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Here’s What to Know About New Orleans’ Smart City Controversy

Hearings regarding allegations of bid rigging and a formal City Council investigation into the city’s “smart city” program began on Wednesday. The initiative would have installed “city-directed” broadband and infrastructure.

(TNS) — The "smart city" program has become a political headache for New Orleans Mayor LaToya Cantrell and her administration, with allegations of bid rigging and now a formal City Council investigation — with hearings starting Wednesday — that will probe whether City Hall officials acted improperly in setting up the now-aborted deal.

The initiative, according to officials in Cantrell's administration, would have installed internet-connected infrastructure and created a "city-directed" broadband network. Last year, City Hall asked private companies to propose a plan and Smart+Connected NOLA was chosen as the winning bidder. But they pulled out of talks about the project this week after reports that a city official, Jonathan Rhodes, had advised one of the consortium's members on a similar project in Los Angeles through his private company.

Meanwhile, City Council members, who had to approve the deal, never got the answers they wanted on how it would all work. And the second-place bidder raised allegations of several conflicts in how the bid process came together.

On Wednesday morning, Rhodes is set to testify in City Council chambers as members look for any signs of wrongdoing among the web of companies, celebrity investors and city officials involved with the "smart city" program and the public bid process.

If you want to get up to speed on the controversy, here's a primer:

What Are 'Smart Cities'?

So-called "smart cities" technology has been talked about by New Orleans officials since at least 2018. It typically includes an expanded broadband network (the fiber-optic cable that makes high-speed internet possible), public WiFi access via kiosks and the deployment of internet-connected infrastructure.

The last category can mean street lights with sensors or security cameras, traffic signals that can adapt to traffic flows, or other internet-connected devices that collect data to make the city run more efficiently. But those technologies have also raised concerns about privacy and the mining of public data for profit.

In 2020, the Cantrell administration announced a pilot program to provide public WiFi in a recreation center in order to test the idea. In April, 2021, Rhodes, a Cantrell deputy in charge of the city's office of utilities, announced the beginning of a process where companies could bid to provide a broader suite of "smart city" technologies to New Orleans and its residents.

By November, a consortium known as Smart+Connected NOLA had been selected and Cantrell administration officials were negotiating a 15-year agreement that would require City Council approval. But from the start, City Council members were skeptical about the deal. Meanwhile, one of the losing bidders, Cox Communications, filed a formal protest alleging conflicts and potential inside-dealing on the bid process.

Now, documents produced under a subpoena issued by Council President Helena Moreno show a series of questionable relationships between the consultants who helped write the request for bids, the companies that applied for it and the city officials ran the process and selected them.

Who's Involved?

Smart+Connected NOLA: A consortium composed of four main companies and numerous subcontractors that won the bid for New Orleans' "smart city" program. The companies are Qualcomm, a San Diego-based tech giant that sells IT components and broadband infrastructure; JLC Infrastructure, a firm owned in part by basketball great Magic Johnson that has worked on tech contracts in other U.S. cities; Jacobs and Zyter. IKE Smart Cities, a maker of WiFi kiosks, was also a partner.

Smart+Connected NOLA pulled out of negotiations on the deal earlier this week.

Jonathan Rhodes: Director of the Mayor's Office of Utilities. Rhodes, a lawyer, has managed the smart city project since at least 2020. He worked with Ignite Cities, a consulting firm tied to Smart+Connected NOLA, to craft the smart cities request for proposals. Council members and the losing "smart city" bidder, Cox Business, have raised questions about how Rhodes and Ignite Cities crafted the bid, and also about Rhodes' outside company, Verge Internet.

Christopher Wolff: IT staffer at New Orleans City Hall. Wolff said he has started multiple tech companies, and is a cofounder of Verge Internet. He acknowledged advising Qualcomm on a smart cities project in Los Angeles, but said the work was "pro bono." Wolff was a member of the committee that evaluated the smart cities proposals and ranked the Smart+Connected NOLA consortium well above its competitors.

Verge Internet: A Delaware-registered company founded by Rhodes and Wolff to build out city broadband networks, according to an investor slide deck and a company website. The slide deck said Verge Internet had secured $250,000 in "commitments" and was seeking $5 million in funding from investors. Wolff said the company was a "hobby" and a "fantasy" that didn't earn any money or provide him with any income.

Helena Moreno: The New Orleans City Council President, Moreno has been the most skeptical public official when it comes to the "smart cities" plan. She issued a subpoena that produced hundreds of pages of documents related to the program and the connections between the city and the bidders. She also proposed the council's formal investigation.

What Is The City Council Worried About?

The council is concerned about the relationships between the winning group of companies and city officials (and a city consultant) involved in crafting the bid solicitation and choosing a winner.

Documents show:

— In June, 2020, a press release issued by JLC Infrastructure, Qualcomm and Ignite Cities announced JLC's plans to "to allocate an initial $75 million in capital for investment in projects developed in collaboration" with Qualcomm and Ignite Cities.

— In January, 2021, Rhodes sent an e-mail to George Burciaga of Ignite Cities for his "insight on the attached Scope of Services for a comprehensive smart city program."

— In March, 2021, Rhodes sent Burciaga an early version of the request for proposal, weeks before it was issued.

— In a blog post on the Qualcomm website posted less than a week after the city's bid solicitation was published, a Qualcomm executive, Sanjeet Pandit, identified Ignite Cities as a Qualcomm partner in smart city endeavors in several cities, including New Orleans.

Those documents suggest that Ignite Cities had business relationships with members of the winning consortium even as it was advising the city on its smart cities project. The city has said Ignite Cities was acting on a "pro bono" basis.

City contracts are supposed to be awarded without preferential treatment to any prospective bidder. Attempting to steer a contract to a particular firm can violate the law.

Documents, city statements and interviews indicate:

— Jonathan Rhodes and Christopher Wolff began pursuing a potential smart cities-related business as early as August, 2020, according to documents filed in Delaware for Verge Internet.

— In February and March of 2021, Rhodes and Wolff, via Verge Internet, advised Qualcomm on its pursuit of a smart cities project in Los Angeles, according to a City Hall statement. Wolff and the city said it was done on a "pro-bono" basis.

— Rhodes arranged a meeting between Cantrell, Burciaga and officials from Qualcomm and JLC before the formal bid process began. City Hall said Cox Business, which lost the bid, also met with city officials before the formal bid process began.

— Wolff served on the evaluation committee of the smart cities proposals. He awarded Smart+Connected NOLA the highest score, at 84, compared to the 47 he awarded to Cox. Wolff said his score was based on Smart+Connected NOLA promising to deploy its technology with no upfront cost.

What Happens Next?

The City Council's vote for a formal investigation means it can move forward in issuing subpoenas and compelling testimony from city officials in relations to the "smart cities" project. Rhodes is set to appear before the council on Wednesday.

Moreno has asked the New Orleans Office of Inspector General to attend the hearing. The IG's office investigates city agencies for breaches of policy or signs of illegal activity in an effort to provide oversight of local government.

(c)2022 The Times-Picayune | The New Orleans Advocate. Distributed by Tribune Content Agency, LLC.
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