Corporations

A new corporate tax cut

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By Tim Redmond

Calitics has the scoop on one of the most insane parts of the budget debate — just as the governor is talking about massive, mind-numbing cuts in public services, the state is about to give a big tax break to large corporations.

Lenny Goldberg, of the California Tax Reform Association, puts it this way:

“This is the gutting of the state corporate tax,” said “In fact, they did it so badly that lawyers are chuckling about the opportunities for tax avoidance.”

Uncivil unions

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steve@sfbg.com

Who really cares about an appointment to the Golden Gate Bridge, Highway and Transportation District Board of Directors? There isn’t a delicate balance of power on the board or any major initiative at stake in this fairly obscure district. San Francisco certainly has more pressing issues and concerns.

Yet the Board of Supervisors’ April 14 vote to reject Larry Mazzola Jr. and select Dave Snyder for that board says more about San Francisco’s political dynamics, the state of the American labor movement, the psychological impact of the recession, how the city will grow, and the possibilities and pitfalls facing the board’s new progressive majority than any in recent memory.

It was a vote that meant nothing and everything at the same time, a complex and telling story of brinksmanship in which both sides of the progressive movement arguably lost. And it was a vote that came at a time when they need each other more than ever.

"It was a win for the Newsom-oriented elements of labor," Sup. Chris Daly, who helped spark the conflict, told the Guardian.

The bloc of six progressive supervisors who shot down Mazzola — who helps run the powerful plumbers union and was the San Francisco Labor Council’s unwavering choice for an appointment that has traditionally been labor’s seat on the bridge board — is the same bloc the unions helped elected last year. It is also the same bloc that has been fighting the hardest to minimize budget-related layoffs.

The vote says a tremendous amount about the crucial alliance between progressives and labor, how that delicate partnership formed, and what the future holds.

PLUMBERS VS. PROGRESSIVES


The Mazzola name carries a lot of weight in San Francisco labor circles. The Web site for the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry Local 38 (UA 38) features a photo of U.S. Secretary of Labor Hilda Solis standing between Larry Mazzola Sr. and Larry Mazzola Jr., the father and son team that runs the union.

But the Mazzolas and their union are also controversial. As the Guardian has reported ("Plumbers gone wild," 2/1/06), the union owns a large share of the Konocti Harbor Resort (which a lawsuit by the Department of Labor said was a misuse of the union’s pension funds) and owns the Civic Center Hotel, which tenants and city officials say has been willfully neglected by a union suspected of wanting to bulldoze and develop the site. The plumbers and other members of the building trades have also fought with progressives over development issues and generally back moderate-to-conservative candidates.

Sup. Chris Daly and several progressive groups locked horns with the union over the hotel a few years ago, and Mazzola Sr. responded by opposing Daly’s 2006 reelection campaign, targeting him with nasty mailers and donating office space to Daly’s opponent, Rob Black. Yet more progressive unions like Service Employees International Union Local 1021, which represents city employees, convinced the Labor Council to back Daly and union support helped Daly win.

So when Mazzola Jr. came before Daly’s Rules Committee last month, the supervisor unloaded on him, and Mazzola gave as good as he got, telling Daly he didn’t want his support and defiantly telling the committee he didn’t know much about the bridge district, or its issues, but he expected the job anyway. Those on all sides of the issue agree it was a disaster.

"He was just patently unqualified for the position," Daly told the Guardian. Mazzola tells us his experience with labor contracts would be an asset for the position, but he admits the committee meeting didn’t go well. "I was caught off-guard and put in a defensive mode that altered my planned presentation," Mazzola told us.

Whatever the case, Sup. David Campos joined Daly in keeping the Mazzola nomination stuck in committee while the progressive supervisors privately asked labor leaders to offer another choice. "We said, ‘Give us anyone else as long as they can intelligently talk about transportation issues and the bridge district," Daly said.

But labor dug in. "It seemed as though the board was trying to dictate to labor what labor should do," Michael Theriault, who heads the San Francisco Building and Construction Trade Council. And the other unions decided to back the trades, for a number of complicated reasons.

"The reason we supported Larry Mazzola is because this was important to the plumbers union," said Mike Casey, president of the Labor Council and head of Unite Here (which includes the Union of Needletrades, Industrial and Textile Employees and the Hotel Employees and Restaurant Employees International Union). "To the extent we can support the trades, we want to."

So when the four most conservative members of the Board of Supervisors used a parliamentary trick to call the Mazzola nomination up to the full board on April 14, the stage was set for the standoff.

THE STATE OF LABOR


Labor is truly a house divided, despite its universal interest in minimizing recession-related layoffs and taking advantage of a new Congress and White House that is generally supportive of labor’s holy grail: the Employee Free Choice Act, which would make it far easier to form unions.

The April 25 founding convention of National Union of Healthcare Workers (NUHW) in San Francisco caps a years-long battle between Sal Rosselli’s United Healthcare Workers (UHW) and their SEIU masters (see "Union showdown," 1/28/09). Rosselli and many others say SEIU under Andy Stern has become undemocratic and has climbed in bed with corporate America, while SEIU says getting bigger has made the union better able to advocate for workers. Both accuse the other of being power-hungry and not fighting fair.

"Inside SEIU, we’ve been struggling for four years basically on a difference of ideology and vision of what the labor movement is," Rosselli told us. David Regan, who SEIU named as a UHW trustee after ousting Rosselli, told us the union divisions have been overstated by the media. "Everyone is together in pushing the Employee Free Choice Act," he said, glossing over the fact that the legislation is in trouble and recently lost the support of U.S. Sen. Dianne Feinstein.

Nationally, SEIU has been at war with all of the most progressive unions. The union recently made peace with the California Nurses Association after a particularly nasty struggle that involves many of the same dynamics as SEIU vs. NUHW, including accusations by CNA that SEIU was a barrier to achieving single-payer healthcare and was illegally meddling in its internal affairs.

SEIU is also accused of breaking up Unite Here, which fought the most high-profile labor battle here since Newsom became mayor in its contract fight with the big hotel chains. Last month, a large faction from the old Unite affiliated with SEIU, whose officials say they were just helping out after the end of what all knew was a bad marriage. "This is an example of a merger that didn’t take," SEIU spokesperson Michelle Ringuette told us. But the building trades have backed Unite Here in its fight against Sterns’ SEIU. As Casey told us, "We’re in a major fight over our right to exist. There’s no other way to characterize it."

Yet in San Francisco, SEIU plays a different role. Local 1021 is the advocate for the little guy, representing front-line city workers who deliver social and public health services. It is the union facing the deepest layoffs in the coming city budget fight and is still negotiating contract givebacks with the Mayor’s Office. The union’s biggest allies in City Hall are the exact same six supervisors who voted against Mazzola.

So why this standoff? SEIU, Unite Here, and other progressive unions share the Labor Council with the building trades, which are traditionally more conservative and friendly with downtown and, these days, starting to really get desperate for work. "We have thousands of guys on the verge of losing their homes and families," Theriault said. "We are desperate."

That was one reason the San Francisco Labor Council last year cut a deal with Lennar Corporation to back Proposition G, which lets Lennar develop more than 10,000 homes in the southeast sector of the city. Daly, who wanted firmer guarantees of more affordable housing, was livid over the deal and has been at odds with the council ever since. But Daly said labor’s undercutting of progressives goes back even further and includes the early reelection endorsement Rosselli’s UHW gave Newsom in 2007, which helped keep big-name local progressives out of the race.

Tenants groups, affordable housing advocates, and alternative transportation supporters form the backbone of progressive politics, but on development projects, they often clash with the trade unionists who just want work. And labor expects support from the progressive supervisors. As Mazzola pointed out, "It was labor that got most of those guys elected."

But labor has its own fights on the horizon. SEIU fears deep city job cuts if the Mayor’s Office can’t be persuaded to start supporting new revenue measures. NUHW is getting challenged by SEIU for every member the try to sign up. And Unite Here’s hotel contracts start expiring in six months, reopening its battle with downtown hotel managers.

"We’re going to be in a real war with some of those employers," Casey said. Yet he said its actually good time for the otherwise distracting fights with SEIU over how nice to play with big corporations. "I embrace this fight because I think this is exactly the struggle we need to have in the labor movement."

But the Mazzola fight was one that neither side relished.

TO THE BRINK


The Board of Supervisors chambers was filled with union members flying their colors on April 14, but the progressive supervisors were just as unified, voting 6-5 to reject Mazzola. All that was left was the political posturing, the decision of what to do next, and the fallout.

"I am disappointed and surprised by the board’s action," Sup. Sean Elsbernd (who voted for Mazzola and publicly called it "a sin" to deny him) told us, refusing to confirm the private joy over the outcome that many sources say he has expressed. "What shocked me is a majority of the board turned their back on labor."

Daly admits that the standoff hurt progressives. "I’m not sure who came up with it, but it’s certainly true that the Sean Elsbernds of the world were able to take full advantage of the situation to drive a wedge between unions and progressives," Daly said.

Yet Daly noted how ridiculous is was for Sups. Elsbernd and Michela Alioto-Pier to be publicly professing such fealty to labor while opposing revenue measures that would minimize layoffs. "At the same time the plumbers were attacking me, I was sponsoring paid sick days," Daly said. "It’s the six members of the board that are the most pro-labor who voted against Larry Mazzola."

Politically, Elsbernd says the progressives misplaced their hand. "I think the easy middle ground for them was to reject Mazzola and send it back to committee," Elsbernd said. Others echoed that point. Instead, supervisors appointed Synder, a widely acclaimed transportation expert who created the modern San Francisco Bicycle Coalition then started Transportation for a Livable City (now Livable City) before becoming the first transportation policy director for the San Francisco Planning and Urban Research Association (SPUR).

"I don’t like how that went down, and I’m not happy with the inability of the board and labor to come to an agreement," Snyder told us. "I was stuck in the middle. I wish they had sent someone the board could have agreed to."

After the vote, Snyder went back to the SPUR office and resigned. SPUR director Gabriel Metcalf admits that labor leaders lobbied him to pressure Snyder to withdraw his name, and that he asked Snyder to do so. But Metcalf said he didn’t want to lose Snyder, whose vast knowledge of transportation issues as been a real asset to SPUR. "It was his choice and not my preference."

"This issue is not why I left SPUR, but it was the precipitating event," said Snyder, whose progressive values have occasionally differed from SPUR’s stands. "My sense of social justice has more to do with class issues than I was able to pursue at SPUR."

In fact, the clashes between progressives and developers (who are often backed by the trade unions) often revolve around how much affordable housing and community benefits will be required with each project approval. Snyder said the defining question is, "How do we accommodate development in San Francisco and maintain progressive values in a capitalist economy?"

He didn’t answer that question, but it is one the building trades also understand. Theriault said he supports holding developers to high standards, even when progressives have block certain projects to get them. "I’m okay with that as long as I see the endgame," Theriault said.

He expects the progressive board to listen to labor more than Daly or Democratic Party chair Aaron Peskin, who Theriault said helped shore up the progressive opposition to Mazzola (which Peskin denies). "With the exception of Daly, the relationships are reparable. But they have to show some independence from Daly and Peskin," Theriault said. "The real fear for me is what comes next."

Theriault was referring to things like new historic preservation standards that supervisors will soon consider, as well as the string of big development projects coming forward this year. And for progressives, they hope their efforts to save city jobs will be followed by labor support for progressive candidates for the Board of Supervisors (such as Debra Walker and Rafael Mandelman) in next year’s election.

"The one thing I know about labor is, we’ve been screwed by politicians on the left and the right," Casey said. "Are we angry about this and disappointed? Yes. But does that mean the alliance between labor and progressives is dead? No. We’re going to work through this stuff, talk, take deep breaths, and move forward."

NUHW’s founding convention takes place April 25 from 10 a.m. to 5 p.m. at Everett Middle School, 450 Church St., San Francisco.

The “tax day” defense

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This surveillance photograph of the suspected bank robber is posted at the SFPD’s website.

The San Francisco Police Department has issued a description of a bank robbery suspect who threatened to blow up the Bank of America at 50 California Street, on April 15, aka tax day, if his demands weren’t met.

Carrying a black lap top case, the suspect, who is described as “a white male, 6’, 190 lbs., last seen wearing a
baseball cap with “SF” on it, a khaki buttoned shirt, and blue jeans,” allegedly “entered the
Bank of America on California Street, at approximately 12:50 P.M, and asked an employee to speak with the manager because he wanted to make a large withdrawal,” according to a SFPD press release.

The manager took him to a room, where the suspect allegedly “explained that he worked for an organization that is concerned about government bailouts of corporations.”

The suspect, who apparently was smiling throughout, then demanded cash, stating, that unless the manager complied, he would “detonate a bomb that he was carrying with him.”

The cash, the suspect explained, “would go to people who deserve it,” according to the SFPD.

The manager withdrew a large amount of cash from a vault and gave it to the suspect, who fled the bank on foot.

For more information–or if you have information for the police, call the SFPD’s Public Affairs Office at 415.553.1651.

Shielding Goni

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news@sfbg.com

Top Democratic Party pollster Stanley Greenberg rolled into San Francisco last month to promote his latest book, Dispatches from the War Room — In the trenches with five extraordinary leaders (2009, St. Martin’s Press). The slight, bespectacled man spoke at the Commonwealth Club, sharing what he hoped were "honest and frank" accounts of working with leaders such as Nelson Mandela and Bill Clinton.

While he happily pontificated on the lessons these experiences held for President Barack Obama, he was a bit more defensive on why he had proudly featured in the book Gonzalo "Goni" Sánchez de Lozada, former president of Bolivia who is currently wanted for his role in a massacre of 67 people in October 2003.

Greenberg was drafted in 2002 to help Goni, a wealthy University of Chicago-educated businessman, get elected president during a time of social upheaval created largely by U.S.-backed neoliberal economic policies. Branding Goni as the only man who could "resolve the crisis," Greenberg and other U.S. political consultants helped their client scrape an electoral victory with just 23 percent of the popular vote.

The deaths took place less than a year later when Goni announced deeply unpopular plans to privatize the country’s natural gas reserves and give foreign corporations more control over Bolivia’s resources. Road blockades erected by protesters in the poorest outlying neighborhoods of the high altitude city of La Paz effectively cut off supplies. Goni signed a decree that instructed the army to clear the roads and promised "indemnification for any damage to property and persons which might occur." That effective carte blanche resulted in the army shooting live ammunition indiscriminately at men, women, and children.

Military repression brought to a head one of the country’s bloodiest years, in which more than 150 people died in social protests. Rising popular anger led Goni to flee the country to exile in the United States. He has since lived comfortably in Chevy Chase, Md., protected by Republicans and Democrats alike.

Greenberg admits in the book that the violence caused him "to take stock," yet he ends up saying he is now "more certain of my course and his [Goni’s]." He concludes: "I am proud of what we did to help Goni become President." From the podium at the Commonwealth Club, he blamed the atrocities on the supposed "parallel violence" by the protestors.

It seems a surprising conclusion for a man who is supposedly in touch with the electorate. Goni is universally reviled in Bolivia as a corrupt and arrogant politician who devalued Bolivian lives. Even Goni’s Vice President Carlos Mesa denounced him and swore that he would never use violence to enforce policies. Two-thirds of Bolivia’s Congress — including many who had formed part of Goni’s coalition — approved a trial seeking responsibility for the massacres. Disgust at Goni’s "free market" (or neoliberal) economic and social policies, which increased poverty and inequality, was partly behind the landslide 2005 electoral victory of one of the leaders of the protest movements, Evo Morales.

