Government

The truth about pensions

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David Cay Johnston, the Pulitzer-Prize-winning former New York Times reporter, has a brilliant piece on his blog about public-employee pensions. His basic point: the mainstream media, including his own former paper, have utterly missed the point about how pensions work:


[Wisconsin] Gov. Scott Walker says he wants state workers covered by collective bargaining agreements to “contribute more” to their pension and health insurance plans.

Accepting Gov. Walker’ s assertions as fact, and failing to check, created the impression that somehow the workers are getting something extra, a gift from taxpayers. They are not.

Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because the “contributions” consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.


Public employees (like the few employees in the private sector who still get pensions) bargain collectively for compensation packages. Some of that compensation comes in the form of deferred pay, which the employer puts aside into a pension fund. In San Francisco, some city employees several years ago, through negotiations, agreed to forego a pay raise and instead accept more deferred compensation; that is, the money they would have received in wages now goes into their pension fund.


When you say that those employees “contribute nothing” to their pensions, you’re not telling the truth:


The fact is that all of the money going into these plans belongs to the workers because it is part of the compensation of the state workers. The fact is that the state workers negotiate their total compensation, which they then divvy up between cash wages, paid vacations, health insurance and, yes, pensions. Since the Wisconsin government workers collectively bargained for their compensation, all of the compensation they have bargained for is part of their pay and thus only the workers contribute to the pension plan. This is an indisputable fact.  


More:


Thus, state workers are not being asked to simply “contribute more” to Wisconsin’ s retirement system (or as the argument goes, “pay their fair share” of retirement costs as do employees in Wisconsin’ s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.


At the time that San Francisco officials agreed to use deferred compensation as a way to avoid pay raises, it was a politically easy decision: The stock market was booming, and the pension fund was making so much money from its investments that the city could in effect keep that money (the pay raises that would have gone to the employees) and use it to avoid tax increases or cuts somewhere else. Unless they were fools, the city officials who signed off on this deal knew, or should have known, that at some point the stock market would come back to Earth, and the city would have to pay the deferred compensation out of the General Fund.


Now: You can argue that those contracts were overly generous and should be renegotiated. You can argue that the city can’t afford to pay its workers as well as it once did and that they should take further pay cuts (beyond the half-billion or so they’ve already given back). I don’t entirely agree, but at least that’s an honest argument.


But to say that city workers aren’t contributing to their pension fund, or need to contribute more, is dishonest. For the newspapers to report that as fact is bad journalism.


 


 

No San Bruno rate hike for PG&E

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EDITORIAL In a Feb. 18 message to shareholders, Pacific Gas and Electric Co. announced that the projected costs of the San Bruno pipeline explosion could exceed $700 million. Now the company wants to get some of that back from ratepayers. That will be a huge test for Gov. Jerry Brown and the California Public Utilities Commission, and send a signal about how the new governor will deal with the rogue utility. The outcome should be simple: every penny of the costs of cleaning up the mess, repairing and upgrading the pipelines, and setting damage claims and lawsuits should be paid out of PG&E profits.

Let’s review the facts.

The CPUC gave PG&E $5 million to upgrade the pipeline under San Bruno in 2009, but the company decided to spend the money instead on executive bonuses.

PG&E officials fought bitterly to prevent the federal government from cracking down on natural gas pipeline inspections.

PG&E never conducted serious inspections of a line that was past its rated use and had been poorly constructed in the first place.

PG&E intentionally inflated gas pressure in that line beyond what regulators say was safe.

It took PG&E more than an hour to shut off the gas after the explosion, making the resulting fire much harder to contain and quite possibly contributing to some of the eight deaths and destruction of more than 30 houses.

That’s not the sort of record that suggests that the pipeline disaster was an unavoidable accident. It certainly wasn’t caused by a natural disaster. It was corporate error — misuse of money, irresponsible monitoring of a dangerous piece of equipment, intentional efforts to blunt public oversight. The damage was PG&E’s fault.

The problem is that so far, the company hasn’t been held accountable. As John Weber, editor of The Bay Citizen, pointed out in a Feb. 5 column: “What consequences have PG&E and its executives faced for these blunders? None. The stock is doing just fine. The California Public Utilities Commission has awarded the company almost $30 million in bonuses for energy-saving targets that weren’t achieved. The company plans to hire a new gas operations executive, but no one has lost his job — except a hapless manager who thought it would be smart to spy on the online discussions of smart-meter opponents.”

Ideally, the CPUC and the federal regulators ought to levy the heaviest possible fines on the company and mandate far stricter maintenance oversight. At the very least, the commission needs to make it clear that no ratepayer money will go for San Bruno-related expenses.

The pressure should be on at every level of government. The San Francisco supervisors should pass a resolution calling on the CPUC to reject any rate hike that would force PG&E customers to pay for the accident. State Sen. Leland Yee (D-SF) has already issued a statement denouncing any rate hike. But the Legislature ought to go further and pass a bill that would state that no utility can charge its ratepayers for costs related to an accident that was clearly the utility’s fault.

Otherwise, the utility that killed eight people and destroyed an entire neighborhood will emerge unaccountable and unscathed. P.S. Go to TURN.org to sign the Utility Reform Network’s anti rate hike petition.

Meet the new boss

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news@sfbg.com

The Guardian hasn’t been invited into City Hall’s Room 200 for a long time. Former Mayor Gavin Newsom, who frequently criticized this newspaper in his public statements, had a tendency to freeze out his critics, adopting a supercilious and vinegary attitude toward any members of the press who questioned his policy decisions. So it was almost surreal when a smiling Mayor Ed Lee cordially welcomed two Guardian reporters into his stately office Feb. 15.

Lee says he plans to open his office to a broader cross-section of the community, a move he described as a way of including those who previously felt left out. Other changes have come, too. He’s replaced Newsom’s press secretary, Tony Winnicker, with Christine Falvey, former communications director at the Department of Public Works (DPW). He’s filled the Mayor’s Office with greenery, including giant tropical plants that exude a calming green aura, in stark contrast to Newsom — whose own Room 200 was sterile and self-aggrandizing, including a portrait of Robert Kennedy, in whose footsteps Newsom repeatedly claimed to walk.

