Budget

McGoldrick’s privatization betrayal

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OPINION This isn’t the first time it’s happened. Most politicians break promises. That’s the nature of politics. But when someone signs a pledge — twice — saying he won’t privatize city services, when he holds himself out as a champion of anti-privatization and then goes directly against that stand —well, it kind of makes you wonder.

That politician is San Francisco Sup. Jake McGoldrick. In the past, he stood against privatizing services. He has fought for golf courses, for the Internet; heck, he even fought for horses when Mayor Gavin Newsom threatened to privatize the stables. During the Service Employees International Union endorsement process, he signed a pledge that he would not privatize work currently done by city workers. We endorsed him and even fought against the effort to recall him. But when the rubber hit the road for people, he screeched out of there.

Newsom has proposed contracting out the work of the Institutional Police, a group of workers represented by SEIU Local 1021. Institutional police officers work primarily at San Francisco General and Laguna Honda hospitals, but they also provide security at health clinics throughout the city. That security — not only for the workers, but for the community that these institutions serve as well — might soon be gone.

If you have ever been in SF General’s emergency room during a violent incident, you know exactly how bad a decision that would be. A nurse who met with McGoldrick described how bad it got on her shift one night. A man who had been shot was being transported to the ER, and the shooter was following closely behind, hoping to finish off the job. When the victim and assailant pulled up to General, the institutional police were there waiting with guns drawn. They disarmed the shooter and arrested him.

The nurse who told this story looked McGoldrick squarely in the eye and told him that the community would know immediately when the ER was staffed by private security officers, and that would endanger the workers and the patients there.

Even the union that represents the private security officers — whose members would get the jobs — told McGoldrick the work should remain with the institutional police.

Training for private security officers is minimal and inconsistent. Turnover is rapid. When private security officers are transferred to new buildings, they’re often not trained on its specific emergency procedures. There is little oversight to enforce existing state training requirements.

This shouldn’t be about money. A couple of weeks ago, during public hearings on the budget, the Controller’s Office reported on the exponential growth of six-figure salaried executive positions in the past few years; 55 new management jobs were created this year alone. McGoldrick, who heads the Budget and Finance Committee, could easily have moved some of that money around, as SEIU 1021 advocated, rather than leave the city’s health care facilities at risk. But he didn’t.

Unfortunately, it only takes one bad incident to expose the false "savings" of contracting out security to inexperienced and less-trained guards. Six supervisors appear to agree. What happened to Jake McGoldrick?

Robert Haaland

Labor activist Robert Haaland works for SEIU Local 1021.

Support SF’s Clean Energy Act

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EDITORIAL The long-awaited charter amendment that would transform San Francisco’s energy policy will come before the Board of Supervisors within the next few weeks. The measure, known as the Clean Energy Act, deserves strong support.

The proposal is fairly simple, but far-reaching. It includes ambitious targets for reductions in greenhouse gas emissions and a mandate that the city shift to entirely renewable electricity by 2040. That would turn Mayor Gavin Newsom’s green city rhetoric into enforceable reality and put the city where it ought to be — in the forefront of global efforts to end reliance on fossil fuels.

And the sponsors of the charter amendment, Sups. Ross Mirkarimi and Aaron Peskin, realize that the only way the city will ever get serious about sustainable energy programs is to get rid of Pacific Gas and Electric Co.’s monopoly and shift to a publicly-run local utility.

The measure would, for the first time, create a detailed municipal energy policy and put control of the city’s energy future in the hands of city officials, not those of a private corporation. The San Francisco Public Utilities Commission would have a mandate to ensure that by 2017, 51 percent of the electricity used in the city came from renewable sources. By 2030 that number would rise to 75 percent, and by 2040 the city would be seeking a 100 percent renewable portfolio. (Energy from the city’s existing Hetch Hetchy hydroelectric project would count as renewable power, and since Hetch Hetchy already covers a significant percent of the municipal load, the targets are entirely reasonable.)

The PUC would have to prepare a report every two years advising the supervisors on how it is moving to meet the targets.

The measure also directs the PUC to come up with a plan to put San Francisco into the business of retail electric power. That’s something activists have been pushing for since the 1920s. The federal law that gave the city the unique right to build a dam in a national park additionally mandated that San Francisco use the electricity from the dam to establish a public power system. The city has been in violation of the Raker Act for some 90 years now. As we’ve reported in numerous stories going back to 1969, the city built the dam in Yosemite and managed to construct a world-class municipal water system — but PG&E, through bribery, corruption, and political influence, hijacked the dam’s electric power. Although San Francisco is the only city in the nation with a federal public-power mandate and one of the few that owns and operates a major public hydroelectric project, residents and businesses are still stuck with PG&E’s soaring rates and lousy service.

And PG&E — which uses fossil fuels for much of its power and operates a nuclear plant — won’t make even the state’s mild mandate of 20 percent renewable energy by 2010.

Public power cities all over California have lower rates and better service. The Sacramento Municipal Utility District, one of the largest public power systems in the state, is a national leader on renewable energy and conservation efforts. And public power makes tremendous economic sense: a municipal utility would bring tens, maybe hundreds of millions of dollars per year into the city’s coffers. That money could be invested in solar, wind, and tidal energy, and some could go to reduce the structural budget deficit that haunts City Hall every year.

PG&E is already nervous about the prospect of a renewable energy and public power measure passing this fall, and has cranked up a campaign of lies and misinformation. The news media are already starting to pick up the pro-PG&E stance — the San Francisco Business Times is running a "poll" on public power that leads off with the tired old claim that "San Francisco can’t make the buses run on time. But it can find power to keep the lights on?" (A bit of reality here: urban bus systems are tough to run because they lose money. Public power systems make money. The lights stay on in Sacramento, Palo Alto, Los Angeles, Alameda, Santa Clara, and a lot of other cities — and the people who live there pay less, get more reliable service, and are more likely to see reductions in greenhouse gas emissions.)

Six votes are needed to put the Clean Energy Act on the ballot. Any supervisor who doesn’t support it will forever be known as someone who puts the interests of PG&E ahead of the needs of San Francisco, the nation, and the planet.

Domestic unrest

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› a&eletters@sfbg.com

Survival often depends on one’s ability to scurry around. Dancers and smaller-scale presenters must use their wits if they want to show their audiences more than homegrown fare. For the most part, the process at SCUBA — a presenters’ network that shares companies out of Seattle, Minneapolis, Philadelphia, and San Francisco — works. Sometimes, however, there is a glitch. Such was the case June 26–28 with one of the two dance installations presented as part of "ODC Theater Festival 2: Local Heroes/Big Picture," Kate Watson-Wallace’s House and Karen Sherman’s Tiny Town.

Watson-Wallace has made something of a reputation for herself in her home city of Philadelphia, where she takes over physical locations and transforms them through performance. Since these are acutely site-specific works, traveling with them is difficult. At Theater Artaud, she was confronted with a huge space that has a strong personality of its own. It proved particularly problematic during the first of two performances on opening night when the soft light of dusk streamed through the huge, history-crusted windows of Artaud’s loading dock. She also had to deal with memories (at least this audience member’s) of Lizz Roman, Joanna Haigood, and other artists who have presented their own — and stronger — interpretations of Artaud. Watson-Wallace works best with intimacy, and her production simply needed more confinement than the space or the budget allowed.

House consisted of what probably were three excerpts from the original piece, performed in the theater’s loading dock and lobby. To create the dining room, she placed a long table and six chairs in a corner, which afforded some sense of enclosure. This first part was choreographically the richest, and well performed by Watson-Wallace, Megan Mazarick, and John Luna with local dancers Sebastian Grubb, Jocelyn Lee, and Marisa Mariscotti. Shifting relationships — on, over, and under the table, as well as up the wall — flowed with the inevitability of clock time, yet they were filled with nuanced little fits and starts. An emotional climate redolent with suggestions of love, rebellion, and fatigue recalled tense moments around anyone’s family dinner table. People came and went, hands tentatively touched, looks were exchanged, support was given and withdrawn.

In the living room — suggested by a sofa, rug, and coffee table nailed halfway up a wall — Mazarick’s slow-paced solo had to deal with gravity as she slithered, climbed, and hung over the furniture. This was bland. Two pillows attached to Artaud’s lobby served as Watson-Wallace and Luna’s bedroom. A live video projected their movement onto a lumpy mattress. The duo’s well-danced intimacy — tender, playful, troubled — suggested two people used to each other in bed and out. I kept wondering whether an element of voyeurism was supposed to be at play between the real and the virtual performance. If there was, I didn’t see it.

Sherman resides in Minneapolis but was born in St. Louis. The person sitting next to me at the show was familiar with the choreographer’s birthplace and caught local references that escaped me. Tiny Town was a sardonic but curiously affectionate portrait that peeled away the layers of what the program described as a "Midwestern landscape," yet this could be any small town. It’s a place where everyone minds everyone else’s business, where residents frantically try to keep up and fit in — and woe to those who can’t.

Tiny was meticulously crafted with rich production values. It ran a little flat toward the end, but showcased fine performances from dancers Sherman, Joanna Furnans, Megan Mayer, Morgan Thorson, and Kristin Van Loon. You knew that not everything was right behind the set’s picket fences when a rising cloud revealed two atomic reactors and a woman with her legs tied literally turned herself upside down to "walk." She ended headfirst in a stack of pancakes, and that was just for starters. In this world of superficial prettiness — flowers stuffed in mailboxes, glittery party dresses — tomboys get beaten up and toothy housewives are indeed desperate.

The dancing was appropriately stiff-legged and fractured, full of moments infused with a dogged persistence. It spoke volumes about discomfort within one’s skin, if not outright self-hatred. And all of it was presented with pasted-on smiles.

Fighting for the right to party

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› steve@sfbg.com

It’s become increasingly difficult and expensive to stage street fairs, concerts, or other parties in San Francisco, a trend chronicled by the Guardian over the past two years (see "Death of fun," 05/23/06 and "Death of fun, the sequel," 04/25/07). But event and nightlife promoters have responded with a proposed ballot measure that would write the right to party into the city’s charter.

The "Promoting and Sustaining Music and Culture in San Francisco" charter amendment would acknowledge the importance of special events to the city’s character, streamline the process for obtaining city permits, and require the nine-plus city departments that promoters must deal with to submit reports outlining how their policies and fee structures will need to be altered to comply with the new mandate for fun.

The measure was developed by the Save SF Culture Coalition, whose members include the Entertainment Commission, Black Rock City LLC (which stages Burning Man as well as events here in town), the Late Night Coalition, and the Outdoor Events Coalition (a group formed last year to counter city policies and neighbor complaints that threatened to scuttle the North Beach Jazz Festival, How Weird Street Faire, concerts in Golden Gate Park, and other events). The measure is sponsored by Sup. Ross Mirkarimi and has picked up four other supervisors as cosponsors, so it needs just one more vote for the Board of Supervisors to place it on the November ballot.

"It was long overdue that the city produce a master plan and vision that promotes a sustainable environment for music, culture, and entertainment throughout the city," Mirkarimi said.

In fact, event promoters say they’ve been hit by a quadruple whammy that threatens their livelihoods and the vibrant nature of the city: rising fees charged by city departments looking to close budget gaps, increased concern over alcohol consumption and other liability issues, more conflicts over noise in increasingly dense neighborhoods such as SoMa, and the ability of a handful of complaining neighbors to create event-killing permit conditions. And those last two problems are only likely to get worse as the city grows.

"We want the city to create a sustainability policy that will save our outdoor events in the face of all the development that is going on," said John Wood, a member of the Late Night Coalition and a promoter who also serves on the San Francisco Love Fest board of directors. "We need to be able to say, ‘This is city policy and you’re not following it.’"

Promoter and club owner Terrance Alan was an original member of the Entertainment Commission, which was formed in 2003 in part to resolve complaints over noise and manage relations between nightclubs and their neighbors. But he said the agency has little staff and no leverage over other city departments involved in permitting, which includes the Planning, Building, Port, Police, Fire, Health, and Recreation and Park commissions and departments, as well as the Municipal Transportation Authority and Interdepartmental Staff Committee on Traffic and Transportation (ISCOTT), the body that approves street-closure permits.

"We have been completely unsuccessful at getting their attention," Alan said. But this new measure, he said, would "set the stage for ongoing discussions that need to be happening."

Or as Wood put it, "It would give us ammunition in the future battles we’re going to have. It’s not going to make those battles go away."

Recreation and Park Department spokesperson Rose Dennis said her agency must deal with many competing concerns, ranging from budgetary issues to being responsive to complaints raised by citizens. "We understand that it might feel heavy-handed, but we have a duty to do so because we have to balance a number of concerns," Dennis said. "[Event promoters] have a bottom line, and we have a bottom line. We have a lot of people to serve."

Yet she said the department will comply with the measure and adjust its policies, fees, and procedures as needed if the measure is approved by voters.

At a June 27 Board of Supervisors Rules Committee hearing, there was lots of support for the measure and no real opposition. "We’re concerned about the future of arts and culture in San Francisco," Steven Raspa, who does special events for Black Rock City, said at the hearing.

All three committee members voiced support for the measure, but because it needed some minor changes, a final vote was pushed back to July 9. Proponents characterize the measure as trying to bring some balance to a situation in which the loudest wheels — those of NIMBYs complaining about noise or party detritus — keep getting greased.

"The bureaucracy is hearing from these neighborhood groups all the time," Wood said. "We feel that we are the majority and we need to demonstrate that politically."

Amanda Witherell contributed to this report.

To read the measure or learn more, visit www.savesfculture.com

Save SF’s campaign finance program

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OPINION In 2000, San Francisco voters approved a system of public financing of campaigns for the Board of Supervisors, which in 2006 was expanded to the mayoral race. By eliminating the need for candidates to raise large amounts of private money, the program has been extremely successful at helping sever the link between big money and political decisions. But now this flagship program is threatened: Mayor Gavin Newsom is proposing to raid several million dollars from the public campaign fund.

Last September the mayor put forth a plan to take $6 million from the fund and give it to one of his pet programs: SF Promise. The cost of this program was only $525,000 the first year, begging the question of why the mayor was grabbing $6 million from the fund. Of course, Newsom had actively opposed public financing for the mayoral race, so it’s possible he wanted to defund the program. Supervisor Aaron Peskin wisely introduced legislation to fund SF Promise from the city’s reserve funds, thereby warding off the raid.

Now another proposal has surfaced to remove $5 million from the fund. According to Ethics Commission spending projections, removing $5 million will create a $1.7 million to $4.3 million shortfall for the next mayoral race in 2011 — and that’s just to meet minimum baseline funding.

The justification for this plan is that the city is facing a budget crunch and needs these funds. The mayor promises, promises, promises to return the funds later — but the only way to legally secure those funds is through a charter amendment, which the Mayor’s Office has declined to support.

This latest rationale rings hollow, and we only have to look across the bay to see why. Earlier in the decade, Oakland adopted public campaign funding, and after it was used in one election cycle, Oakland was hit with a budget deficit. The City Council decided to dip into the public financing funds in the gap. They promised, promised, promised that they would restore the funding once the deficit problems were resolved. Yet to this day Oakland still does not have public financing of campaigns — because, while it’s still the law, there’s simply no money in the fund.