Yet sadly, Greenberg’s positive spin of Goni seems to be a view that is widely shared with the Democratic Party. At a Washington launch event for Greenberg’s book, Speaker of the House Nancy Pelosi also appeared to hold Goni in high esteem, warmly welcoming him to the event and calling him a "very special man." Goni’s former defense lawyer, Gregory Craig, is now Obama’s White House counsel. The Democrats’ historic loyalty to one of their favored pro-American friends seems to outweigh their commitment to human rights and fair legal process.

Rogelio Mayta, the resolute lawyer representing the families whose loved ones were killed in October 2003, tries to give Pelosi the benefit of the doubt. "We want to believe in the good faith of … Pelosi and believe that these praises are due to misinformation rather than a concrete line of action and thinking by the U.S. government," he said.

Yet the anger of Eloy Rojas, who lost his eight-year-old daughter when troops entered his village and started shooting indiscriminately, is harder to hide. "Every effort that allies of Sánchez de Lozada make to present the ex-president as a victim and an honest man is for us an offense. It is an offense against the pain and suffering that his terrible actions had for our lives. His determination to defend his and other people’s economic interests meant that he stopped valuing peoples’ lives … That is why we continue to seek justice."

In March, Bolivian families who lost loved ones marked a significant milestone in their struggle to end the legacy of impunity for political elites like Goni. After five years of navigating political games and legal loopholes, a date was set for the trial of responsibility for Goni and seven of his ministers. Yet the main defendant, Goni, will be missing because the U.S. government has ignored requests for extradition for several years.

Many in the U.S. and worldwide continue to hope that Obama’s inauguration will mark a new chapter in relations worldwide, especially in Latin America, where there has been a new wave of resistance against U.S. attempts to impose its economic interests. Obama has made some important first steps in ordering closure of the Guantánamo Bay detention facility and reinvigorating the use of diplomacy in regions such as the Middle East. But if he really wants to start a new chapter of international relations rooted in human rights, he doesn’t need to travel abroad. He just needs to respond to Bolivia’s lawful request for extradition and send home the man who lives just seven miles from the White House. 2

Nick Buxton is a British journalist who was based in Bolivia for many years before moving to San Francisco last year. His blog, Open Veins, is at www.nickbuxton.info.

Green-collar heat

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› sarah@sfbg.com

GREEN CITY Local residents, workers, and businesses are anxious to learn who and what will be stimulated by the billions of dollars that President Barack Obama authorized for release when he signed the American Recovery and Reinvestment Act.

Since January 2008, unemployment in the Bay Area has risen from 4.9 percent to 8.4 percent, according to the U.S. Department of Labor Statistics, and house prices and consumer spending are down.

Despite all the anxiety, representatives from local low-income community groups hope to turn Obama’s stimulus package into an opportunity to make local government accountable for creating decent green-collar jobs. And Sups. Eric Mar, John Avalos, Sophie Maxwell, and Board President David Chiu seem happy to help further the community in this environmentally friendly cause.

Mar scheduled a March 23 hearing of the board’s Land Use and Economic Development Committee "to obtain community input on the creation of jobs, particularly green-collar jobs, in San Francisco as the city positions itself for federal investment dollars."

"The hearing was the first step toward building a grassroots coalition to hold government accountable," continued Mar, who worries that the Mayor’s Office is not sharing enough information related to the stimulus package. "Labor and community groups, not just department heads and City Hall, should be at the table."

At the hearing, representatives from the city’s Office of Economic and Workforce Development said that a substantial part of the first wave of stimulus package dollars has already been allocated, mostly to shovel-ready projects such as the Doyle Drive rebuild and massive development projects at Treasure Island and the Hunter’s Point Shipyard.

OEWD representatives also indicated that more waves of formula funding are expected, for which San Francisco must compete with other cities, and that the city’s Department of Technology is constructing a Web site to track all local money from Obama’s $787 billion package.

OEWD deputy director Jennifer Entine Matz says community-based organizations, unions, and community colleges need to work together to ensure that people are successfully brought through any work program. "In many cases, green collar jobs are existing jobs," Matz said. "If we are successful in training people with green power technology, they will be more marketable here and beyond. We can also train and modify people in existing programs."

But representatives from the Chinese Progressive Association, PODER (People Organizing to Demand Environmental and Economic Rights), and POWER (People Organizing to Win Employment Rights) expressed their belief that stimulus package funds should go to help low-income communities, not rich corporations.

"Let’s make sure we stimulate quality to make sure we stimulate the economy," said PODER’s Oscar Grande, who warned against using the funds on low-paid jobs with few advancement opportunities. He and others suggested tracking what communities receive funding. "We want to go past the green hype, the green-washing, and the green lifestyle marketing," Grande said.

Raquel Pinderhughes, an urban studies professor at San Francisco State University who helped Berkeley’s Green Business Council and Oakland’s Green Jobs Corp program, defined green-collar jobs as "blue collar jobs in green businesses.

"Green collar jobs can function to get more people out of poverty," Pinderhughes said. "They can provide living wages. They have low barriers to entry. They provide an opportunity for occupational mobility. They are inherently dignified, and they have a shortage of entry-level workers, so there is room for people."

But Pinderhughes warned that cities must link improving environmental quality to social justice to avoid creating temporary jobs and preserve industrially zoned lands for green-collar jobs. She also said that cities must fund case management services "so folks don’t quickly drop out."

The Land Use Committee has scheduled an April 6 continuation to address a plethora of outstanding issues like how much money is going to specific corporations and departments, the division of funds between public transportation and freeway projects, and how much Lennar Corp. is getting for its Hunters Point Shipyard/Candlestick Point redevelopment project.

Event fee policy threatens How Weird and other festivals

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The How Weird Street Faire has become a popular event, particularly with the Guardian staff, including (from left) Associate Art Director Ben Hopfer, Culture Editor Molly Freedenberg, City Editor Steven T. Jones, and Art Director Mirissa Neff.

By Steven T. Jones

The city’s budget crunch and stricter policies on making special events pay up front for all city services that they’re required to use are once again threatening the How Weird Street Faire, a popular dance festival now in its 10th year that seems to battle city bureaucracy every year. Now, the grassroots organizers are challenging policies that could leave San Francisco with only events sponsored by deep-pocketed corporations.

Organizers say they can’t come up with the almost $10,000 that the San Francisco Police Department is requiring them to pay up front, a tab needed to pay for cops that do little except stand around at an event that would rather be allowed to police itself. The May 10 event is scheduled to take place around Howard and 2nd streets after city officials made them move from their previous spot 10 blocks away.

“The SFPD is demanding we pay them nearly $10K up front for police services, which was not discussed at the ISCOTT [the city body that issues street closure permits] hearing and is twice the amount of 2007. We simply do not have the money for this and they are threatening now to not plan for our police services. I have a bad feeling they will not sign off on our ABC license [needed for beer sales],” lead organizer Brad Olsen recently wrote in an appeal to City Hall for help.

Real set-aside reform

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Whenever conservative elements within San Francisco’s political mix put forth measures that carry the moniker "good government," liberals, progressives, and those of us concerned that good government serve the people rather than the corporations should take notice.

Last year, one so-called good government measure usurped the right of four members of the Board of Supervisors to check a mayoral veto by putting a measure on the ballot at the last minute. The reform imposed a requirement that hearings be held before the supervisors put any legislation on the ballot.

Never mind that empirical evidence shows no correlation between the route to the ballot and the quality of measures; good as well as crap has made it onto the ballot and into law from all origins. Never mind that there were other ways to ensure that voter-initiated ordinances were amendable and flexible. Downtown wanted to crimp the power of the Board of Supervisors and our neighborhoods and, with the help of some progressives, succeeded.

They’re back at it again, as government grapples with revenue shortfalls caused by the second Great Depression, a depression caused by the economic policies championed by our local conservative/moderate coalition. We are seeing another effort at good government that would only benefit those who wish to destroy popular public services, to enable Reaganism, and to wipe away much of the public sector.

In order to secure a dedicated, reliable stream of funding, activists have run campaigns to create set-asides for various public programs. The earliest funded the San Francisco Symphony during the first Great Depression. Since then, programs that carry great public appeal, from the Children’s Fund to the Open Space Fund to Muni have been given set-asides by the votes.

The proposal on the table now would change the way the city handles budget set-asides, ostensibly to allow greater flexibility during tough times. It would allow the Board of Supervisors, under certain budgetary shortfall conditions, to dip into funds earmarked for particular purposes. But the result would be dangerous to the ongoing essential function of government. And the proposal would prevent the voters from solving a problem created by our City Charter — the inability to do multiyear budgeting.

What this city needs is a way for voters to express their long-term funding priorities and to hold the feet of elected officials to the fire in funding those priorities — but in a manner that accounts for the vicissitudes of the economy.

The reason the city can’t do multiyear budgeting without a Charter set aside is that any regular ordinance passed by the board and the mayor can override any other ordinance. One way to approach the problem: amend the charter to create a new class of ordinance, one that would allow for multiyear budgeting. This class of ordinance would need to be classified as a multiyear budget ordinance when proposed, and would require either a vote of the people or a super majority at the Board of Supervisors and a mayoral signature to enact.

The multiyear budgeting ordinances would govern subsequent years’ budgets and could be overridden only with a super-majority vote, and only under conditions of economic hardship. In normal times, the city could set longer-term spending priorities for projects and priorities that last longer than one budget year, as well as those areas that are important to San Franciscans year in and year out. *

Marc Salomon is a neighborhood activist in San Francisco.

The Chronicle death watch

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› sarah@sfbg.com

Is San Francisco really the frontrunner in the race to become the first major U.S. city to go without a major daily? Or is it a victim of disaster capitalism, in which powerful corporations exploit economic meltdowns to exact otherwise unacceptable concessions from employees and/or antitrust legislators?

Media critics chewed on those questions last week, following Hearst Corporation’s abrupt Feb. 24 announcement that it is undertaking "critical cost-saving measures including a significant reduction in the number of its unionized and non-unionized employees" at the San Francisco Chronicle, and will close or sell the paper, which has 1,500 employees, 275 in the newsroom, unless these changes occur within weeks.

Noting that the Chronicle lost more than $50 million in 2008 — the worst in a string of nonstop losses the paper has suffered since Hearst bought it in 2000 — Hearst vice chairman and chief executive officer Frank A. Bennack Jr. and Hearst Newspapers president Steven R. Swartz warned that "without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down."

Two days later, the California Media Workers Guild, which represents workers at the Chronicle, reported that Hearst is seeking "a combination of wide-ranging contractual concessions in addition to layoffs, the exact number of which the company said it did not yet have."

"For Guild-covered positions, the company did say the job cuts would at least number 50," read a Guild statement. "Other proposals include removal of some advertising sales people from Guild coverage and protection, the right to outsource — specifically mentioning ad production — voluntary buyouts, layoffs and wage freezes."

Guild representative Carl Hall said he doesn’t see any reason to think Hearst’s threats are a bluff.

"The Rocky Mountain News just closed in Denver," Hall told the Guardian. "The Seattle Post-Intelligencer, which is also owned by Hearst, is slated to close in March, if a buyer isn’t found. We’ve seen bankruptcies and disaster scenarios all around the country, and the Chronicle has experienced some of the deepest operating losses in the nation."

Reached for comment March 2, Chronicle publisher Frank Vega told the Guardian, "We’re still in the process," while Guild treasurer George Powell said that "proposals have been exchanged and each side is evaluating them."

WHERE’S THE MONEY?


Evaluating Hearst claims is hardly an easy task. A privately held corporation, Hearst doesn’t open its books to the public. But one thing is clear, just from reading postings on the corporation’s Web site: Hearst is midway through a squeeze in which it’s trying to turn a profit on the 15 newspapers it owns throughout the country.

And that means more syndicated stories — and possibly the end of free newspaper Web sites.

As Swartz outlined in a recent press release, all Hearst newspapers will be required to allow for "efficient production or common content sharing," use "outbound telemarketing and self-service ad platforms more effectively," increase their subscription rates, outsource printing, and charge for digital content.

"Exactly how much paid content to hold back from our free sites will be a judgment call made daily by our management," Swartz stated. "Our goal is a business model that seeks, by 2011, to get more than 50 percent of our revenue from circulation revenue and digital advertising sales."

And the same day that Chronicle workers learned that their newspaper might be facing the axe, Hearst cut 75 out of 135 newsroom positions at the San Antonio Express-News in Texas.

As San Antonio Express-News editor Robert Rivard told his staff, "Incremental staff and budget cuts, we are sorry to say, have proven inadequate amid changing social and market forces now compounded by this deepening recession."

"It’s like death in here today," a source, who asked to remain anonymous, said. "Everyone who was laid off is still here, working ’til March 20."

And like the growing pool of newsroom refugees nationwide, the survivors of this San Antonio massacre have since met to brainstorm about other newsgathering business models.

"We all have kids, so we need salaries and insurance," our source confided, "but we’re going to start researching some options, see what’s working and not in other places. The time is ripe."

THE SINGLETON SCENARIO


Meanwhile, sources within the Chronicle — who asked to remain anonymous given the ongoing negotiations — claim that there isn’t much hope that Hearst will come up with innovative solutions, but that there is a chance the paper could be sold to Dean Singleton, the only other major Bay Area newspaper publisher.

Singleton’s MediaNews Group owns the San Jose Mercury News and the Contra Costa Times, and has lost several antitrust cases in recent years. Any deal with the Chronicle would require Department of Justice approval — and would give one owner control of nearly every daily newspaper in the Bay Area.

The media baron refuses to comment on whether he is considering buying the Chronicle.

"We’ll just watch it play out," Singleton told Editor and Publisher’s senior editor, Joe Strupp, last week. "I am not going to speculate on what could happen."

But, as Strupp noted, "MediaNews remains highly leveraged."

Hearst Corporation currently holds a substantial amount of MediaNews debt, owns 31 percent of MediaNews Group newspapers outside of the San Francisco Bay Area, and recently took control of four Connecticut papers that MediaNews was managing for Hearst.

Former Chronicle city editor Alan Mutter believes Singleton could still be in the running.

Observing on his Reflections of a Newsosaur blog that "To wipe out a $50 million loss, let alone make a profit, the [Chronicle] would have to eliminate 47 percent of its entire staff," Mutter later clarified that he believes it’s "extremely unlikely" that the Chronicle will reduce its staff to that extent.

"But, it will try to do some serious cost cutting, and it could be sold, potentially, to MediaNews, because Singleton would not necessarily be expected to put up any money," wrote Mutter, noting that hundreds of people involved in the Chronicle‘s advertising operations could be eliminated if Singleton took over, since ads for MediaNews’ papers are already assembled in India. Another motivation for Hearst to find someone to take over the Chronicle lies in the multimillion dollar printing plant that Hearst just built.

"But no one expects the business to break even now," Mutter said. "If you want to make $20–<\d>$30 million profit over the long term, that’s not a good outcome for a business that has lost $1 billion in recent years."

Michael Stoll, director of the Public Press project, which seeks to launch a nonprofit daily paper, told us he thinks it would be "a real tragedy" if Hearst followed through on any of its Chronicle threats.

"Most San Francisco journalism is generated by reporters at the Chronicle, and its few competitors would be ill-prepared to step in and immediately fill the void," Stoll said.

Concerned that Singleton’s MediaNews could try to make the case that there is a crisis and that the Department of Justice should therefore waive antitrust prohibitions against monopoly ownership, Stoll warned that "the expansion of MediaNews ownership to nearly every other paper in the Bay Area in the last two years has proven to be an unmitigated disaster in terms of a less independent voice from Santa Cruz to Santa Rosa, and from San Mateo to Contra Costa."

The Society of Professional Journalists is calling for a public discussion of Hearst’s threats.

