Wednesday, February 06, 2013

The Wisner Fund - Battle for the Bayou - Part 1.5

Yesterday, I had the opportunity to speak with two members of Mayor Landrieu’s administration on the issue of the Wisner trust.  Director of Communications for the Mayor, Ryan Berni, and Mike Sherman, Director of Intergovernmental Affairs, Counsel to the Mayor and Wisner trust appointee.  They were kind enough to sit down with me and go over the city’s stance on the Wisner trust issues.  

Admittedly, I published part one without reaching out to the Mayor’s office for comment.  It’s not that I am lazy, it’s just that my attempts to get commentary from them on previous issues led me to believe that it would be futile for me to even try on this issue.   

I was I'm now publishing an interjection...version 1.5.    

Mea culpa...I appreciate these gentlemen taking the time out of their busy schedules to speak with me about the Wisner issue.  And with their input, I hope I can provide some clarity and balance to AZ readers with this post.

The mayor’s thesis’s the prime directive of the current administration as delineated to me by Mr. Berni and Mr. Sherman in our meeting.  They were very passionate to inform me that this administration believes the Wisner fund is a public entity and should therefore operate completely “above board” and in the public eye.  That includes the Advisory Committee meetings, expenditures and subsequent accounting, as well as any public records requests submitted to the city regarding the Wisner Trust.  

It was explained to me that they believe the trust has traditionally operated under a veil of secrecy and it is the mission of the current administration to lift this veil and shine a light on the Wisner funds.

With that development, I delayed part 2 and I am now publishing 1.5.  Forgive my incompetence. 

Let’s take a look at the bullet points Mr. Berni and Mr Sherman gave me to reiterate their thesis.


Berni and Sherman identified some specific instances in the history of the Wisner Trust that they believe show a clear case of nepotism.  Specifically, they pointed out that the brother of former Treasurer/Secretary, Cathy Norman, was contracted by the Advisory Committee for services in the wake of the BP oil spill.

From 2010 through 2012, Norman’s brother, Don Norman of Norman Wildlife Consulting, was hired to be an on site environmental liaison for the Wisner land in order to monitor wildlife populations and survey BP’s clean up efforts after the spill.  Norman Wildlife, Inc. is located in Shoreline, Washington but apparently Mr. Norman was traveling back to the area to perform the duties.

The administration was able to produce invoices paid to Don Norman that totaled over $100k over a three year period.

In response to the nepotism claim, a source close to the Wisner Trust provided me with the minutes from an August 2010 committee meeting showing a unanimous vote to bring Norman Consulting onboard.  The minutes also reflects that the Advisory Committee was having an issue finding other qualified candidates and there was a general consensus among all the board members that Don Norman would be best suited to handle the job.  One of the qualifiers in the arrangement was that Norman had also worked on the property prior to 2010 and had a detailed knowledge of the property.

(I am trying to get the minutes to this meeting online for download, having a few issues, hold will be there as public record)    

On face value there is certainly the appearance of nepotism but it’s important to distinguish that the heirs to the trust have always maintained they are a private entity, not public.  

This is a critical issue when considering the hiring of Don Norman.  Obviously the heirs have a special interest in the land, financially and emotionally.  They consider the property to be private and the money generated off it to be, essentially, a gift to the public domain.  The heirs consider themselves and the Committee to be the filter, if you will, of the proceeds that go to the city.  

It’s also important to note that Mrs. Norman had no authority or voting power on the Advisory Council in regards to the vote to hire Don Norman.  By definition, that excludes the nepotism charges but clearly the Wisner trust and the land has been treated as a guarded asset by the heirs.  The people entrusted to manage the land and the trust have traditionally had close ties to the folks who have a vested interest.  

This is one of those cavernous grey areas of social structure.  We must seek legal opinion in order to define the memes “public” and “private”.  

Following the nepotsim train of thought, Berni and Sherman also pointed out that the Treasurer/Secretary prior to Cathy Norman was Richard A. Peneguy, a Wisner family member and heir to the property.  