Meanwhile, in San Francisco, members of the Budget Committee seem to be prepared to vote in favor of this dangerous proposal as early as July 3. While Supervisors Ross Mirkarimi and Chris Daly have wisely expressed opposition, Supervisor Jake McGoldrick, who has been a public financing supporter in the past, has so far expressed support for the cut. McGoldrick could end up being the swing vote, joining with public financing opponent Sup. Sean Elsbernd and mayoral ally Sup. Carmen Chu to support this legislation.

Dipping into the public financing fund for any reason sets a terrible precedent and undermines the integrity of this valuable program. Just as politicians should not draw their own district lines because of a conflict of interest, they should not undermine previously established campaign finance laws.

Rob Arnow and Steven Hill

Rob Arnow and Steven Hill have been the architects of public financing for mayoral and Board of Supervisors elections. Steven Hill also is director of the Political Reform Program at the New America Foundation. Contact them at info@voterownedelections.org.

 

MUD money

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Originally published October 10, 2001 A San Francisco public power agency could buy out Pacific Gas and Electric Co., cut residential electricity rates by 20 percent, dramatically reduce the city’s reliance on fossil fuels – and still operate with a $18 million annual surplus, a Bay Guardian analysis shows. Our study’s figures directly contradict the argument that’s at the heart of PG&E’s campaign against public power: they show that a municipal electrical system can be bought and run at no cost to the taxpayers – with plenty of money left over. Our figures are all taken from public sources and are consistent with the financial reports of other major public power agencies in the state. In fact, if anything, our figures are conservative; the real benefits are almost certainly higher. The financial issues are essentially the same for a municipal utility district and for a city power agency, so our figures would apply to either the MUD, which would be created under Measure I, or the Water and Power Agency, which would be created under Proposition F. Calcuutf8g the financial feasibility of a municipal utility district or city power agency in detail is a complex process. Consultants typically charge upward of $1 million for detailed feasibility studies that use all sorts of models and assumptions to come up with the sorts of figures you can take to the bank (or to Wall Street to sell bonds). So our analysis isn’t anywhere near as detailed as what the MUD or the WPA will eventually have to produce. But we’ve covered all of the major revenues and costs; if we’re missing anything, it won’t radically change the bottom line. And it’s safe to say that we haven’t over<\h>estimated the financial viability of public power. The questions on the minds of most voters this fall are relatively simple: Can public power pay for itself? Will the MUD or the Water and Power Agency be a financial success? And our research shows that the answer is a resounding yes. We’ve run through two scenarios, a worst-case scenario and a best-case scenario. In each case, we’ve found, a San Francisco public power agency is more than financially viable. Our study is the rough equivalent of what a MUD’s or WPA’s annual energy report to the public would look like once the agency was up and running. In fact, we’ve pretty much followed the model of the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power (LADWP), and we’ve relied on those two agencies’ figures to estimate some of what the city’s comparable costs would be. We’ve discussed our study with Ed Smeloff, the city’s top energy expert, and while he couldn’t verify our conclusions (since he hasn’t run the numbers himself), he said that there were no major costs that we had ignored. The results are summarized in the two accompanying charts. Where’s the money? Based on how other MUDs have been set up, the process in San Francisco would look something like this: The elected MUD (or WPA) directors would commission a detailed feasibility study outlining the financial future of the agency. Then they would begin negotiations with PG&E to buy the company’s local transmission and distribution system. If PG&E wouldn’t sell, the MUD or WPA would seize the system through the power of eminent domain. The agency would then issue revenue bonds to cover the cost of the acquisition and start-up, hire a staff, and go into the retail power business. Sales of electricity would bring in revenue that would cover operating costs and pay off the revenue bonds; any money left over at the end could be turned back to the city’s General Fund, used to reduce rates, or used for conservation and environmental projects. So the first step in analyzing the finances of a MUD is to figure out how much revenue would be available each year. That’s a relatively simple calculation. According to the California Energy Commission, PG&E currently sells about 5.4 billion kilowatt-<\h>hours of electricity to customers in San Francisco. (This figure doesn’t include energy used by the city government, since government agencies use power from the city’s Hetch Hetchy dam.) Residential, commercial, and industrial customers all pay different rates. If a MUD sold power at current PG&E rates (as provided to us by PG&E spokesperson Ron Low), it would bring in $562 million in revenue (enough to create a big annual surplus – roughly $36 million.) But a MUD or power agency almost certainly wouldn’t sell power at PG&E’s high rates – one major attraction of public power is that it offers cheaper electricity. So in both of our scenarios, we assumed that the rates would be at least 10 percent below PG&E’s rates. In fact, as our study shows, rates could drop as much as 20 percent without harming the MUD or WPA’s viability. What’s it cost? There are three basic categories of costs that the agency would have to cover. The first is payments on the bonds, the second is generating or buying power, and the third is basic operations and maintenance (paying the staff to keep the system up and running, to send out bills, to read meters, as well as operating the repair trucks, etc.). Electricity can’t just be delivered to the doorsteps of customers like canned ham in a UPS box. It has to be distributed through a network of transformers, substations, wires, and poles and measured with individual meters. And until the public power agency owns that distribution network, it can’t sell a single kilowatt. Unfortunately, the system that’s now in place in San Francisco is owned by PG&E – and almost everyone involved agrees that it would be cheaper, easier, and quicker for the city to take over that system than to build a new one from scratch. That’s what SMUD did and what most other public agencies that have gotten into the power business in the past half century have done. A MUD or a city power agency would have the right to seize PG&E’s property by eminent domain. But PG&E would be entitled under law to fair compensation for the taking of its property, and one of the most complex, bitter – and crucial – issues involved in establishing public power will be the price tag. “This is not an easy case at all,” Richard Epstein, a professor of law at the University of Chicago and a national expert on eminent domain, told us. “I can guarantee you that nobody, but nobody, has any idea right now what fair compensation would be.” The issue will almost certainly be settled in court. PG&E insists that its San Francisco property is worth a small fortune – as much as $1.4 billion. In a 1996 study the Economic and Technical Analysis Group suggested that the price could be anywhere from $315 million to $1.2 billion. The ETAG study, which was highly favorable to PG&E, suggested that the most likely figure was around $795 million. The reason those figures are so widely divergent is that there are numerous ways of evaluating what a utility’s property is worth. The simplest is to establish what PG&E originally paid for the property, then factor in depreciation. That’s how insurance companies decide what they have to pay you if your car is stolen. The process generally leads to a low figure favorable to the city. But courts have recently been somewhat more friendly to an analysis that recognizes that utility property is more valuable than, say, a private car, because the utility property produces income. One way to address that is by valuing the property at its replacement cost and factoring in the value of a “going concern” – which, of course, leads to a much higher price. Real market value But there’s another way to look at the issue, and that involves going to the state agency that appraises the actual market value of PG&E’s property for tax purposes: the Board of Equalization. Every year the board’s appraisers evaluate exactly what PG&E’s property is worth – and the agency’s record is pretty good. When California’s private utilities sold 22 power plants under deregulation, the board checked its appraisals against actual market prices, and while sale prices for some plants varied from estimates, the board was accurate to within 1 percent overall, chief appraiser Harold Hale told us. The Board of Equalization estimated that as of January 2001, all of PG&E’s property in San Francisco was worth $962,140,298. That includes property that isn’t at all relevant to running an electric utility. The value of the property actually used in the electricity business, the board says, is $753,978,471. But that figure includes PG&E’s huge 77 Beale St. headquarters office complex, which the city almost certainly wouldn’t want or need to buy in an eminent domain action. If you subtract 77 Beale St. (which one real estate expert we contacted said was worth about $225 million as of Jan. 1), then the value of the property the city might actually buy is about $528 million. It may be even less than that: the real estate market has fallen almost 15 percent since Jan. 1, according to our expert, a senior executive at one of the city’s biggest firms, who asked not to be identified by name. However, to be conservative, we’re sticking with the Jan. 1 figure. Epstein, who has worked as a consultant fighting municipalization efforts and thus isn’t inclined to be biased in favor of a public buyout, agreed that using the Board of Equalization figures is “certainly a good place to start.” There’s no guarantee that the courts will accept this approach (although, with PG&E in bankruptcy court right now, it’s also entirely possible, experts say, that PG&E might be forced to accept a much lower value for its property and sell it without a fight, in order to pay off some creditors with cash). So we also analyzed a worst-case scenario, essentially accepting the figures of ETAG’s much maligned report and assuming that, under a replacement cost-<\d>plus-<\d>”going concern” analysis, the city would have to spend $795 million to take over the system. (Even ETAG concluded that it’s unlikely the final price would be as high as PG&E’s estimate; nobody whose property is up for seizure starts off by quoting a realistic price.) No matter what the price, the bond sale will have to include some money for contingencies – the actual cost of the bond sale, start-up cash, etc. We’ve added $50 million for those costs. Paying the staff, buying power PG&E doesn’t publicly reveal its operating costs for San Francisco (or any other specific service area). And it’s difficult to use the company’s system-<\h>wide operating costs as a basis for estimating San Francisco costs, since the population of San Francisco is so much denser than in most of the company’s northern California territory. The denser the population, the cheaper it is to serve; the distance between customers is smaller, so you need less transmission line per customer. Reading meters is faster, since the employee doing that work doesn’t have to drive long distances between each house. Repairs and maintenance are cheaper for the same reason. And PG&E’s costs aren’t a fair comparison for a public power agency anyway: PG&E pays huge executive salaries (see “Public Power vs. PG&E,” page 24), which are included in the operations overhead. So we based our cost estimate on LADWP, which is about as close a comparison to San Francisco as we could find. Los Angeles is not quite as dense as San Francisco, so the L.A. figures are almost certainly higher than what San Francisco would pay, but they provide a reasonable, if conservative, estimate. LADWP’s cost per customer is $383; multiplied by the number of customers in San Francisco, that cost is $131 million a year. Then there’s the question of generating or buying the electricity. Here San Francisco has a huge advantage over other public power agencies: The city owns a large hydro<\h>electric dam that can generate enough to cover some of the local power needs – and it’s already paid for. Power from the Hetch Hetchy dam is cheap: the cost of operating the system is only about 2¢ a kilowatt-<\h>hour. Unfortunately, the city also has to pay PG&E to ship the power over its lines to the city borders, since the city has no complete transmission line to carry the power here; San Francisco pays PG&E $9.6 million a year in what’s known as “wheeling fees.” San Francisco currently sells most of the available Hetch Hetchy power to the Turlock and Modesto Irrigation Districts. Our analysis assumes that those contracts will be broken and that much of the power – 425 million kilowatt-<\h>hours’ worth – will be available to the MUD or WPA. The city also has a very expensive contract with Calpine to provide backup energy when water is low at the dam. The wheeling fees and Calpine deal boost the actual cost of Hetch Hetchy power to about 4¢ a kilowatt-hour. But the Calpine deal ends in five years, at which point Hetch Hetchy power will be far less expensive – and the MUD’s costs will go down. Green power Our analysis is based on the assumption that San Francisco will move as rapidly as possible to reduce its reliance on fossil fuels (see “Green City,” 9/26/01). Not all of the alternative-<\h>energy sources that should ultimately be part of the city’s mix are likely to be online when the MUD starts operating, so we’ve again been conservative, assuming in our worst-case scenario only a modest amount of solar power to supplement Hetch Hetchy power. In our best-case scenario we assume that the city will be able to develop 200 megawatts of solar and wind power – five times as much as projected in the solar bond measure, Proposition B, and enough to power 200,000 homes. The cost of solar and wind is easy to determine: it’s the cost of the interest on the bonds needed to buy and install the windmills and panels. Once they’re up and running, they cost very little to operate – and the fuel, of course, is free. Based on the San Francisco Public Utilities Commission staff’s analysis of Prop. B), 40 megawatts of solar, wind, and efficiency programs – the equivalent of 98 million annual kilowatt-<\h>hours – will cost about $7.5 million a year. Our ambitious plan – for five times that much solar and wind power- would cost $38 million a year. (Again, the actual costs will probably be lower; once a big agency orders a large amount of solar- or wind-<\h>generating facilities, the price goes down substantially.) The rest of the power the city needs will have to be bought on the open market. Because the market is so volatile, it’s hard to say exactly what that cost would be. But futures contracts for power are listed on the New York Mercantile Exchange Web site, and they’re currently running at less than 4¢ a kilowatt-hour. That price is expected to decline in the future. Again, we’ve stuck to conservative numbers, assuming the MUD or WPA would have to pay 6.9¢ a kilowatt-<\h>hour for power generated locally, by Mirant Corp.’s Potrero Hill power plant (one energy expert told us that Mirant is unlikely to accept less than the 6.9¢ the state is now paying for power), and 5.5¢ a kilowatt-<\h>hour for power bought from out-of-town sources. We assumed that the Potrero plant would operate at its capacity. The power the city would import can’t exceed the amount that can be carried along the one transmission line leading into San Francisco, and our projection meets that criterion. PG&E pays a substantial amount of taxes to the city, and almost all of the San Francisco-<\d>Brisbane MUD Board candidates have pledged to make sure that, at the very least, the city’s General Fund doesn’t lose any money if the private utility is replaced with a public agency. So part of the MUD’s expense would be the payment of a fee to replace what PG&E paid in taxes. The utility pays three major taxes: property taxes, a franchise fee, and business taxes. Based on the Board of Equalization’s assessed value for PG&E ($962 million) and the city’s property tax rate, PG&E’s property taxes are about $1 million. The franchise fee – 1.5 percent of sales – adds another $8.4 million. It’s impossible to say how much PG&E pays San Francisco in business taxes, since that figure is not public, but even at several million dollars a year, it wouldn’t significantly change our bottom line. Unanswered questions There are plenty of questions our analysis doesn’t – and can’t – answer, factors that are impossible at this point to predict with any accuracy. PG&E customers, for example, have to pay a substantial surcharge on their electric bills for what’s known as the CTC, or competitive transition charge. In essence, that’s the money ratepayers have been forced to cough up to cover the cost of PG&E’s bad investments in nuclear power. It’s possible that a San Francisco power agency would have to include some of those charges in its bills – but according to Mindy Spatt, media director at TURN, it’s unlikely. The CTC is expected to end next year and probably wouldn’t be a factor by the time the MUD or WPA was up and running. It’s also unclear whether the MUD or WPA would have to pay a share of the costs of the expensive long-term power contracts that the state Department of Water Resources has signed to buy power for the bankrupt PG&E. There would almost certainly be some substantial legal fees, possibly in the millions of dollars, that would reduce the surplus during the first few years (but not once the eminent domain issues were settled). Most of the MUD candidates have voted to shut down PG&E’s Hunters Point plant, and it’s unclear how much it will cost to decommission that facility. The MUD or WPA could also buy the Potrero plant (it recently sold for $330 million) and pay less for the power generated there. And, of course, it’s uncertain how much electricity will cost on the open market in the next few years. That’s why the MUD or WPA would probably want to move aggressively to increase its own generating capacity. But if power prices go up, one thing is clear: PG&E’s prices will go up higher, and faster, than the prices of a public power agency. Voters won’t have to take our word alone on the subject. The public will have more information on San Francisco’s energy plans in the coming weeks. The county’s Local Agency Formation Commission is planning to bring in experts on public power and energy for hearings, and Smeloff is hiring Amory Lovins’s Rocky Mountain Institute to assess the city’s energy alternatives. Both reports are expected before the Nov. 6 election. Our analysis isn’t that radical or unusual; it just confirms the experience of every other major public power agency in the state. We’ve found what just about everyone who’s gotten out from under the private utilities already knows: public power is cheaper. It’s that simple. Public power in San Francisco: Best-case scenario (Low rates, extensive renewable energy) Revenue1 Residential sales 1.481 billion kwh @ 11.5¢ per kwh $170 million Commercial/industrial sales 3.942 billion kwh @ 9.5¢ per kwh $374 million TOTAL $544 million Expenses Payment on revenue bonds $578.9 million @ 8 percent2 $50.9 million Cost of power * <\i>Hetch Hetchy 425 million kwh @ 4¢ per kwh3 $17 million * <\i>Solar, wind, efficiencies 500 million kwh4 $38 million * <\i>Potrero Hill plant 1.6 billion kwh @ 6.9¢ per kwh $110 million * <\i>Contract purchases 2.90 billion kwh @ 5.5¢ per kwh5 $160 million Operations and maintenance6 $131 million Replace PG&E’s city taxes7 $9.4 million Public benefits8 $10 million TOTAL $526 million Surplus $18 million This chart shows how a San Francisco public power agency could take over Pacific Gas and Electric Co., reduce the city’s reliance on fossil fuels, provide all of the electricity the city needs, and still have money left over. The analysis would apply to either a municipal utility district or a city water and power agency. Proposals for both are on the November ballot. (The MUD proposal would include both San Francisco and Brisbane, but since Brisbane is a very small area – only about 4,000 residents – and since it’s difficult to get accurate data on Brisbane’s current usage, our numbers include only San Francisco. The cost of providing service to Brisbane and the revenue from that jurisdiction would not significantly change the analysis.) The scenario presented here is an optimistic one – although, based on our research, the figures are quite realistic. All of the figures we’ve used are conservative – if anything, our analysis underestimates the financial viability of the MUD or a city WPA. The bottom line: Even with residential rates 20 percent below what PG&E currently charges, and with a huge investment in solar and wind power (five times the size of what the city is currently planning), the MUD or WPA would run a large surplus. This study reflects what a MUD or WPA would be facing several years into its existence. In the first few years, the agency would probably have to buy more power on the open market and would generate less from solar and wind (which take time to set up). But on balance that probably lowers the cost of power (solar is comparatively expensive). There are certain to be factors that we missed – although our cost and revenue projections are very similar to what we found in the annual reports of other large public power agencies such as the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power (LADWP). But we’ve accounted for every foreseeable big-ticket item, and the projected surplus is large enough to cover unexpected costs. 1Revenue is based on sales of 5.4 billion kilowatt-hours: the amount PG&E currently sells in San Francisco, according to the state Energy Commission. A MUD or WPA could set rates at any level it wanted; for this analysis, we set residential rates at 20 percent below PG&E’s current rate of 14¢ a kilowatt-hour rate (which is projected to rise sharply). We assumed that commercial and industrial rates would be at the low end of PG&E’s scale. 2This assumes the MUD or WPA can buy PG&E’s assets at current market value, as assessed by the state Board of Equalization as of Jan. 1, 2001 (see story for details). Ken Bruce of the Board of Supervisors’ Budget Analysts Office told the Bay Guardian that 8 percent would be a reasonable projection for the interest on revenue bonds. 3Hetch Hetchy currently generates about 1.7 billion kilowatt-hours a year, and half of that goes for city government needs – Muni, the lights at City Hall, etc. We assumed that the city would pay the MUD what it pays now – the actual cost of generating the power – so the power sold to the city would be a financial wash. Thus it’s not in our analysis as either a cost or a revenue item. The cost we project for Hetch Hetchy power is high – it includes unfavorable contracts that will expire in five years (see story). The actual future cost would be closer to 2¢ a kilowatt-hour. 4The cost of solar and wind is based on financial estimates for Prop. B. 5It’s impossible to determine exactly what it would cost the MUD or WPA to purchase power in the future, but future contracts currently listed on the New York Mercantile Exchange are going for less than 4¢ a kilowatt-hour, and that price is expected to drop. Again, we took a conservative estimate; actual costs might be lower. 6Based on the cost per customer of operations and maintenance at LADWP (see story). 7The MUD would have no obligation to pay city taxes, but almost all of the candidates for MUD director have pledged to make sure the city doesn’t lose money – in other words, the MUD would almost certainly pay fees equivalent to what PG&E was paying in taxes (see story). 8The state mandates that power companies or agencies spend 2 percent of revenues on “public benefits” – conservation, environmental programs, and the like. Public power in San Francisco: Worst-case scenario (Moderate rates, less renewable energy) Revenue Residential sales 1.481 billion kwh @ 12.6¢ per kwh1 $186 million Commercial/industrial sales 3.942 billion kwh @ 9.5¢ per kwh2 $374 million TOTAL $560 million Expenses Payment on revenue bonds $850 million @ 8 percent3 $74.4 million Cost of power * <\i>Hetch Hetchy 425 million kwh @ 4¢ per kwh $17 million (includes wheeling and backup)4 * <\i>Solar, wind, efficiencies 98 million kwh5 $7.5 million Purchased power6 * <\i>Potrero Hill plant 1.752 billion kwh @ 6.9¢ per kwh $120 million * <\i>Contract purchases 3.098 billion kwh @ 5.5¢ $170 million Operations and maintenance7 $131 million Replace PG&E’s city taxes8 $9.4 million Public benefits9 $10 million TOTAL $539 million Surplus $21 million This chart shows how a public power system in San Francisco would operate if some of the worst-case assumptions are true: if, for example, the municipal utility district or power agency had to spend $800 million to buy out PG&E’s system (the highest likely figure, even according to pro-PG&E studies) and if the MUD was unable to fund and site affordable renewable-energy systems and was thus forced to rely on buying a large amount of its power from the Potrero Hill plant (owned by Mirant Corporation) and from other generators through long-term contracts. Even under those circumstances, the chart shows, the MUD could cut residential rates by 10 percent, keep commercial and industrial rates at the low end of PG&E’s rates, and still end the year with a surplus. As in all of our calculations, the numbers are very conservative; expenses would probably be considerably lower. 1The MUD could set rates at any level it wanted; for this scenario, we’ve set residential rates at 10 percent below PG&E’s current rates. 2The commercial/industrial rate is at the low end of PG&E’s equivalent rate. 3See story for details on the $850 million figure. The bond rate of 8 percent is based on an estimate from Ken Bruce of the Board of Supervisors’ Budget Analyst’s Office. 4See story and “Public Power in San Francisco: Best-Case Scenario” for details. 5This is the amount of solar and wind power projected in the city’s report on the solar bond measure, Proposition B. 6See story and “Best-Case Scenario” for details. 7Based on comparable costs per customer at LADWP. 8See story. 9See story.