Worried that additional cuts to the Chronicle "will only exacerbate what SPJ perceives as an already growing vacuum of credible reporting and will further limit scrutiny of our public institutions," Northern California SPJ board president Ricardo Sandoval observed that closing the Chronicle "would mean losing the largest source of news for hundreds of thousands of readers in the San Francisco Bay Area."

Asking Hearst to participate in "a high-profile conversation with its community based on the imperative of reinvention," Sandoval said, "We urge journalists, foundations, corporations, the public, and public officials to join us in finding solutions to this increasingly urgent civic challenge."

As University of California at Berkeley journalism professor Bill Drummond warns, "this is not just the decline of the industry. If the mainstream media, which is supposed to be balanced and fair, goes away, if that scrutiny is no longer there, everything will be more partisan and narrower.

"And in this atmosphere where everyone is begging the government to fund their industry, what about the fourth estate?" Drummond said. "Maybe we need the newspaper equivalent of public broadcasting, with pledge drives and bake sales."

Score one for fun

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› steve@sfbg.com

City officials and race organizers have dropped plans for a crackdown on partying at the annual Bay to Breakers race in the face of a massive grassroots organizing effort that quickly generated more than 20,000 members opposed to the proposed bans on alcohol, floats, and nudity.

"We’re pleased with the outcome. I think it’s a victory," Ed Sharpless of the group Citizens for the Preservation of Bay2Breakers told the Guardian. "When you have over 20,000 people join your group in two weeks, it means something."

It means that people are tired of the string of crackdowns by Mayor Gavin Newsom (and his special events coordinator, Martha Cohen) that the Guardian has labeled the "Death of fun" (see "Death of fun, the sequel," 4/25/07), which have included canceling Halloween in the Castro District and placing restrictions on the Haight Ashbury Street Fair, How Weird Street Faire, North Beach Festival, North Beach Jazz Festival, and other events.

And the public outcry demonstrates that big events like Bay to Breakers don’t belong to the organizers and sponsors; they’ve become the property of the entire city.

Sharpless was part of a Feb. 27 meeting convened by the Mayor’s Office that included opponents of the crackdown, race organizers, neighborhood groups, and Sup. Ross Mirkarimi, who has been trying to balance complaints about public urination, drunkenness, and trash with his concerns about killing yet another party.

Afterward, the Mayor’s Office issued a statement indicating that floats would be allowed as long as they aren’t used to transport alcohol, urging Bay to Breakers participants to register for the race, and stating that alcohol consumption "will be subject to the laws of California. Race organizers will coordinate with the San Francisco Police Department to proactively remove kegs and glass bottles of alcohol from the race course."

While that alcohol policy was left deliberately vague, those involved with the negotiations and the May 17 event say drinking will be allowed as long as attendees don’t get out of control. As with alcohol, nudity isn’t specifically allowed, but it’s no longer explicitly banned.

"The issue was it had gotten out of hand last year," Sam Singer, a crisis communications specialist brought in by race organizers, told the Guardian. He said the race organizers wanted to put a stop to the mayhem and proposed the restrictions, but eventually agreed to work with the partyers this year.

"There was a request by the pro-float, pro-alcohol group to continue what had been a San Francisco tradition. Now it’s incumbent on them to register for the race so organizers can pay for it," he said. "This debate has created a positive social pressure to be a cool person and to be respectful of one’s self and one’s neighbors."

Opponents of the crackdown agree and say they will work to keep things under control. Or as Citizens for the Preservation of Bay2Breakers wrote in a public statement, "The problems with public drunkenness … we get it and agree. People, you need to act more responsibly. Pace yourself. It’s a long day. Don’t get out of hand and don’t ruin it for the majority of folks who are acting responsibly. Most importantly, take care of your friends and each other."

But there are still outstanding questions about whether race organizers (including for-profit corporations AEG and ING) are providing enough portable toilets and trash receptacles to avoid last year’s problems, concerns that were raised but not resolved on Feb. 26 during a permitting hearing before the city’s Interdepartmental Staff Committee on Traffic and Transportation.

Organizers told ISCOTT they would provide 650 portable toilet this year, compared to 550 last year, and that they would be more concentrated around problem areas such as Alamo Square and the Panhandle. But Sharpless told the committee that still wasn’t adequate, describing last year’s problems as "mostly a logistical issue" and saying the proposed crackdown and hiring of Singer, who often charges $400 per hour, were counterproductive.

"Why is it they bring in such a heavyweight to deal with this when they could have applied their resources to these logistical issues?" Sharpless told ISCOTT. "They want to take away the fun in San Francisco to make a buck."

Longtime runner Tony Rossman, who supports the crackdown, didn’t agree and told ISCOTT, "There is a one-word problem here and that is alcohol. And that requires public enforcement."

But Conor Johnstone, a runner who opposes the crackdown, told ISCOTT that banning alcohol was an attack on the character of the 97-year-old event, rather than dealing with the main stated problems. "I think an increase of 100 Porta-Potties is anemic at best," he said.

Jeremy Pollock, who was representing Sup. Mirkarimi, offered ISCOTT and race organizers a long list of suggestions to mitigate the problems, including using large capacity urinals, creating an end point with entertainment and Dumpsters for those with floats, and setting a cheaper registration tier for those who aren’t serious runners. "Nobody wants to see this race end," he said.

Opponents of the crackdown say they will continue working to resolve the outstanding issues.

"We’re not done, folks. There is still work to be done. Issues to be resolved. Details to be hammered out," Citizens for the Preservation of Bay2 Breakers wrote in a public statement. "What wasn’t discussed at the meeting and tabled for later discussion are the logistical deficiencies we still believe exist with race organizers’ plan for the event. Recent research by our group revealed that the New York Marathon sources 2,250 toilets for 39,000 participants in their race, while AEG race organizers source only 500 toilets for 65,000 participants in Bay to Breakers. Could it be that there are such massive issues with public urination because there simply aren’t enough toilets?"

Mirkarimi was happy with the agreement, but said it didn’t address the logistical concerns he’s been raising. "It’s a good step in the right direction. However, this is predicated on the trust that may not be felt until the day of the race. We were looking for specifics to improve this race."

Vanishing points

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› a&eletters@sfbg.com

ESSAY/REVIEW There is a wry but hilarious scene near the very end of Roberto Bolaño’s novel 2666 (Farrar, Straus and Giroux; 912 pages; $30), in which a French literary critic finds a German writer, Archimboldi, lodging at what the critic calls "a home for vanished writers." After checking into a room at the large estate, the elderly vanished writer wanders the grounds, meeting with the other vanished authors, residents whom Archimboldi finds friendly but increasingly eccentric. Gradually it dawns on Archimboldi that all is not as it seems. Walking back to the entrance gate, he sees, without surprise, a sign announcing that the estate is the "Mercier Clinic and Rest Home — Neurological Center." The home for vanished writers is an insane asylum.

As we enter the Obama era, with all its promise of "change," I’ve found it impossible to read 2666 without being haunted by the memory of those who vanished into the lunatic asylum of the long George W. Bush years — not just the nameless and unlucky left to rot in the Bush administration’s secret torture cells throughout the world, but also those who disappeared right here at home. For instance, a guy I worked with a couple of years ago. One day he was training me on the job, and a week or so later he was in a federal prison, labeled a "terrorist" — which in his case meant that he edited a Web site called Stop Huntingdon Animal Cruelty.

There were other ghosts, those who vanished after refusing to speak to grand juries. They were rumored to have gone over the border, or back to the land, or who knows where, their very names now superstitiously verboten to speak out loud, lest we bring the heat down on ourselves. Now that Obama is here and everybody is eager for "change," who will remember the once-bright hopes and dreams of the generation that beat the World Trade Organization in Seattle at the dawn of this decade — the hopes that would later be chased down and gassed and beaten by riot police under cover of media blackout in the streets of Miami, St. Paul, or countless other cities? Of course, there were the suicides and overdoses, and other kinds of disappearances, different but related, too: the abandoned novels, or the guitars taken to the pawnshop. Three people in my community jumped off bridges. Only one survived. The human toll of the Bush years in my life has been enormous.

Watching the celebrations in the streets of the Mission District on election night in November, I could tell all of this was soon to be trivia. I saw a virtually all-white crowd of completely wasted people take over the intersection at 19th and Valencia, shouting "Obama!" and dancing in the street. In one way, this scene was touching: the spontaneous gathering was a product of the true feelings of human hope that people have for a better world. Yet the moment already had the scripted feel of something self-conscious or mediated, like the Pepsi ad campaign it would soon become. I had a sinking realization: those of us who have spent eight years battling the post-9/11 mantra of Everything Is Different Now were now going to soon be up against a new era of, well, Everything Is Different Now.

The narratives we tell ourselves about our country are important. Just when a Truth and Reconciliation Committee is most needed to write a detailed narrative of the Bush era’s torture, spying, illegal war, and swindling, I could already see the opportunity for that kind of change slipping away into the blackout amnesia aftermaths of the street parties taking place all across the nation. The election of a president of the United States from among the ranks of the nation’s most oppressed minorities has offered the country a new triumphant storyline. We have symbolically redeemed our sins against civilian casualties and third world workers, without too much painful self-examination. I could see that Obama’s brand of change was really so seductive because it offered a chance to change the subject.

Like Ronald Reagan, elected while the U.S. was mired in recession and post-Vietnam soul-searching, Barack Obama developed campaign narratives that made the U.S. feel good about itself again. Obama guessed correctly that national morale is low partially because we don’t want to deal with the nameless guilt we feel from the atrocities Bush and company committed in our names. Accordingly, he stated during his campaign that he would not pursue criminal prosecution of members of the Bush administration. Nor has Obama questioned the preposterous idea that we can win either a War on Terror or the war in Afghanistan. If you think about it, "Yes We Can" — his campaign’s appeal to good old American can-do spirit — isn’t far off in substance from Bush’s faith-based convictions about U.S. power. Both Bush’s crusade to make democracy flower in the desert of Iraq and Obama’s notion that the auto industry could save itself — and the planet! — with electric cars are fantasies that appeal to our sense of pride about being the richest and most powerful.

When a country that is owned by China and is getting its ass kicked simultaneously by ragged guerilla armies in two of the most impoverished and backward parts of the world keeps finding new ways to tell itself that it’s the richest and most powerful country, it is in deep trouble.

When political leaders and journalists seek to generate false narratives for our consumption and comfort, the difficult task of remembering the truth falls to literature.

Roberto Bolaño completed 2666 in 2003, shortly before he died, too poor to receive a liver transplant, at the age of 50. Born in Chile, Bolaño counted himself a member of "the generation who believed in a Latin American paradise and died in a Latin American hell," and was himself something of a vanished writer. Briefly jailed during the 1973 coup in which Gen. Augusto Pinochet overthrew the popularly elected socialist government of Salvador Allende, Bolaño wandered in exile from Mexico City to Spain, working variously as a janitor and a dishwasher, entering obscure literary competitions advertised on the backs of magazines, while his generation was consumed by Pinochet’s secret prisons and torture cells.

Fittingly, disappearance is perhaps the main action of characters in Bolaño’s works, from the vanished fascist poet and skywriter in 1996’s Distant Star (published in English by New Directions in 2004) to the entire romantic generation of doomed Mexican poets and radicals followed across the span of decades and continents to its vanishing point in a desert of crushed hopes in 1998’s The Savage Detectives (published in English by Farrar, Straus and Giroux in 2007). In 2666, the terminally ill Bolaño wrote as if in an urgent race against the moment of his own departure, unwilling to leave anything out, as if he wanted to save an entire lost underworld from banishment. Taking on every genre from detective noir to the war novel to romantic comedy in an exhilarating, nearly 1,000-page race to the finish, the book is Bolaño’s epic of the disappeared.

The periphery of 2666 teems with Bolaño’s archetypal lost and doomed, a host of minor characters including a former Black Panther leader turned barbecue cook, various Russian writers purged by Stalin during World War II, a Spanish poet living out his days in an asylum, and an acclaimed British painter who cuts off his own hand. There are the usual obscure literary critics and lost novelists, and we even briefly meet an elderly African American man who calls himself "the last Communist in Brooklyn." This last communist could speak for all of Bolaño’s lost and departed when he explains why he presses on: "Someone has to keep the cell alive."

The book’s action, however, centers upon the unsolved serial killings of hundreds of women in the fictional Mexican border city of Santa Teresa during the late 1990s, events based on real-life unsolved killings in Juarez, Mexico. The majority of the women murdered in Juarez were workers at the new factories along the border with the United States, the unregulated maquiladoras that have sprung up in the wake of the North American Free Trade Agreement.

In the book’s longest section, "The Part about the Crimes," we learn the names, one by one, of 111 of these murdered women. In terse, police-blotter language, Bolaño describes the crime scenes — the girls’ clothing, their disappearances, and the police investigators’ attempts to construct the last hours of their lives. Their bodies are discovered slashed, stabbed, bound, gagged, and always raped, in ditches, landfills, alleys, or along the side of the highway. Seen from these vantage points, Bolaño’s Santa Teresa is a disjointed place, seemingly patched together from snatches of barely remembered nightmares. Shantytowns and illegal toxic dumps spring up everywhere in "the shadow of the horizon of the maquiladoras." It is a city that is "endless," "growing by the second," a new type of urban zone in a Latin America that has become a laboratory for free trade policy experiments. It is a city made unmappable by globalization.

Bolaño clearly intends the reader to see the disappearances as the inevitable byproduct of the cheapness of life in the maquiladora economy, yet the killings also eerily evoke the disappearances in fascist 1970s Chile and Argentina. These murders are an open secret, virtually ignored by the media. Residents almost superstitiously refer to them only as "the crimes." The Santa Teresa police respond to the killings with a staggering indifference and ineptitude that might suggest complicity. The maquiladoras are ominous, hulking windowless buildings often in the center of town, not unlike the torture cells once hidden in plain sight in Buenos Aires (Bolaño even names one of them EMSA, an obvious play on Argentina’s most notorious concentration camp, ESMA), and many of the women’s bodies are discovered in an illegal garbage dump called El Chile. 2666 suggests that the unrestrained capitalism of the free-trade era is the ideological descendent of the 1970s South America state repression from which Bolaño fled, and that the killings in Santa Teresa are in part a recreation of the Pinochet-era disappearances.

While the scenes Bolaño describes are grisly, his language is clinical, the cold camera eye of the lone detective gathering evidence. The collective impact of story after story starts to accrue into its own profoundly moral force. By giving name and face to hundreds of disappeared women, Bolaño suggests that literature is a political response, a way to make wrongs right by bearing witness. While it would certainly be a mistake to read 2666 strictly as a political tract, Bolaño explicitly ties writing to justice in a rambling digression about the African slave trade. A Mexican investigator of the killings points out that it was not recorded into history if a slave ship’s human cargo perished on the way to Virginia, but that it would be huge news in colonial America if there was even a single killing in white society: "What happened to (the whites) was legible, you could say. It could be written." For Bolaño, the search for justice is partially about who can be seen in print.

At a literary conference in Seville six months before his death, Bolaño joked that his literary stock might rise posthumously. Sure enough, Bolaño the man has, ironically, vanished after his untimely death, lost in the fog of fame in the English-speaking world. Mainstream critics call his work "labyrinthine" — perhaps English-language critics’ stock adjective for Latin American writers — in a rush to "discover" a new Borges. Bolaño was a high-school dropout who bragged of discovering literature by shoplifting books. He claimed to be a former heroin addict who hung out with the FMLN in El Salvador. His genius deserves comparison to the great Borges, but it’s safe to say that, unlike Borges, a literary lapdog of Argentina’s generals, Bolaño would never have addressed the military leaders of the fascist Argentine coup as "gentlemen." Bolaño wrote without a net, over the abyss of atrocity into which his generation vanished. He did so in an effort to make a literature that recorded for all time where the bodies were buried. As a female reporter in 2666 says, "No one pays attention to these killings, but the secret of the world is hidden in them."

