Coalition of 21 groups calls on Convention Center to use $100 million from cash reserves to support hospitality workers
By Michael Isaac Stein
Source: The Lens
March 31, 2020
A coalition of 21 local unions, advocacy organizations and other groups are calling on the Ernest N. Morial New Orleans Convention Center to release $100 million out of its unrestricted cash reserves to support hospitality industry workers who are out of work due to the coronavirus crisis.
The Convention Center has recently reported somewhere between $185 million and $215 million in unrestricted reserves, which it has accumulated through the collection of locally generated hotel, food and beverage taxes. In 2018 and 2019, those collections exceeded $65 million.
Convention Center officials did not respond to requests for comment for this story, including questions about the current value of its reserves.
“These ‘rainy day’ reserves were amassed through the booming success of the hospitality industry — an industry that only succeeds and exists because of the work of tens of thousands of New Orleanians and Southeastern Louisianans,” says a letter from the coalition to Convention Center President Michael Sawaya. “We understand why these ‘rainy day’ funds exist — to provide a cushion for our dynamic tourism and convention industry, keeping one of New Orleans’ primary economic drivers on safe footing in the event of a disaster. The disaster is here. Now. The industry is shut down.”
The new group is calling itself the Coalition to Create a Fair Fund for Hospitality Workers, and includes Unite Here Local 23, which represents more than 100 workers at the Convention Center and sent a similar letter last week.
The Convention Center’s large cash reserves have been a point of contention in the past. Groups like the Bureau for Governmental Research as well as New Orleans Mayor LaToya Cantrell have questioned whether the center is receiving too much tax revenue, given the size of its reserves.
Last year, the Convention Center agreed to tap its reserves to provide more than $20 million in one-time funding to the city to be used for infrastructure improvements. But that was done in return for the city’s support for legislation allowing the Convention Center to build a publicly subsidized hotel. And it was far less than the $75 million Cantrell originally sought.
Much of the money was raised through taxes levied over the years specifically to fund a “Phase IV” expansion of the center. That plan was scrapped shortly after Hurricane Katrina, and some of that money is now being repurposed for the center’s $557 million capital plan, as well as a hotel and “entertainment district” development it wants to create on the upriver side of the center where the Phase IV expansion was originally supposed to be.
‘I haven’t received jack yet’
The coronavirus crisis has hit the tourism and hospitality industry hard. It’s a global problem, but especially bad for New Orleans, where the industry is a key part of the local economy. A recent study by the Brookings Institution found that New Orleans was at high risk from the economic fallout from the global crisis.
New Orleans started limiting hours and the number of customers in bars and restaurants on March 15 to try and slow the spread of the coronavirus. The next day, Mayor LaToya Cantrell announced that bars, venues, malls and other businesses would have to close altogether, and that restaurants would be limited to take-out and delivery only. The result has been mass layoffs and furloughs, with others officially keeping their jobs but going without pay.
According to WWL-AM, there have been 136,000 unemployment claims filed in Louisiana over the past two weeks — an unprecedented level of claims that have caused delays in responses.
One of those that applied for unemployment is Ben Dubroc, a long-time hospitality industry worker who lost both of his jobs at La Petite Grocery and Commander’s Palace almost immediately after Cantrell’s announcements in mid-March.
Dubroc is one of the thousands of New Orleans residents who are out of work, but still facing the everyday, necessary costs of living. He said he’ll be able to cover his rent on April 1 because he filed his taxes early and got his tax return. But even after covering rent, he is still the sole income provider for his wife and 9-month old child. And he says he has a father with dementia and mother on disability benefits in Avoyelles Parish that will need his help.
He said that so far he’s applied for unemployment benefits and food stamps. Both programs have recently relaxed some of their restrictions but have been inundated with new applications. And a recently passed federal stimulus bill will mean that those receiving unemployment will temporarily receive an additional $600 per week above the state maximum, which is $247 per week in Louisiana, along with a one-time payment of $1,200 going to most adults. Dubroc has also applied for funds through the Greater New Orleans Foundation’s Service and Hospitality Family Assistance Program.
“I haven’t received jack yet,” he said. “That’s all supposed to be hard by design, because God forbid someone gets an extra carton of milk on our dime.”
The letter from the new coalition applauds the measures being taken by local and state governments. And it notes that relief funds have been set up by United Way of Southeastern Louisiana, the Greater New Orleans Foundation and NOLA Business Alliance.