The Chamber attacks public power

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The SF Chamber of Commerce is getting itself all into a frothy lather over the prospect of a public-power campaign, and the email that the Chamber sent out today is full of insanely inaccurate iinformation.

Here’s the email and a few notes on its most bizarre claims:

This Friday, June 27 at 10:00am at City Hall, Room 263 the Rules Committee will consider a measure that would put the City in control of our power system. The cost of this measure will be billions of dollars, paid for with higher utility bills, especially for business.

The cost to buy the PG&E electric system in San Francisco in 2010 is presently expected to beat least $4.02 billion. This is only a preliminary estimate, the final figure could be substantially higher. When you include the interest payments on the bonds and the associated severance and financing costs, the ultimate cost for a takeover will be more than twice that amount.

WHAT? Where do you suppose that $4.02 billion came from? It clearly didn’t come from any realistic study. PG&E’s dilapidated, poorly maintained distribution system is probably worth less than $500 million — and even if the city had to pay twice that much, it would be more than worthwhile when you look at how much revenue would come in.

San Franciscans Will Pay to Replace the Lost Tax Revenue

Taking over PG&E means removing PG&E from the tax rolls. That will cost taxpayers over $25 million annually in lost franchise fees, payroll taxes, property taxes, and direct contributions from PG&E. Those taxes and payments will need to be replaced – or services will need to be cut. The City is now facing one of the most severe budget shortfalls ever. The power system takeover will make this budget gap at least $25 million worse. Again, there is no current plan to replace this lost revenue. The PG&E takeover means either service cuts and layoffs – or another massive tax increase.

HUH? The $25 million the city would lose would be more than replaced by the money — several hundred million at least — that the city would gain in extra revenue from running a municipal utility.

We’ll All Pay the Price of Putting City Hall in Charge of our Power System

Right now, PG&E is regulated by the State of California. But a city-run power system would be exempt from most state regulations, giving the Board of Supervisors the power to make some customers pay more so others can pay less, siphon away funds needed for the retrofit of the Hetch Hetchy water system and delay investments in the safety and reliability of our energy grid.

WELL, actually the supervisors could mandate renewable energy — which PG&E isn’t doing.

So the battle is already underway, and already, PG&E’s mouthpieces are putting out wildly misleading data.

Should be a great hearing tomorrow.

Newsom’s backwards budget

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EDITORIAL The San Francisco city employee union that represents front-line workers has come up with a remarkable document. It’s an analysis by the city controller, requested through the office of Sup. Aaron Peskin, that shows how many jobs have been added or cut in the past 10 years, broken down by bargaining group.

Since almost all San Francisco employees, including managers, are unionized, and different categories of workers have different unions, the analysis paints a clear picture of where hiring has taken place and where job cuts have hit hardest. It is, in many ways, a snapshot of the budget priorities of Mayor Gavin Newsom. And as Sarah Phelan reported this week on sfbg.com, here’s what it shows:

As direct public services have been hacked up and eliminated, as homeless shelters close and nursing services for elderly shut-ins vanish, the city has hired a whole lot of new high-paid managers.

In fact, in the past decade, the city has added 334 high-level jobs, paying an average of $140,000 a year. That’s a 45 percent jump. Under Newsom’s administration, during tough budget times, 166 new managers have been added. In this year’s budget alone, Newsom is calling for 52 new managers.

Professional and technical jobs increased by 781 positions, a 23 percent rise.

Front-line jobs, on the other hand, have grown by less than 10 percent.

Of course, the city needs managers and technical staff. Some of the new positions are entirely legitimate and justified. But these high-level jobs are also where political cronies are placed, and management jobs in this city have always had a political patronage element. And when the budget is deeply in the red, it doesn’t make sense to lay off the people who are doing the day-to-day work and hire more people to supervise a reduced staff.

Let’s look at the numbers. The total tab for new managers amounts to about $46 million a year. The increase — just the increase — in management positions in this year’s budget would total $7.8 million. That would save a lot of services: Newsom shut down Buster’s Place, the city’s only 24-hour drop-in center for the homeless, to save $300,000. Keeping public health nurses to serve sick seniors would cost only a few hundred thousand more.

The daily newspapers have ignored this story so far, but it’s the blockbuster of the budget season. It shows where the mayor puts his priorities, what he really cares about. He’s got exotic positions like a director of sustainability, in his own office — which is a wonderful idea, but with a budget deficit of more than $300 million, is it really worth $160,000 a year? (Don’t we already have a Department of the Environment?) He’s got people out at the airport who collect six-figure salaries and do very little visible work. And yet he can’t manage to keep basic services for the needy — services that can make the difference between life and death on the streets — from vanishing in a whirlpool of red ink.

Peskin has made some noise about cutting high-end jobs instead of rank-and-file positions, but with the budget coming to a head soon, that ought to be one of the top priorities. In fact, the board’s Budget Committee ought to issue a challenge to the mayor: before another homeless program is cut, before another public health service is eliminated, before another city agency that does on-the-ground work to help low-income people is gutted, Newsom should demonstrate, job by job, why so many $140,000-a-year positions are critical to the city.

The other glaring problem with the budget is that it includes no plans for increased revenue.

Newsom is happy to blame Gov. Arnold Schwarzenegger for terminating aid to cities, but let’s face it: with Republicans in Sacramento and Washington DC, San Francisco is going to have to solve most of its problems on its own. This is nothing new; Newsom should hardly be shocked by it.

If the mayor wants his budget to be taken seriously, he should immediately announce that he’s supporting Peskin’s two revenue-generating measures on the November ballot and do all that he can to help them pass. Then he can add another $50 million or so to his budget, based on the projected revenue, and save a lot of crucial services that are now facing the ax.

Is Newsom’s Baby Savings Bond for Suckers?

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When Newsom introduced plans during his January 2008 inauguration speech to deposit $500 for every baby born in San Francisco, I was left wondering how many people who give birth in San Francisco today will manage to keep that child housed, clothed and fed in the City for the next 18 years, which is just one of the requirements for those hoping to eventually cash in on Newsom’s proposed Baby Bond.

June-Sucker-Nation.gif

The June Sucker in the indicator species for the health of the watershed known as the June Sucker Nation, which feeds the rivers flowing into Utah Lake. So, does that mean that newborns in San Francisco are an indicator species for the health of the City and County of San Francisco? If so, we, as a City, are in trouble, with the number of children steadily decreasing once they get out of the stroller and start pushing the envelope of tiptoe-through-the-condo-and-don’t make-a-noise living…

According to Newsom, the fund would earn interest – and could be accessed by every graduating high school student, who participates in public service anmd whose family remains in the city that long, with the money intended to help pay for college or first-time home ownership.

Now we learn that Newsom has budgeted $1.478 million line item for the program in a budget from which he is making 22 percent cuts to vital preexisting services , thanks to a projected $338 million deficit.

All of which has got me wondering if there is any means testing in place for this Baby Savings Bond. Because if not, isn’t it likely that the only folks whose kids will likely cash in on this program will be rich people, making more than $150,000, while the rest of us suckers and our poor offspring get displaced into the East Bay and beyond.
(Adios, suckers!)

OK, maybe it’s more like 5:1.

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Just got off the phone with SEIU 1020’s RObert Haaland, who apologized for misreading the data, which we have now posted online, so all you budget wonks can go nuts and help us ordinary morals understand the City’s hiring trends over the past decade.

Haaland now believes Newsom’s manager to worker hiring ratio is more like 5:1, not 10:1, as previously blogged.

As Haaland told me, Controller Ben Rosenfeld just clarified that it’s important to look at the gross number, not net number, which in the case of SEIU 1021, bumps up new positions to 771, and not 113 positions.

That said, Haaland still maintains there is a “a massively disproportionate number of managers, compared to workers,” being hired.

“The justification being given to me is that the Municipal Executives Assocation accepted the furloughs, so they got new positions,” Haaland claimed. “But at the same time they are saying that most of these “new positions’ are in fact reclassifications, not new monetary positions, and tthat there are in fact only 14 or 15 actual new positions. But from our perspective, going from a manager to an executive is like being given a promotion or a raise, because it’s up to Human Resources to set the salary.”

Haaland further argues that if you look at the last three years worth of hiring data, and not just this year’s bad budget year, then you can more clearly see a citywide trend of hiring more managers than front line workers.

Either way, this story continues to unfold, so stay tuned, and feel free to reply to this posting, with your insights into the true meanings hidden within the numbers. (And to think, they promised us that there would be no math!)

Newsom’s manager to worker hiring ratio? 10:1.

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Does Newsom show more love to managers than workers?
photos and text by Sarah Phelan

SEIU Local 1021’s Robert Haaland says the City has a pattern of hiring way more managers than front line workers over the last decade.