This is true.   

Here is a list of the people who have served as the Treasurer/Secretary from 1951 up to the present “Interim Treasurer/Secretary” who replaced Cathy Norman last week:
1.  Richard A. Peneguy 1951 until February 26, 1990, his date of death 
2.  Jerome P. Dickhaus took over in June 1990, after being placed therein by Sidney Barthelemy, with the approval of the Committee. Dickhaus died in 1992 
3.  Andre "Mac" Charitat occupied the office, on behalf of Mayor Barthelemy, but was not “officially appointed” as the "interim" secretary-treasurer.  A nationwide search was the conducted to find a qualified person to fill the spot 
4.   C. Cathy Norman, served from some time in late 1992 until her resignation effective January 26, 2013.  Cathy was selected from over 100 applications 
5.   L. Amanda Phillips is currently serving the Wisner trust as interim Treasurer/Secretary.  She was appointed in a special meeting on January 25, 2013, effective upon Cathy Norman’s departure.  It should be noted that the Advisory Committee hired Phillips, not the mayor.
The concern from Mr. Berni and Mr. Sherman is that Richard Peneguy was another instance of nepotism.

From the heirs point of view, they stressed that Richard devoted his life to the maintenance and well being of the land....he was passionate about the land's health.  I am not sure how Richard Peneguy was appointed to the Treasury/Secretary position but Cathy Norman was officially appointed to the position by the Advisory Committee after a submission for resumes.  

Is the mayor actually required to seek approval from the Advisory Committee?     

Another point that Sherman and Berni pointed out is that they do not believe the mayor is required to seek the approval of the Advisory Committee in how the city’s portion of the money is spent.  They provided me with two legal opinions on the matter that were obtained by previous mayors, Marc Morial and Sydney Barthelemy:

They also pointed out that in the original 1929 Agreement of Compromise, the language regarding the mayor’s requirement to get the Advisory Committee’s approval before spending the City’s share of the money does not state the mayor MUST act with the consent of the majority of the Advisory Committee.  It states that he MAY act:

“ ....The right of appointment herein given may be exercised by the heirs, trustee, successors, or assigns of said parties; that the Mayor of the City of New Orleans, with the approval of the Commission Council (or its successor body), MAY act as such Trustee up on the advice and with the consent of the majority of said Commissioners, and such action, so authorized, shall be binding on all parties hereto.”

I’ll refrain from playing armchair attorney on this and let the professionals ascertain whether or not the Mayor must obtain the majority consent of the committee before he allocates the City’s portion of the money.  

I’m a blogger, I can’t offer legal opinions but I can certainly offer semantic opinions.  We can discuss this further in the comment section. 

Tax status 

The City also points out that the Wisner fund does not pay taxes to Lafourche Parish because the Wisner land is considered to be a public entity and is therefore tax exempt.  They state that if the land is truly a private entity, the heirs should be required to pay taxes on their proceeds from the trust.  

I don’t want to speculate too much on this issue, I would just ask you to first read this 1949 opinion from then Louisiana Attorney General, John L. Madden:
“The Commission would be inclined to the opinion that the interest of the last named parties in the property should be assessed even if we adopted the view that their respective interests were merely held in trust.  However, the Commission is of the opinion that neither the Salvation Army nor the Widow and the Heirs of Wisner have a taxable interest in said property.  The title to all of the property, under the Agreement of compromise is vested in the City of New Orleans.  The City of New Orleans is obligated only to pay to the parties to the compromise agreement a certain proportion of the revenues derived from the property.  As the Commission sees it, the Wisner Heirs and the Salvation Army agreed in effect that in consideration of the Trustee paying them a certain percentage of the revenues they would surrender any right whatsoever held by them in the property. 
“In view of the fact that the Widow and Heirs of Wisner voluntarily surrendered whatever color of title they  may have had in this property to these public and quasi-public agencies, the Parish of Lafourche is without interest in the matter.
“...The Commission further declares the Wisner lands as described in the judgment referred to above exempt from future assessment, as long as same are held by the City of New Orleans under the terms and conditions of said judgment.”
Having subscribed fully to the ruling made by the Louisiana Tax Commission, and for the reasons set forth in its ruling, we advise you that, in our opinion, the lands aforesaid are not subject to ad valorem taxation in Lafourche Parish, Louisiana.”
Now keep in mind this is merely an opinion from the AG back in 1949, it is not an official mandate from the bench.  However the ruling pre-qualifies the tax exemption on the notion that the heirs surrendered all titles to the land.  (Not just titles but “colors” of titles! Whoever wrote that ruling was a spry one, fo’ true).  