When it comes to policy issues, however, some expect to see little more than business-as-usual in the Mayor’s Office. Democratic Party chair Aaron Peskin, a progressive stalwart, said he sees no substantive changes between the new mayor and his predecessor. “It seems to me that the new administration is carrying forward the policies of the former administration,” Peskin said. “I see no demonstrable change. And that makes sense. Lee was Willie Brown and former Mayor Gavin Newsom’s handpicked successor. So he’s dancing with the guys that brought him in.”

Sup. David Campos, viewed as part of the city’s progressive camp along with Peskin, took a more diplomatic tack. “So far I’ve been very pleased with what I’ve seen,” Campos noted. “I really appreciate that he’s reached out to the community-based organizations and come out to my district and done merchant walks. I think we have to wait to see what he does on specific policy issues.”

But while Lee has already garnered a reputation for being stylistically worlds apart from Newsom, he still hews close to his predecessor’s policies in some key areas. In our interview, Lee expressed an unwillingness to consider tax-revenue measures for now, but said he was willing to take condo conversions into consideration as a way to bring in cash. He was unenthusiastic about community choice aggregation and dismissive of replacing Pacific Gas & Electric Co. with a public-power system. He hasn’t committed to overturning the pending eviction of the Haight Ashbury Neighborhood Council’s recycling center, and he continued to argue for expanding Recology’s monopoly on the city’s $206 million annual trash stream, despite a recent Budget and Legislative Analyst’ report that recommended putting the issue to the voters.

Public Defender Jeff Adachi, who met Lee in 1980 through the Asian Law Caucus, said Lee would be facing steep challenges. “It’s a fascinating political karmic outcome that he is now our appointed mayor. He didn’t seek it out, as he says, but the opportunity he has now is to focus his efforts on fixing some of the problems that have gone unaddressed for decades, pension reform being one of them. I think he realizes he has a limited time to achieve things of value. The question I and others have is, can he do it?”

 

THE RELUCTANT MAYOR

Lee identified as a non-politician, patently rejecting the notion that he would enter the race for mayor. In meetings with members of the Board of Supervisors at the end of 2010, he said he didn’t want the job.

Yet while vacationing in Hong Kong, Lee became the subject of a full-court press. “When the lobbying and phone calls started … clearly they meant a lot to me,” Lee told us, adding that the choice “was very heavy on my mind.” He finally relented, accepting the city’s top post.

Although rumors had been circulating that Lee might seek a full term, he told the Guardian he’s serious about serving as a caretaker mayor. “If I’m going to thrust all my energy into this, I don’t need to have to deal with … a campaign to run for mayor.”

Adachi offered an interesting take on Lee as caretaker: “Somewhere along the way, [Lee] became known as the go-to guy in government who could take care of problems,” Adachi said, “like the Wolf in Pulp Fiction.”

Sounding rather unlike Harvey Keitel’s tough-talking character, Lee noted, “One of my goals is to rebuild the trust between the Mayor’s Office and the Board of Supervisors. I think I can do that by being consistent with the promises I make.”

Lee’s vows to keep his promises, mend rifts with the board, and stay focused on the job could be interpreted as statements intended to set him apart from Newsom, who was frequently criticized for being disengaged during his runs for higher office, provoking skirmishes with the board, and going back on his word.

The new mayor also said he’d be willing to share his working calendar with the public, something Newsom resisted for years. Kimo Crossman, a sunshine advocate who was part of a group that began submitting requests for Newsom’s calendar in 2006, greeted this news with a wait-and-see attitude. “I’ve already put in a request,” Crossman said. “Politicians are always in support of sunshine — until they have to comply with it.”

 

THE ELEPHANT IN THE ROOM

Pointing to the tropical elephant-ear plants adorning his office, Lee noted that elephants are considered lucky in Chinese culture. With the monstrous issues of pension reform and a gaping budget deficit hitting his mayoral term like twin tornadoes, it might not hurt to have some extra luck.

Pension reform is emerging as the issue du jour in City Hall. A round of talks on how to turn the tide on rising pension costs has brought labor representatives, Sup. Sean Elsbernd, billionaire Warren Hellman, City Attorney Dennis Herrera, labor leaders, and others to the table as part of a working group.

Gabriel Haaland, who works for SEIU Local 1021, sounded a positive note on Lee. “He’s an extraordinarily knowledgeable guy about government. He seems to have a very collaborative working style and approach to problem-solving, and he is respectful of differing opinions,” Haaland said. “Where is it going to take us? I don’t know yet.”

Lee emphasized his desire to bring many stakeholders together to facilitate agreement. “We’re talking about everything from limiting pensionable salaries, to fixing loopholes, to dealing with what kinds of plans we can afford in the health care arena,” he noted. Lee said the group had hashed out 15 proposals so far, which will be vetted by the Controller’s Office.

A central focus, Lee said, has been “whether we’ve come to a time to recognize that we have to cap pensions.” That could mean capping a pension itself, he said, or limiting how much of an employee’s salary can be counted toward his or her pension.

Since Lee plans to resume his post as city administrator once his mayoral term has ended, he added a personal note: “I want to go back to my old job, do that for five years, and have a pension that is respectable,” he said. “At the same time, I feel others who’ve worked with me deserve a pension. I don’t want it threatened by the instability we’re headed toward and the insolvency we’re headed toward.”

 

BRACING FOR THE BUDGET

If pension reform is shaping up to be the No. 1 challenge of Lee’s administration, tackling the city budget is a close second. When Newsom left office, he passed Lee a budget memo containing instructions for a 2.5 percent reduction in most city departments, part of an overarching plan to shave 10 percent from all departments plus another 10 percent in contingency cuts, making for a bruising 20 percent.

Lee said his budget strategy is to try to avert what Sup. David Chiu once characterized as “the typical Kabuki-style budget process” that has pitted progressives against the mayor in years past. That means sitting down with stakeholders early.

“I have opened the door of this office to a number of community groups that had expressed a lot of historical frustration in not being able to express to the mayor what they feel the priorities of their communities are,” Lee said. “I’ve done that in conjunction with members of the Board of Supervisors, who also felt that they weren’t involved from the beginning.”

Affordable-housing advocate Calvin Welch said Lee’s style is a dramatic change. “I think he’s probably equaled the total number of people he’s met in six weeks with the number that Newsom met in his seven years as mayor,” Welch said.