“Over the last ten years, the City has hired managers to front line workers at a rate of ten to one, “says Robert Haaland, SEIU Local 1021’s political coordinator. “That means 1,000 managers to 100 front line workers. And fifty percent of these new management hires have occurred within the Newsom administration.

Haaland makes his argument using an analysis of full-time equivalent positions that the City has budgeted and funded over the last ten years, broken down. by union.

SEIU requested this analysis through the office of Board President Sup. Aaron Peskin.

These figures, Haaland observes, show that SEIU gained 113 new positions over the last decade, the Municipal Executives Association gained 334 positions, and Local 21, which represents professional and technical engineers, gained 781 positions.

“We’re not going after Local 21, or any union,” Haaland says. “We’re going after the City’s hiring practices, in which their priority is to hire executives and managers.”

Haaland’s explosive claims come as the City is going through one of the most painful budget hearings in memory, in an effort to reconcile a $338 million projected deficit–a deficit that Newsom’s critics claim has been predominantly balanced on the backs of the poor.

Monique Zmuda, Deputy City Controller, confirmed that there are 53.95 FTE MEA positions budgeted for 2008-09, with many occurring in the Municipal Transportation Agency and at the airport.

“The Muncipal Executives Assocation is sort of the top management level of the City,” Zmuda told the Guardian.

She noted that when the Mayor recently talked about deleting management positions, “He was not talking about the unions, he was talking about managers generically.”

“We also have managers who are attorneys, police, firefighters and physicians, and of we are looking at hiring increases over time, most are in police, nurses and sheriffs,” she said.

Says Haaland, “We’re not haggling over positions, we’re haggling over an institutional priority in every City department of hiring managers over workers.”
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And people wonder why the real Newsom looked stressed at his June 2 budget announcement at the Shipyard.

Budget Battle bumps up against Gay Marriage

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Bridal Money bags are sexy, budget documents ain’t.

As LGBT couples were praising Mayor Gavin Newsom for making legally wedded bliss a reality in their lifetimes, a parallel community inside City Hall was criticizing the Mayor for making potentially fatal cuts to public health programs, many of which have served San Francisco’s LGBT community for decades.

Unfortunately, between all the gay marriage hoopla going on in the marble corridors of City Hall, and the burn out that non-profits are already feeling having suffered crippling mid-year cuts, there was an unprecedented feeling of doom and gloom during this year’s Beilensen Hearing inside the Board of Supervisors’s chambers.

The Beilensen Hearings, which the state requires when cuts are proposed to public health programs and services, have become an annual dance, which goes like this: first the Mayor proposes massive cuts, then the Board tries to restore funds, next competing rallies are held, and finally most of the programs are restored,

Only this year, there is little to no money to be found.

During his June 2 budget annoucement, Mayor Gavin Newsom pointed out that while the City is facing a record $338 million deficit, it is also is seeing healthy increases in tax revenues.

So, why such a massive imbalance this year? Newsom claims we are spending more than we are taking in, but that answer sidesteps the political reality of just why that is happening on such a greater scale, this year.

The answer to that question lies in two directions: Newsom’s approval, and the Board’s largely unflinching support (Sup. Chris Daly was the lone dissenting voice) for union contracts last summer, when the Mayor was up for reelection; and Newsom and the Board’s failure to introduce legislation last year to create new revenue streams to make up for the increasing slice of funds that those same union contracts, predictably, are swallowing up.

To their credit, Board President Aaron Peskin (who celebrated his birthday June 17, just as gay marriage mania was hitting City Hall big time) and Sup. Jake McGoldrick, who chairs the Board’s powerful Budget and Finance Committee, have now bitten the bullet and introduced legislation that seeks to increase property transfer taxes and close the pay roll tax partnership loophole.

But even if these measures are approved, (and that’s a big if, they won’t ease this year’s budget pains.

What could help, on a more immediate level, is the identification of significant savings within the Mayor’s proposed 2008-09 budget. And to that end Budget Committee chair McGoldrick has dug his claws deep into Newsom’s proposed budget document and drawn blood.

This blood letting began ast week, when McGoldrick led the charge against funding the Mayor’s proposed $3 million Community Justice Center. (The proposal got sent back to committee where it will likely fester, and the Mayor has responded by placing a measure on the November ballot that would allocate $1.8 Million in city funds and earmark an additional $984,000 in federal grant money to create the proposed center.)

And at yesterday’s Board meeting, McGoldrick told me that he has identified potential savings of $8-10 million from the San Francisco Police Department, including eliminating over staffing as well as defunding two out of the Mayor’s three proposed police academies.

“Any claims that they are understaffed are not true,” said McGoldrick, who says he came to this conclusion by factoring in 129 civilianized positions into SFPD staffing totals.

“And I’ve already told the Mayor and the Chief of Police that they are not going to get three police academies, and that the Mayor’s 311 Center is not getting 26 new positions,” McGoldrick continued. “We are going to have to figure out a more efficient way to run it. This is all about priorities. My priorities are the sick, the shut-ins, the elderly, children, the mentally ill and the victims of domestic violence.”

Meanwhile, Sup. Chris Daly extracted hollow laughs when he announced that he would not make the exact same speech as he did at last year’s Beilenson Hearing.

Daly was referring to his now infamous speech in which he referred to “allegations of cocaine use,”—allegations that were whispered around town, after it was revealed that Newsom had had an adulterous affair with the wife of his then campaign manager Alex Tourk, but that were never proven and thus would have been better left unmentioned in a public hearing that was seeking to illuminate Newsom’s wacky budget priorities..

But because Daly mentioned them, the media, which doesn’t like covering budget hearings, since there’s nothing sexy about covering hours of testimony in which people describe , over and over, the devastation that proposed cuts will have on their programs, happily refocused its lens on the alleged inappropriateness of Daly’s speech, thereby helping the Mayor get off the hook for proposing cuts to substance abuse treatment programs, in the same year he claimed to be undergoing alcohol abuse therapy.

Or maybe it was because that in this LGBT-friendly town, Newsom will always be remembered as the patron saint of gay marriage, and because of his sainthood voters will largely absolve him of all his other sins, including making decimating financial cuts to public health programs that have helped the LGBT community for decades.

Either way, this time around, Daly, (while complaining that the Beilenson hearing should happen in front of the Mayor), didn’t bother to imply that Newsom had somehow lost his moral compass.

Which was probably a wise l move, given that at that very moment the Mayor was being elevated to international renown for having pushed the gay rights envelope all the way to the wedding altar, at a time when the rest of the Democratic Party, fearing another four years of President Bush in 2004, was whimpering “too much, too soon, too fast.”

Instead, Daly commented that his district will likely look like “the Night of the Living Dead” once Newsom’s proposed budget cuts go into effect,

Daly also introduced the “Treatment on Demand Act,” which “requires that the City and County of San Francisco “maintain an adequate level of free and low cost medical substance abuse services and residential treatment slots commensurate with demand.”

Daly’s act measures demand, “by the total number of filled medical substance abuse slots plus the total number of individuals seeking such slots as well as the total number of filled residential treatment slots plus the number of individuals seeking such slots.”

But for now, it’s budget hearing season, and advocates like Bill Hirsch of the AIDS Legal Referral Panel are telling the Board how they believe the Mayor’s proposed cuts amount to “a dismantling of a system of care that has taken over 25 years to put together.”

“We’re terribly disappointed with the mayor’s Budget,” Hirsch said, against a soundtrack of whoops of joy as gay couples celebrated their weddings outside the Board’s chambers.
“Hopefully, the Board can help prevent the worst of this.”

Others, like Connie Ford of Office Employees Local 3, which represents 800 non-profit workers, called the 22 percent cuts that the Department of Public Health is facing, “the most chaotic, unstrategic and ill-advised cuts” she’d ever seen.
“We’ll hurt people and the cuts will actually cost us more money” Ford said. “There is no rhyme or reason to these cuts.”

FelicianHouston, program director of a Woman’s Place, said that the proposed cuts are a “reflection of the dismantling of the continuum of care.”
“Just don’t do it.” Houston said.

And the list of speakers went on and on, including representatives for suicide prevention, crystal meth intervention, and mobile assistance patrol programs.

“Studies show that for every one dollar spent on substance abuse treatment seven dollars are saved at the law enforcement level” said several speakers. It’s a comment that brings us full circle to the insanity of proposing to start new programs, like the Community Justice Center, while proposing to slash the programs that would serve that center.

Stay tuned for move coverage of this and other budget insanities, between now and the end of July, when the annual budgetary approval cycle is scheduled to be resolved.

Obama contingent can’t campaign at Pride

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By Mara Math

An official contingent of Barack Obama supporters will be marching in the Pride Parade next weekend — but they’ve been told not to wear campaign buttons or t-shirts and not to carry campaign signs.

An internal email from Rebecca Prozan, a member of Obama’s national LGBT leadership committee, went out June 15th asking participants in the Obama contingent at this year’s parade to “refrain from wearing campaign-related materials in the march . . . to make sure the parade does not lose funds as a result of our participation.”

That surprised a lot of activists: The parade has always had its share of political campaigns. And some worried that the Obama camp, which has so far refused to support same-sex marriage, wanted to keep its distance from the community.

But the decision actually came from the Pride Foundation, which runs the parade. Pride argues that allowing direct promotion of one particular candidate would interfere with the group’s tax-exempt status and would violate the conditions of a $77,000 annual grant from Grants for the Arts, which administers the city’s hotel tax funds. And because of the group’s tax-exempt status,

In fact, Brendan Behan, Pride’s community mobilization specialist, told us that “Obama contingent participants can wear T-shirts of Obama as a senator from Illinois, but not as a presidential candidate.”
As a nonprofit education group with a 501 c tax exemption, Pride can spend a tiny fraction of its budget on lobbying or campaigning. The city’s rules also prohibit allowing unequal access to any one party or lobbying group.

It’s hard to make the unequal-access point stick, since queer supporters of John McCain could also march in the parade. But Pride Executive Director Lindsey Jones put it this way: “They have equal access to not campaign.”
Jones, who has been at the helm for five years, told us she didn’t recall any active campaigning at the parade. “We only have four years of notes in our records,” she said. “Maybe it’s happened in the past, but we’re all fallible.”

Sup. Tom Ammiano told us that the rules have been in place for years, but people have always found ways around them. “The first time I ran for School Board, we’d made a big school bus and they told us we couldn’t use it because I was a candidate,” he said. “So we made a big fuss and in the end the put us last in the parade.”
In other years, he said, “supporters of a candidate can just march along on the sidewalk. And sometimes they slip in and join you, and it’s not a big deal.”

Attorney Randy Shaw, founder of the nonprofit Tenderloin Housing Clinic, told us he thinks Pride’s stance is misinterpretation of the law: “Clearly, no public funds can go toward sponsoring a political activity. But funds are sponsoring security, bathrooms, publicity, insurance etc.— participants are not being “subsidized.”
In fact, he said, “event organizers have no ability to enforce such a restriction, so it clearly is not covered by city restrictions on the use of public funds.”

Jones disagrees: “When the Obama campaign questioned our guidelines, it was the first time we’d had a significant challenge to those guidelines, so I had people doing research, and the City Attorney affirmed our interpretation.”
“There’s a difference between having a standard guideline that we inform people about, and it’s another whether we follow it,” Jones was quick to add. “It’s not an expectation of Grants for the Arts that we have an entire enforcement squad.”

Prozan has a similar view. “If someone shows up to march in an Obama ’08 shirt,” she told us, “I’m not going to tell them to take it off unless they’re sweating.”

“To me it’s an issue of freedom of speech, what some people would call a Constitutional issue,” says activist Tommi Avicolli Mecca, an original member of Gay Liberation and a queer activist for almost four decades. “This is really discouraging coming from a community that in the past has itself been the victim of attempts to restrict its freedom of speech. Is $77,000 worth selling out for?”

To the question of whether the gain is worth the strain, Jones responds, “It’s the responsibility of the community to make the changes they want to see.” The Parade is 38 years old, she notes, and began as a gathering of 200 people; today, thanks to community demand, it has 20 stages and more than three-quarters of a million attendees.
The Parade has only had Grants for the Arts funding for 10 years. “If we come to feel that we need to forego that $77,000–that’s how Pride changes. Every conversation we have, including this interview, changes Pride.”

She urged those interested to “Pick up the phone and call me.”

You can also email her at info@sfpride.org

Another shelter down

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› amanda@sfbg.com

Inside the front door of the Marian Residence for Women, a small handmade sign by a former resident advises newcomers, "Don’t compare this place to any others."

But I’ve stayed in the city-funded homeless shelters, and after a night at Marian, it’s hard not to rave about the differences. I’m given an actual bed to sleep on, with freshly laundered sheets, blankets, and a pillow. The bathrooms and showers are clean, and I’m offered every toiletry I could possibly need — as well as pajamas. Dinner is a wholesome meal of turkey, potatoes, and steamed greens — not the mystery meat on Wonder bread I received at the city’s MSC South shelter.

And unlike the tension I’ve witnessed at other shelters, the atmosphere inside Marian is close to pacific. After dinner, the 29 other women shower, read, rest on their beds, work on their laptops, or talk quietly while sitting at small tables in the common area. After my mandatory shower, I sit with an employee who explains the rules — be respectful of others, no drinking or drugs, and don’t forget to do my chore, which is assisting with dinner service. As long as I’m home by 7 p.m., I can have my bed as long as I need it.

That is, she clarifies, until the end of August — when they’re closing the shelter. For good.

Marian is a casualty of a plan by St. Anthony Foundation to cut $3 million from the foundation’s operating budget. In addition to closing the $1.2 million Marian facility, which houses 30 women in the emergency shelter and 27 in a transitional program, St. Anthony also will shutter its 315-acre organic dairy farm in Petaluma, currently used as a rehabilitation program for homeless addicts. Its Senior Outreach and Social Services [SOSS] is also losing staff and office space as it consolidates with the Social Work Center.

Five of the foundation’s 11 programs face cuts, the result of a two-year sustainability study that St. Anthony’s executive director, Father John Hardin, said will keep the charity out of a fiscal tailspin.

"We’re not in a financial crisis," he told the Guardian. "The reason we’re doing this is so we won’t be in a financial crisis."

He said the closures reflect the organization’s desire to get back to basics.

But, as one of the 40 soon-to-be-laid-off employees said, "They’ve said they want to refocus on basic services, but I see shelter as a basic service."

St. Anthony receives no city money for the work it does, but the closures are occurring in what’s already a war zone of budget cuts for social services in San Francisco. The loss of any of St. Anthony’s programs affects the city as a whole.

"Are we concerned? Yes," said Dave Knego of Curry Senior Services, which frequently refers seniors the group can’t help to St. Anthony’s SOSS program. "Unfortunately, we already have a waiting list, and the city’s cutting our funding back by 10 percent."

The closure of Marian is yet another sign of the slow erosion of shelter space in San Francisco. Since July 2004, 364 shelter spots have disappeared. By the end of August, Marian’s 57 beds and Ella Hill Hutch’s 100 mats will be gone as well. "You can’t afford to lose 57 beds, especially in a place where women are being treated like human beings," said Western Regional Advocacy Project’s Paul Boden, who’s worked with homeless services in the city since the 1980s. "What I thought was really ironic was there wasn’t any attempt to build a community effort to discuss how to save this facility. These beds are an incredibly important community resource."

