NEW ORLEANS -- Last Friday, former mayor Ray Nagin was accused of granting loan and tax waivers to an eastern New Orleans theater owner in exchange for a family trip to New York City.
The theater involved in that alleged arrangement is the Grand of the East, and even seven and a half years after Nagin cut its powerful owners a break, the deal is still costing the city millions.
Public records show that the theater still owes the city $6 million on a federal Housing and Urban Development loan and hasn’t made a payment since 2009. Lake Forest Plaza LLC, which owns the land that includes the abandoned theater and what used to be the Lake Forest Plaza mall, has a $484,000 tax delinquency and owes $16 million on a $17 million loan it got from Lowe’s in 2006.
Both Lowe’s and the city have had to sue in attempts to collect, and just three months ago the Landrieu administration sent a demand letter for the $6 million.
Meanwhile, the theater building is a graffiti-laced eyesore on a huge vacant lot that stands out like a sore thumb from the nearby interstate. To mom-and-pop business owners like Tonette Harrison, who reopened her Gayle Laurence Ltd. Hair Studio salon across from the vacant Plaza in 2006 and has fought to keep it humming, the inaction from recipients of corporate welfare is unacceptable.
“Community leaders should drive their communities forward, not backward,” she said. “And I figure if we can do it with nothing, they should be able to do it with everything they’re getting. It’s very disheartening. It’s a slap in the face to the community.”
The theater’s managing partners are local bank presidents Ashton Ryan Jr. of First NBC and Alden McDonald Jr. of Liberty Bank. The other members of the LLC are T. George Solomon Jr., listed as the theater developer and operator; as well as Ronnie Burns, Gowri Kailas and Joe Canizaro.
The Plaza was once split between Ryan and Kailas, but Nagin confidant Cesar Burgos joined the group after Katrina as the developer, and Ryan took over Kailas’ share in 2009. City records also show Solomon’s name on the Lake Forest Plaza LLC tax delinquency.
Ryan handles most of the correspondence with the city. After getting the tax delinquency waived for 2004 and 2005, he asked for more breaks in 2006 and 2007. When Nagin’s recovery director Ed Blakely rejected Ryan’s request and demanded payment for the 2004 and 2005 bills, Ryan fired off an angry letter to Nagin, reminding him that he had personally supported the relief.
“The operation of the theater in the East was a cultural and social success, but an economic failure,” Ryan wrote on October 25, 2007. “The theater never generated sufficient profitability to allow it to pay its principal and interest on the HUD loan or its rental to the Plaza.
“Mr. Mayor, you are well aware of that fact since Alden (McDonald) and George (Solomon) visited with you on several occasions and you encouraged them to continue with the development of the theater and that you would be willing to restructure the theater loan because of the importance of this large amenity to the New Orleans East community,” Ryan added.
Nagin’s indictment says that as a part of a conspiracy to defraud the citizens of his honest services, Nagin accepted private jet travel and limo service in New York from an eastern New Orleans theater owner known only as “Businessman A.”
The indictment alleges that the trip to New York was a reward for “Nagin’s support on a tax penalty waiver associated with overdue tax bills and loan payments due the City of New Orleans.”
We do not know who “Businessman A” is, but sources confirm that it is one of the owners of the Grand of the East.
The Plaza continued to seek subsidies for years after Katrina. In 2009, the New Orleans City Council voted to approve a special tax increment financing district for the site, which would have siphoned off tax revenue for development of the site. But the plan was opposed by community leaders and the area’s councilwoman, Cynthia Willard-Lewis.
The Bureau of Governmental Research said at the time that the Plaza’s $220 million plan didn’t have enough assurances that the developers would actually deliver. The plan died on the vine.
When the city called the HUD loan on Oct. 2, it gave the theater group 10 business days to pay the $6 million delinquency. Landrieu spokesman Ryan Berni said nothing has been paid and the city is reviewing its options to collect from an entity that has no income and no other assets.
The members of the company do have other assets, however. Solomon, for instance, owns Southern Theatres LLC, which runs several Grand Theatre locations across the region, including in Slidell.
We went to Solomon’s mansion Uptown and were turned away at the gate. We also left a message for him at Southern Theatres that was not returned. We also called Ryan and McDonald for the story and did not hear back from them.