Sup. Carmen Chu, recently installed as chair of the Budget & Finance Committee, predicted that the budget will still be hard to balance. “We are still grappling with a $380 million deficit,” Chu told us, noting that there are some positive economic signs ahead, but no reason to expect a dramatic improvement. “We’re been told that there is $14 million in better news. But we still have the state budget to contend with, and who knows what that will look like.”

Sup. John Avalos, the former chair of the Board’s powerful Budget Committee, said he thinks the rubber hasn’t hit the road yet on painful budget decisions that seem inevitable this year — and the outcome, he said, could spell a crashing halt to Ed Lee’s current honeymoon as mayor.

“We are facing incredible challenges,” Avalos said, noting that he heard that labor does not intend to open up its contracts, which were approved in 2010 for a two-year period. And federal stimulus money has run out.

 

DID SOMEONE SAY “CONDO CONVERSIONS”?

Asked whether he supported new revenue measures as a way to fill the budget gap, Lee initially gave an answer that seemed to echo Newsom’s inflexible no-new-taxes stance. “I’m not ready to look at taxes yet,” he said.

He also invoked an idea that Newsom proposed during the last budget cycle, which progressives bitterly opposed. In a conversation with community-based organizations about “unpopular revenue-generating ideas,” Lee cautioned attendees that “within the category of unpopular revenue-generating ideas are also some that would be very unpopular to you as well.”

Asked to explain, Lee answered: “Could be condo conversion. Could be taxes. I’m not isolating any one of them, but they are in the category of very unpopular revenue-generating ideas, and they have to be carefully thought out before we determine that they would be that seriously weighed.”

Ted Gullicksen, who runs the San Francisco Tenants Union, said tenant advocates have scheduled a meeting with Lee to talk about condo conversions. Thanks to Prop. 26’s passage in November 2010, he said, any such proposal would have to be approved by two-thirds of the board or the voters. “It’s pretty clear that any such measure would not move forward without support from all sides,” Gullicksen said. “If anyone opposes it, it’s going to go nowhere.”

Gullicksen said he’d heard that Lee is willing to look at the possibility of significant concessions to renter groups in an effort to broker a condo conversion deal, such as a moratorium on future condo conversions. “If, for example, 1,000 TICs [tenants-in-common] became condos under the proposal, then we’d need a moratorium for five years to minimize and mitigate the damages,” Gullicksen explained.

More important, some structural reform of TIC conversions may be on the table, Gullicksen said. “And that would be more important than keeping existing TICs from becoming condos.”

Gullicksen acknowledged that Lee has the decency to talk to all the stakeholders. “Newsom never attempted to talk to tenants advocates,” he said.

 

GREEN, WITHIN LIMITS

Lee’s two children are in their early 20s, and the mayor said he takes seriously the goal of being proactive on environmental issues in order to leave them with a more sustainable San Francisco. He trumpeted the city’s green achievements, saying, “We’re now on the cutting edge of environmental goals for the city.”

Leading bicycle activist Leah Shahum of the San Francisco Bicycle Coalition had praise for Lee on bike issues. “I’m really encouraged by his very public support of the new green separate bikeways on Market Street and his interest and commitment to creating more,” she said. “I believe Mayor Lee sees the value of connecting the city with cross town bicycle lanes, which serve a wide range of folks, including business people and families.”

Yet some proponents of green causes are feeling uncertain about whether their projects will advance under Lee’s watch.

On the issue of community choice aggregation (CCA), the ambitious green-energy program that would transfer Pacific Gas & Electric Co. customers to a city-run program with a cleaner energy mix, Lee — who helped determine rates as city administrator — seemed lukewarm. “I know Mr. [Ed] Harrington and his staff just want to make sure it’s done right,” he said, referring to the general manager of the city’s Public Utilities Commission, whose tepid attitude toward the program has frequently driven him to lock horns with the city’s chief CCA proponent, Sup. Ross Mirkarimi.

Lee noted that CCA program goals were recently scaled back. He also said pretty directly that he opposes public power: “We’re not in any day getting rid of PG&E at all. I don’t think that is the right approach.”

The controversial issue of the Haight Ashbury Neighborhood Council Recycling Center’s pending eviction from Golden Gate Park still hangs in the balance. The Recreation and Park Commission, at Newsom’s behest, approved the eviction despite overwhelming community opposition.

Lee said he hadn’t looked at the issue closely. “I do know that there’s a lot of strong debate around the viability, what that operation attracts and doesn’t attract,” he said. “I had the owner of HANC here along with a good friend, Calvin Welch, who made a plea that I think about it a bit. I agreed that I would sit down and talk with what I believe to be the two experts involved in that decision: Melanie Nutter at the Department of the Environment and then Phil Ginsburg at the Rec and Park.” Nutter and Ginsburg supported HANC’s eviction.

Welch, who is on the board of HANC, noted that Lee could be swayed by his staff. “The bunch around Newsom had old and bad habits, and old and bad policies. In dealing with mayors over the years, I know how dependent they are on their staff. They’re in a bubble, and the only way out is through a good staff. Otherwise, Lee will come to the same conclusions as Newsom.”

HANC’s Jim Rhoads told the Guardian he isn’t feeling reassured. “He said he would keep asking people about it. Unfortunately, if he asked his own staff, it would be a problem because they’re leftovers from Newsom.”

Speaking of leftovers, Lee also weighed in on the debate about the city’s waste-management contract — and threw his support behind the existing private garbage monopoly. Campos is challenging a perpetual waste-hauling contract that Recology has had with the city since 1932, calling instead for a competitive-bidding process. When the Department of the Environment recommended awarding the city’s landfill disposal contract to Recology last year, it effectively endorsed a monopoly for the company over managing the city’s entire waste stream, at an estimated value of $206 million per year.

The final decision to award the contract was delayed for two months at a February Budget & Finance Committee hearing. Campos is contemplating putting the issue to the voters this fall, provided he can find six votes on the Board.

“I know that Sup. Campos had given his policy argument for why he wants that revisited,” Lee said. “I have let him know that the Recology company in its various forms has been our very dependable garbage-hauling company for many, many decades. … I feel that the company has justified its privilege to be the permit holder in San Francisco because of the things that it has been willing to do with us. Whether or not we want to use our time today to revisit the 1932 ordinance, for me that wouldn’t be a high priority.”