Some of the women who live in the transitional program at Marian wanted to rally and save the shelter. "First and foremost was to try to save Marian Residence for Women," said Leticia Hernandez, a two-year resident of the transitional program who still hasn’t lined up a place to go when the shelter closes. "Even if we couldn’t save it, we thought it was still worth a try because any money that would come would go back to them." The women drafted a letter asking for help, which they’d hoped management would distribute to the press and public.

The foundation, Hernandez said, had a "thanks, but no thanks" response.

Hardin told us that St. Anthony’s wasn’t facing a financial crisis, so "we’re not going to get up and cry wolf. We want to go back to some of the basics. We’re turning people away from the clinic," he pointed out.

He agreed that shelter was a basic service, but said, "We can’t do it all."

The foundation wouldn’t detail its intentions for the building once it’s vacated Aug. 31, beyond affirming that it would be rented. "That’s going to be an income generator," said foundation spokesperson Francis Aviani. "We are hoping to get a social service agency to use the space in the way it’s designed for, helping folks."

Multiple St. Anthony employees said they were told the facility would be used for medical respite — beds set aside for people who aren’t in critical condition, but are too ill or fragile to mingle with the general population and have nowhere else to go — and a St. Anthony board member confirmed that was the only plan presented to the board.

Marc Trotz, director of the San Francisco Department of Public Health’s Housing and Urban Health division, which oversees its $2.5 million, 60-bed medical respite program currently housed in two facilities, told us the city is looking for a new respite site. He confirmed that the Marian building is a facility the agency has seriously considered. "We’re not looking to push one program out in favor of another or anything like that." But, he said, "It’s a potential site that would work well."

While St. Anthony is cutting $3 million in programs, foundation staffers have been working for several years on a $22 million capital campaign for a new administrative building at 150 Golden Gate Ave. The building will replace a facility at 121 Golden Gate, where offices, the clinic, an employment center, and a dining room are currently housed. The popular dining room — which serves 2,600 meals a day — will ultimately move back to 121 Golden Gate after the building is razed and rebuilt to meet modern earthquake safety standards. The project is part of another $20 million campaign that includes a partnership with Mercy Housing to build affordable rentals on the upper floors.

St. Anthony staffers say the types of donors who will contribute to a new building are very different from those who will fund ongoing programs.

Meanwhile, food costs in the dining room have increased 18 percent in the last three months, and St. Anthony staffers expect another 25 percent increase during the coming quarter. At the same time, other free food programs in the city have closed, which means St. Anthony is seeing new faces in the dining room.

Aviani confirmed that donations have increased 8 percent to 10 percent, but the group receives very few "unrestricted" funds. Most of the money is earmarked for the dining room. In a way, she said, "that’s the community deciding what they want."

A third of the organization’s $19.7 million budget comes from bequests — a form of donation that has waxed and waned in recent years. According to Aviani, the foundation has yet to receive a single bequest this year.

The group has increased grants and deployed new fundraising methods, but she said that "The amount of grants out there for shelters and women’s programs are few and far between." She acknowledged that shelters are needed, and said St. Anthony has been "pretty outspoken about that."

The foundation has kept a tight lid on talk about the closures. None of the employees contacted by the Guardian would speak on the record — for fear, they said, of losing their severance packages.

Aviani said severance packages — which include pay and personal job coaching — are not on the line. "We asked them not to create a gossip chain, to stay focused on their work, and when people have questions, direct them to me. We didn’t say they couldn’t talk to anyone at all. That wasn’t the message at all."

Whether or not the gag order was intentional, it has had an effect and created suspicion about the foundation’s true intentions.

Even the city deferred to the organization when questioned about the potential plan to rent the Marian building and use it as a medical respite facility. "We’re not going to talk about that," said DPH spokesperson Eileen Shields. "We’re going to let St. Anthony talk about that at this point because it’s St. Anthony’s call."

On Feb. 14, Newsom — who has said shelters don’t solve homelessness — announced he would like to redesign the city’s shelters and called on the community to come up with suggestions. One of his specific suggestions was to create more medical respite centers.

In May, the Local Homeless Coordinating Board, which is chaired by Hardin, released a report outlining a number of detailed suggestions for improving city-funded shelters and services. It specifically stated that shelter beds shouldn’t be sacrificed to make room for respite.

The Mayor’s Office has yet to formally respond to the report, but at the June 2 LHCB meeting, Kayhan said there were a few things he felt confident the mayor would endorse.

"We heard loud and clear: more senior beds," Kayhan said. "And I’ll add to that women’s beds." He said that respite care would be "moving and co-locating with another location. We think that could free up space at one of the shelters." And, he added, that space could be allocated to women or seniors.

Which makes it sound like more beds for women and seniors are in the works — but considering the elimination of Marian and a shelter at Ella Hill Hutch Community Center, the city is still looking at a net loss of places for the homeless to sleep at night.

Board member Laura Guzman, who runs the Mission Neighborhood Resource Center, said she heard Hardin announce the Marian closure at a May 5 meeting. "He said it was a very difficult decision. I believe he said we’re going to try to open some medical respite beds," Guzman said. "All along we’ve said we don’t want to replace shelter with medical respite beds, but that’s exactly what’s happening."

Shuttering Marian is just one more loss in an environment of dwindling resources for women. Buster’s Place, the only 24-hour drop-in center for men and women, closed in March, and was replaced by a smaller facility that only allows men.

Five of the city’s other shelters have sections for women, but one of them is slated to close as well and none can offer a women-only safe space like Marian. A Woman’s Place is the only other all-female facility, and its 15 mats on the floor are always full. "With Marian closing, there’s going to be more of a demand on the total system," said Janet Goy, executive director of Community Awareness and Training Services, which runs A Woman’s Place. "It’s a loss, no question."

Emily Murase of the Commission on the Status of Women said it’s difficult to accurately count homeless women because women tend to take more measures than men to stay off the streets, though they may not necessarily be safely housed. Women are more prone to couch-surf, stay in abusive relationships, or settle for some other kind of compromised situation.

Murase’s group now funds a special women-only program at Glide Memorial Church, whose director, Willa Seldon, said, "We’re certainly seeing an increase in volume of women in the city to our programs. In October, we were seeing 11 in our support groups. That increased to 18 by March. It could definitely be related to Buster’s Place closing."

Hardin acknowledged the need for women’s shelters but said the city ought to take on the burden. "Maybe closing the Marian is a tipping point," he said. "As I said in front of the Board of Supervisors, it’s the government’s responsibility to provide the safety net. We’re the hands beneath the safety net."

Sandy Van Dusen has been living in the transitional program for a year and a half since her husband was murdered. She’s been told that she is about to get a studio apartment. She’s visibly excited about the move, and grateful to the foundation. But, she says, she’s still been crying every day since she heard Marian is closing. "They saved my life," she says, crying a little now. "They’re doing what they told me to never do — throw in the towel."

*

Editor’s Notes

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› tredmond@sfbg.com

Ask any elected Democrat in San Francisco about the governor’s budget, and you’ll get an instant answer: it’s awful. It’s brutal. It sucks. Education, housing, the environment … everything we care about is being gutted because the governor and the Republicans in Sacramento won’t raise taxes.

Which is absolutely correct.

Now ask those same Democrats what they think about Mayor Gavin Newsom’s budget. In too many cases, the answer’s a little slower, and a little softer. Gee, it’s too bad that the economy, and Washington and Sacramento and all of these other forces out of our control leave us no choice but to tighten our belts and do things that none of us really wants to do. Gee, Gavin doesn’t like cutting either, but he has to balance the books. Gee, it’s certainly not the mayor’s fault.

Which is absolutely wrong.

The governor of California is not the only chief executive who can look for revenue solutions to a budget shortfall. The mayor of San Francisco can do that too. In fact, Newsom wouldn’t have to look far: Supervisor Aaron Peskin has introduced two measures that together could bring in a minimum of $30 million per year and, in good years, $80 million or more. That’s about a quarter of the budget deficit, enough to save a whole lot of city services, city jobs, and city resources for the needy.

Both tax measures are aimed at the wealthier end of the spectrum. One would raise the transfer tax on real estate sales of more than $2 million. Few first-time homebuyers would see any impact at all, and the ones who do … well, if you can afford a $2 million house, you can pay a reasonable transfer tax. The biggest revenue would come from major downtown commercial property sales: when the Bank of America Building is sold for $1 billion, none of the investors are paupers and the corporations, real estate investment trusts, and financiers involved have all done quite well under the George W. Bush administration’s tax cuts. This is, for the most part, a tax on the rich.

The second measure would eliminate a loophole in the business tax law that allows some partnerships, like law firms, to avoid payroll taxes. See, if you’re a partner in a firm and you earn "profits" in the form of a partnership payout as opposed to a "salary," then the money you make doesn’t get taxed by the city. Most of these outfits are big firms that can afford to pay the city’s business tax. It’s only fair: companies that don’t operate on the partnership model have to pay taxes, and so should everyone else.

The two measures need a vote of the people, and passing any tax is hard. It would help immensely if the mayor endorsed these progressive taxes — and I guarantee that if a Democratic legislator in Sacramento introduced a statewide tax bill hitting the exact same group of people for the exact same amount of money, Newsom and all his Democratic allies would support it (and if the governor vetoed the bill, those same Democrats would denounce him).

The measures would take effect in the middle of the next budget year, and the income could make Newsom’s river of red ink a good bit smaller. He could, in theory, endorse the measures, work for them, and include the revenue in his proposed budget. But so far Peskin hasn’t heard a word from Newsom’s office on this. Neither have I.

Gavin? Hello? *

Avoiding a Lennar meltdown

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EDITORIAL Millions of dollars in campaign money kept Lennar Corp.’s plans for southeast San Francisco alive. But the financial news isn’t looking good for the giant homebuilder — and the San Francisco supervisors ought to be worried.

Last week, Sup. Chris Daly released a document he obtained from the Redevelopment Agency showing that the city had quietly sought a $25 million grant from the state Department of Housing and Community Development to cover a projected loss in Lennar’s Hunters Point Shipyard project.

The problem: increased construction costs, trouble in the financial markets, and unforeseen environmental issues have eaten up all the money that Lennar and the city had made available for infrastructure improvements on the site. That means the roads, water and sewer pipes, and other basic stuff that project will need to go forward are no longer adequately funded. Without an influx of state money, the city argued, the whole shipyard project would either be "drastically reduced in scope" or put on hold for another two or three years.

"Without the requested $25,021,079 Infill grant allocation, our infrastructure project faces a serious risk of being mothballed," city officials wrote. As Sarah Phelan reported at sfbg.com, the state rejected the application last week.

The shipyard project is the first piece of Lennar’s grand-scale Bayview Hunters Point redevelopment — and it’s already in serious financial trouble. The same issues that are causing problems at the shipyard will be in play when Lennar starts work on the 10,000 new housing units now approved for the Bayview–Hunters Point redevelopment area. Construction costs will be even higher in a year or two. The end of the mortgage crisis is not yet in sight. As Daly told us, the shortfall in the first part of the project "casts a very large shadow on the mixed-use development envisioned under the conceptual framework on Proposition G."

Then on June 8, a Lennar subsidiary that’s working on redeveloping the Mare Island Naval Shipyard property filed for Chapter 11 bankruptcy. That project is now in limbo as the development consortium — facing economic pressure and unable to get the necessary financing — seeks protection from creditors. Combined with the fact that Lennar’s bond ratings continue to tumble (Lennar debt was downgraded again June 10), San Francisco officials ought to be asking the obvious question: can this Miami-based developer actually pull off this project? Or is it possible that after all of the political debate over the Lennar plan, the lack of adequate affordable housing, the future of the 49ers, the toxic contamination of the site, and everything else, the entire massive project could collapse because Lennar doesn’t have the financial ability to finish it?

This, of course, is one of the inherent problems with the traditional redevelopment model. The city essentially will be giving a huge piece of public land to a single private company that will then be responsible for building an entire new neighborhood with homes, offices, stores, and parks. In theory the developer will make enough money to stay afloat until construction is finished — and the property taxes in the area will increase enough to fund necessary infrastructure (schools, roads, bus lines, water and sewer service, and other public amenities). But if the developer goes broke, the city is left hanging.

That’s what’s happening in Vallejo, where a city that already has serious financial problems is facing the possibility that environmental cleanup at Mare Island will grind to a halt, and that a $6 million municipal service fund — paid for in part by Lennar — could suffer.

The prospects for San Francisco could be far worse. Suppose the city goes ahead and transfers public land to Lennar — which then goes into bankruptcy. Would that city land be treated as a private asset and given over to whatever creditor or vulture fund picks up Lennar’s ghost?

Fred Blackwell, the director of the Redevelopment Agency, won’t return our phone calls, but the supervisors need to hold a hearing on this and force him and Lennar to provide some answers. The board needs an independent audit of Lennar’s finances, either by Budget Analyst Harvey Rose or an outside consultant. And until the city knows for sure that the developer can actually handle this project, the entire redevelopment process for Bayview–Hunters Point needs to be put on hold. *

A heart once nourished

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› gwschulz@sfbg.com

Community court, every second Thursday at 10 a.m. Narcotics Anonymous on Wednesday. Apprenticeships for construction workers, Monday, bright and early.

The ancient letter board just inside the entrance of the Ella Hill Hutch Community Center tells much of the story of this neighborhood institution. Since 1981 it’s been a crucial hub for the Western Addition, a mostly level stretch of terrain west of downtown that rivals the Mission District and Bayview–Hunters Point as the source of the most despair from senseless gun violence.

For decades Ella Hill was a safe haven, a place where kids and seniors felt comfortable, where people could learn and teach and talk and work together, a little oasis in the world of urban hurt.

A placard affixed to one wall of the entryway honors Thurgood Marshall, the nation’s first African American US Supreme Court justice. In a small office nearby, a tutor assists a young girl with the multiplication table. Elsewhere, a list of rules forbids profanity, play-fighting, and put-downs.

There’s also a poster of Ella Hill Hutch, the first black woman elected to San Francisco’s Board of Supervisors, where she served from 1978-81.

But in 2006, a man was murdered during daylight hours in the center’s gymnasium before dozens of witnesses. That slaying was one of at least five brutal incidents that took place in the shadow of Ella Hill between 2006 and 2007; three more murders occurred within blocks. Many remain open cases today.

And now the center is having serious problems — troubles that reflect those of the city’s African American population, which has been plagued by violence and socioeconomic changes that are closing opportunities and forcing longtime residents out the city.

Several census tracts in the neighborhood that at one time contained between 3,000 and 6,000 black residents are down to 1,000 or far less, according to a San Francisco State University study commissioned by the city last year. The report showed that between 1995 and 2000 San Francisco lost more of its black population than 18 other major US cities.

Ironically, the city is now preparing to close the final dark chapter on 50 years of federally subsidized redevelopment in the Western Addition. But the displacement that the bulldozers set off half a century ago continues today, unabated.

That exodus has compounded structural problems at the center just when its remaining clients need it most. The nonprofit late last year underwent an organizational shake up and brief takeover by the Mayor’s Office to save it from imminent financial collapse. The center’s executive director of two years, George Smith III, was fired with little public explanation last year, and a permanent head was named only recently.

