Friday, October 7, 2022

Council asks judge to immediately halt Cantrell admin’s disbursement of Wisner Trust funds | The Lens

-

- Advertisement -


Much of Port Fourchon, a major oil and gas port, sits on Edward Wisner Donation land. Credit: Edmund D. Fountain / weather.com

The New Orleans City Council asked a Civil District Court judge on Thursday to temporarily prohibit Mayor LaToya Cantrell’s administration from disbursing any money from the contentious Wisner Trust without the council’s approval.

The motion for a temporary restraining order was filed as part of an ongoing lawsuit the council filed against the Cantrell administration over the trust, which controls rental revenues from tens of thousands of acres of land donated to the city more than a century ago, including the land on which Port Fourchon sits.

The suit is part of an even longer tussle between Cantrell and the council over whether the Cantrell administration is unnecessarily ceding millions of dollars a year to a group of nonprofits and roughly 50 private individuals.

“Millions of dollars in Trust revenues — revenues rightfully owned by the city — are being divested from the Council and the City of New Orleans annually in favor of hundreds of known and unknown purported beneficiaries and other unknown recipients,” Thursday’s motion said.

The aim of the suit, filed in July, is to permanently stop the flow of funds to these outside entities and force the administration to seek council approval before using them. Thursday’s motion is asking the court to put those requests into effect immediately as the litigation is pending. It argues that in the meantime, without the restraining order, the city will suffer irreparable harm by continuing to unnecessarily dole out funds.

“Recovering these assets is functionally impossible given that they are being distributed to hundreds of private parties all over the country,” the filing said. 

The move also comes the day after WWLTV reported that a nonprofit started by Cantrell — called Forward Together New Orleans (FTNO) — had frozen its accounts after receiving a subpoena from the city’s Office of Inspector General. The reason for the IG inquiry into the nonprofit isn’t entirely clear. But earlier this year, council members questioned whether it was proper for the administration to transfer roughly $850,000 from the Wisner Trust to FTNO to pay for city programs. Cantrell used one-year cooperative endeavor agreements, which do not require council approval, to make the transfers.  

“This is not directly related to FTNO because the lawsuit was filed long ago, and we wanted to give the administration time to respond,” Councilman Joe Giarrusso said in an emailed statement about the motion for a TRO. “We are filing a temporary restraining order to stop money flowing to people and entities who are no longer entitled to Wisner revenue and to stop the Administration from doling out Wisner funds to anyone for the time being.”

100-year trust

The origin of the dispute goes back over a century, to 1914, when Michigan-born banker Edward Wisner put 50,000 acres of South Louisiana land he owned into a 100-year trust that had four original beneficiaries — the city of New Orleans, Tulane University, the Salvation Army and Charity hospital, now part of LSU. Wisner died the year after establishing the trust. The city was named trustee. 

But soon after the trust was formed, Wisner’s widow sued the city, claiming she deserved a cut of the revenue generated by the property as well. The city later settled the dispute by agreeing to give 40 percent of the revenues to Wisner’s family and descendants. That left the city with 34.8 percent of the revenues, the Salvation Army with 1.2 percent and both LSU’s Charity Hospital and Tulane with 12 percent each.

That agreement was set to end in 2014. By that time, the land had become much more valuable. In the 1950s, oil was discovered on it. And much of Port Fourchon, which serves more than 90 percent of deepwater oil production in the Gulf of Mexico, is now located on the land and pays rent to the trust. In 2018, the trust generated $9 million, according to the council lawsuit. 

City council members, as well as expert legal observers, have argued that when the agreement expired in 2014, the payments to the nonprofits and Wisner heirs should have ceased, and the land should have been wholly owned by the city. In fact, then-Mayor Mitch Landrieu went to court in 2012 to ensure the trust would expire and revert to city control.

But despite winning that litigation, Landrieu didn’t terminate the agreement. Instead, he signed a series of short-term extensions, and maintained the same revenue sharing agreement until he left office in 2018. When Cantrell replaced him, she did the same. 

But in 2020, as The Lens reported, the Cantrell administration quietly signed an agreement that would continue the revenue sharing in perpetuity. Some City Council members were confused as to why the city would cede millions of dollars a year to private groups and individuals, even though it seemingly had no legal obligation to.

There were also questions about whether the contract was even legal. In its suit, the council argues that it should have received City Council approval. The suit also claims that “upon information and belief” the agreement was never reviewed by the city’s Law Department, which was also required. 

The council’s suit takes issue with certain changes the 2020 agreement made to the status quo. First, it gets rid of the public body that currently oversees the trust — called Edward Wisner Donation Advisory Committee — and replaces it with a private board. 

“The 2020 ratification agreement purports to replace the Advisory Committee — established by the City Code and held by the Louisiana Fourth Circuit to be subject to open meetings laws — with a privately managed board shielded from oversight and scrutiny from the public, the media, or the City Council,” the suit says.

The suit also notes that instead of setting an expiration date — such as the 100-year term set in the original Wisner agreement — the 2020 agreement puts the revenue sharing agreement in place in perpetuity. 

The Cantrell administration didn’t give a public explanation for the extension for more than a year after The Lens first reported about it. In early 2022, however, the administration told the Times-Picayune that without the 2020 agreement, the trust would likely sell off all the land, the lease revenues would end and the city would only be entitled to 34.8 percent of the money from the sale. 

Cantrell’s spokesperson told the paper that the land was recently assessed at a worth of $17 million. But that figure left out the Port Fourchon parcels, The Times-Picayune reported. A full appraisal of the Wisner land put its value at between $73 million and $114 million.

The council took its first legal action to dispute the 2020 agreement early this year by intervening in an ongoing lawsuit against the trust filed by a group of law firms regarding an ongoing dispute over attorneys fees. But as part of that suit, the firms questioned the validity of the 2020 trust extension. 

In July, the council decided to file its own direct lawsuit against the Cantrell administration. The suit asks the court to find that the 2020 agreement was illegal and invalid, that a judge find that the Wisner Trust is terminated and that all the land is owned by the city. It also asks the court to stop the distribution of funds for the duration of the litigation without City Council approval.

“It became apparent to the Council that the Mayor’s actions were not legal, were not in the best interest of the City, and were not going to be altered without legal action,” the suit said.


(Except for the headline, this story has not been edited by PostX News staff and is published from a syndicated feed.)

Source

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related Stories