 

UNFINISHED BUSINESS

In the last week of 2010, Avalos pushed through groundbreaking local-hire legislation, without the support of then Mayor Gavin Newsom or his chief of staff, Steve Kawa, who wanted Avalos to back off and let Newsom takeover the task.

With Lee now in Room 200, things appear to be moving forward on local hire, in face of misleading attacks from Assemblymember Jerry Hill (D-San Mateo), who wants to make sure no state money is used on local-hire projects, presumably because the building trades are upset by it. And Kawa, whom Lee has retained as chief of staff, doesn’t really support the legislation. Indeed, Kawa’s presence in the Mayor’s Office has his detractors believing that the new boss in Room 200 is really the same as the old boss.

“I feel like things are moving forward in the right direction around local hire, though a little more quietly than I’d like,” Avalos told the Guardian. Avalos noted that he is going to hold a hearing in March on implementing the legislation that should kick in March 25.

Welch said he believes that if Lee starts replacing staff wholesale, it could indicate two things: he’s a savvy guy who understands the difficulties of relying on Newsom’s chief of staff Steve Kawa for a budget, and he’s not ruling out a run for mayor.

“If I was in his position, the first thing out of my mouth would be, ‘I’m not running.’ I think he’s very focused in the budget. And it’s going to make or break him. But if he starts overriding Kawa and picks staff who represent him … well, then I’d revisit the question of whether he’s contemplating a run for mayor, say, around June.”

A call to do your (jury) duty

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By Ken Maley

OPINION For decades San Franciscans concerned and interested in the workings — and malfunctions — of city government have turned to the Guardian for insights and possible solutions. Guardian readers have developed a reputation for being community activists, and to those activist-minded readers, I encourage you to apply to serve on the San Francisco civil grand jury.

Few citizens understand that the California Constitution requires all counties to impanel a civil grand jury each year. The San Francisco grand jury has researched and issued many important findings — most recently, pertinent reports on the enormous, and growing, city employee retirement obligations threatening to consume our city’s general fund and possibly bankrupt the city in the next five years if not resolved.

Each year the San Francisco Superior Court accepts applications from citizens who want to serve on the jury. Thirty screened applicants are selected, and from those 30, 19 are impaneled as that year’s civil grand jury. Jurors serve for a one-year term, from June to July.

The full jury discusses various issues of interest, selects issues that gain 12 of the 19 votes, spends a year investigating, then writes and releases reports. The panel can investigate any function of city government — contracts, corruption, spending, tax policy .. the mandate is very broad. And the jury has tremendous power, including the ability to subpoena records and force city officials to testify. No pertinent information may be withheld once the judge approves the request.

But the dilemma confounding the court is the lack of qualified applicants. In 2009, the number of applicants was so low we were nearly unable to impanel a jury at all. What a disgrace, in activist San Francisco.

I find it so disheartening that in a city renowned for community interest and participation in almost every aspect of government activity, we have such a small number of citizens willing to make the time to serve.

So I appeal to Guardian readers to direct your interest in the workings of our city government, to consider putting your knowledge and commitment to better city governance by serving on the San Francisco civil grand jury.

Your contribution of time and energy as a juror will be well spent and personally rewarding.

To learn more about the civil grand jury, how you can do your civic duty and apply, go to www.sfgov.org, click on agencies, scroll down to civil grand jury. Applications are due by April 15 for the 2011-12 jury. 

Ken Maley was a member of the 2008-09 civil grand jury and is media committee chair of the San Francisco Civil Grand Jury Association.

 

Naughty girls (need love too)

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SCANDAL! Flaubert’s Madame Bovary is one of those pillars of French culture whose dismissal might well get you deported. (Deservedly.) It has inspired innumerable adaptations and co-optations, including a Hindi musical, a VeggieTales episode, and a postmodernist novel posing as a nonfiction memoir-literary homage (Julian Barnes’ Flaubert’s Parrot). Its film incarnations have been reset everywhere from Portugal to Argentina to Rye, N.Y., attracting directors as celebrated as Jean Renoir and Vincente Minnelli and actresses as disparate as emotional heavy-lifter Pola Negri and chilly, twiggy Isabelle Huppert.

A few notches below that lofty company is 1969’s The Sins of Madame Bovary, a German-Italian coproduction with the era’s requisite mixture of dubbed multinationals — none very well remembered now — which is being issued this month by South San Francisco’s CAV Distributing. Despite its lurid title, this is a fairly faithful, if uninspired, version of the novel directed by journeyman Hans Schott-Schöbinger, whose less-than-illustrious prior credits included something called The Pastor with the Jazz Trumpet (1962).

It was a last career stop for him, but just the beginning for star Edwige Fenech, an Algerian-born beauty contest winner of Maltese and French extraction who would be the face that launched a thousand European exploitation movies — well, a lot of them anyway — over the next decade-plus. (Never entirely retired, she recently had a cameo in 2007’s Hostel: Part II.) Through all her giallos and sex comedies, Fenech, a brunette with a jones for heavy mascara, gamely deployed her beauty in various stages of undress, revealing a curvy figure with considerably less discretion than Flaubert allowed the tragic ninny he both pitied and ridiculed.

It’s probably on the shelf of every junior-high library now, but the original Madame Bovary was hugely scandalous — not just in her fictive world of bourgeois discontent, but in the salons, government offices, and courts of actual mid-19th century France. Couched in the most exquisite prose, her hapless infidelities — spurred by the fatal error of having married a nice, very dull country doctor — brought charges of immorality against author and original publisher (when it was serialized in a magazine) that came close to throwing the future pal to George Sand, Turgenev, and Emperor Napoleon III in prison.

Who knows how many titillated readers tried to emulate Emma B.’s suggested shag in a closed horse-drawn carriage only to discover their design in that era would in all likelihood make that exercise conducive to unpleasant contortions and muscle cramps? Perhaps that was another of Flaubert’s little jokes — as a many-mistress’d lifelong bachelor who’d explored the length of the Kinsey Scale (yet never truly moved out of his mother’s house) and had the venereal souvenirs to show for it. Yet one suspects he would have found the subsequent graphic sexualities of later banned books Lady Chatterley’s Lover, Ulysses, Tropic of Cancer, etc. to be merely vulgar.  