As with many aspects of this troubled community, it was unaddressed violence that fed the fire. Simply subsisting in the heart of a violent neighborhood was strain enough for Ella Hill. But suffering an attack from within seemed too much to bear for an institution some call "San Francisco’s Black City Hall."

The 2006 killing took one man’s life, but Ella Hill itself — still facing an uncertain financial future — felt the searing rounds too. Now some wonder if the nonprofit can survive the very violence and poverty it was created to help end in a neighborhood that’s changing forever.

In Ella Hill’s noisy gymnasium at the building’s east end, two teams of middle schoolers practice basketball.

"My job is to be in the best position to box him out for a rebound," their coach says as they crowd around the free throw line.

The kids are radiant and attentive now. But from this same basketball court on April 27, 2006, the Western Addition briefly edged ahead of the rest of the city in extreme bloodshed.

Donte White, 22, was working part-time at the center. As he supervised a basketball game, two unidentified males entered Ella Hill. One brandished a firearm and shot White at least eight times in the face, neck, and chest as several kids looked on in utter horror. Among them was White’s young daughter.

Police arrested 25-year-old Esau Ferdinand for the attack five months after White’s murder. But within two weeks prosecutors decided they could no longer hold him and declined to press charges when a key witness disappeared on the eve of grand jury proceedings.

Even with other witnesses filling the gym, police gathered few additional leads, an all-too-common story in a neighborhood where residents often prefer to avoid both law enforcement and vengeful criminal suspects.

The center installed cameras and an alarm. A buzzer was placed on the front door. But the new security measures cut against Ella Hill’s image as a demilitarized zone, and the center remains shaken by White’s murder. Some parents began barring their children from going there.

"Can you imagine something like that, someone coming into a rec center in the middle of the day with a firearm and shooting and killing a guy?" asks Deven Richardson, who resigned from Ella Hill’s board in 2007 to focus on his real estate business. "That really set us back big time in terms of morale. It really was a dark moment for the center."

Sup. Ross Mirkarimi, whose district includes Ella Hill, says that after he took office in 2004, he learned that the police weren’t stationed at the center during prime hours and had never created a strategy for attaching themselves to the center the way they had at other safe-haven institutions in the city, like schools. He told us he’s had to "really work" to get the nearby Northern Station more integrated into Ella Hill.

"Before the murder of Donte White, there had also been a series of incidences inside Ella Hill Hutch," Mirkarimi said over drinks at a Hayes Valley bar. "Nothing that resulted in anybody getting killed, but certainly enough indicators that really should have been taken more seriously by the mayor."

In June 2006, shortly after White’s shooting, the San Francisco Police Commission and the Board of Supervisors held a tense public meeting at the center. Residents, enraged over the wave of violence that summer in the Western Addition, shouted down public officials, including Chief Heather Fong, who was forced to cut short a presentation on the city’s crime rate.

That same month, the supervisors put a measure on the ballot to allocate $30 million over three years for violence-prevention efforts like ex-offender services and witness relocation. But Mayor Gavin Newsom, following a policy of fortifying law enforcement over community-based alternatives, opposed the measure because it excluded the police department. Prop. A, designed to finance groups like Ella Hill with connections to the neighborhood that the police will never have, lost by less than a single percentage point.

Meanwhile, four homicides in the neighborhood that year joined frequent anarchic shootouts in the Western Addition, including many that never made headlines because no one was killed. The fatalities led to promises by City Hall that the area would be saturated with improved security, including additional security cameras that have mostly proved useless in helping the police solve violent crimes.

On June 3, 2006, 19-year-old Antoine Green was standing on McAllister Street near Ella Hill early in the morning when he was shot to death in the head and back. On Aug. 16, 38-year-old Johnny Jackson’s chest was filled with bullets as he sat in the front seat of a Honda Passport on Turk Street not far behind Ella Hill. A woman next to him in the car suffered a critical gunshot wound to the head.

Two more killings occurred further east at Larch Way, a popular location for murder in the neighborhood.

Burnett "Booski" Raven, a 32-year-old alleged member of the Eddy Rock street gang, was found bleeding at 618 Larch Way early Oct. 7, his body laying halfway in the street and containing at least 10 gunshot wounds. On July 22, police found 23-year-old John Brown, another purported Eddy Rock member, wedged under a Chevy pickup truck, dead from up to seven gunshots.

Brown had reportedly survived two prior shootings, but the Western Addition’s cultural condemnation of "snitching" to police has so infected the neighborhood that he allegedly told police not to bother investigating either of the attacks.

Loïc Wacquant, a sociology professor at the University of California, Berkeley, says neighborhoods like the Western Addition that once contained stable black institutions — schools, churches, and community centers that glued residents together — have been overwhelmed by the rise of a white-collar, service-based economy, the decline of unions, and the withdrawal of meaningful social safety nets.

Cities have responded to the resulting marginalization with more police officers, more courts, and more prisons. But the failure of those institutions to cure rising violence "serves as the justification for [their] continued expansion," Wacquant quoted Michel Foucault, the famous late UC Berkeley sociologist, in the academic journal Thesis Eleven earlier this year.

The roots of the Western Addition’s tragedy go back to the early post-World War II era. In 1949, Congress enacted laws giving cities extraordinary powers to clear out land defined as "blighted." In San Francisco, that meant neighborhoods where low income people of color lived.

The Western Addition was devastated. Huge blocks of houses were bulldozed. Clubs, stores, restaurants — the heart of the black neighborhood — were wiped out. Many residents were forced out of the neighborhood and sometimes the city forever; others lost their property and their livelihoods (see "A half-century of lies," 3/21/2007).

By the 1970s, neighborhood activists were hoping that at the very least the Redevelopment Agency would pay for a recreation facility for kids. But city officials wouldn’t put up the money, recalls the Rev. Arnold Townsend, a longtime political fixture in the city and associate pastor of the Rhema Word Christian Fellowship.

Townsend said activist Mary Rogers — whom he calls "the greatest champion kids ever had in this community" and a famous critic of redevelopment — gave up on City Hall and went to Washington DC, where she sat in at a meeting that happened to include Patricia Harris, Secretary of the Department of Housing and Urban Development under President Jimmy Carter. Rogers, joined by a group of colleagues from San Francisco, bumped into Harris afterward.

"[Harris] shook Mary’s hand like politicians do, and Mary wouldn’t let her hand go until she had a meeting," Townsend said. "They were having a tug-of-war over her hand."

Rogers’ determination paid off, and enough political channels opened up that money for the center became available. Then-Mayor Dianne Feinstein cut the ribbon for the $2.3 million Ella Hill Hutch Community Center four months after the supervisor’s death, complete with outdoor seating for seniors, a gymnasium, tennis courts, and child-care facilities.

A young counselor named Leonard "Lefty" Gordon who worked at the Booker T. Washington Community Service Center, one of the city’s oldest black institutions — it was founded in 1919 on Presidio Avenue, where it remains today — was named executive director of Ella Hill three years later and led the center to wide acclaim for 17 years.

A recreation coordinator at Ella Hill started a reading program for young athletes after discovering that a local high school football star wasn’t aware he’d been named the city’s player of the year: the teenaged boy couldn’t read the newspaper to find out. Other programs for tutoring and job training targeting young and old residents were likewise started under Gordon.

Many of the people we interviewed recalled the "kitchen cabinet" meetings convened by Lefty Gordon at Ella Hill as among their fondest memories. Everyone from the "gangbangers to police" attended Gordon’s meetings, Townsend said, and made them a repository of complaints about what was happening in the neighborhood.

Alphonso Pines, a former Ella Hill board member and organizer for the Unite Here! Local 2 union, eagerly showed up at the meetings for months after attending 1995’s Million Man March in Washington.

"I hate to see brothers die, regardless of whether it’s at Ella Hill," Pines said of Donte White’s 2006 killing. "But that was personal for me, because that was the place where I had sat on the board for years. That was real shocking."

Lefty’s son, Greg Gordon, said that his legendary father — who died of a heart attack in May of 2000 — worked so hard for the center that he allowed his own health to deteriorate.

Most beneficiaries of Ella Hill’s social services now live in the southeast section of the 94115 ZIP code, roughly bordered by McAllister and Geary streets to the south and north, and Divisadero and Laguna streets to the west and east.

The majority of Ella Hill’s approximately $1.4 million annual budget comes from government sources, either through grants or nonprofit contracts.

Newsom, through his community development and housing offices, has given $860,000 over the past three years to Ella Hill to help job-ready applicants obtain construction work and other general employment in the neighborhood. The center launched its JOBZ program in 2006, targeting formerly incarcerated young adults and others with a "hard-to-employ" status.

Caseworkers must convince some participants to leave gangs, deal with outstanding warrants, pay back child support, expunge criminal records, or eliminate new offenses, all of which can exacerbate a desire to give up. Sometimes the center has to buy people alarm clocks.

"None of these other programs that are being funded in this community want to deal with the kinds of kids or people who come to Ella Hill…. [It] is the last stop for everybody," said London Breed, head of the African American Art and Culture Complex on Fulton Street and a Western Addition native. "That’s where people go who have no place else to go, which is why it’s so important."

Most nonprofits working for the city must regularly report their operational costs or show how program funds are being spent on graduation ceremonies and trips to university campuses. The required forms are mind-numbingly bureaucratic and reveal little about what a place like Ella Hill might face on a practical level each day. But last year, former executive director George Smith betrayed a crack in Ella Hill’s veneer.

"Once again violence has impacted the community with three incidents in close proximity to the complex this month alone," he wrote to the San Francisco Department of Children, Youth and Their Families, which supports the center with college preparation grants. "One of the victims was a young man scheduled to graduate from high school in June."

On May 25, 2007, 19-year-old Jamar Lake was leaving a store on Laguna and Eddy streets, northeast of Ella Hill, when a teen suspect opened fire on him. Paramedics were so worried about security in the neighborhood that they fled before attempting resuscitation, according to a report from the San Francisco Medical Examiner. Lake died at General Hospital that day.

Weeks later, a manic 12-hour long feud erupted between several gunmen on McAllister Street. Seven people were wounded during two daytime shootings that took place in the Friendship Village Apartments, across the street from Ella Hill.

Then in July, a suspect randomly and fatally stabbed 54-year-old Kenneth Taylor in the neck as he sat on a park bench near sundown at Turk and Fillmore streets, within easy view of the SFPD’s Northern Station. Police didn’t respond until Taylor stumbled to the sidewalk and collapsed; a witness had to flag down a patrol car.

Following the Lake shooting, the mayor and police department promised, as they had the year before, that foot patrols would be increased in the 193-unit Plaza East Housing Development and other public housing projects in the Western Addition.

But the city’s most visible response has bypassed Ella Hill — which has some street credibility — altogether. Instead, City Attorney Dennis Herrera went to court to get injunctions against street gangs in June 2007.

Herrera’s initial filing came days after the wild shootout on McAllister Street, but the timing was coincidental. The city attorney also had been preparing injunctions against gangs in the Mission and Bayview-Hunter’s Point for months. For the Western Addition, the city attorney noted a "recent rise in violent crimes perpetrated by the defendants," and asked that the members of three gangs be banned from associating with one another inside two "safety zones" marked along the contours of their respective territories, a 14-square-block area that straddles Fillmore Street and rests just north of Ella Hill.

"The conditions within the two safety zones have become particularly intolerable in 2007 as the deadly rivalry between the Uptown alliance and defendant Eddy Rock has intensified," Herrera’s office told the court. "In 2007 alone, this rivalry is the suspected cause of at least three homicides and numerous shootings within the two safety zones."

Some critics viewed barring people from congregating with one another a civil rights violation. And worse, they feared it would merely shove more African Americans and Latinos out of the Western Addition, which would benefit the city’s wealthiest white residents.

"All of this stuff about gang injunctions is a bunch of malarkey," said Franzo King, archbishop of the Saint John Coltrane African Orthodox Church on Fillmore Street. "You don’t really have gangs here…. [In San Francisco] they’re a big club."

Herrera nonetheless convinced a Superior Court judge to issue the injunctions after filing 1,200 pages of evidence arguing that the three "clubs," which include only about 65 people named by the city, are endless public nuisances and force organizations like Ella Hill to battle with them for the affections of Western Addition youth.

Police admit that the injunctions since last year have, in fact, led people to simply leave the neighborhood. Still, they insist the injunctions have reduced trouble in the Western Addition. The Knock Out Posse, for instance, is evaporating, they say.

Paris Moffett, a 30-year-old alleged Eddy Rock leader, told the Guardian in a separate story on the gang injunctions last November that he and others were organizing to quell violence in the neighborhood and would do so in defiance of the gang injunctions (see "Defying the injunction," 11/28/07).

But on the day that story ran, Moffett hampered his new cause when, according to a March 27 federal indictment, police arrested him in Novato for possessing a large quantity of crack and MDMA, as well as a Colt .45 semiautomatic.

After Lefty Gordon died, the center went through a couple of directors in relatively short order. Robert Hector, a second-in-command to Lefty Gordon, helmed the center briefly; he was replaced with George Smith III, who left in 2007.

Meanwhile, problems at Ella Hill grew.

"The seniors just stopped their participation," Anita Grier, a former Ella Hill board member who first ran for the San Francisco City College Board of Trustees in 1998 at Gordon’s encouragement, told us. "Things were never excellent, but they just got much worse once [Gordon] was no longer director."

The center, a standalone nonprofit, had long struggled financially in part because it relied so much on contracts and grants from the city rather than pursuing funds from private donors. Mirkarimi says Ella Hill’s structure is unlike any other community center in the city. Many other centers are directly maintained by the San Francisco Recreation and Park Department.

Contract revenue from one Ella Hill program, such as providing emergency shelter to the homeless, was often diverted to keep another on life support or to simply cover the center’s utility bills.

By early 2007, the center faced a financial catastrophe. Donald Frazier joined Ella Hill’s board as president in January 2007 and embarked on a reform effort to turn the center around. He commissioned what came to be a blistering audit that revealed the nonprofit owed over $200,000 in state and federal payroll taxes. As a result, the center faced $63,000 more in penalties and accrued interest.

Mirkarimi blames community leaders in his district for refusing to acknowledge a crisis at the center and for not turning to City Hall for help when Ella Hill appeared to be slowly rotting from the inside out.

The mayor’s staff, he adds, wanted to believe Ella Hill was working on its own and should’ve continued to do so because, despite its financial reliance on the city, it was technically an independent nonprofit. In reality, Mirkarimi said, "They were afraid to piss off black people, is what it comes down to. They were afraid to tell it like it is — that things weren’t working."

Sending delinquent invoices to the city, failing to institute reasonable accounting standards, and falling far behind on its payroll taxes all threatened the government contracts and grants that kept San Francisco’s Black City Hall afloat. By extension, the audit concluded, that meant Western Addition residents who relied on Ella Hill were "victimized" by the center’s improper use of its limited resources.

Aside from the audit, which Ella Hill instigated itself, there’s no indication in the records of agencies funding the center that any problems were occurring, which implies the city wasn’t paying attention.

"As far as I’m concerned," Mirkarimi said, "we had a renegade institution, and the only reason it wasn’t renegade in an illegal sense was because the lease allowed them to have a parallel governance structure. But it was renegade in the sense that the city neglected to supervise properly."