The letter says that the Convention Center is “noticeably absent” from these efforts. The Convention Center was recently activated by the state to be used as a medical facility for recovering coronavirus patients. But it hasn’t announced anything like a relief fund for workers.
‘That’s not enough’
As detailed in a recent article from The Times-Picayune/New Orleans Advocate, getting government or nonprofit benefits, and getting them fast, is not always easy and sometimes impossible for some workers. One of Dubroc’s coworkers at La Petite Grocery, Alec Desbordes, said that these programs, while helpful, can’t account for everything and won’t cover the long-term economic turmoil many workers are facing.
“The United States doesn’t really have a permanent social safety net comparable to any other developed country,” he said. “About 44 workers I work with at the restaurant, we’re all going to be losing our health insurance tomorrow.”
He said that some programs don’t help as much as people may think. For example, while evictions have been temporarily suspended, there is no suspension on paying rent. Desbordes said he is digging out of savings to pay rent on time anyway. He said that he was in eviction court last month over a disagreement with his landlord, and that he doesn’t trust that he won’t be penalized at the end of all of this if he pays his rent late.
But Desbordes’ situation, and his access to savings, isn’t ubiquitous. Ethan Ellestad, Executive Director of the Music And Culture Coalition of New Orleans, said that there is a “complete lack of institutional wealth” among hospitality workers.
“There hasn’t been an opportunity for many in the hospitality industry to build wealth. People are living paycheck to paycheck in multiple jobs. So it’s great that there are these local funds that give out $500 or $1000 and the federal stimulus. But with the cost of living in New Orleans, that’s not enough.”
A new fund created by the Convention Center, he argued, would help fill in the gaps in currently available assistance and ensure that people are still covered months or even a year from now, when many will still be feeling the ripple effects of the global pandemic.
Workers said the financial assistance will be needed even in the highly unlikely scenario that everything returns to normal in June. Even in a usual year, the summer is a tough time for the hospitality industry.
“For most people, what they make from February through May is what keeps them going from June through September,” Dubroc said. “The hospitality industry is dealing with an unprecedented uncertainty, since we don’t know what this will look like this summer, we don’t know what this will look like next year. There’s a high likelihood a lot of restaurants will either have to close or restructure and we can expect high unemployment in the hospitality industry when this is over.”
Ellestad said that it’s time for the Convention Center, a publicly funded, quasi-governmental institution, to put its money where its mouth is. He noted that for years, the Convention Center has justified its tax collections by touting its importance for creating jobs in the city.
“When tourism leaders talk about how many jobs they create and how important they are for the economy, but then when there’s a crisis are silent about supporting the workers that are the backbone of the industry, that’s a huge problem.”
‘It’s our money’
Dubroc argued that creating a new fund wouldn’t just benefit tourism workers, it would benefit the whole city by reducing future costs associated with joblessness, health issues, homelessness and a diminished workforce.
“The people of New Orleans and Louisiana have to think, ‘Do we want to see a bunch of unemployed hospitality industry workers in our state when this is over, or do we want to give them a stipend so they can at least transition to something else if need be.”
John A. Williams, dean of the College of Business Administration at the University of New Orleans, told The Times-Picayune/New Orleans Advocate that he’s worried that when this is all said and done, hospitality businesses could have trouble finding enough workers to fill their staff. Desbordes said he already knows people considering leaving the city.
Dubroc said that along with being necessary for the survival of tourism industry workers, the money is rightfully theirs to begin with.
“It’s our money,” he said. “It’s created by our labor, from taxes taken from our labor.”
Some members of the coalition are looking even further down the road, saying that the fund shouldn’t only be used as immediate crisis relief, but should be maintained for the future to continue to aid workers in the hospitality industry.
“What we need to work on in the long-term is restructuring how the hospitality industry works in New Orleans,” Desbordes said. “The fact that there are so many of us that are so vulnerable to this is a fundamental problem. There needs to be way more voices of workers and workers organizations in how we define and operate our industry, from the wages and working conditions, to how we manage these funds that are extracted from our industry.”
He said the money could go towards guaranteeing sick days or creating a harassment hotline for workers. But in the short term, Desbordes agreed the priority should be on immediate financial relief for workers.
Dubroc said he wants to get back to work. He told The Lens that when thinking about his situation, he kept envisioning the scene from Titanic where the wait staff continues to serve even as the ship is sinking.
“I would definitely be there, you want to make overtime. You want to keep serving as the ship is sinking because you get double pay, maybe even hazard pay.”
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