The dangers of believing false narratives should be evident by now. In the wake of our current financial collapse, it is now widely understood that the U.S.’s sense of itself as the richest and most powerful nation in the world has been kept artificially afloat in the recent past by the import of cheap goods and credit from China. These cheap goods are manufactured under labor and environmental conditions much like those of Bolaño’s maquiladoras — conditions we tell ourselves we would never allow here at home, yet which are vital to our economic survival. Dealings with China have, instead, spread repressive tactics in reverse back to corporations from the United States, such as when Google memorably agreed to remove all reference to the 1989 Tiananmen Square massacre from its Google China site.

There is a crucial difference between hope and self-delusion. In its dogged search for uncomfortable truth, 2666 creates a hard-won hope that is different from the way in which that word manifests on the campaign trail. It respects the hope that truth matters, that staring it down can provide the shock of self-awareness that makes real change possible.

In the meantime, there is the hope of literature itself. In 2666, Bolaño devotes a scene to one of his disappeared characters, a Spanish poet who lives out his days in an insane asylum in the countryside. The poet’s doctor — who in a classically deadpan Bolaño twist tells us he is also the poet’s biographer — reflects on the asylum the poet has vanished into. "Someday we will all finally leave (the asylum) and this noble institution will stand abandoned," he says. "But in the meantime, it is my duty to collect information, dates, names. To confirm stories." *

Erick Lyle is the author of On The Lower Frequencies: A Secret History of The City, out now on Soft Skull Press.

Losing the tax argument

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EDITORIAL The lead topic on the local cable TV show City Desk News Hour Feb. 21 was the state budget, and a panel of local reporters were talking about the mix of tax increases and service cuts the Legislature finally passed. After a bit of back and forth, Scott Shafer, host of KQED’s California Report, piped up. "Everyone knows it’s a bad idea to raise taxes in a recession," he said.

Shafer, who was a press secretary to former Mayor Art Agnos, is hardly a conservative commentator. In fact, at the risk of damaging his credentials as an unbiased reporter, we might even call him a liberal. And to judge from the response of most of the panel, nothing he said was particularly controversial. Sure, raising taxes in a recession is bad; so is cancer, and violent crime. Next question.

But that’s not just a limited viewpoint — it’s factually inaccurate. Raising taxes during a recession can be an excellent economic idea, if it’s done right. Because the one thing almost every credible economist outside of the far-right intellectual swampland agrees on these days is that cutting government spending during a recession is a terrible idea — and if the only way to keep the public sector jobs, the social services, and the welfare payments going is to raise taxes, then raising taxes on those who can afford to pay is not only good politics, it’s good policy.

And it’s infuriating that this point seems to have dropped out of the mainstream of debate. That’s a major failure of the Democratic leadership, in California and nationwide.

Historians can argue forever about the direct impact the New Deal had on ending the Great Depression. But it’s pretty clear that what Nobel Prize winning economist Paul Krugman calls the great jobs program of World War II turned the American economy around. And during World War II, tax rates, particularly on the wealthiest individuals and corporations, were exceptionally high. The top marginal income tax rate exceeded 80 percent. Corporations that made more than a modest return paid a high excess-profits tax. The high income tax rates on the richest Americans remained through the postwar boom era, a time when inequality declined and overall wealth grew.

That money went into the public sector, not just for the war but for retooling and rebuilding U.S. industry. High taxes on the rich paid for the interstate highway system, the University of California system, the California Water Project, the birth of the Internet. It took almost half a century for the Republicans and no-taxers to wreck the economic gains of that high-tax era.

And yet, despite all the consistent, clear evidence, we still hear the news media, the commentators, and even liberal Democrats saying that tax cuts are good for the economy and tax hikes are bad.

What we’ve got here is failure to communicate.

One of the most important goals of the next year or two, under the Obama administration, is to change the national debate over public and private priorities. That won’t be easy. President Obama has started off in the right direction, although the Republicans forced him to include several hundred billion in wasteful tax cuts in his stimulus bill. The tax hikes in the state budget plan are almost entirely regressive (sales taxes and a flat increase in the income tax.)

Here in California, and here in San Francisco, elected officials who claim to represent the Democratic Party’s future need to stop mouthing the old Republican line. None of the Democratic candidates for governor, including Mayor Gavin Newsom, have been our front about the need for more government spending, even if it means higher taxes on the wealthy (say, a business tax that hits harder on the biggest and less so on the small). In fact, Newsom has taken the opposite line, writing in a Feb. 13 San Francisco Chronicle op-ed piece that "we have to reduce spending." The San Francisco supervisors are at least talking about new revenue sources, but polls show that will be a hard sell.

Why do the polls show that? Because people like Newsom — and to some extent, the supervisors — aren’t using their bully pulpits to change the tone of the discussion, to make the case for economic sanity, to challenge the demented wisdom that’s brought us to this nightmare.

That has to change, now, or there will be no way out. *

PG&E/BofA take over the Small Business Commission

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Mom and Pop lose their voice as the recession-racked small business community is feeling City Hall neglect and used by PG&E and big downtown business

By Bruce B. Brugmann

(Scroll down for a list of the Small Business Commissioners)

Here’s a snapshot of how the Pacific Gas & Electric Company and its downtown allies operate to keep City Hall safe for the illegal private power monopoly. Rebecca Bowe’s story in the current Guardian shows how a PG&E spokesperson, Darlene Chiu, and a Bank of America ally, retired Bank of America executive Irene Yee Riley, have taken control of the Small Business Commission through key commission appointments by Mayor Gavin Newsom, a PG&E ally.

PG&E’s interest is clear: to grab as many City Hall appointments as possible to protect and enhance the position of this corrupt and corrupting private utility. (See Guardian stories and editorials since l969.) And, at the Small Business Commission, to help insure that the commission does nothing to injure PG&E’s position, such as raising questions about the many terrible problems small business has with PG&E’s high rates, unreliable service, onerous collection policies, and unaccountability. How, many small business people ask, does a small business complain about any of these problems with PG&E?

Timely example of PG&E unaccountability: Chiu, since Newsom appointed her last March, has missed four commission meetings, more than any other commissioner. Bowe called Chiu at PG&E to ask why she had missed so many meetings, but Chiu did not return her calls by press time. I will try myself tomorrow. However, I am not optimistic. PG&E has long maintained a corporate policy of not returning Guardian phone calls or providing information even when its representatives are sitting on public commissions purportedly doing public work representing small business.

Mom and pop lose their voice

By Rebecca Bowe

Bank of America and Pacific Gas and Electric Co. are quite the opposite of mom-and-pop operations, yet two of the seven members appointed to San Francisco’s Small Business Commission hail from these corporations, much to the chagrin of true small business leaders.

In a heated e-mail fired off to an assortment of City Hall staffers Jan. 13, Small Business Commissioner Michael O’Connor criticized the Mayor’s Office for diluting the commission — which was set up to go to bat for the little guy — with big business appointees.

Meanwhile, funding for the Small Business Assistance Center was almost eliminated last month by the Board of Supervisors.

Click here to continue reading.

Previous Guardian coverage:

>>Volume 20.02 (PDF) An exclusive Bay Guardian study in 1985 challenges the convention wisdom that downtown development creates jobs. Instead, our study by an MIT economist shows that small business have created virtually all the new jobs in San Francisco since l980.

>>Volume 21.02 (PDF) Our updated study in l986 shows that as highrises have gone up, downtown San Francisco has lost jobs. In fact, all the net new jobs in the city have come from new and small businesses in light industrial areas and the neighborhoods

>>October 1, 2003 (PDF) The Guardian’s small business agenda for San Francisco

Mom and pop lose their voice

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› rebeccab@sfbg.com

Bank of America and Pacific Gas and Electric Co. are quite the opposite of mom-and-pop operations, yet two of the seven members appointed to San Francisco’s Small Business Commission hail from these corporations, much to the chagrin of true small business leaders.

In a heated e-mail fired off to an assortment of City Hall staffers Jan. 13, Small Business Commissioner Michael O’Connor criticized the Mayor’s Office for diluting the commission — which was set up to go to bat for the little guy — with big business appointees.

Meanwhile, funding for the Small Business Assistance Center was almost eliminated last month by the Board of Supervisors. And a report that was supposed to streamline the unwieldy permitting process for small businesses, which the administration was required to complete under the 2007 measure Proposition I, never materialized.

At a time when small businesses are struggling in the face of a dour economic landscape, strong advocacy on their behalf is needed now more than ever. But even as former Small Business Commissioner David Chiu ascends to the presidency of the Board of Supervisors, small business leaders are decrying their lack of support in City Hall.

The Small Business Commission is a seven-member body composed of three members appointed by the Board of Supervisors and four appointed by Mayor Gavin Newsom. Set up to serve as an advocate for the small business community, the commission was also chartered to oversee the Office of Small Business, a branch of the city’s Office of Economic and Workforce Development.

Last May, the office opened its Small Business Assistance Center, created to lend startups a helping hand with navigating the bureaucratic maze of permits, fees, licenses, and other hoops to be jumped through to legitimately set up shop in the city.

Regina Dick-Endrezzi, acting director of the Office of Small Business and one of four people staffing the center, says there’s a real need for the service. She said that about 99 percent of all San Francisco businesses fall into the category of "small," which she defines as having fewer than 100 employees, making it one of the most important sectors of the city’s economy.

Since the center opened, more than 1,300 small business clients have received assistance there, according to Dick-Endrezzi. Many lack the resources and capital that larger enterprises might have at their disposal, so SBAC case managers act as counselors for people who are trying to get a new business off the ground.

Entrepreneurs have sought help with things like obtaining a permit to open a vegan taco truck, acquiring a license to start a cleaning business, or filing for tax credits for an organic baby food business, to name a few examples. "This is something we really need," Dick-Endrezzi told the Guardian, "and this is something politics shouldn’t get in the way of."

Nonetheless, the center and the commission haven’t been spared from controversy. In December, the Board of Supervisors considered slashing SBAC funding. The $800,000 annual budget was ultimately granted, but it weathered midyear budget cuts of around 10 percent.

Now a new issue of contention has emerged: O’Connor has sounded the alarm that the SBC is becoming weakened by mayoral appointees who represent the large corporate interests that are often quite different from those of small businesses.

The conflict went public at the Jan. 12 SBC meeting when it came time to elect a new vice president. Richard Ventura, who heads a consulting firm and serves as executive director of the downtown-based Hispanic Chamber of Commerce, had just won commissioners’ approval to serve as president. Before a second round of votes were cast, O’Connor — who served as president for two years but declined to try for the post again — voiced his fervent opinion that "an actual small business owner" should be chosen for the other leadership slot.

"I think we need the balance of a small business owner in either the presidency or the vice-presidency position," said O’Connor, who owns the Independent music venue in the Western Addition. "If we have a president and a vice president that both come from downtown, and if three out of the four mayoral appointees on this commission are from downtown, I will be incredibly embarrassed to be on this commission. And I’m sorry, this is nothing personal — I like everybody on this commission — but small business is in a fight for its life, in this building and in City Hall."

Despite his plea, Commissioner Irene Yee Riley — a retired Bank of America executive — was elected. Although not a small business owner, Yee Riley told commissioners that she was qualified to serve as vice president thanks to her "many years of experience working with small business owners as a banker."

"I’m retired, and I have time, so I want to use this opportunity to give back to the community," she added.

Yee Riley won after receiving one vote more than Commissioner Janet Clyde, a bartender and general managing partner of Vesuvio Cafe in North Beach. "I live in the Mission District in a solid working-class neighborhood that is rapidly changing," Clyde told the other commission members during her pitch. "I know the challenges of small businesses operating far from the power and economic center of San Francisco, and I intend to work to recommend their interests … even in this difficult budgetary time."

The following morning, a dismayed O’Connor vented his frustration in an e-mail to mayoral staffers, typing "Small Business Commission … or … Big Business Commission" into the subject line. Installing commissioners with ties to large corporations rather than direct small business experience constitutes "a neutralization of the only real voice small businesses have in San Francisco," he charged.

The most recent mayoral appointee to the SBC was Darlene Chiu (no relation to David Chiu), a spokesperson for PG&E who formerly served as deputy director of communications for the Mayor’s Office. When the Guardian queried the Mayor’s Office last March on what qualifications a PG&E spokesperson brought to the Small Business Commission, Press Secretary Nathan Ballard responded with this statement: "Darlene has first hand knowledge of the challenges facing small businesses in San Francisco. She grew up working in her family’s … retail businesses in Chinatown, managing nine to l5 employees. She will also bring her knowledge of city government and communications to the commission, which will be important to the successful operations and promotion of the assistance center." (See "Newsom to small business: drop dead!" March 18, 2008 Bruce Blog.)

But since her appointment last March, public records show that Chiu has missed four of the monthly meetings. Excessive absenteeism at city commission meetings briefly emerged as an issue in September 2006, prompting Newsom to introduce a new standard with a working goal of 100 percent attendance for commissioners.

Meanwhile, not everyone agrees with O’Connor’s assertion that "San Francisco’s Office of Economic Development seems to believe small business is just an annoying little rock in its shoe."

"The Office of Economic Development is incredibly committed to keeping this commission strong," counters Jennifer Matz, managing deputy director of the Office of Economic and Workforce Development, who played a role in starting the Small Business Assistance Center. "Michael is very disappointed about what happened, but I don’t think it reflects a lack of commitment to small business on the part of the city or the Mayor’s Office."

Matz said the challenge to the SBAC came from the Board of Supervisors — not the Mayor’s Office — when they considered revoking the center’s funding. She also contends that the Small Business Commission’s voting record doesn’t demonstrate a downtown vs. small business split.

From January 2008 to this January, commissioners voted unanimously 34 out of 38 times, the record shows. But it’s on the divisive issues where small and big businesses differ that can have the most impact.

Sup. Chiu served on the Small Business Commission before being elected to the Board of Supervisors. He said commission members usually saw eye-to-eye on most items that came before the commission regardless of whether they were board or mayoral appointees. But for him, the frustration was that "it didn’t feel that either the mayor or the Board of Supervisors were focused on small business."

In his new capacity as board president, he said measures that aid small businesses will be moving up on the list of priorities. For example, he has asked for a hearing on why the report on streamlining small business regulations, which Prop. I required the Office of Small Business to complete by 2007, was never done.

Although doubts about the commitment to small business seemed to be cast on all sides, everyone we spoke with seemed to agree on one point: in these stormy economic times, San Francisco’s small businesses need all the help they can get.

Two reports released in December by the U.S. Bureau of Labor Statistics and Automatic Data Processing (ADP) provide some insight into the challenges facing small businesses nationally. BLS reported that 524,000 jobs were lost during December, bringing the 2008 total to 2.6 million lost jobs — the highest since 1993.

The ADP report showed that 281,000 jobs had been shed from companies with fewer than 50 employees. This signifies a drastic increase in job losses from this sector: between October and November, small businesses cut just 79,000 employees, according to ADP, and between September and October, they let go of 25,000 employees.

"That was the first time since 2002 that small businesses had net job losses," says Scott Hauge, president of Small Business California. What’s frightening, he says, is that the small business sector traditionally acts as an economic stabilizer.

During the battles it the mid-1980s over accelerating downtown office building construction, the Guardian commissioned a study from noted MIT economist David Birch that found that small business accounted for most net job creation in San Francisco, and that catering to corporate demands downtown actually cost the city jobs.

