilwoman Helena Moreno said the votes were “moving the process forward” in the formal investigation the council launched last month.
The council will now begin a bid process to select an outside investigator. Whoever is selected will have 45 days to complete a written report. The report will be based on documents the council already subpoenaed from the administration, but the investigator will also be allowed to ask the council to issue more subpoenas for documents or additional public hearings.
The public hearing procedures the council approved on Thursday dictate that any witnesses called will have to answer questions under oath, and cannot refuse to answer questions unless they explicitly invoke their Fifth Amendment protections against self-incrimination.
From digital equity to witness testimony
The city announced a public bid for the smart cities project in April 2021, with big promises of expanding internet access to those who can’t afford it, while installing millions of dollars in new “smart cities” devices to improve city services and create new revenue. All of that would be “cost-neutral,” city officials said, requiring no upfront city investment and paid for over time through savings and new revenue.
But those lofty ambitions have since turned into a major city controversy.
Questions grew in November 2021, when The Lens reported on the proposal the city selected for the project, submitted by a consortium of businesses called Smart+Connected NOLA, led by wireless giant Qualcomm and JLC Infrastructure, an investment firm co-founded by NBA legend Magic Johnson.
The Lens reported on the details of that proposal, including the plan to partially fund the program by ramping up and monetizing data collection through the installation of smart cities devices that contain cameras, microphones, internet equipment and other sensors. The Lens also reported on key details that were missing from the plan, like how much it would cost, what data would be collected and whether the plan actually achieved one of its biggest promises — getting in-home internet to New Orleans households that don’t currently have it.
Two days after that story was published, Moreno publicly raised concerns about the project at a budget hearing.
In December, The Lens first reported on contract-fixing allegations lodged by a losing competitor in the smart cities public bid, Cox Communications. The company accused the city of conspiring with a “pro bono” consultant — Chicago-based Ignite Cities — to illegally steer the contract toward a predetermined company — Smart+Connected NOLA.
The protest argued that Ignite had a conflict of interest. It noted that although Ignite Cities wasn’t listed as an official member of the Smart+Connected NOLA consortium, the company had publicly announced in 2020 that it formed a business partnership with two of the companies leading the consortium — Qualcomm and JLC — to deliver the exact type of project they were pitching in New Orleans.
Cox provided evidence that Ignite Cities had helped the city for months to develop and even write the public bid documents, called requests for proposals, or RFPs. Documents showed the consultant was given early access to the final RFP weeks before it was released to the public.
The city dismissed the Cox protest, downplaying Ignite’s role in writing the RFP and arguing that it wasn’t aware of any financial interest Ignite had in the project. The city did not fully explain, and has not since, why Ignite, a for-profit business, would be doing so much work and spending money on a project it had no financial interest in.
The council’s scrutiny of the project began to rise in earnest in April, when the Cantrell administration began to publicly pressure the council into backing the project. As originally pitched, the project would require a multi-year contract, which would require approval from the City Council.
Cantrell held several “WiFi for All” events in New Orleans with Johnson, using his star power to help sell the public and council on the project.
“We could have taken our check anywhere, because a lot of cities want this,” Johnson said during a press conference the same day. “There’s no magic without the City Council.”
But council members, in particular Moreno and Councilman JP Morrell, were frustrated that the administration was publicly calling for their support, while failing to produce a draft contract or answer the council’s basic questions about the program.
The final straw was when the Cantrell administration revealed to The Lens that it decided to pursue a one-year agreement — which would not be subject to council approval — to jumpstart the project as the administration continued to negotiate and rally support for a long-term contract.
Moreno called that an attempt to “circumvent the Council.” She and Morrell last month issued a subpoena to Rhodes, the Office of Utilities director, demanding a wide array of documents and ordering him to publicly answer questions under oath at a council hearing.
In response, Rhodes produced hundreds of pages of emails and documents that illustrated 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.
Shortly after, it was revealed that Rhodes himself may have had a conflict of interest due to his outside businesses: his law firm, which he has advertised as specializing in smart cities planning, and a business he co-founded with another city employee — Christopher Wolff — called Verge Internet.
Rhodes and Wolff both worked closely on New Orleans’ smart cities project. Wolff was part of the purchasing selection committee that chose Smart+Connected NOLA. At the same time, the two were actively trying to raise investment capital for Verge Internet, a company that envisions providing the same type of broadband service that’s included in the New Orleans smart cities project.
The two also provided “pro-bono” consulting services through Verge to Qualcomm for a “digital equity proposal” with the city of Los Angeles, months before its group was selected for the New Orleans project.
The council opened a formal investigation into the smart cities project on April 21. Four days later, Smart+Connected NOLA announced it was dropping out of the project. Two days after that, the council questioned Rhodes under oath and formally requested the New Orlean Office of Inspector General open an investigation of its own.