 

Dick Meister: Shades of the Thirties

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Dick Meister, formerly labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor, politics and other matters for a half-century.

By now, there’s can be no doubting it: What’s happening in Wisconsin is one
of the most important labor developments in decades. It’s of major
importance to unions and their members, of major importance to working
people generally ­ of major importance to us all.

In  many ways, it’s the 1930s again. Just as then, workers and their
political allies and other  supporters are demonstrating, picketing,
marching, striking and otherwise forcefully demanding the basic civil right
of collective bargaining ­ the unfettered right for workers’ representatives
to negotiate with employers on setting their wages, hours and working
conditions.

Eventually, workers and their millions of supporters won the 1930s struggle.
Congress, acting closely with President Franklin D. Roosevelt, granted the
legal right of collective bargaining to most workers. Farm workers,
domestics and a few other groups were excluded from the law, but all others
finally had that vital right.

The 1930s struggle arose primarily because of the economic pressures of the
Great Depression that led to massive protests, just as today’s struggle can
be traced to the pressures of the Great Recession that also have led to
massive protests.

There are key differences between then and now, however. In the thirties,
the struggle was to win union rights for workers in the face of strong
opposition from large financial interests, powerful conservative politicians
and other anti-labor forces. Today, the struggle is to keep union rights
from being taken away from workers by today’s anti-union forces. Their main
targets are public employees and the pensions and other benefits they won in
past bargaining with their government employers.

The governments’ aim, of course, is to use the savings from that to make up
for budget shortfalls resulting from the recession and, in many cases, from
poor government management.

But there’s another important reason: Public employees have become the
vanguard of the labor movement. Their numbers and the percentage of them
belonging to unions have been growing steadily, while the number and
percentage of unionized workers in private employment have been shrinking.
That’s caused anti-union forces to shift their major efforts into attempting
to curb the escalating spread of unionization among public employees.

Which explains what’s happening in Wisconsin, where Republican Gov. Scott
Walker has moved to all but eliminate the bargaining rights of most state
employees.
Walker is pushing bills through the GOP-controlled Legislature that would
bar state employees from bargaining on anything except their pay, and limit
any pay increases to the level of Consumer Price Index increases.

Employees would have no say in determining  their benefits or working
conditions, although most would have to increase their contributions to
pension and health care funds by up to 50 percent. What’s more, their
contracts would have to be re-negotiated yearly, and union dues could no
longer be deducted from employee paychecks.  It’s hard to imagine a union
surviving under such restraints.

The pay and benefits of Wisconsin state workers may be too high, or too low,
depending on who’s measuring. But that could be addressed through
negotiations between Gov. Walker and union representatives. But like some
petty dictator, Walker insists, “I don’t have anything to negotiate.”

Peaceful negotiations are how it’s done in civil societies, but that’s not
the style of union-busting Walker and his cohorts.  And if anyone doesn’t
like Walker’s approach, look out! He’s alerted the National Guard to be
armed and ready should Wisconsin state workers strike, disrupt state
services or otherwise rise in protest.

Shades, again, of the 1930s. In fact, the last time the Guard was called out
to quell a labor dispute in Wisconsin was during a United Auto Workers
strike in 1934.

Workers eventually won that and many other struggles of the thirties, thanks
to their courage and fierce determination and the broad public support they
inspired. And that’s precisely what it will take to overcome today’s
anti-worker onslaught by Walker and others like him.

The good news ­ and it’s very good news ­ is that such help is here and
growing fast. Crowds of as many as 70,000 labor supporters have been
gathering daily outside the Wisconsin State Capital in Madison to demand
that Walker and his fellow reactionaries return to the 21st century.

But give Walker this: Like the anti-labor politicians of the 1930s, he has
aroused public outrage that has brought important new strength and
solidarity to the cause of working people and their unions nationwide.

Certainly they’ll need all the strength they can muster, with major efforts
similar to Walker’s in Wisconsin underway in at least 17 other states.  In
more than a dozen. , Republican anger over labor’s strong support for
Democrats in last year’s elections have led directly to measures curbing
union political activities.

President Obama is correct. There is indeed a nationwide “assault on
unions.” But as the assaults increase, so will the public outrage that’s
winning unions the broad support they so badly need ­ and so richly deserve.

Dick Meister is a San Francisco-based columnist who has covered labor and
politics for a half-century as a reporter, editor, author and commentator.
Contact him through his website, www.dickmeister.com

“My girlfriend is a hacker”: Inside the EFF party

2

On our way to the Electronic Frontier Foundation’s 21st Birthday party, my programmer friend explained to me why, if it weren’t for the work of the good folks over at EFF, neither eBay nor WikiLeaks could do their thing.

See, it’s all about encryption, a topic my friend is slightly obsessed with. It used to be illegal for anyone but the government to send encrypted information through electronic channels, he explained, using technology that’s now commonplace and used in any website that requires a log in. In the 1990s, the EFF came along with a lawsuit to open up the ability to offer a secure transfer of information to the masses. The tech law firm prevailed, and soon it became possible to securely log in to a website and enter your credit card information without fear that it would be intercepted. Hence, the trail was blazed for online shopping.

From minds far more subversive than that of Meg Whitman sprang a very different use of the technology. Utilizing encryption software, WikiLeaks designed a way for whistleblowers to securely submit classified documents to an online repository.

That’s just one of many accomplishments that EFF could point to at its Feb. 16 celebration. A nonprofit, EFF “fights for freedom primarily in the courts,” according to its website, taking on the US government and major corporations on issues that threaten Internet freedom and digital rights. EFF boasts more than 61,000 contacts through its Action Center, which it uses to beat back bad legislation and raise awareness.

Just in the last few weeks, EFF has taken on the FBI over its plan to expand federal surveillance laws, weighed in on net neutrality, fended off against attacks from Congress over its aggressive protection of online privacy, and spearheaded a program that allows web users to surf secure all the time.

The EFF staged its 21st bash at Bricks and Mortar Media (BAMM.tv), a “content creation factory” in SoMa.

The place was adorned with festive, futuristic hacker art, from a flat-screen monitor displaying a word cloud, to a stage setup featuring an aerial array of computer bits and video game controllers.