Yet now, with the small business community sometimes serving as a political football tossed between downtown and City Hall, the city’s economic base is in trouble and hoping for help from political leaders who are now contemputf8g deep budget cuts.

————

Here’s a list of all the small business commissioners:

Commissioner Darlene Chiu
Occupation: Communications, PG&E
Appointed by: mayor

Commissioner Janet Clyde
Occupation: General managing partner / bartender, Vesuvio Cafe
Appointed by: Board of Supervisors

Commissioner Kathleen Dooley
Occupation: Florist / owner, Columbine Design
Appointed by: Board of Supervisors

Commissioner Gus Murad
Occupation: Owner, Medjool (restaurant) and Elements (hotel)
Appointed by: mayor

Commissioner Michael O’Connor
Occupation: Co-owner, The Independent (music venue)
Appointed by: Board of Supervisors

Commissioner Irene Yee Riley
Occupation: Retired senior vice president and market executive, Bank of America
Appointed by: mayor

Commissioner Richard Ventura
Occumpation: Executive director, San Francisco Hispanic Chamber of Commerce
Appointed by: mayor

————-

Previous Guardian coverage:

>>Volume 20.02 (PDF) An exclusive Bay Guardian study in 1985 challenges the convention wisdom that downtown development creates jobs. Instead, our study by an MIT economist shows that small business have created virtually all the new jobs in San Francisco since l980.

>>Volume 21.02 (PDF) Our updated study in l986 shows that as highrises have gone up, downtown San Francisco has lost jobs. In fact, all the net new jobs in the city have come from new and small businesses in light industrial areas and the neighborhoods

>>October 1, 2003 (PDF) The Guardian’s small business agenda for San Francisco

Where federal banking money should go

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OPINION The federal government is shelling out hundreds of billions of dollars to prop up failing financial institutions, with no end in sight. Taxpayer money is going to commercial banks and insurance companies that took outsized risks and participated in extraordinarily complex financial transactions, motivated by no purpose beyond the hunger for profits. They were allowed to engage in this destructive behavior despite being among the most heavily regulated companies on earth. This is a terrible mess, and we’re all paying for it.

Yet there is one type of financial institution that remains unsullied by the current crisis – community development financial institutions, or CDFIs. CDFI is an official federal designation given to community loan funds, credit unions, and community development banks that have a mission first and foremost to address the financial needs of working people and low-income communities.

To be designated a CDFI, a financial institution must go through a rigorous screening process administered by the Treasury Department and prove that its core mission is to bring about economic benefits for the underserved and that it’s accountable to the communities it serves. In the Bay Area, active CDFIs include the Northern California Community Loan Fund, One California Bank in Oakland, and my own organization, Opportunity Fund.

CDFIs make microloans to new and emerging small businesses. They offer fair and non-predatory mortgage loans to first-time homebuyers, often combining their loans with homebuyer counseling. And they finance the construction of new affordable rental housing, health clinics, and social service facilities. Opportunity Fund, for instance, has invested more than $120 million into some of the most troubled neighborhoods in the Bay Area, with a loan loss rate of less than 1 percent. And we have somehow managed to do this without the use of complex derivatives, credit default swaps, or exotic mortgage products. We have done it by taking prudent risks on hardworking people who deserve a chance.

Unlike lenders motivated by greed and empowered by questionable financial "innovations," CDFIs are generally in much healthier financial condition than their mainstream counterparts. Despite being regulated by nothing more than our mission to make our communities better, we are not in need of a bailout.

We are, however, forcefully and unapologetically asking for a major share of any economic stimulus that Congress approves.

If the treasury can pour $700 billion (and counting) into corporations that pushed the envelope way too far in pursuit of profits, surely it can and should inject $5 billion or $10 billion into CDFIs, which will invest that money in our neighborhoods and into a better life for those who are struggling most right now.

The Treasury Department invests in CDFIs through its CDFI Fund, so this stimulus can be administered with no new bureaucracy. Furthermore, we are ready to put the money to work right away instead of salting it away like many banks did with the first round of bailout money. Opportunity Fund has identified $50 million in shovel-ready affordable housing developments that we could finance immediately if we had the capital, and our sister organizations also have real deals in their pipelines.

Let’s work together to make sure that this time around some of the money in Bedford Falls goes to Jimmy Stewart, and not all to Mr. Potter.

Eric Weaver is CEO of Opportunity Fund (www.opportunityfund.org).

Housing is economic stimulus

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By Paul Boden


EDITORIAL Change is certainly in the air these days. A president who understands that the phrase "economic recovery" is more then just a buzzword for tax cuts and bailouts for corporations and wealthy people represents perhaps the biggest, and some would argue the most important change — and it offers an opportunity for struggling communities.

President-elect Barack Obama has promised to create the largest public works construction project since the creation of the federal highway system in the 1950s. He has talked about funding work on everything from schools to sewer systems, from green jobs to ensuring that every American has access to a college education. All this is incredibly good news for the country as a whole.

My concern is that homelessness has received very little mention, although more than 3 million people experience homelessness every year. Family homelessness, in particular, is on the rise, with 16 cities (out of 25 surveyed in a recent report) reporting an increase in the number of families forced out of their homes. And yet there seems no clear plan for using economic recovery programs to restore the draconian cuts in federal affordable housing funding. Since 1983, those programs have been reduced by $54 billion a year. And there’s no plan to show how addressing homelessness can and should be part of the economic revitalization of local communities.

Many of us watched in despair as our issues were ignored during the campaign debates and in the party platforms. Homelessness is the No. 1 issue locally, yet it was all but ignored nationally.

But the country has now elected a president who understands what it means to respect the work of true community organizations and allow for local voices to be at the table when decisions are made that have an impact on our lives.

Local Community Development Corporations (CDCs) and Housing Development Corporations (HDCs) already exist in many communities. The credible ones will work in partnership with community members and organizations to combine a federal reinvestment in affordable housing with economic stimulus activities that benefit everyone — street-level space for creating new local businesses, job training connected to positions created in the development and management of the new business and housing units, the use of (and training in) smart green technology in all development.

Tax dollars invested in affordable housing stay in the local economy. Many of the jobs created remain long after the construction phase is completed.

Economic recovery plans are being made now, as federal departments are hiring staff and priorities are being set. Congress, despite the lessons learned from the banking bailout, is in a rush to release funds without much detail. We need direct petitioning from local communities. We need calls demanding that a share of economic recovery funding be given directly to local organizations to develop desperately needed housing and community spaces, using accountable local hiring requirements and safe green building practices.

It’s on all of us locally to come together and make the call.

Paul Boden is director of the Western Regional Advocacy Project, a coalition of West Coast social justice-based homeless organizations.

Editor’s Notes

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› Tredmond@sfbg.com

Barack Obama is going to have to be a different kind of president, and I don’t mean just policy or the fact that he’s by far the coolest guy to hold that office in my lifetime. I mean he’s going to have to change the tone of how Americans look at our country. He’s going to have to do something that George Bush (and Bill Clinton before him) never did. He’s going to have to get rid of the selfish baby boomer ethos. He’s going to have to talk about sacrifice.

The economy can’t be fixed with deficit spending alone, and the equally massive environmental issues can’t be fixed with just hybrid cars and wind turbines. All those things are important. Without massive federal spending, probably well beyond what Obama is talking about today, the nation will continue to lose millions of jobs, the recession will become a deep depression, and life around here will really suck. And without new technologies, climate change will continue to get worse and energy will become far more expensive and far less reliable.

But in the end, it’s going to take more.

I was listening to the Democratic response to the governor’s State of the State speech Jan. 15 and the KQED radio host asked Darrell Steinberg, the state Senate president pro tem, the basic question of our time: why do Californians want all these wonderful services — education, parks, roads, trains, etc. — but don’t want to pay for them? Steinberg ducked beautifully, but the question still hangs out there. And it’s not just California.

Let us not forget: the United States is still a very wealthy country, and the Bush years made some of its residents exceptionally rich. I just added up the net worth of the top 20 people on the latest Forbes 400 list, and it came to $433 billion. That’s 20 people. The net profits of the top 10 companies on the Fortune 500 list for 2008 totaled more than $100 billion. That’s 10 companies.

Bush never asked any of those people or corporations to help pay for his war. Instead he told them everything would be easy, and gave them juicy tax cuts.

Obama has to set a different tone. He needs to say, loudly and clearly, that those who have the most (far more than they need) in very tough times should be willing to share.

A one-time, 10 percent wealth tax on the ultra-rich would probably raise half a trillion dollars. A short-term excess profits tax (similar to what the nation enacted during World War II) would provide another huge chunk. And it would send a signal to the rest of the country: this isn’t going to be easy. We all have to help out, starting with those at the top.

It also means that, on every level, we all have to get more engaged, more involved in the community. We have to become a nation of givers, not just takers. Public service has to be more important than private profit.

That’s a tough order for a generation raised on selfishness and greed. But it’s the only way out — and the guy we put in office on a banner of change has to lead the way.

Don’t privatize cab permits

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EDITORIAL In tough times, political leaders with no backbone for making hard decisions tend to look for easy, short-term fixes. And Mayor Gavin Newsom’s proposal to auction off taxicab permits to the highest bidder is just that — a quick fix with serious long-term problems. In fact, it amounts to the privatization of a lucrative public asset.

A bit of background: since 1978, when then-Sup. Quentin Kopp authored a measure called Proposition K, San Francisco has issued some 1,500 taxi permits, known as medallions, to working cab drivers. Under Prop. K, the medallions can’t be owned by corporations, and they can’t be bought and sold as speculative commodities. They’re owned by the city, and only people who actually drive cabs for a living can use them.

There’s a logic to that. The permits are valuable — a medallion holder not only has the right to drive a cab, he or she can lease that permit to other drivers for additional shifts. Since a taxi can be on the road 24 hours a day, the lease income is substantial, roughly $30,000 a year. But only active drivers get that benefit; nobody can hold a permit, sit at home (or work another job), and just collect that cash.

The process isn’t perfect. The waiting list for a medallion takes more than 10 years. Some medallion holders cling to their permits long after they should have retired (and thus keep driving when they should no longer be on the road). There’s no process for compensating a permit holder who becomes disabled.

But those are issues that can be addressed. The basic fact is that San Francisco has taken the position that the public benefit — a license to drive a cab for hire — should be given only to those who are using it. Prop. K prevents consolidation of ownership in the industry, prevents speculators from turning medallions into a new form of securities (which worked out so well with mortgages), and gives people who have spent 10 years or more driving a cab a chance to reap the full benefits of their work.

Newsom, however, sees those permits as a gold mine. If the city auctioned them off, they might bring $100,000 apiece. Under Newsom’s plan, much of that money would go to the city, although some would go to current medallion holders.

The plan is full of problems.

For one, it could completely change the cab business in San Francisco, shifting control of the industry away from drivers and giving it to big businesses and investors. Very few working drivers (who are lucky to clear $30,000 a year) could afford to buy permits, particularly at auction. So the first people in the market would be the cab companies, which for years have wanted the right to own and control the medallions. Private investors — wealthy individuals and institutions — would see the permits as an asset likely to appreciate, and would buy up medallions, then seek to raise the lease fees for drivers. The only way drivers could buy permits would be to seek the equivalent of mortgage loans — but the banks that handle that sort of loans typically require 20 percent down, putting many drivers out of the running. Unless, that is, some shadowy characters come along with cash loans — or unless the cab companies handle that payment, thereby getting further control).

Unless medallion ownership is limited to drivers, the entire process will get corrupted. People will drive for a minimal period of time, bid on medallions, then go into another line of work — and keep the medallion. Newsom’s office says he’s going to do that, but there are no details on the plan yet.

Cab drivers in the city talk about the need for security and retirement income. After years of driving with a medallion, they want the right to sell it for a chunk of cash. But under the current system, drivers are — and most of them like being — independent contractors.

Freelance writers, consultants, small business owners, and many others who are self-employed are responsible for their own retirement planning. Why should cab drivers get a special deal from the city?

Privatizing the permits is just a bad idea. Newsom promised last year — in writing — that he wouldn’t seek to change Prop. K. It’s infuriating to see him so quickly break that promise.

The supervisors should reject this proposal.

Editorial: Don’t privatize taxicab permits

0

Mayor Newsom promised last year in writing that he wouldn’t privatize taxicab permits. It’s infuriating to see him so quickly break that promise.

EDITORIAL In tough times, political leaders with no backbone for making hard decisions tend to look for easy, short-term fixes. And Mayor Gavin Newsom’s proposal to auction off taxicab permits to the highest bidder is just that – a quick fix with serious long-term problems. In fact, it amounts to the privatization of a lucrative public asset.

A bit of background: since 1978, when then-Sup. Quentin Kopp authored a measure called Proposition K, San Francisco has issued some 1,500 taxi permits, known as medallions, to working cab drivers. Under Prop. K, the medallions can’t be owned by corporations, and they can’t be bought and sold as speculative commodities. They’re owned by the city, and only people who actually drive cabs for a living can use them.

There’s a logic to that. The permits are valuable – a medallion holder not only has the right to drive a cab, he or she can lease that permit to other drivers for additional shifts. Since a taxi can be on the road 24 hours a day, the lease income is substantial, roughly $30,000 a year. But only active drivers get that benefit; nobody can hold a permit, sit at home (or work another job), and just collect that cash.
The process isn’t perfect. The waiting list for a medallion takes more than 10 years. Some medallion holders cling to their permits long after they should have retired (and thus keep driving when they should no longer be on the road).

There’s no process for compensating a permit holder who becomes disabled.
But those are issues that can be addressed. The basic fact is that San Francisco has taken the position that the public benefit – a license to drive a cab for hire – should be given only to those who are using it. Prop. K prevents consolidation of ownership in the industry, prevents speculators from turning medallions into a new form of securities (which worked out so well with mortgages), and gives people who have spent 10 years or more driving a cab a chance to reap the full benefits of their work.

Newsom, however, sees those permits as a gold mine. If the city auctioned them off, they might bring $100,000 apiece. Under Newsom’s plan, much of that money would go to the city, although some would go to current medallion holders.

The plan is full of problems. For one, it could completely change the cab business in San Francisco, shifting control of the industry away from drivers and giving it to big businesses and investors. Very few working drivers (who are lucky to clear $30,000 a year) could afford to buy permits, particularly at auction. So the first people in the market would be the cab companies, which for years have wanted the right to own and control the medallions. Private investors – wealthy individuals and institutions – would see the permits as an asset likely to appreciate, and would buy up medallions, then seek to raise the lease fees for drivers.

The only way drivers could buy permits would be to seek the equivalent of mortgage loans – but the banks that handle that sort of loans typically require 20 percent down, putting many drivers out of the running. Unless, that is, some shadowy characters come along with cash loans – or unless the cab companies handle that payment, thereby getting further control).
Unless medallion ownership is limited to drivers, the entire process will get corrupted. People will drive for a minimal period of time, bid on medallions, then go into another line of work – and keep the medallion. Newsom’s office says he’s going to do that, but there are no details on the plan yet.

Cab drivers in the city talk about the need for security and retirement income. After years of driving with a medallion, they want the right to sell it for a chunk of cash. But under the current system, drivers are – and most of them like being – independent contractors.

Freelance writers, consultants, small business owners, and many others who are self-employed are responsible for their own retirement planning. Why should cab drivers get a special deal from the city?
Privatizing the permits is just a bad idea. Newsom promised last year – in writing – that he wouldn’t seek to change Prop. K. It’s infuriating to see him so quickly break that promise.
The supervisors should reject this proposal.<0x00A0>2

Diversify, DIY, or die

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› culture@sfbg.com

You never thought your innate talent for margarita mixing or jewelry design would get you very far, so you went to business school, or got into publishing. Soon, you were working your way up in a dependable industry, the sort guaranteed to provide you with a secure income.