In November 2007, just after residents hijacked a chaotic board meeting with an extended public comment period, Frazier told the directors in closed session that the Redevelopment Agency was planning to restrict future funding for the center due to its management problems.

One month later, the mayor dispatched an aide, Dwayne Jones, along with redevelopment agency director Fred Blackwell, to a meeting at Ella Hill with an ultimatum. Jones told the assembled that new interim appointees would be taking over the center’s bank books, recreating its bylaws, and electing a new board and executive director. The old board would essentially be dissolved. According to observers at the meeting, Jones told them that if they resisted the plan, funds received by Ella Hill from various city agencies would be jeopardized, as would its low-cost lease of city property.

Two defiant board members viewed the move as a "hostile takeover" of a private nonprofit organization by the mayor and voted against it, but the rest of the board agreed to the restructuring. Mirkarimi says there was simply no alternative.

"Right now it needs to be shrunk to what it can do really well, instead of doing what they had to do in the last five years, an incremental sloppy way of programming," he said.

The interim board in April named a former Ella Hill employee and Park and Rec administrator, Howard Smith — unrelated to George Smith — to be the center’s new executive director. But after all the changes Ella Hill made to fix its leadership problems, there are no assurances the city won’t leave Ella Hill without the money it needs to keep the doors open next year.

It’s noon on a recent Friday and Ella Hill’s new executive director is scrambling to keep things together. An employee wants him to glance at a form. Another man wants to come in and play basketball. Smith has a board meeting minutes from now, but he’s scheduled an interview with the Guardian at the same time.

Smith’s a well-built man dressed in a pressed suit, polished shoes, and a sharply-knotted tie. He’d mostly avoided our calls for weeks. Word spread in the neighborhood that the Guardian was planning some sort of hit piece on Ella Hill.

But it won’t be a newspaper that capsizes the center.

A significant portion of the center’s funding will be threatened over the next year. The redevelopment agency is scheduled to end its 45-year reign in the Western Addition by then, a blessing of sorts since so many people in the neighborhood feel it’s done nothing but upend the lives of black residents. But the end of the agency means that redevelopment funds for Ella Hill’s job placement programs, about $400,000 annually, will disappear.

In addition, about $300,000 more a year will dry up since the San Francisco Human Services Agency hasn’t renewed an emergency homeless shelter contract with the center. Mirkarimi believes the mayor, too, will try to stop providing Ella Hill with funding through his community development office next year.

If Newsom does back away, Mirkarimi warns, there will be "a very loud showdown."

"What I’m worried about is that the Newsom administration is basically cutting and running on this, and I’m not going to allow that to happen, at least not without a fight," he said.

The alternative is for Rec and Park to take over managing Ella Hill’s facilities with DCYF continuing to fund youth programs there while the Redevelopment Agency commits community benefits dollars from a legacy fund to the center — the least it can do after a half-century of transforming the neighborhood, locals be damned.

An interagency council made up of the center’s primary funders could collectively watchdog its performance, Mirkarimi says. Once Ella Hill’s leaders prove that the center has fully returned to its original mission, it can consider expanding to serve other populations in the neighborhood, or even seek a plan to detach further from the city.

The mayor’s spokesperson, Nathan Ballard, did not respond to an e-mail containing detailed questions, and his aide, Dwayne Jones, did not return several phone calls. But Smith said during a later lunch interview at the Fillmore Café that he agrees with Mirkarimi’s idea.

"There are so many programs out there that say they’re doing something on paper, but they’re really not doing it," Smith said. "They’re running ghost programs. So what I’ve been saying at Ella Hill since I got there is, ‘We will do exactly what we said we were going to do.’<0x2009>"

In the meantime, Smith is determined to prove that Ella Hill’s history has only just begun. The mural of Lefty Gordon outside the center received a fresh coat of paint recently, and the color pops. The sidewalk is being repaved and new handrails installed. The walls inside are clear of the aging posters and letter board that hung there a few months ago.

Before heading off to his board meeting, Smith teasingly asks an adolescent boy meandering in the center’s entryway for 75 cents. The boy’s always hitting him up for pocket change.

"I don’t got any," the boy responds.

"You don’t have any," Smith corrects.

Smith suddenly realizes what time it is.

"Hey, why isn’t this guy in school?" he wonders aloud.

At that moment, only the Ella Hill Hutch Community Center was asking the question. *

Oh, no — not BUDWEISER!

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bud.jpg belgium.jpg sad.jpg

Egads! The company that makes my favorite beer may be taken over by a Belgian brewer!

And sales are down 1.4 percent this year!

I’m sorry, Mr. August Busch IV — I’m drinking as much Bud Light as I can!

How can we allow this timeless icon of America be sold off to the makers of (gasp!) Stella Artois?

Forget the war, the budget, crime and poverty — the is BEER we’re talking about. To the ramparts!

And so it begins

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› sarah@sfbg.com

Mayor Gavin Newsom chose a telling site for the June 2 release of his budget: the San Francisco Police Department’s Special Tactical Operations Center at Hunters Point Shipyard. And if its relationship to Proposition G, the mayor’s plan to let Lennar Corporation develop the southeast part of the city, wasn’t clear enough, Newsom made it explicit.

"You’ll have the opportunity to support Proposition G and reject Proposition F, the one that is getting in the way," Newsom told department heads and the press as police, who warned budget protesters that it is illegal to campaign on city property, looked on in silence. It is also illegal for the mayor to campaign for ballot measures on city property.

In his speech, Newsom labeled as the "heroes" of this year’s budget the unions that have agreed to unpaid days off, including the Laborer’s Union, the Deputy Sheriff’s Association, Firefighters Local 798, and the Municipal Executives Association. Conversely, he vowed to remember that the police, nurses, and lawyers unions wouldn’t amend the contracts Newsom negotiated last summer.

Sounding more like a gubernatorial candidate intent on winning over Orange County voters than the leader of the most progressive city in the nation, Newsom said, "We are living within our means and being fiscally prudent, without out-of-control borrowing and without tax increases. But we still have a $338 million shortfall."

But there has been widespread criticism of the mayor’s plan as details emerge of its massive cuts to health and human services, while increasing the city’s budget for street repaving, pothole repair, and police academies.

"It’s the least democratic, least transparent budget process in many years, in terms of lack of information from the Mayor’s Office to the city departments and the community-based organizations that are affected," said Coleman Advocates for Children and Youth organizer Chelsea Boilard. "In the past, programs were given a heads-up. This year it continues to be a frantic scramble."

According to Boilard, city departments were still finding out the extent of the cuts even after Newsom made his presentation, including the news that the budget addbacks approved by the Board of Supervisors last year are not being continued in the 2008-09 budget.

"A nightmare," was how Debbi Lerman of the San Francisco Human Services Network described the budget.

"If we listen to mayor’s presentation, everything is rosy, revenue-wise. It’s just a spending problem. But from the community’s perspective, it’s shocking," Lerman said, citing $15.5 million in cuts to the Department of Public Health, $3.5 million in cuts to the Human Services Agency, and a 20 percent cut to domestic violence programs.

"And [the cuts] have been a constantly moving target," Lerman added. "We’re mere weeks away from the implementation of this budget, but no one knows which clients, programs, or services will be lost, though we are sure that there will be a lot of layoffs in our sector. The mayor should not balance his budget on the backs of the poor."

She believes the city needs to look at some non-essential services during a bad budget year and see what can be deferred to the future — and find ways to increase its revenue.

"The mayor is not a stone. He does get it to some degree. But it’s unfortunate that he’s not chosen to put forth revenue measures at this point," Lerman said.

Robert Haaland of Service Employees International Union Local 1021 agrees that the city has a revenue problem. He also believes that it’s not OK to ask the city’s lowest-paid workers to make concessions, again and again: "[SEIU 1021] has repeatedly stepped up to the table, we’d like to see some others do it."

Jonathan Vernick, executive director of Baker’s Place, which is facing the prospect of having to close one floor of its medical detox program, argues that many of the mayor’s proposed cuts are in conflict with Newsom’s stated goal of getting the homeless and inebriated off the street. "Ironically, this budget seems to fail to meet a simple criteria — that the proposed cut actually saves money," Vernick said. "All I can see is cuts that by end of fiscal year will have dismantled a system that’s been working for 35 years."

John Eckstrom of the Haight Ashbury Clinics believes the budget cuts will decimate the model of integrated services. "These are very deep cuts," said Eckstrom, who expects to lay off 40 to 50 of his 170 employees.

"It’s a testament to the willpower of the nonprofits that we are able to stay alive," Eckstrom said. "But what are the mayor’s priorities? There’s his rhetoric that says it’s not a revenue problem, and then there’s the reality."

With the Board of Supervisors set to conduct public budget hearings throughout June, Board President Aaron Peskin sees Newsom’s proposal as a "law and order budget."

"Domestic violence programs have lost $750,000 in funds, substance abuse programs have been taken to the woodshed, and mental health programs are being cut by 25 percent," said Peskin, criticizing the mayor for "introducing and extolling new programs while failing to protect the safety net of human and health services that San Francisco has put together over many years."

"Last time we had a budget like this, Mayor Willie Brown was much more forthright and honest about its disastrous impact on the poor," Peskin added. "This administration has cloaked this disaster in a press blitz. But any way you dress it, it’s a pig."

As chair of the Board’s Budget and Finance Committee, Sup. Jake McGoldrick was equally blunt in his criticisms as he set about deciphering the details of Newsom’s proposal

McGoldrick refuted as "a deception" Newsom’s claim of having cut 1,085 jobs. "The real number is 99.08 positions," McGoldrick said, factoring in preexisting vacancies, Newsom’s three proposed police academy classes, and the 26 staff positions for Newsom’s 311 program, not to mention other new proposed programs and initiatives.

Upset that Newsom has budgeted $500,000 for a Community Justice Court that will divert people to the kinds of programs that Newsom’s budget is undermining, McGoldrick told the Guardian that he "aims to identify at least $30 million to $40 million in deceptions and redirect these funds to top priority human needs and services that are already woefully underfunded."

"The mayor is trying to pump all the problems over to the Board of Supervisors," McGoldrick said. "It’s going to be a labor of love to figure out how to direct money to folks who are hurting now."

Peskin said he expects the supervisors to discuss three new revenue proposals in the next month in order to avoid another slash-and-burn budget next year. These proposals include a property transfer tax, closing a payroll tax loophole on partnerships, and preserving the city’s 911 fee, which is under legal attack.

As of press time, the Mayor’s Office had not returned calls about revenue creation. Maybe Newsom’s handlers were busy figuring out how to deal with a budget protest slated for 6 p.m. June 11 outside the his residence in the Bellaire Tower building, 1101 Green St.

Organized by Jennifer Friedenbach, executive director of the Coalition on Homelessness, the protest aims to draw attention to what Friedenbach calls "Mayor Newsomator’s plans to terminate the poor."

These plans include closing the Ella Hill Hutch Homeless Shelter as well as the Tenderloin Health Homeless Drop-in, and the almost total elimination of the SRO Families United Program. The Board has until July 31 to adopt a revised budget.

Interfaith demonstration challenges Newsom to remember homeless

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By Marianne Moore

At the foot of the rotunda stairs in City Hall, a young bride in a short white dress shifts her weight from side to side, holding a bouquet of bright yellow lilies. Maybe she’s watching intently as the solemn procession of roughly 120 clergy and activists winds slowly up the steps and towards the bronze bust of Harvey Melk. Or maybe she’s just annoyed at being made to wait.

religiouswitness2a.jpg

The demonstration, which began in the South Light Court at 10:30 on Thursday, June 5, was organized by Religious Witness for Homeless People, an interfaith organization that pushes for policy change on behalf of San Francisco’s homeless. Though Religious Witness has been responsible for hundreds of actions during its 15-year existence, including a much-publicized 1996 campaign to preserve the Presidio’s Wherry housing for low-income tenants, today’s protest was specifically directed at the ongoing budget process. The city is facing a $338 million dollar deficit, and Mayor Newsom is expected to balance the budget by cutting city funding to key service organizations. “The proposed budget is a disaster for San Francisco’s homeless,” said Sister Bernie Galvin, the founder of Religious Witness and a Catholic nun. She cited the 137 documented homeless deaths in San Francisco in 2007, suggesting that if the mayor and the board of supervisors cut crucial services, homeless deaths could rise this year.

The demonstrators processed through the corridors of city hall, singing softly, past signs reading “Silence: meeting in progress.” The procession halted outside the office doors of each of the city’s 12 supervisors, and each time Sister Bernie rapped loudly on the glass. As the door opened, retired Catholic priest John “Fitz” Fitzgerald spoke each supervisor’s name loudly, and the crowd responded in unison: “we call on you to remember that our moral compass always points in the direction of compassion.” Sister Bernie presented the supervisor with a plaque (usually accepted with an embarrassed smile by an aide) and the slow marching and singing resumed, punctuated by the sound of the heavy wooden doors slamming shut. When the demonstration reached the office of Gerardo Sandoval, the 11th district supervisor, a grinning Sandoval joined the procession, chatting with the clergy, shaking hands and clapping backs. “I’m with you one hundred percent,” he said, addressing the crowd.

Beyond the budget spin

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OPINION Local government is frozen. The mayor’s office and the Board of Supervisors have been engaged in open warfare for months. This week, Mayor Gavin Newsom announced that in order to balance San Francisco’s budget, city services and community-based organizations will have to undergo draconian cuts.

In a preemptive move against embarrassing protests, the mayor’s press office did not reveal the location of the annual budget presentation to the news media until late Friday afternoon. Even the supervisors, who will be debating and voting on the budget during the month of June, were left in the dark until then.

While the mayor didn’t blame city workers for the financial crisis, he did suggest that Service Employees International Union Local 1021, which represents the low-wage, frontline, service-providing city workers, should "help out."

Well, we have. SEIU members stepped up to "help out" in fiscal years 2003–04 and 2004–05 by agreeing to wage freezes and self-funding our pensions. All the recent midyear cuts were in public health agencies and among SEIU-represented nonprofits.

Most recently we stepped up by helping draft and vigorously campaigning to pass Proposition B, which freezes city workers wages for two years and tightens eligibility for retiree health care benefits in exchange for a modest increase in city pension benefits.

The mayor’s budget director repeatedly has said that this is a spending problem, not a revenue problem. Talk about spin.

Moreover, in his June 2 budget presentation, the mayor made no mention of raising revenue as an answer to our fiscal problems. You could almost hear Gov. Schwarzenegger’s voice as Newsom presented a slash-services budget with a "no-new-taxes" slogan waiting in the wings for his next campaign.

Everyone knows it’s expensive to live in San Francisco. Paying city employees a wage that allows them to stay in the community they serve isn’t a budget "problem." It ought to be a basic part of what City Hall does and cares about. And if that means looking at bringing in new sources of money, we should have that conversation.

We believe there are various revenue sources that make more sense to explore than some of these service cuts, including a real estate transfer tax increase for high-level properties.

Fortunately, the mayor’s proposal is just a starting point. Soon we will be proposing specific alternatives.

Toward that end, the San Francisco Human Services Network and Coleman Advocates for Children and Youth have organized a citywide forum on the mayor’s proposed budget cuts. SEIU 1021 is cosponsoring this event. The San Francisco budget and revenue town-hall meeting will be held June 9 from 2-4 p.m. in the San Francisco Main Library’s Koret Auditorium, 100 Larkin (at Grove)

Don’t get angry. Get organized.