One room featured a live video feed projected onto the wall with a strobe-light effect, and partygoers delighted in throwing kung-fu kicks in front of it and watching themselves flicker on screen like action figures seconds later.

In true tech-pioneer fashion, the night featured live nerdcore performances. What’s nerdcore? Let me put it this way. When the star of Dual Core shouts into the mic, “Throw your hands in the air if you’ve got mad skills,” the people he’s addressing really do have mad skills – like programming, web design, developing apps for mobile devices, managing vast databases, creating video games, and yes, even hacking. One of Dual Core’s raps included the line, “My girlfriend is a hacker.” He’s clearly smitten.

Several chiptune artists also performed, including Crashfaster  — “a chip musician, retro remixer, and low-bit concert promoter whose outreach has galvanized the Bay Area’s vibrant chiptune community,” according to EFF – and Trash80, “the eminent chip musician behind ArduinoBoy — software that helps integrate the Nintendo Game Boy into any existing electronic music arsenal.”

I had the honor of chatting with Doctor Popular, described on EFF’s site as a “professional yo-yoer, nerdcore artist, and innovator.” The good doctor makes music using only an iPhone, iPad, and some wires. He told me he writes songs using a handful of apps while riding CalTrain from San Francisco to San Mateo for his day job at a company that makes video games.

And oh, the nerdy crowd! The knowing glint in their eyes, those people who really understand how to manipulate technology. They program software, develop apps, eat, sleep and breathe online communication, whip out iPhones and Droid phones and talk about video games, latest versions of browsers and operating systems, and other matters that this reporter could not quite comprehend, because they were using acronyms.

They were gracious. “Sorry,” some one said to me after launching into a paragraph of alphabet-soup gibberish to my programmer friend. “Sometimes I forget, and then I notice people’s eyes glazing over.”

And yet, when you hang out with hardcore nerdcore fans, you learn the most fascinating things. For example, how when you begin typing “Torrent” into a Google search engine, the word “torrent” will not show up in the automatic feed that suggests search terms. Why? Well, there are theories.

Warren Hellman: The rich are undertaxed

31

I couldn’t reach financier Warren Hellman before I wrote my column in this week’s paper talking about the employee pension discussions. But he called me yesterday (Feb. 16) after he’d seen it, and I expected he’d give me some shit.


Wrong.


In fact, Hellman had only one problem with my analysis: “Your article is didn’t go far enough.” Turns out he thinks I was a bit too easy on the billionaires.


“When you compare upper-echelon tax rates [in America] to any developed country in the world,” Hellman said, “the rich pay very low taxes here. You’re article is exactly correct — the wealthy are undertaxed.” He told me that he’s stopped trying to amass more personal wealth (“it’s all going into a foundation”) because he realizes that he couldn’t possibly spend all the money he has “and all that happens if you leave it all to the next generation is that you spoil your kids.” 


Quite a statement coming from one of the city’s richest and most influential business leaders.


Of course, putting all the money in a foundation isn’t the only answer.   The only way to address the wealth gap, and the decline in social, education and infrastructure spending, to for the government to get more involved — and that means collecting more tax money from the people who can afford to pay it. Hellman told me that he’s not about to accept a reduction in his lifestyle — but we both agreed that he doesn’t have to. He could pay a lot more in taxes and still be really, really rich.


So we talked about my proposal, which goes like this:


I’ve got a suggestion for the pension reform negotiators. Why not talk a little about parity.


 Yes, pensions have to be fixed; let’s start at the top. Maybe nobody should have a pension of more than $100,000 a year; certainly, a former police chief shouldn’t get $250,000 a year for life. Maybe the highest-paid city employees should have to pay more into the pension system to protect the pensions of the people who make less. I could easily support progressive pension reform that would save the city money.


 I just think tax reform should also be part of the equation.


 Hellman wants $300 million in pension savings? Good — how about pairing it with $300 million in new taxes on the wealthy? How about big business and rich people give up something this time around, instead of all of the cuts falling on public employees and poor San Franciscans?


And Hellman, to his credit, didn’t disagree with the concept. His problem he said, was with the politics. “Taxes are the third rail of politics,” he said. “I’ve gotten my head handed to me three times now when I’ve supported tax increases.” 


But I still think there’s a way to move forward here. The city employee unions agree to some sort of pension reform, which starts with a pension cap and higher payments from higher earners (not with what amounts to a pay cut for lower-wage employees who have already taken pay cuts in the past few years). Then Hellman, Mayor Ed Lee and Sup. Sean Elsbernd agree to support a progressive tax measure that would bring in badly needed revenue for public services and education.


It’s possible that the tax measure would have to wait until Nov. 2012, when it would only require a 50 percent vote. Maybe both measures go on that ballot. And Hellman, Elsbernd and Lee use their clout with downtown to push the Chamber of Commerce and the Commitee on JOBS to at least stay neutral and cut off any big-money campaign against the tax measure. Then they all agree to help raise money and campaign to pass it. And labor agrees to work for both measures.


Hellman said he feared that “one would kill the other” and both measures might fail. But I believe the people of San Francisco are willing to support new taxes — progressive new taxes — if they don’t think the money’s going to waste. And pairing pension refrom with new taxes sends a strong message: We’re all sharing the pain. Particularly if Hellman, Elsbernd and Lee can sell the tax package part of the deal to the business community.


It’s worth a try. Because otherwise, we’re going to have another Prop. B battle, both sides are going to spend a ton of money, and nobody’s going to walk away happy.


“It’s worth thinking about,” Hellman told me. I hope so.