Then the financial crisis hit.

This November alone, in the biggest one-month drop in US payrolls since 1974, employers cut 533,000 jobs. Seemingly invincible corporations like AT&T and Citigroup have laid off thousands of employees, and many jobs once coveted for the security they provided are now as unpredictable as Bay Bridge traffic.

It’s time to look up your secret margarita mix recipe. In order to survive the recession, Bay Area residents are rediscovering their old talents and secret passions. Got an eye for detail? Help people perfect their résumés. Speak three languages? Tutor someone preparing to study abroad. Whether you’re recently laid off or simply nervous about the prospect, this type of diversification can provide relief in a time when reliable jobs are scarce.

If you’re unsure how to market your skills, take some advice from Allan Brown, who may be the poster boy for career diversification.

Brown, a "senior level marketing guy by trade," is currently the director of marketing for a publishing services company. In addition, he runs a résumé and cover-letter business out of his home, as well as a private bartending service.

After being let go from a publishing company a few years ago, Brown searched for a way to make some extra income while looking for a new job. He remembered how his father used to help the neighborhood kids write résumés, and thought he might have a knack for it, so he posted some ads online. "I thought, maybe I’ll make a few bucks," Brown told the Guardian. "Instead, I made a lifestyle change without even realizing it."

His customers were so impressed by this work that they referred him to their friends, and it wasn’t long until his endeavor developed into a rather lucrative enterprise, one he doesn’t even feel comfortable calling a "side business" since it brings in so much income. Once his résumé-writing business took off, he started a private bartending service, which he does "for a little extra money" as well as for fun.

"All you have to do is think outside the box," Brown told the Guardian. "In hard times like these, people don’t want to — or can’t — work in an office. So what if the industry is dried up? Think of what else you have to offer."

Brown believes that by taking in internal revenue that has nothing to do with the corporate office, people can develop their own kind of job security, even in times like these.

He’s one of the few people who are currently optimistic about their own financial state. "I feel I’m diversified enough to withstand the tide," he says. He admits holding three jobs is "a juggling act, to say the least" — still, in this economy, it’s better to have too many jobs than none at all.

The crucial tip for diversification, Brown says, is Craigslist.org, the online listings community to which he says he is "forever indebted."

"Twenty years ago, people with my type of skills found it very hard to make a living because it was hard to let people know about them. The only thing we had were classified ads. Now, we have Craigslist, and it’s a wonderful tool."

Peruse Craigslist.org and it’s clear that many others are following in Brown’s footsteps. "Need a Latin quote or love poem deciphered? Possum te adjuvare [I can help]," writes John Sullivan. "I got my BA in English literature by writing papers on books and plays I’d never read while paying my rent on papers that I was writing on subjects about which I knew little to nothing," boasts John Dillion.

"No matter if you want to sell stained glass sculptures or quilts, there’s someone out there on Craigslist who’s interested," Brown adds. "If you know how to market and make a good product, it will sell."

Lysa Aurora knows what Brown says is true from firsthand experience.

Aurora also juggles jobs: she works part-time for a nonprofit and as a marine biologist lab manager. While she enjoys her work at both places, her true passion lies in hat design.

"There’s a buyer for everything — even for my hats!" Aurora says.

Aurora, who calls herself "a Renaissance woman … the kind who only needs a glass of water and a broom to work my way to the top," decided to try her hand at hat design because she wasn’t working full time and wanted some extra money. Now, she’s the founder of De La Lucha Designs and sells her hats at stores around the Bay Area. Her side business helps her make rent, but it’s also her dream — and something she may not have pursued if she had a more stable job: "These are hard times and [my hat company] directly translates from the struggle. Through the ugliest of situations, we find ourselves."

It’s not only current members of the work force who are diversifying. Soon-to-be college graduates, like Connie Wang, are frightened by the state of the economy and taking precautions to make sure they’ll be able to get by until the market gets better. Wang has always longed to be a fashion journalist, but admits that in times like these, "knowing about the latest runway trends and what the editor-in-chief of Vogue is doing is kind of nonessential. I’m still trying to build up my résumé with internships before I graduate in May, but print clips don’t exactly pay the bills."

In order to make money while still doing what she loves, Connie started her own fashion blog, www.prettylegit.blogspot.com, where she posts about trends and writes product reviews. As her site gained more popularity, companies began sending her free products in exchange for write-ups.

"Unfortunately, what interests me more than honest-to-blog fashion reporting is not starving, so there have been a couple times where I’ve found myself reviewing products that didn’t exactly fit in with my readers for a little extra cash," she says. For example, she was just sent a new Google phone — trendy, but not exactly wearable. Wang does have limits — once, she was sent a set of "fancy douches," which she chose to disregard. "If I get sent something that is completely irrelevant and/or offensive, I won’t write about it. I’m not evil, I’m just poor."

Wang says she feels more confident graduating this spring with a steady, albeit small, stream of income — as well as an online portfolio and an abundance of free goods.

If you can’t find your inner blogger or designer, you could always try growing out your hair. "The economic situation has resulted in a substantial increase of users on our site," says Jacalyn Elise, the executive partner of www.hairtrader.com, which is essentially a hair-specific version of eBay.com. "Predominately, the people who visit our site seem to be those who were going to donate their hair to groups like Locks of Love, but now they’re in a financial bind, lost their job, need money to help pay the rent … selling hair helps."

Elise started the Web site a few years ago to help a friend who needed some extra money and had 12 inches of hair to spare. Soon, more and more people were contacting her to ask if they could participate. The site allows people to sell straight to buyers rather than going through a salon. Interested parties — whether wig makers or, yes, hair fetishists — browse through ads with frequently laughable sexual connotations, such as "20+ inches virgin uncut Asian hair: asking for at least $1,000." Jaclyn says site traffic has increased 40 percent since the Dow first plummeted in September 2008.

An Oakland resident and www.hairtrader.com user who prefers to remain anonymous says she is slightly embarrassed that she sold her hair instead of donating it. "But, I have to pay my bills — and I got over $500 for the hair I’ve had on my head for years."

It’s hard to keep a positive financial outlook these days. But sometimes — as these Bay Area residents discovered — it takes a layoff or a similar struggle to get out of one’s comfort zone and take a chance on change.

The Chron’s skewed notions of water and rights

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by Amanda Witherell

118-cover.web.jpg

“Is there a right to water?” The San Francisco Chronicle’s editors asked today. The editorial outlined how water isn’t currently considered a human right by the UN, an issue the Guardian also recently covered. The Chron still found a way to criticize the notion that we all deserve a clean, safe glass of it.

“Enshrining water as a right sounds innocent. But it carries multiple implications. On one level, such a right would put nations on notice to upgrade water systems to make sure all their citizens have access. It’s an inarguable ideal for a human necessity.”

They go on: “But it also carries a political undercurrent. Such a right would be a powerful signal to international water companies such Veolia, Suez and RWE (all based in Europe) that their attentions are unwelcome in developing countries. These poor nations are prime targets as their leaders wrestle with the costs and engineering needs to improve outdated pipes, dams and spigots. In this setting, water shifts from a [sic] everyday need to an economic issue.”

Doubtless water is an economic issue – it costs money to install pipes, pumps, filtration systems, and monitoring equipment. It costs money to keep the system running properly. It costs money to ensure the cleanliness of water sources. How much should it cost? Should that cost include a profit margin?

Corporations and private companies would contend that governments just don’t have enough money to do the massive infrastructure improvements that are called for worldwide – in the US alone water infrastructure needs amount to a $1 trillion investment.

Beyond the bloody cuts

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EDITORIAL There’s actually a bright side to the brutally depressing budget struggles in San Francisco and Sacramento. This could be the year Californians finally start to recognize that they can’t have a functioning state, with the services everyone wants, without paying taxes. It could be the end of the Republican lie that the budget problem is only on the spending side, the end of the famous no-new-taxes pledge — and the end to the requirement that two-thirds of the Legislature pass any budget, an archaic rule that is crippling California.

And with a little leadership from the new supervisors at City Hall, this could be the year San Francisco takes a serious look at how local government is financed.

This is no time for modest, cautious proposals. The budget situation is alarming. California is looking at $40 billion in cuts over the next 18 months — more than a third of the entire state budget. San Francisco is looking at $500 million in red ink — roughly half the discretionary spending from the general fund. Filling those holes with cuts alone would be devastating.

This isn’t your average budget battle, where everyone fights to save a few hundred thousand dollars here and a million there for a crucial program. This is, by all accounts, something of an order that the state and local government haven’t seen since the 1930s.

So small-time, piecemeal fixes aren’t going to work. Here’s what the state and the city need to be talking about.

AT THE STATE LEGISLATURE


The first thing that has to go is the two-thirds rule. It’s become almost a farce — a handful of Republicans, who have sworn never to raise taxes under any circumstances, are holding the world’s sixth-largest economy and a state of more than 37 million people hostage to their failed ideology. Enough talk: the Democrats need to mount a massive signature drive for a special election this summer to repeal that requirement.

There are many fair ways to raise taxes to bring in enough revenue to stave off devastating cuts. Raising the income tax levels on the highest wage earners makes the most sense. Gas prices are way down; raising the state gas tax by a few cents a gallon won’t bring prices even close to last summer’s level. We’re nervous about taxing services (medical care, for example, is a "service"), but a carefully crafted tax that exempts essentials ought to be on the table. California is the only oil-producing state that doesn’t tax oil at the wellhead; that’s a no-brainer. So is restoring the vehicle license fee; Gov. Schwarzenegger’s decision to eliminate that fee has cost the state $40 billion over the past five years.

AT CITY HALL


Step one: the mayor has to recognize that there’s no way to solve a half-billion dollar shortfall with cuts alone. Step two: the mayor needs to back off from the layoffs and cuts for a few weeks until the supervisors and the community stakeholders have a chance to meet, talk, and look at all the options. Step three: some far-reaching changes have to be on the agenda, right now.

We like the idea of a city income tax. Technically, under state law, all the city can do is tax income earned within local borders, meaning that commuters would pay (good) and San Franciscans who work out of town would escape payment (bad). But overall, the concept is better than anything else out there. A local income tax that exempts, say, the first $50,000 (assuring that lower-income people pay nothing) with progressive rates skewed toward charging very high wage-earners the most could bring in significant revenue in the fairest way possible.

We’d like to see a progressive business tax — raise the rates on the biggest companies. We could live with a short-term hike in the local sales tax; frankly, we could live with most short-term revenue increases. The supervisors need to look at what new taxes make the most sense and prepare for a special election in the spring to put a revenue package before the voters. And everyone — including the mayor — needs to campaign hard for it.

The city also needs to look at the rainy-day fund, money set aside for bad economic times. Only a small amount of the close to $100 million now in that fund is available in any one year, but that rule might have to be changed.

This crisis is an opportunity — a chance to examine how the city’s current revenue sources are unfair, unstable, and unwieldy. Why are business taxes flat (big corporations and small businesses pay the same rate)? Why does San Francisco rely so much on property and transfer taxes, which shift radically with economic ups and downs? And of course, a public power system would generate enough money to cover a huge part of the deficit. The supervisors need to find an immediate revenue-based solution, but should also start creating a serious task force to overhaul the entire revenue side of the budget. Today.

Tap dreams

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› amanda@sfbg.com

On Dec. 2 two water conferences were held in San Francisco, attended by very different groups of people.

Downtown, in a room deep within the Hyatt Regency hotel, executives from PepsiCo, Dean Foods, GE, ConAgra, and other major companies gathered for the Corporate Water Footprinting Conference. The agenda that the conference made public included a presentation by Nestlé on assessing water-related risks in communities, Coca-Cola’s aggressive environmental water-neutrality goal, and MillerCoors plan to use less water to make more beer.

But what these giant corporations, which are seeking to control more and more of the world’s water, really discussed the public will never know. Only four media representatives were permitted to attend — all from obscure trade journals not trafficked by the typical reader — and both the Guardian and the San Francisco Chronicle were denied media passes.

The event was sponsored by IBM, and tickets were $1,500 — out of reach for many citizens and environmentalists who might have liked to attend.

And why might people take such a keen interest in the kind of corporate conference that probably occurs routinely in cities throughout the world?

Because there’s almost universal agreement that the world is in a water crisis — and that big businesses see a huge opportunity in the privatization of water.

Only one half of 1 percent of all the water in the world is freshwater. Of that, about half is already polluted. Although water is a $425 billion industry worldwide — ranking just behind electricity and oil — one in six people still don’t have access to a clean, safe glass of it. If the pace of use and abuse remains, the 1.2 billion people living in water-stressed areas will balloon to more than 3 billion by 2030.

That includes California. On June 4, Gov. Arnold Schwarzenegger declared a statewide drought after two lackluster seasons of Sierra snowfall. Scientists are predicting the same this winter. You can see how the state is mishandling the issue by looking at some recent legislation. Schwarzenegger and Sen. Dianne Feinstein have proposed a $9.3 billion bond to build more dams, canals, and infrastructure. At the same time, the governor vetoed a bill that would have required bottled water companies to report how much water they’re actually drawing out of the ground.

In that context, while the big privatizers were hobnobbing at the Hyatt, activists were attending a very different event, the "Anti-Corporate Water Conference," held at the Mission Cultural Center. It was free and open to the public and the media. More than 100 people gathered to hear a cadre of international organizations share information on how to keep this basic human right — water — in the hands of people.

Speakers included Wenonah Hauter, director of Washington, DC-based Food and Water Watch; Amit Srivastava of Global Resistance, a group that works to expose international injustices by Coca-Cola; Mark Franco, head of the Winnemem Wintu Tribe, which lives among water bottling plants near Mount Shasta; and Mateo Nube, a native of La Paz, Bolivia, and the director of Movement Generation Justice and Ecology Project.

Nube spoke about water as a commons, requiring stewardship, justice, and democracy. "We’re literally running out of water. Unless we change the way we manage, distribute, and consume water, we’re going to have a real crisis on our hands," he said. Nube’s remarks tied together the tensions of control and revolt, democracy and privatization, ecological balance and human need — all enormous issues, all related to water and water scarcity, which the Worldwatch Institute has called "the most under-appreciated global environmental challenge of our time."

BASIC NEED, INFINITE MARKET


Water is a basic human need, perhaps even more important than clean air, food, and shelter. People will never strike against water and stop drinking.

And that means, from a capitalistic point of view, it’s a perfect, nearly infinite market. "As water analysts note, water is hot not only because of the growing need for clean water but because demand is never affected by inflation, recession, interest rates or changing tastes," wrote Maude Barlow in her 2007 book Blue Covenant.

If scarcity drives price, anyone with a stake in the water industry stands to gain from an increasingly water-stressed world. As Barlow also reported, "In 1990, about 51 million people got their water from private companies, according to water analysts. That figure is now more than 300 million." By controlling the resource and choosing when and if they engage with the public it allows some of the biggest water abusers to set the terms of a critical ongoing debate.

The fact that humans need water raises important questions: should water be classified as a basic human right available to everyone? Is water part of the commons? If so, should corporations be allowed to control the taps or bottle it, mark up the price, and sell it for profit?

Not much polling has been done on people’s opinions of water, but during 35 informal on-the-street interviews conducted by the Guardian, 31 people said it is a basic human right. The other four said it was subject to the laws of supply and demand.