 Remember this opinion because it will come into play in future litigation.

The mayor’s intent

In the previous post I spun a web of speculation on what the mayor’s intent might be with the land.  Turns out the mayor and his peeps took exception to my pontifications.  

Ryan Berni gracefully voiced their displeasure with my musings...hat tip Mr. Berni.  I admit that I was speculating on what the mayor’s intent for the Wisner property is in the last post, I don’t apologize for it...but I admit that it is pure speculation. 

Taking the previous post into account, I had the opportunity to ask the Landrieu admin. what their intent is with the land and the trust.  In 2014 the trust ends and anything can happen.

The following quote is Berni's response for what the mayor's plans are for the land and the trust:    
"The mayor has been very clear that what needs to happen is that an evaluation needs to take place of all the assets (the Advisory Committee approved an evaluation two meetings ago) and that until an evaluation takes place an informed dialogue can't take place.  When the evaluation takes place we intend to have a robust dialogue with the Advisory Committee and all the beneficiaries.  Absolutely no decision has been made on what happens in August of 2014, what has been determined is that, process-wise, that valuation must be done so that everyone can make an informed decision. "

Once the land is evaluated, I would imagine the race will officially be on to the August, 2014 expiration date. 


With that, I have addressed the majority of the grievances and viewpoints Berni and Sherman shared with me on behalf of the Mayor’s administration.  The following is my personal take on these items.     

Every one who reads this blog knows that I would martyr myself on the altar of transparency, the 1st amendment and the need for open government.  If an entity is public , I won't hesitate to try and tilt any windmill to liberate information from that entity in order to inform the public as to what is going on.  In fact, that’s exactly what led me into this story in the first place. this case...Wisner....I want to point out that the money generated off this land is not a tax on the citizens of the “state”.  It is essentially a gift from a private citizen, a century ago, who gave it to the city with very specific intent.  The question of whether or not the trust is private or public is not only critical to this situation, it is pervasive. 

If the trust truly is private, as the federal income tax returns would suggest, then it’s really none of the public’s business who the Committee has hired to oversee the land and put in as treasurer/secretary or any other position.  

If the trust is a public entity, then it is absolutely in the City’s interest as to who is hired, how they were hired, and how the land itself is being maintained.

I am not a lawyer but the legal decision as to wether or not this trust is public or private will define everything about it is divided, how the money is allocated, etc.

On an ethical level, the Mayor’s office is claiming that their only goal is to create greater transparency in government and open the curtains on the Wisner fund.  To the current administration’s credit, Mayor Landrieu’s office has increased the profile of the trust and even provided grant proposal guidelines on the City’s website.  This is good stuff...this is what we need....bravo!  

However, I have other concerns about what is going on with Wisner and I will air them out in Part 2.

Personal perspective 

My overall concern...I mean my personal the land itself.  I would like to see the land left intact and not screwed with in any way.  It’s not only a wildlife preserve, it’s an environmental laboratory for that region.  The bulk of the money generated off the property is pretty much written in stone, it’s simply a matter of the pipes running underneath the land. 