Adachi and Ballard’s pension reform gloves come off

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Yesterday, I talked to Public Defender Jeff Adachi about the latest efforts to address pension reform in San Francisco. Readers may remember that Adachi roused the ire of the labor unions last year, with the ultimately unsuccessful Proposition B. At the time, most folks felt Adachi’s measure didn’t have a snowball’s chance because it asked public employees to bear the brunt of the city’s ballooning retirement and health plan costs. Yet, they all praised Adachi as a great city leader who has been on the right side of many other battles in this city’s rich political history.
But the pension reform issue hasn’t gone away, and now that Adachi is threatening to introduce another measure this fall, the gloves have apparently come off, as witnessed by a Bay Citizen article that reported that union leaders don’t want Adachi to be part of a pension-reform working group at City Hall
In that Bay Citizen article, Nathan Ballard, who served as communications director for former Mayor Gavin Newsom from 2007 to 2009, said, “Inviting Jeff Adachi to our talks would be like inviting Sarah Palin to speak at the Democratic convention.”
The Bay Citizen characterized Ballard as “a Democratic strategist who has been involved in the working group since its inception.” And it noted that Mayor Lee had reached out to Adachi—an effort that it framed as a “complicating move.”
But it didn’t get Adachi’s thoughts on Ballard’s comments. So, I asked Adachi how he felt about being compared to Sarah “Moose in the headlights” Palin.
“It’s ironic that a spokesperson from Burson-Marsteller, which is headed by Republican operatives such as President Bush’s former press secretary (Dana Perino) and represents some of the most reactionary corporate interests, such as USA Blackwater, is accusing me of being a Republican for trying to solving our city’s pension crisis,” Adachi replied, referring to the fact that Burson-Marsteller, a global public relations firm, appointed Ballard as a managing director in March 2010.
“This is a company that is known for representing the worst corporate criminals in modern history,” Adachi continued. “They organized a campaign against civil rights in Argentina, supported a government massacre in Indonesia and tried to justify the killing of over 2,000 people in India’s Bhopal disaster. You have a hired mouthpiece, Nathan Ballard, who’s been paid $50,000 out of union member dues deciding who can attend meetings at City Hall. “
Asked for his thoughts on Adachi’s response, Ballard replied, “Burson-Marsteller employs talented operatives from both sides of the aisle. Although I won’t speak to the specifics of Jeff Adachi’s allegations, Burson is well known as the world’s go-to firm for crisis communications, and that tends to involve handling high-stakes disputes for controversial clients. As a criminal defense lawyer, Jeff Adachi should resist the temptation to assign blame to an advocate for accusations made against a client.”

So, buckle your seats, ladies and gentlemen. The pension reform battle is ON. And if the exchange posted above is any indication, it’s only going to get uglier

Muni looks for money — but not downtown

12

The San Francisco Municipal Transportation Agency is looking for new ways to bring in money, which is a fine thing. I think taxes for transportation make perfect sense. And while not everything in government gets better when you throw money at it, Muni generally does. Some of the ideas are pretty sound and take a progressive approach; it’s hard to argue against a vehicle impact fee, since private cars on the road increase traffic and slow down the buses. I’m all for higher parking rates, and an off-street commercial parking fee is a great idea (even though the Guardian, which owns a building that has a small parking lot, would have to pay the fee).


But the list is missing the most obvious and the most fair element: A special tax assessment for downtown commercial property. We know, because the city has done numerous reports on this, that office developers don’t pay anywhere near the real cost of providing Muni service to their buildings. We know that most of the Muni lines, and certainly the ones with the heaviest traffic, exist to take commuters downtown. We know that decent transit is critical to the success of the entire central office district.


So why is there nothing on this list to address that? Why not an annual fee per square foot of commercial office space in the area zoned C-3-0 (highrise offices)? That ought to be part of any Muni funding plan.


I tried to get the folks at Muni to respond to my question, but I haven’t heard back. I’ll update as soon as I do.

Ammiano goes after tax cheats

3

Assemblymember Tom Ammiano is moving to close a huge tax loophole that costs state and local government millons — and while his last attempt failed, this year he has a much better shot. The measure will probably make it out of the Legislature (hard to argue against something that doesn’t raise taxes at all but just makes sure nobody cheats) and I can’t imagine Jerry Brown deciding to veto it.


The bill, AB 448, would force companies that sell or transfer propetry to report it as an ownership change, which triggers a new assessment under Prop. 13. It’s one of the oldest loopholes in the book: I create a corporation or LLC to hold a piece of property, and when I want to sell, I simply transfer stock in the corporation or membership in the LLC to the buyer — and the property deed isn’t changed.


The California Tax Reform Association tracks this stuff, and you can see some examples here.


Ammiano’s been working with San Francisco Assessor Phil Ting, who told me “it’s a simple issue of fairness. Homeowners face reassessment when they buy property; why shouldn’t corporations?”


The stakes are high. It’s impossible to say how much San Francisco would pick up every year, but over time, it could be many millions of dollars (and about 57 percent of property tax revenue goes to the General Fund, the rest to the state, which returns most of it it the public schools).


Perhaps the Democrats should simply include this projected revenue in their budget; that way, Brown would have an even greater incentive to sign it.

A jaundiced proposal

0

news@sfbg.com

An ordinance to ban unsolicited print Yellow Pages across San Francisco, proposed Feb. 1 by Board of Supervisors President David Chiu, seeks to reduce waste and save money.

“Phone books are a 20th-century tool that doesn’t meet the business and environmental needs of the 21st century,” Chiu said as he introduced the measure in board chambers.

The ordinance would establish a three-year pilot program starting Oct. 1 in which the city would reduce the mass distribution of phone books, making them available only at distribution centers or to residents or businesses that request them.

A rally in support of the ban before the meeting included Rainforest Action Network’s founder Randall Hayes and California Sen. Leland Yee (D-San Mateo), who proposed legislation that failed to gain steam last year for making it easier for Californians to opt out of receiving phone books.

But the Yellow Pages Association refuses to be thrown out with the rest of yesterday’s trash. YPA Vice President of Public Policy and Sustainability Amy Healy said her group opposes the proposal but that she was encouraged that Chiu and his staff say they are open to working with the association.

 

BY THE NUMBERS

Chiu introduced the ordinance, which is cosponsored by Sup. Scott Wiener, because of the potential effect it could have on reducing city waste, both in the city’s garbage bins and its treasury.

According to Chiu’s office, San Francisco receives about 1.5 million phone books a year. At an average weight of 4.33 pounds per book, the current distribution system creates about 7 million pounds of waste. If the production were cut in half for the city, it would save nearly 6,180 metric tons of carbon dioxide emissions a year from polluting the air.

But it isn’t just the environmental cost that is wearing on the city.

Phone books are tough to recycle. With plastic inserts, bulky design, and low-grade paper, the books have to be presorted and recycled manually. It costs Recology, the company contracted with the city for waste disposal, $300 per ton to dispose of the city’s unused phone books, which in turn costs taxpayers about $1 million a year for their disposal.