This week marks the 60th anniversary of the United Nations Universal Declaration on Human Rights, and Barlow, who has been appointed special advisor on water to the UN, will be addressing the General Assembly on the fact that water is still missing from the original 30 Articles.

"The reason that water was not included in the original 30 Articles in the Universal Declaration of Human Rights is that no one at that time could conceive there would be a problem with water," Barlow told the Guardian. "It’s only in the last 10 years that the concept of water as a human right has come to the fore."

The problem has its roots in the inherent conflict between conservation and profit. Saving water is relatively cheap, but there’s no money to be made by eliminating waste. Developing expensive new water sources, though, is a potential private gold mine.

As Barlow points out in her book, technology is becoming an integrated part of the solution to the water crisis. Desalination plants, water recycling facilities, and nanotechnology are all being thrown at the problem — in some cases before a full assessment of use and abuse has occurred.

While technological solutions may be warranted in some places, Barlow worries that relying on them bypasses any true attempts at efficiency and conservation. "I’m not going to say there’s no place for water cleanup," she told the Guardian. "What I’m concerned about is we’re going to put all the eggs in the cleanup basket and not nearly enough in the conservation and source protection basket. What I’m concerned about is the idea that technology will fix it. Meanwhile, don’t stop polluting, don’t stop the over-extraction, allow the commercial abuse of water, allow the agricultural abuse of water because what the heck, there’s tons of money to be made cleaning it up. I think that’s the wrong way of coming at it."

The technological fix is one way the state’s water crisis may slowly seep into private sector control, and a couple of examples show what can happen when private companies don’t play nice with the public, how citizens constantly battle with state agencies to enforce regulations, and how the public process could and should be honored.

GET THE SALT OUT


In theory, California has plenty of water — its 700 miles of coastline border the giant reservoir known as the Pacific Ocean. But humans can’t drink salt water — and some companies see a nice industrial niche in that dilemma. Build a plant that takes out the salt, and suddenly there’s plenty for all.

Several small desalination facilities already exist throughout the state, mostly cleaning water reservoirs brined by agriculture. But another 30 desalination plants have been proposed for the coast as a way to deal with future water shortages.

One is in Carlsbad, near San Diego, where Poseidon Resources is constructing the only large-scale desalination plant that the state has permitted to date. It’s a 10-year-old project that, so far, doesn’t even have a pipe in the ground.

Despite Poseidon’s ability to grease the wheels with local officials, the facility is controversial. It sits next to a fossil-fuel burning peaker power plant, and will be desalinating the power plant’s discharge water, thus shielding its negative environmental impacts by claiming its the power plant that’s sucking up seawater and damaging marine life — the desalination plant is just making use of the wasted water.

That argument doesn’t sit well with Joe Geever of the Surfrider Foundation, who pointed out that part of the power plant is scheduled for a retrofit to air-cooling, and talk is of a potential state ban on using water for this type of cooling system. There are other more environmentally benign seawater extractions, he said, like drilling and capturing subsurface sources, that the desalination plant could have used.

Mostly, he contends, the plant subverts conservation. "Per capita consumption of water in San Diego is much higher than other places," he said. "In southern California we waste an enormous amount of water on growing grass. There’s a lot to be saved."

Poseidon, a private company, is footing the bill for the plant’s construction, but the financing scheme is predicated on a future increase in the cost of water. As Poseidon’s Scott Maloni explained to the Guardian, the contract with the San Diego Water Authority states that the cost of desalinated water can never be more than the cost of imported water. It can, however, walk in lock-step with it — and by all accounts the price to pipe water to sunny southern California is going to increase. Maloni said his company was taking an initial loss but would start paying itself back as imported water costs increase. Eventually rates will be set halfway between the real cost of desalinated water and the higher cost of imported water.

What kinds of guarantees are there that this will happen? Nobody knows. "They’ll say anything, but when it comes to showing you a contract, we’ve never seen anything," said Adam Scow of Food and Water Watch. "There’s a lack of regulation with a private company controlling the water."

The plant now has no less than three lawsuits hanging over it, all filed with state agencies in charge of permitting and oversight — the Coastal Commission, the State Lands Commission, and the San Diego Regional Water Quality Control Board. All basically contend that the state didn’t do enough to require Poseidon to implement the most environmentally sound technology that’s least harmful to marine organisms, as required by state law.

Geever stresses that desalination is an energy-intensive way to get water. "Every gallon of water you conserve is energy conserved," he said. "Not only could San Diego do more conservation, but they don’t recycle any wastewater to potable water standards. That’s much less energy intensive."

Poseidon counters by saying that it invested $60 million in energy efficiency measures for the plant and will be installing solar panels on the roof. Perhaps most telling is that the company sees itself as vending reliability. "It’s not the current cost of water the San Diego Water Authority is concerned about, but the future cost for an acre-foot," Maloni said. "There’s a dollar figure you can put on reliability. Public agencies are willing to pay us a little more for that."

Which gets back to a comment Barlow made about capitalizing on crisis. "We are frightened half to death and everyone who looks at it, right-wing or left-wing, sees that. … They use the crisis to say we have no alternative except to go into massive desalination plants."

And, as Peter Gleick, president of the Pacific Institute pointed out, San Diego wasn’t calling for proposals to bring it more water. "Poseidon wanted to build a desalination plant and it came to San Diego. That’s one way to do it. The other way is for a municipality to say we want a desalination plant, we’re opening it up to bids, let’s have a competition. That didn’t happen, and instead we have one contractor."

Geever added, "Poseidon has been really successful at lobbying politicians and convincing regulators to give them permits."

Which points to one of the chronic ills of managing water systems, particularly in California where water has always been political. "In the 20th century decisions about water were made by white males in back rooms," said Gleick. "It solved a lot of problems, but it led to a lot of environmental problems. The days when water decisions made in back rooms should be over. And they aren’t over, and that’s part of the problem."

DELTA BLUES


Nowhere is that more obvious than the delta, where the state’s two most prominent rivers — the Sacramento and the San Joaquin — meet the Pacific Ocean just north of San Francisco. It’s ground zero for one of the most charged political fights in the state.

Two-thirds of California’s water comes from the delta. About 80 percent of it goes to cropland, watering about half of the state’s $35 billion agricultural industry, much of it through historic water rights that have been granted to a small lobby of powerful growers who sell their surplus rights for profit. Another 18 percent goes to urban water needs, and — in spite of the fact that this is the largest estuary on the west coast of North and South America — only 2 percent of the water remains for natural environmental flows.

Delta issues are legion and begin at the headwaters of the Sacramento River, near Mount Shasta, a land Mark Franco describes as an Eden. "The deer, salmon, and acorns that we eat — everything that we need is there," Franco told the Guardian. "It’s such a beautiful place. Now they’re drying it, that Eden."

Franco is head of the Winnemem Wintu, or "little water people" tribe, and is fighting the first phase of water diversions from the Sacramento River, 200 miles north of the capitol where companies like Coca-Cola, Crystal Geyser, and now, potentially, Nestlé, pump millions of gallons a year into small plastic bottles and ship it around the country to sell in groceries and convenience stores.

"Here in the US, people have become soft. They’ve become so used to just having things directly handed to them that they no longer understand where their water comes from," he said at the anti-corporate water conference. "Realize this: those springs on Mount Shasta are not an infinite supply of water."

After the Sacramento feeds the bottled-water companies, what remains wends its way south, with more diverted directly to farmers and into the State Water Project, which pipes it to drier southern regions. What’s left empties into the delta.

A lack of fresh water, flagging environmental preservation, increasing agricultural needs, and leveed island communities that are seismically unsafe and sinking, all mean the delta is failing as an ecosystem, and has been for some time. Chinook salmon and delta smelt populations are collapsing to such an extent that court orders have halted a percentage of water diversions and salmon fisherman were forced to dock their boats this year. Levees are crumbling, causing islands to flood and raising ire among landowners. Farmers with historic water rights are fiercely protective of them, while environmentalists are lobbying them to use more conservation and efficiency.

Nearly all stakeholders agree that the status quo won’t hold.

The challenge is finding a solution. Ending exports seems impossible, limiting them means massive investments in other resources. No one agrees on what will really save the endangered salmon and smelt or improve conditions for the 700 other native plants and animals.

In 2006, the governor convened a seven-member Delta Vision Blue Ribbon Task Force, which released a strategic plan in October calling for balancing co-equal goals of ecological restoration and water reliability.

The plan also specifically recommended a dual conveyance system similar to what was proposed in a study by the Public Policy Institute of California. It combines some through-delta pumping with a peripheral canal around the delta. PPIC crunched the numbers and determined that the canal was economically better than any of the four options they had weighed.

The peripheral canal idea isn’t new, but it’s been controversial since it was first proposed almost three decades ago. The plan was ushered by then-Gov. Jerry Brown, but defeated by voters in 1982 after a major organizing effort by environmentalists. (Whether voters will cast ballots on it this time remains to be seen, though the Attorney General’s Office, now headed by Brown, has counseled the Department of Water Resources, which is charged with implementing whatever plan is decided upon, that a vote of the people isn’t required.)

Shortly after its release in July, the PPIC report was criticized by five elected Congressional Democrats — Reps. George Miller, Ellen Tauscher, Doris Matsui, Mike Thompson, and Jerry McNerney. "The PPIC report should not be used to ignore the many things that can be done today to restore Delta health, including providing necessary fish flows, undertaking critical ecosystem restoration projects, and making major investments in water recycling and improved conservation measures," Miller said.

Numbers used by the PPIC report have also been criticized by Jeffrey Michael, a business professor at the University of the Pacific in Stockton. In an analysis of PPIC’s work, Michael said the group had used inflated population figures, as well as high costs for desalinated and recycled water, therefore resulting in a report that made it look like it was too expensive to end delta exports altogether and replace them with other water sources.

The PPIC said the state’s population would be 65 million by 2050, that desalinated water costs $2,072 per acre-foot, and recycled water goes for $1,480 per acre-foot — numbers that were scaled to 2008 dollars from 1995 figures. Michael contends that if the numbers were adjusted to reflect actual costs, the peripheral canal wouldn’t look like such a sweet deal.

Maloni, of Poseidon Resources, said the desalinated water cost would be $950 per acre-foot for San Diego, including a $250 subsidy. A similar plant the company is hoping to construct in Huntington Beach will be about $50 more per acre foot.

When asked if $2,100 per acre-foot was a reasonable figure for desalinated water in California, Maloni said, "That’s nuts."

What does all this illustrate? That even among a small cast of purported experts there’s little consensus on several fundamental issues.

Adding more fuel to the fires of public skepticism is that a third of the funding for the PPIC report came from Stephen D. Bechtel Jr. — heir to the Bechtel Corp., which has come under tremendous criticism for its moves to privatize water around the world.

"That is very upsetting to us. They would stand to gain a lot with a contract to build a peripheral canal," said Barbara Barrigan-Parrilla of Restore the Delta.

PPIC’s Ellen Hanak said the funding didn’t affect their findings. "It’s really much more linked to the fact that the foundation is really interested in the environment and water is a part of that."

Linda Strean, the PPIC’s public affairs officer, told the Guardian that it was Bechtel himself who wrote the check, not the foundation. It’s the first time Bechtel has given to PPIC.

But considering Bechtel’s past performance managing water, it doesn’t inspire much confidence.

BECHTEL’S BIG ADVENTURES


In April, Cesar Cardenas Ramirez and César Augusto Parada, traveled from Guayaquil, Ecuador, to San Francisco. The two men were on a fact-finding mission: they wanted to know more about the company that owns Interagua, the company that is supposed to deliver the drinking water that only occasionally comes out of the taps in their homes.

One of the first things they discovered is that 50 Beale St. doesn’t necessarily advertise itself as the home of Bechtel — one of the world’s largest private corporations, with global construction and infrastructure contracts amounting to billions of dollars annually.

In Guayaquil, water service has been problematic for decades. During the 1990s the country received a loan from the Inter-American Development Bank to improve basic infrastructure. The money was given directly to the government, but like many World Bank and International Monetary Fund loans granted throughout Latin America at the time, it was predicated on an eventual privatization of the water service contract.

The money helped — water conditions improved, and the city seemed to be on track to bring service to outlying areas. But in 2000, the city, abiding by the loan conditions, requested bids to run the water and sewage systems. No bids were received. Leaders scaled back provisions that kept some control in the hands of the government, and they got one response. In 2001, Interagua, a company owned by Bechtel, took over water service.

"Since the contract, nobody has been able to drink the tap water," Cardenas, who represents the Citizen’s Observatory for Public Services, a watchdog group formed in Guayaquil to monitor the water contract between the government and Interagua, told the Guardian. "Prior to the contract you could drink the tap water, although there were some sections of the city where the plumbing was old and inadequate."

Even though Interagua is managing a public service, because it’s a private company, information about its exact responsibilities have been elusive. The Observatory does know that Interagua pays nothing for the water it draws from the local river, is guaranteed a 17 percent rate of return, and that it has a minimum mandate to expand service. What’s also known is its citizens’ experience — during the first six months of the contract, some rates were increased 180 percent.

Bechtel’s SF office refused to meet with the two men or answer their phone calls, e-mails, and letters, which highlights the inherent problem with corporate control of water — a lack of accountability. Bechtel didn’t answer any of the Guardian‘s detailed questions regarding the Interagua contract, and only provided a three-page letter originally drafted to the World Bank in December 2007, that paints a rosy scene of productivity and accomplishment in Guayaquil.

"At present, over 2.1 million residents of Guayaquil (84 percent of the population) are connected to the municipal potable water system, and more than 90 percent of the customers have 24-hour per day, uninterrupted service." The letter goes on to state that coverage is expanding with new connections, water quality meets public health standards, prices have decreased, and procedures are in place to help customers who have higher than average bills.

"There are things that have improved, yes," said Emily Joiner, who spent last summer in Ecuador and is author of the book Murky Waters, a history of water issues in Guayaquil published by the Observatory in 2007. But the bottom line is that citizens pay for the service, but they can’t drink the water.

"You still don’t drink the water anywhere in the city at any time," said Joiner. People buy bottled water or boil it. "Bottled water is expensive, as a percentage of income," she said.

Whereas water service was previously priced more like a progressive income tax, with the lowest consumers paying the lowest rates, Interagua has flattened out the rate structure and now big water consuming businesses are paying the same as residents. "It’s pricing some families out of the market," Joiner said. "It’s great for business. It’s not great for people who don’t have enough water to bathe or wash their clothes."

The Observatory would like the water system turned back over to the government. The local authority, which once ran the water service and is now charged with overseeing Interagua, fined the company $1.5 million for not meeting goals for expanding service. According to Joiner, there’s been no follow-up on whether the company is meeting those goals now.

The Observatory also filed complaints with the World Bank, which attempted a settlement, but, according to Joiner, representatives from Interagua refused to sit down at the same table as Cardenas. "The process stalled," Joiner said. "Interagua said the issue had become too politicized. César [Cardenas] has a reputation for rabble-rousing, and at the time he was lobbying for constitutional amendments outlawing privatization. Interagua considered it negotiating with a hostile party."

A new constitution was passed in September that does, in fact, outlaw privatization, but still allows existing contracts to be honored if they pass a government audit.

In the meantime, the local rumor is that Bechtel is arranging to sell Interagua to another company. Bechtel wouldn’t confirm this, and no one could say more beyond what was reported in speculative articles in Guayaquil’s local newspapers.

It wouldn’t be the first time Bechtel bailed on an international water contract. In what was part of a massive privatization of a variety of Bolivia’s national services, in 1996 the World Bank granted the city of Cochabamba a $14 million loan to improve water service for its 600,000 citizens. Like Ecuador, there were strings attached: a future privatization of the city’s water service. It was sold to Aguas del Tunari, the sole bidder — also a subsidiary of Bechtel. Almost immediately rates increased by nearly 200 percent for some families. In January 2000, people stopped paying, started rallying, and the water war began.