The way the land is preserved or exploited is up to the intent of the Advisory Committee.  I am very worried that the committee is being compromised for political gains and hence the health of the land will suffer.  

For example, LaFourche Parish wants to encourage tourism with the land by creating beach areas that would include the construction of an RV park.  They are even pushing for ATV’s and other vehicles to be allowed access to drive over the beaches.  

The Wisner land is one of the most rapidly eroding pieces of property in the country, losing an average of 46 feet of coastal retreat a year.  It lost over 100 feet in Hurricane Issac last year.  

Allowing vehicle traffic on these beaches is only going to accelerate the loss of the land and wreak havoc on nesting birds and other wildlife.  Building an RV park on the land is a ridiculous notion as it will almost certainly be wiped out in the next major storm event.  Not to mention the damage the recreational vehicles will do to the land itself. 

Trying to turn this land into a tourist area is a zero sum equation.   

Putting all my personal opinions aside, there are multiple pipelines running under the proposed beach of the Wisner property that carry a large portion of the country’s oil and gas supply.  Some of these pipelines have already been exposed from sub-terra by recent storm activity.  The combination of public access to this area with the critical subterranean infrastructure is a recipe for disaster. 

Imagine allowing people to ride their ATVs out on the beach and light a campfire next to an exposed natural gas pipeline....I’m not kidding....that is a scenario based in reality.

I hope to provide some video perspective to the story soon.  Until then....

.....part 2 is on deck.... it will be out in short order.


mcbrid35 said...

Transparency in the Landrieu administration is little more than a buzzword. For example, a transparent administration would not have shut down public access to all city permitting - the best window into the day-to-day operations of the city - since last June. But that's exactly what this administration has done.

Anonymous said...

Rumor has it that there have been several public records request on Wisner but none have been answered. Transparency.......

Jason Brad Berry said...

I'm going to address this in part 2.

Anonymous said...

The work you are doing on this story is great.

I'm impressed that members of the current city administration took time to talk to you, as well.

These issues are obviously complex. Kudos to you for asking questions, and also to the Mayor's team for providing their answers to some of them.

Because I am an asshole, the name "Dickhaus" made me spit out my coffee laughing.

My apologies to Dickhauses everywhere.

Anonymous said...

The Landrieu Admin accusing anyone of nepotism is rich....

Anonymous said...

Transparency? Landrieu's administration wants transparency? I'm choking over here. There are three things Landrieu's administration wants: power, power, and more power.

Don't let them giving you the time of day cut into your caustic reporting. We need more reporters who aren't in the media only to smile on TV and make connections for future personal gain.

Ricardo said...

Well played sir. Part 1 definitely struck a nerve at City Hall. You would not have had the scope of dialogue with Ryan Berni and Mike Sherman had you not first pushed the "what if" envelope.
Matt, Thank you for the comment on the shut down of transparency in city permitting.

Anonymous said...

I concur with Anonymous.... How rich is that this Mayor accuses anyone of nepotism when he has not one but two sisters in law serving at top levels in his administration? Amy Quirk and Emily Arata. And, since we are on the subject, why shouldn't members of the Wisner family be directly involved? It's their gift, after all....charities in the city have received millions because of them.

Anonymous said...

After careful review of the 1929 document and the City's position that the mayor may act upon the advice and with the consent of the committee, suggests that the mayor has the option to do as he pleases.

In fact, reading the Compromise, paragraph 5, the language says:

(language in brackets is not part of the quote, it just identifies what preceded the bracketed language)

"...that the Mayor if the City of New Orleans, with the approval of the Commission Council [City Council] (or its successor body), may act as such Trustee upon the advice and with the consent of the majority of said Commissioners {Wisner Committee Members], and such action, so authorized, shall be binding on all parties hereto."

So, the way I read it, it does not say that the mayor can act without the Committee approval, it says the mayor may only act as Trustee, upon the advice and with the consent of the Committee. If the mayor does not have that consent, he cannot act as trustee, which means he cannot act.

