Former New Orleans mayor Moon Landrieu appeared yesterday to be headed for quick Senate approval as secretary of housing and urban development after telling the Senate Banking Committee that he stands to lose at least $5 million and possibly much more by taking the job.
Landrieu, whose net worth was put at about $283,000 in documents given the committee, estimated that, by divesting himself of controversial holdings in several properties he acquired at almost no cost, he could lose $5 million in anticipated gains over the next five years and $30 million over the full 30-year life of one, the Canal Street Project in New Orleans.
It is also possible that the projects could collapse, he said, but he called the prospect of losing the potential profits "painful."
He said he is willing to get rid of the holdings to avoid conflict of interest, because "I'm a public animal . . . all I ever wanted to do was be a politician."
He told the senators that he has discussed the matter with his wife and nine children and they said, "You never had it so you ain't going to miss it when you don't collect it."
Appearing assured and knowledgeable about housing, after eight years as New Orleans mayor and a stint as president of the U.S. Conference of Mayors, Landrieu won warm endorsement from Sens. Russell B. Long (D-La.) and J. Bennett Johnston (D-La.), who praised his civil rights record.
Committee Chairman William Proxmire (D-Wis), winding up four hours of questioning devoted largely to exploring Landrieu's real estate connections, said, "I'm sure you'll have no trouble being promptly confirmed." Proxmire said the committee will vote Monday or Tuesday. "We went over these financial dealings very carefully, and we don't see any problem," Proxmire told a reporter.
Proxmire questioned Landrieu about three development deals involving possible conflicts of interest. One dealt with a project involving millionaire developer Joseph Canizaro and a Landrieu friend named Blake Arata. Landrieu confirmed that in 1970 he had put $300 into this so-called Port Madison Project, and ended up with $58,000 in 1978, when the partnership was dissolved. During this period, he was New Orleans mayor.
However, Landrieu said that the project was initiated by Arata, an old friend and campaign manager and a lawyer who dealt in such properties, that it was "not secret" as some had alleged, that it was a speculative project located well outside New Orleans (across the river from Mississippi) and that the project hadn't any dealings whatever with New Orleans. The purchase of the property in 1971 for $1 million was achieved entirely with loans, he said, so when it was sold for twice as much each investor profited greatly beyond his initial investment.
Landrieu's big potential gain of $5 million to $30 million came from the Canal Street Project, conceived by Canizaro while Landrieu was mayor. The proposed $350 million development could succeed only if the city swapped 3.7 acres of land near Canal Street for 1.5 acres of more valuable downtown land owned by Canizaro.
Landrieu was instrumental in getting the swap approved. Later, after Landrieu left the mayor's job, Canizaro and many others offered him jobs as a development expert, he testified. Canizaro first offered him $75,000 a year and a 5 percent, interest, then $100,000 and 10 percent, which he finally took.
His 10 percent interest in the Canal Street Project, for which he paid nothing, may be worth as much as $500,000 today, and he estimated that it could be worth $5 million in five years and $30 million in 30.
He said he would insulate himself as secretary from any decision on a $5 million application by New Orleans for a HUD grant to help the property along. He told Proxmire that he wouldn't return to work for Canizaro after his HUD tenure ends.
He also described a Key West land deal he said a close friend and former campaign leader of his, Leon Irwin, had brought him into last year. It involved purchase and redevelopment (with loans) of Pier House, a hotel property.
Landrieu bought in for 5 percent for $5,000, which he said may be worth $200,000 now. (This $200,000, plus the potential profits from Canal Street, aren't included in his $283,000 net worth).
A HUD grant is being sought by Key West to help this project along, but Landrieu said he would insulate himself from this matter, too, and divest his shares.
Landrieu avoided strong policy commitments on specific housing and urban issues, but he did give some general indications of his views.
He said he is a strong backer of community block grants, urban development grants and rent subsidies and said he wouldn't favor restricting the latter to only the very poorest. If the slightly less poor don't have good housing too, he said he fears it may hurt "the structure of the city" by driving them out.
He doesn't favor requiring rent-subsidy families to use at least 30 percent of their income for housing; the current 25 percent "is a fair posture," and would leave these families with more money for other things.
He is reluctant to endorse any permanent policy blocking condominium conversion; temporary halts here and there might solve the problem as some communities are arleady doing, he said.