Led by La Coordinadora for the Defense of Water and Life, organizers shut down the city, physically blockading roads and demanding the regional governor review the contract. The battle went on into February, resulting in injuries to 175 people and the death of one. Originally the government announced a rate rollback for six months, but the Bechtel contract remained. "The [Bechtel] contract was very hard to get a hold of," Omar Fernandez of the Coordinadora told Jim Schulz of the Democracy Center. "It was like a state secret." Once they did examine a copy of it, Bechtel’s sweetheart deal for a guaranteed 16 percent profit was exposed and people demanded a full repeal.

Eventually, the residents got it, and though decent water service in Cochabamba is still elusive, the water war has become the poster child for successful grassroots activism.

"One of the most inspiring struggles around community control of water happened in Cochabamba, Bolivia, in the year 2000, when international corporation Bechtel — based here in San Francisco — privatized the municipal water system and hiked the water rates for citizens by 30 to 40 percent. Thankfully, there was a popular upsurge. It was a very bitter struggle and people succeeded in turning control back to public hands.

"This success changed the public debate in Bolivia," said Mateo Nube, a native of La Paz, Bolivia, who spoke at the anti-corporate water conference. "People said ‘enough’ to privatization, enough to corporate control. We need to seize control of our government."

You don’t have to go to Bolivia to find water-privatization battles. In 2002, catching wind that the city of Stockton was on the brink of privatizing its water services, the Concerned Citizens Coalition rallied signatures for a ballot measure against the idea. Weeks before the vote, the Stockton City Council narrowly approved one of the west’s largest water privatization deals — a 20-year, $600 million contract with OMI-Thames. The ballot measure still received 60 percent approval, and activists took the issue to court arguing there hadn’t been a proper CEQA process. In January 2004, according to the Concerned Citizens Coalition Web site, "San Joaquin County Superior Court Judge Bob McNatt ruled in our favor — we won on all points. The judge ruled that privatizing, in and of itself, needed environmental review." The city appealed, but eventually dropped the suit and OMI walked away in March 2008.

PUBLIC AGENCY, PUBLIC PROCESS


Bechtel also failed to hold on to a more local contract, a $45 million deal with the SFPUC to manage the first phase of its multibillion dollar Water System Improvement Project. After a 2001 story by the Guardian exposed Bechtel’s exorbitant billing for services that resulted in few gains (see "Bechtel’s $45 million screw job," 9/12/01), the contract was revoked by the Board of Supervisors and granted to Parsons, which runs it now.

Years later, in 2007, when the SFPUC released a draft of the Environmental Impact Report for the $4.4 billion project, massive public outcry arose against it. The plan outlined major seismic upgrades for miles of aging water infrastructure between San Francisco and Yosemite National Park, where the headwaters of the Tuolumne River are captured by a giant dam in Hetch Hetchy Valley and gravity-fed to the city. While the EIR projected little additional water use for San Franciscans, it called for diverting an additional 25 million gallons of water per day from the Tuolumne to meet the needs of 23 wholesale customers in San Mateo, Santa Clara, and Alameda counties.

The Pacific Institute and Tuolumne River Trust collaborated on a study showing that 100 percent of the anticipated water increases were for those wholesale customers — most of it for outdoor water use. The SFPUC hadn’t factored in any increased conservation, efficiency, or recycling measures, nor had it independently questioned the growth numbers.

The EIR received upwards of 1,000 public comments, more than any other document ever generated by the SFPUC. Environmental groups rallied, writing editorials, flooding public meetings, and asserting a different vision of the Bay Area’s water future and stewardship of its primary, pristine water resource.

And it worked. "We got about 95 percent of everything we wanted out of the WSIP process," said Jessie Raeder of the Tuolumne River Trust. "We do consider the WSIP a huge win for the environmental community … because we were able to organize and get a seat at the table and discuss this with the PUC." She said the Bay Area Water Stewards, a coalition of environmental groups, met with the PUC nearly every month and slowly the initial additional river diversions were pared down to a possible 2 million gallons. Also, a cap has been placed on any diversions until 2018, which gives agencies time to implement conservation and efficiency measures.

The SFPUC feels positive about it, too. "We are really thrilled that the program EIR was approved by the Planning Commission, approved by the PUC, and not appealed," said spokesperson Tony Winnicker. He said there were really controversial elements and the trick was balancing the competing interests of wholesale customers and environmental groups. "It took a really hard-nosed look at our demand projections and what we could really do for conservation." He concedes there are still controversies, in particular over the Calaveras Dam, which the Alameda Creek Alliance opposes. "It would be hubris for us to say it’s been a complete success."

"This is a process that would only occur through a public agency," Winnicker added.

"What we saw with the WSIP was a solution where everything was fully transparent," Raider added. "It was all a public process, and there was plenty of opportunity for public input."

Which is really what a public water utility should be doing. "When you’re talking about public water, it isn’t them, it’s us," said Wenonah Hauter, director of Food and Water Watch. "A public water system is only as good as the people involved with it."

DRINK LOCALLY


"This conference isn’t a public event," organizer Andrew Slavin told the Guardian when we tried to gain admittance to the Corporate Water Footprinting Conference. While water activists rallied outside deriding the corporations inside for greenwashing their images, Slavin said that the fact that the conference wasn’t open to the public proved that the corporations weren’t trying to do environmental PR. "If they’re trying to do greenwashing this isn’t the place to do it. The aim is to try to share information."

Slavin pointed to representatives speaking from the Environmental Protection Agency, the SFPUC, and NGOs like the World Wildlife Fund. From an environmental perspective, if these companies are going to be using water, isn’t it worth working with them to reduce their impacts?

"There are companies I call water hunters," explained Maude Barlow. "They destroy water to make their products and profit. Unfortunately, some of the companies that are leading this conference are bottled water companies. I don’t know how you can become ‘water neutral’ if your life’s work is draining aquifers."

Many water activists consider bottled water the low-hanging fruit as far as getting people to change behaviors. San Francisco banned the use of tax dollars to buy it, and the SFPUC has been promoting its pristine Hetch Hetchy tap water, gravity-fed from Yosemite National Park. "Bottled water companies are basically engaged in a multiyear campaign. Their marketing approach is you can’t trust the tap, your public water isn’t safe," Winnicker said.

Slavin said he thought it was weird to protest the conference, because the corporations are genuinely trying to avoid conflicts. He pointed to a company called Future 500 that has created a business out of mediating between corporations and communities. "It’s hard for companies to speak to people so they use other companies to do it," Slavin said.

In fact, representatives from Future 500 appeared to be the only conference attendees who stepped outside to watch the protest.

"I think it’s great," Erik Wohlgemuth of Future 500, said of the protest. "I think press should have been there. I think more of these voices should have been there. My personal view is they need to come up with some sort of reduced rate to allow these nonprofits to attend these kinds of conferences."

Jeremy Shute, a representative from global infrastructure company AECOM who was standing with Wohlgemuth, said, "There’s a tremendous amount of research and thought going into these questions and it would be great if that knowledge could be shared."

But is that going to happen when private companies cite "proprietary interest" as a reason for not sharing more information about their businesses? Or when they don’t have to abide by public records laws, leaving their contracts shielded from public scrutiny? Or when they refuse to answer calls from their constituencies and the media? In which case, should those advocates be in the same room as some of the biggest water users in the world? When pressed with the question, Slavin seemed stumped. "Why didn’t we invite them?" he asked. Then, after a long, thoughtful pause, he said, "I don’t know."

————————

WATER, BY THE NUMBERS

One-half of 1 percent of the world’s water is fresh. [1]

Of that .5 percent, about 50 percent is polluted. [2]

One in 6 people don’t have access to clean, safe water. [3]

Five food and beverage giants — Nestlé, Unilever, Coca-Cola, Anheuser Busch, and Groupe Danone — consume almost 575 billion liters of water per year, enough to satisfy the daily water needs of every person on the planet. [4]

The average human needs about 13 gallons of water each day for drinking, cooking, and sanitation. [5]

An average North American uses about 150 gallons of water each day. [6]

An average African: 1.5 gallons. [7]

An average San Franciscan: 72 gallons. [8]

The average Los Angeles resident: 122 gallons. [9]

About half the water used by a typical home goes for lawns, gardens, and pools. [10]

50 percent of US water comes from non-renewable groundwater. [11]

86 percent of Americans get their water from public water systems. [12]

80 percent of California’s homes get water from public systems. [13]

The 20 percent of CA households receiving water from privately-owned systems pay an average of 20 percent more for it. [14]

Of the 4.5 billion people with access to clean drinking water worldwide, 15 percent are buying it from private water companies. [15]

It takes 3 liters of water to produce 1 liter of bottled water. [16]

Tests of 1,000 bottles of water spanning 103 brands revealed that about one-third contained some level of contamination. [17]

The bottled water industry is worth $60 billion a year. [18]

Water is the third biggest industry in the world, worth $425 billion, ranking just behind electricity and oil. [19]

About 70 percent of CA’s water lies north of Sacramento, but 80 percent of the demand is from the southern two-thirds of the state. [20]

[1] www.gwb.com.au/gwb/news/mai/water12.htm

[2] Maude Barlow, interview with SFBG

[3] foodandwaterwatch.org/world/utf8-america/water-privatization/ecuador/bechtel-in-guayaquil-ecuador

[4] The Economist magazine

[5] www.ens-newswire.com/ens/mar2002/2002-03-22-01.asp

[6] www.canadians.org/water/publications/water%20commons/section4.html; environment.about.com/od/greenlivinginyourhome/a/laundry_soaps.htm

[7] montessori-amman-imman-project.blogspot.com/2008/01/in-news-interview-with-ariane-kirtley.html; answers.yahoo.com/question/index?qid=20080304195801AAnrv4Y

[8] sfwater.org/mto_main.cfm/MC_ID/13/MSC_ID/168/MTO_ID/355

[9] www.nwf.org/nationalwildlife/article.cfm?articleId=928&issueId=68

[10] American Water Works Association

[11] www.canadians.org/integratethis/water/2008/May-28.html

[12] www.foodandwaterwatch.org/water/private-vs-public

[13] California Public Utilities Commission

[14] Black and Veatch’s 2006 California Water Rate Survey

[15] www.canadians.org/water/publications/water%20commons/section2.html

[16] www.pacinst.org/topics/water_and_sustainability/bottled_water/bottled_water_and_energy.html

[17] Natural Resources Defense Council study, "Pure water or pure hype?" (1999)

[18] www.bottlemania.net/excerpt.html

[19] www.timesonline.co.uk/tol/money/article4086457.ece; thegreenblog.leedphilly.com

[20] www.energy.ca.gov/2005publications/CEC-700-2005-011/CEC-700-2005-011-SF.PDF

Ricky Angel and Katie Baker assisted with research.

Stop PG&E’s corporate welfare

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EDITORIAL Just in time for the holiday season — and the colder weather — Pacific Gas and Electric Co. wants to shift millions of dollars in fees off big industrial customers and force residential consumers to pay more for natural gas.

The move would set a terrible precedent, and San Francisco officials should join the consumer groups that are calling on the California Public Utilities Commission to reject the plan.

At issue is California Alternative Rates for Energy (CARE), a state-mandated program that helps low-income consumers pay for basic gas service — enough to heat their homes and cook their food. CARE costs PG&E nothing; the entire subsidy system is paid for by modest surcharges on every utility bill in the state. But now the biggest gas users — giant corporations like Exxon Mobil and Chevron — want to stop paying the surcharge, and PG&E, along with San Diego Gas and Electric and Southern California Edison, is taking up their cause. The three giant utilities have asked the CPUC to reduce their subsidy contribution by $90 million. Residential customers would pick up the slack. Why? Jeff Smith, a PG&E spokesman, told Los Angeles Times columnist David Lazarus that "We’ve got to try to help make it more attractive for businesses to do business in California."

But Chevron and Exxon Mobil aren’t suffering from a hostile business climate in this state. Both have reported record profits in the past year. The CEO of Exxon Mobil, Rex Tillerson, was paid $16.7 million; Chevron’s CEO, David O’Reilly, made $15.74 million. The fee shift wouldn’t help small businesses much; it’s based on how much energy a customer uses, so the big energy-intensive industries pay the most.

The best way to boost the business climate in this recession era is to promote consumer spending — which means putting more money in the pockets of residents. Raising the gas bills of people who are already hurting will have the opposite effect.

"It’s an absolute outrage that the biggest companies would be given a discount on the backs of ratepayers," Mindy Spatt, media advocacy director at The Utility Reform Network (TURN), told us. "Everyone’s so worried about making the climate good for businesses, but what about the climate for people?"

A CPUC administrative law judge ruled against the utilities in November, but the case will go to the full commission, possibly as soon as Dec. 18. (Details are online at the Bruce Blog at sfbg.com.)

San Francisco has an interest in the outcome, since the city’s economy will take another hit if PG&E gets away with this. And, of course, it’s ironic that the utility would take this step just after it spent $10 million to defeat a local public-power measure (which would have lowered electric rates and helped both small and large businesses, as well as consumers).

The supervisors ought to pass a resolution opposing the plan and City Attorney Dennis Herrera should file a formal statement of opposition on behalf of the city.

In another front on another battleground, state assemblymember Tom Ammiano and state senator Mark Leno are introducing a joint resolution that would put the Legislature on record as supporting the legal challenge to the same-sex marriage ban, Proposition 8, and as raising concerns that the measure violates the equal protection and separation of powers safeguarded in the state constitution (see "Tyranny of the majority," 11/26/08).

Leno told us that the intent isn’t to put pressure on the California Supreme Court, which will begin considering the case in January, but to make clear the Legislature’s intent that substantial changes to the constitution such as this should go through the more cumbersome revision process.

Joining Leno and Ammiano in sponsoring the bill are Assembly Speaker Karen Bass and Assemblymember John Perez, and state senate president Darrell Steinberg and state senator Christine Kehoe. Leno said he expects others to sign on as well. It’s a solid idea, and the Legislature should approve it.

Chevron not guilty

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by Amanda Witherell

Chevwrong12.1.08.png
The jury didn’t think so.
Image courtesy of Justice in Nigeria Now

A federal court jury in San Francisco has found Chevron not guilty in a case alleging the corporation was complicit in the shootings, killings, and torture of protesters on a Chevron oil platform off the Niger Delta in 1998.

Plaintiffs in the case, who include Larry Bowoto, injured when Nigerian police opened fire on the unarmed protesters, have announced they will appeal the decision to the 9th Circuit, the most liberal appeals courts in the country.

“The fact that Bowoto v. Chevron made it this far in the process is a victory in and of itself, because it means that we have demonstrated that there is a clear pathway in the US court system for holding corporations accountable to the rule of law,” said Laura Livoti, founder of the group Justice in Nigeria Now, in a press release after the verdict. “This is the first time a case against a company for aiding and abetting human rights violations overseas has even gone before a jury.”

The case was filed under the Alien Tort Statute, an 18th century law that allows foreign victims of human rights crimes inflicted by US-based corporations to sue them in US courts, and a ‘guilty’ verdict would have been a first – similar cases settled out of court in the past.

So, this is a victory for Chevron, which has been spending a lot of cash on its image lately and was dealt a losing hand from voters on Election Day with the passage of Measure T, a business tax reform measure that will cost the billion-dollar corporation $26 million. The money will go to Richmond city coffers and Green Party Mayor Gayle McLaughlin has said funds will be allocated for projects through an open public process, according to a story in today’s Chronicle.