Robert Haaland

Robert Haaland is a longtime San Francisco activist who works for Local 1021.

Drug deal hurts consumers

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› gwschulz@sfbg.com

City Attorney Dennis Herrera made San Francisco the first government entity in the nation to accuse two major players in the pharmaceutical drug industry of conspiring to illegally manipulate the price of prescription drugs when he filed a lawsuit May 20. Connecticut followed Herrera’s lead days later, and filed an almost identical suit making the same charges.

The cases could have far-reaching implications. If Raymond Hartman, an economist and visiting professor at Boalt Hall School of Law who testified in a related case filed by a group of East Coast labor unions two years ago is correct, then consumers, insurers, and Medicaid administrators nationwide have overpaid for prescription drugs by billions of dollars as a result of the price manipulation scheme (see “Big Pharma’s Shadow,” 12/20/06).

To explain the highly complex litigation, consider how goods are usually priced. Take the 99¢, three-ounce bags of chips that are reliably available at the corner store near your house. Cool Ranch Doritos. Chili Cheese Fritos. Sour Cream and Onion Ruffles. It wouldn’t be a true bodega if there wasn’t a rack of them situated near the front door or register.

For as long as anyone can remember, it seems, they’ve cost just 99¢, regardless of the local cost of living, from Richmond, Va. to San Francisco. That’s because the suggested retail price of 99¢ is printed ubiquitously by the manufacturer on the packaging.

So you’d notice if a sticker suddenly appeared, lazily affixed to your bag of Sun Chips, stating a new price: $1.99. The manufacturer didn’t place it there because behind the sticker you can still see the old printed price. And the counter clerk didn’t place it there, because he knows the true suggested retail price is still just 99¢ and the laws of supply and demand never called for a price increase.

Instead, a local company that buys chips from the manufacturer and distributes them to the bodega in your neighborhood put it there. The bodega owner didn’t complain because now it’s possible for him to earn an extra dollar for each bag. In fact, as a result of the new sticker, he’s more likely to take his business back to that particular distribution company over a competitor since that company is willing to artificially inflate the retail cost of a bag of chips on his behalf simply by putting a new price tag on the bag.

Now imagine that the product isn’t a cheap bag of chips but billions of dollars worth of pain-reducing or life-saving pharmaceuticals. And the distributor isn’t a local guy who drives a delivery truck full of boxes of chips but a multinational corporation, headquartered in San Francisco, that’s ranked 18th on the Fortune 500 list, with $93.6 billion in annual revenue and a CEO, John Hammergren, who received compensation in 2007 worth more than $22 million after presiding over the company’s record profits that year.

Imagine, too, that the distributor is powerful enough to slap new price stickers on cartons of drugs around the country, not just at your corner bodega, so you can’t simply elect to shop elsewhere to protest the new prices. Neither can you just stop consuming needed medicines the way you can snack chips.

Herrera’s federal civil suit probably has escaped media attention due to its esoteric nature (not to mention a potential conflict of interest at the San Francisco Chronicle, but we’ll get to that in a minute). It charges that McKesson Corp., along with a tiny drug data publisher based in San Bruno called First DataBank, conspired in an "elaborate scheme" to unfairly mark up the price on more than 400 name-brand prescription drugs. The conspiracy allegedly resulted in the San Francisco Health Plan being forced to make thousands or even millions of dollars in excess payments to cover the cost of such medications.

The SF Health Plan is not the same as Healthy San Francisco, the city’s historic 2006 bid to grant universal health care to the 82,000 adults here who live without insurance. The SF Health Plan extends mental, medical, and dental health coverage to about 50,000 people, including approximately 28,000 children in the city, and offers in-home support workers to the disabled and elderly. The plan is funded through a combination of federal and state dollars known in California as Medi-Cal and elsewhere as Medicaid.

The programs help low-income residents get health care, but its public subsidies are being endangered by a massive state budget deficit. So making sure the SF Health Plan is paying the appropriate price for prescription drugs, a $200 billion industry in the United States, is more important than ever.

McKesson and First DataBank, the lawsuit alleges, placed new stickers on drug packages so that everyone — from private insurers to Medi-Cal to consumers without insurance who simply walk up to a pharmacy window and cover their drug treatments with cash — paid far more than they should have, based on an industry calculation that’s similar to the suggested retail price printed on our analogy of a bag of chips. Herrera says he took on the suit because San Francisco is not alone in overpaying for pharmaceuticals and he saw a chance to force greater reforms in the system.

"We make our decisions based on the facts and the law, and we do our best to protect consumers, taxpayers, and businesses alike," Herrera told the Guardian. "This impacts a lot of things. It’s about protecting consumers from having high drug costs passed on to them. It’s about protecting taxpayer dollars since this is the San Francisco Health Plan, and it’s something that emanates out of a city program. But it’s also about protecting businesses, because a lot of businesses and health plans are the ones footing the bill for increased drug costs."

First DataBank is not listed as a defendant in Herrera’s suit but is described as "an unnamed co-conspirator." The company is a little-known subsidiary of the private, New York–based media conglomerate Hearst Corp., which owns dozens of major publications including the San Francisco Chronicle, the Seattle Post-Intelligencer, Esquire, and The Oprah Magazine. Spokespersons for McKesson and First DataBank refused to comment for this story.

As far as revenue is concerned, First DataBank is a bit player in the world of pharmaceuticals. Court records in a related 2006 suit describe its annual pretax income as just $19 million, barely enough to cover the McKesson CEO’s compensation last year.

But the company is nonetheless important to people who rely on prescription drugs. It’s one of the few major companies in the United States that maintains a sophisticated electronic database of information on tens of thousands of prescription drugs. Plus, First DataBank possesses a virtual monopoly on the market because the company merged with its only real competitor, Medi-Span, in 1998. Its database includes numbers, for instance, on what a drug manufacturer like Aventis might charge distributor McKesson for the allergy medicine Allegra, a figure known as the "wholesale acquisition cost."

Because it’s almost impossible to track every transaction between McKesson and retail chain pharmacies that McKesson distributes bulk drugs to, like Rite Aid and CVS Caremark McKesson, it’s First DataBank’s job to survey the distributors and come up with an "average wholesale price."

After you obtain a bottle of Allegra with a co-pay to take care of your stuffy nose, your insurance provider, say, Blue Cross or Kaiser Permanente or the SF Health Plan, refers to First DataBank’s massive catalog of drugs — for which they’ve paid a hefty subscription fee — to make sure the price they’re paying for your allergy medicine is the one properly set by the market.

First DataBank claimed for years that it was surveying multiple drug wholesalers like McKesson to come up with its average published prices and that it was increasing the number of surveys it conducted. But there aren’t that many wholesalers to actually survey because so many of them have merged with one another in recent years. Also, two out of the nation’s three top wholesalers apparently declined to participate in the surveys as a matter of policy.

Troy Kirkpatrick, a spokesperson for Cardinal Health, one of McKesson’s few competitors, said his company doesn’t give out proprietary information to anyone, let alone First DataBank.

"We have a long-standing policy of not providing confidential pricing information to external sources," Kirkpatrick said. "So if we get asked to share that type of information, we decline."

By 2001 it appeared that First Databank wasn’t really surveying several wholesalers or even the two major companies that compete directly with McKesson, according to court records. First DataBank allegedly conspired with McKesson to establish an artificial baseline markup on hundreds of drugs that didn’t accurately represent their true suggested retail price

.

But if the bodega, or in this case, the retail pharmacy, is benefiting from the new stickers, then what’s in it for McKesson?

Herrera’s suit contends that if pharmacies like CVS and Rite Aid saw McKesson pressing the scales for them, they’d return to McKesson with their business instead of its two other major American wholesale competitors, Cardinal Health and AmerisourceBergen.

The three companies aggressively compete with one another for business just like they’re supposed to in good ol’ free-market America. But now it appears that McKesson has found a way to game the system and edge ahead of its two rivals. Indeed, McKesson is narrowly beating them in total revenue according to the Fortune 500 list.

Profit margins from drugstore chains were sagging at the time the alleged scheme between McKesson and First DataBank took off, and chain pharmacies had been pressing manufacturers to help them earn higher profit margins. According to the lawsuit, distributor McKesson came to the rescue.

So the final question, then, is whether the drug stores were enriched by all this.

Longs Drugs last year made more than $5 billion in revenue. About 20 percent of that, or $1 billion, came from the government-subsidized health care programs Medicare and Medicaid, according to company records.

In its most recent annual report to the Securities and Exchange Commission, Longs admits that if insurers began using a different benchmark than the prices published by First DataBank, such as a pricing guide that more accurately reflected market prices, there could be a "material adverse effect on our financial performance."

A fall revenue measure

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EDITORIAL If you think the June ballot was busy, wait until November. San Francisco will be electing six district supervisors. The mayor and organized labor are going to be pushing the mother of all bond acts, roughly $1 billion to rebuild San Francisco General Hospital. There’s likely to be a public power charter amendment mandating that the city mount a real effort to take over the electric grid. There will probably be a major affordable-housing initiative that includes a set-aside for low-income housing and perhaps some affordable-housing bond money. It’s shaping up as an election that will change the city’s direction for years to come — but there’s still a crucial piece missing.

There’s no money.

Public power will, of course, generate vast amounts of new revenue, but not immediately: the process of setting up the system and fighting Pacific Gas and Electric Co. in court could drag out for several years. That, of course, is all the more reason to get started — if the city had done this years ago, we wouldn’t have a budget crisis today.

But in the meantime, right now, San Francisco needs cash — and there needs to be a November ballot measure that brings in new revenue to pay for more affordable housing and to save the services Mayor Gavin Newsom is cutting.

It’s tough to pass new taxes in California. Most of the time, state law mandates a two-thirds majority vote by the people to enact any new form of taxation. But it’s a bit easier when the supervisors are up for election; on those ballots, the threshold is only 50 percent. And with at least four tightly contested supervisorial races bringing out voters, labor bringing out the troops for the General Hospital bond, and the Democratic Party pushing to get voters out for Barack Obama, the turnout should be excellent.

So if there’s ever a good time to try to pass a tax measure, November 2008 ought to fit the bill.


All sorts of tax proposals have floated around City Hall in recent years and some of them — for example, a higher real-estate transfer tax — were defeated at the ballot. Some groups will oppose any tax proposal, and it’s hard to find constituencies that want to work hard for higher taxes.

So the key to crafting a revenue measure is to ensure that it’s as progressive as possible, and that it takes into account the concerns of those small businesses and homeowners who aren’t rich and can’t afford huge new levies. We see two good options:

1. A city income tax. This hasn’t been seriously discussed since the 1980s, but it ought to be. California law bars cities from collecting traditional income taxes — that is, San Francisco can’t tax the incomes of everyone who lives here. But in 1978 the state Supreme Court ruled that cities can tax income earned from employment in the city. The upside is that a San Francisco employment income tax would hit commuters, a huge group who use city services and don’t pay for them. The downside is that people who live here but work, say, in Silicon Valley would escape the tax.

But overall, income taxes are the fairest method of collecting revenue, and a city tax could be set to hit hardest on the wealthiest. The city could exempt, say, the first $50,000 of earned income, levy a modest (say, 1 percent) tax on the next $50,000, then increase the marginal percentage so that people with enormous salaries pay as much as 2 or 3 percent.

The beauty of this: most of the people who paid the top-end income tax would simply write it off their federal income taxes — meaning this would be a direct shift of cash from Washington DC to San Francisco. And it would come primarily from people who have already received a huge tax windfall from the Bush administration.

Yes, some people would cheat. Some businesses would try to claim their employees all really worked out of a satellite office in another city. But New York City has a municipal income tax. So does Philadelphia. They manage to deal with the cheaters. The supervisors at least ought to consider the idea.

2. A new business tax. Almost everyone agrees that San Francisco’s business taxes are unfair. The city places a flat tax on businesses — a small merchant pays the same percentage as a giant corporation — and some partnerships, like law firms, get away with paying no city taxes at all. The best way to fix that may be to create a single, progressive business tax (probably on gross receipts), with no loopholes, that exempts the first $100,000 or so and actually lowers the levy on small businesses while significantly raising it on big ones. Most small businesses would get an actual tax cut while the big guys would pick up the tab.

Together, a tax package like this could bring in the $250 million a year or so the city needs — and some of the money could go to cutting, say, Muni fares or reducing the sales tax so working-class San Franciscans would pay less.

Almost everyone at City Hall knows the current tax system is unfair, regressive, and inadequate. We’ve been calling for the supervisors to do something about it for years now. November 2008 seems like an excellent time.

Editor’s Notes

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› tredmond@sfbg.com

I think it’s safe to say that most people in the real estate business tend to oppose raising taxes on real estate. And generally speaking, you don’t find the industry well represented at dinners for urban environmental groups. But John Barry is different. He’s a Sunset District Realtor who is full of ideas about how to get the city more revenue, and after I ran into him at the San Francisco Tomorrow dinner May 21, he sent me a proposal he says would bring in more than $5 million a year.

Barry was digging around in property records recently and learned that a parcel out on 19th Avenue sold a year ago, in June 2007, for $2.5 million — and the new owners still hadn’t received a property tax bill. The owner "most likely won’t be getting the bill until July or later," Barry wrote. "He will then have another 30 to 90 days to come up with his payment."

Although the city will eventually get the money, the late property tax bill means that cash is sitting in a property owner’s bank account, earning interest that ought to go to the city. At the current tax rate of 1.141 percent of market value, which is typically the sale price, the lost interest on this one property is about $2,800. Multiply that times all the commercial and residential sales in the city, and Barry estimates San Francisco is losing some $5 million in interest every single year.

"Who is to blame? All of us," he wrote. "If taxpayers had been raising a fuss, the city would have found ways to do this all quicker."

When property changes hands, it typically goes through a title company and an escrow procedure and, at closing, a bunch of money changes hands. The buyer pays a whole list of fees — to the title company, the broker, the mortgage company, etc. Why can’t the city be in the mix?

Here’s how it could work, Barry suggests: "The title company calls the tax collector and says, ‘We are closing a sale in two days. The sale price is $1 million. Send us an interim estimated tax bill.’ The tax collector multiplies .01141 [the property tax rate] against $1 million and instantly prints an interim bill of $11,410 and e-mails it to the escrow officer."

Makes sense to me.

So the day I got Barry’s e-mail, I called Assessor-Recorder Phil Ting and left him a message saying I’d found him $5 million. He called back right away. I ran Barry’s idea by him, and he told me it was worth pursuing.

It’s a bit more complicated than it seems, he said, particularly with commercial property — which is where the big money is, anyway. In many cases the city doesn’t accept the sales prices as the actual value, and under Proposition 13, you can’t raise a tax bill once you set it. But I have great faith that City Attorney’s Office can figure a way around that.

Of course, Ting has another problem: he doesn’t have the staff to catch up on the existing backlog — and Mayor Gavin Newsom wants to cut his budget. "Nobody wants to stand up and fight to fund the tax man," he told me. That, of course, is lunacy. If you’re short of money, you don’t cut the folks who are bringing it in.

It’s hard to talk about taxing anyone, even in San Francisco. "I write this," Barry said, "because I am a founding member of the How a Realtor Can Commit Professional Suicide Club." But you know he’s right.