Anonymous said...

It sounds like Ryan Berni and Mike Sherman called you into chat because you speculated on what the administration's plan is for the land/trust. And they didn't like the tone of what you had speculated. They wanted to set the record straight that there "no decisions" have been made because a "valuation must be done."

Although Mr. Berni's statement may be technically true (a valuation still needs to be done, and no decision has been made ... because when is a decision in politics ever truly final until some pen meets paper), it is disingenuous. I do not believe that the administration is sitting around and saying, "well, gee, golly, I don't know what we're going to do, let's just wait a while and see what things are worth." They've put thought into this. They might not want to share what those thoughts are, and they might take exception to those who are trying to fill in the blanks, but they've put some thought into it.

If I told you that I year from now a multimillion dollar jackpot was up for grabs and you were in the running for it, wouldn't you start thinking now about how you were going to get it, and perhaps come up with some scenarios on how you would spend it? Yeah, the devil might be in the details and you're not sure if you're getting 10 million or 100 million, but you're planning. In fact, you're probably directing a lot of resources to planning just because the potential windfall is so huge. And you are most certainly doing your due diligence to figure out just how big that windfall is ahead of time, not waiting for the "official" valuation to come down.

Such is the case I (speculatively) would imagine here. In fact, the administration is already building its case, using a cute story of nepotism and digging up relevant laws. This will become part of the PR package as the 2014 deadline nears and this issue is brought up more in the mainstream media. So for the administration to say they don't have an intent for what they hope to accomplish, both in the grab for the land/trust and for what they would spend it on, just doesn't add up.

I (speculatively) promise you the "informed dialogues" are happening behind closed doors, and Mr. Sherman knows what he's doing. A full disclosure: I worked for Mr. Sherman for a handful of months at one point in time. I don't wish to defame his character, but simply to say he's very good at playing politics and revealing what he wants to reveal to whom he wants to reveal it. Like the administration as a whole, he's a planner. He knows what moves he's going to make and when. He's just not telling what those moves are yet, and perhaps that comes with the job, and perhaps that's also fair (even necessary) in politics. I just wish the administration wouldn't always throw up their hands, as they are doing here, and say, "well, we just don't know what we're going to do yet, and we're being honest and transparent with you when we say that." It's just not true.

Anonymous said...

Seems like all of the beneficial interests of the trust ought to be worried about the City's intentions. Why are Charity, Tulane and Salvation Army not up in arms over the City's position that they can sell the whole thing?
Wouldn't the others want to have a say in whether the land is parceled out or the trust extended?

Anonymous said...

I should have read the comments first. All ofo them should be at the top of people's minds when navigating this debacle -- especially the pot calling the kettle black "nepotism" charge. Bottom line (having been through public records requests with the current administration): The only thing that Landrieu and his political circle of lap dogs care about is criticism. That's when they start pretending to be transparent, because the only thing that Landrieu wants is more power, at any cost. "Transparency" is just the clever word du jour. He's a punk, exercising politics as usual while earning favorites for the city's resurgent popularity -- for which Landrieu deserves no credit. His disingenuousness, and lack of intellect are covered over by the thin costume of actor's training. He's good at remembering his line and working a crowd, sure, but is easily, visibly disturbed when challenged with something he hasn't memorized how to respond to yet. That's when the fun really begins, as his Little Napoleon storms out to reveal the true character of the man, which is why his critics are so very powerful. Just keep pushing the man's buttons. He's so very predictable.

Anonymous said...

Sherm the worm...don't be fooled, Jason.

Anonymous said...

It appears someone (why name names?) has taken a page out of the Pew Charitable Trust playbook, when they (and, critically, others before them) coopted a categorically "private" endowment known as the Barnes (Art) Collection, rendering it a "public" entity under Pew's aegis. Do take a moment to watch the spot-on documentary "The Art of the Steal" and see if there are telling parallels here. I believe there are! Where there's Berni, there's fire.