 

OPT IN VS. OPT OUT

The YPA has been sensitive to the environmental concerns, recently launching a website that allows a person to opt out of receiving a phone book.

But it is also suing the Seattle City Council over its Feb. 1 approval of a plan to charge Yellow Pages a 14-cent publisher’s fee per book and create an opt out system for the city, arguing the Seattle ordinance violates the First Amendment’s free speech protections.

According to a statement by YPA President Neg Norton, the association believes that “if don’t want a phone book, you shouldn’t have to get one.”

But YPA opposes the ban on unsolicited books, citing the jobs it would cost, the business community’s desire to “generate leads and revenue from ready-to-buy consumers,” and claiming the First Amendment “prohibits government from licensing or exercising advance approval of the press and from directing publishers what to publish and to whom they may communicate.”

Wiener has a different take on the matter, a stand he said he has already received lots of criticism for, including from some constituents who compared it to the board vote to ban Happy Meals last year. But he said this issue is very different.

“An enormous number of books dumped all over the city is a bad thing, and we should do something to address the issue,” he told the Guardian, noting that the ability to opt out isn’t good enough. “It’s not like the do-not-call list where it is directly annoying and people are more likely to take action … Stacks sit in apartment lobbies, and people don’t decide to opt-out.”

But YPA is also citing the public’s apathy as a reason the ban is unfair. “People don’t take the time to respond to e-mails,” Healy said. “It’s an unreasonable barrier to have a stranger knock on your door and ask you to take something.” The YPA claims that “seven in 10 adults in California use print Yellow Pages, so we do not believe a system that puts a burden on the majority of people to opt in is the best path for choice.”

 

ARE THEY USEFUL?

Do people still value the Yellow Pages?

Healy believes they do, stating that advertising with the Yellow Pages gives businesses a “high return on their investment.” We asked some city businesses that still advertise in the Yellow Pages what they thought about the potential ban.

Barbara Barrish, manager of Barrish Bail Bonds, doesn’t see her customers using the Yellow Pages anymore. “We used to swear by the Yellow Pages. Now young people use the computers, or their Blackberries and phones.”

Although she has an ad in the print edition, Barrish said she wouldn’t advertise with the directory again and only did so this time because it slashed its prices. “It used to cost a lot more, but it cut its advertising costs by a third,” she said. “They gave me a good deal.”

When asked if she would request a copy if the ban goes through, she said she probably would. “I might grab a phone book if the computer is down.”

Daniel Richardson, an immigration attorney who advertised in the Yellow Pages until 2008, predicted the business community would kill or water down the ordinance. “You are talking about going up against AT&T and other major businesses,” he told the Guardian with a chuckle.

Richardson said he stopped advertising in the Yellow Pages because he didn’t get enough business. He believes people look to the Yellow Pages for criminal or personal injury lawyers, but not immigration attorneys.

Even pizza places, a staple of advertising in the Yellow Pages, are ho-hum about the usefulness of the Yellow Pages. Junior Reyes, who is in charge of advertising for Go Getter Pizza on Gough Street, believes the restaurant gets most of its customers from online. “We do a lot of advertising with other places and online,” he said. “The Yellow Pages isn’t our main source.”

But what about people who do use the Yellow Pages, particularly groups that are not big Internet users. Would they miss it?

David Bolt is the dean for academic affairs at Expression College for Digital Arts in Emeryville and producer of the PBS series The Digital Divide. He believes that banning the Yellow Pages may be a problem for certain groups, including the elderly, recent immigrants, and the poor — groups with the least access to Internet, particularly in urban centers.

“We should err on the side of giving as much information to the greatest numbers of people, especially to groups that may not be technologically literate,” he said. “Society should think about how groups could be impacted by this decision.”

But Barbara Blong, executive director of the Senior Action Network, said older people are becoming more tech savvy. She said computer classes and other resources have put many of the city’s seniors online. She questioned the concept that seniors are one of the largest groups affected by the digital divide, noting that seniors oppose wastefulness as much as anyone.

“We are against having a lot of Yellow Pages laying around,” she said. Blong also mentioned that seniors who do not use the Internet for contacts can use the public library or senior centers that have phone books on hand. “I don’t see it as a ban, but moving on so we don’t have a great deal of waste,” she said.

The ordinance also exempts foreign language phone directories, further diluting the divide argument. The legislation wouldn’t ban the Chinese Yellow Pages or Momento (Spanish Yellow Pages) because they are distributed through community centers, not residences.

The ordinance is expected to have its first public hearing around the end of the month. The YPA will continue to tout its opt out website to the board in hopes it might be enough to persuade the city to forgo the opt in system. The group also hasn’t ruled out a lawsuit.

But YPA’s Healy said he hopes the coming dialogue will be productive. “We share the same goal — we don’t want to print directories that are unwanted.”

A better option for trash

6

EDITORIAL One of the biggest, most important municipal contracts in San Francisco is never put out to bid. It’s awarded to the same company, automatically, and has been since 1932. Recology Inc. (formerly known as Sunset Scavenger, Envirocal, and Norcal Solid Waste Systems) is the only outfit licensed to pick up trash in the city. It’s also the only company that has a monopoly guaranteed in the City Charter. Its residential rates are set every five years by an agency almost nobody’s ever heard of, the Refuse Collection and Disposal Rate Board, which consists of the city administrator, the controller, and the general manager of the San Francisco Public Utilities Commission. Commercial rates are set by Recology alone; there’s no appeal or oversight.

San Francisco is the only major city in the United States that contracts out solid waste collection to a private company. And it may be the only city of any size that does it without competitive bidding.

Now that city officials are discussing where the garbage should go — that is, what landfill should hold it — there’s a perfect opportunity to open up the 1932 deal, amend the charter, and fix this.

Sups. David Campos and Ross Mirkarimi are working on a measure that would mandate competitive bidding for the contract to pick up commercial and residential trash. “It’s not in the interest of the ratepayers to have a monopoly,” Campos told us.

It’s true that Recology has worked with the city on reducing the waste stream and developing a curbside compost and recycling plan. And Recology is an employee-owned company.

But that doesn’t mean the city or its residents and businesses are getting the best possible deal. Could another company do the same job better — and for less? Maybe. Would the prospect of a competitive bid drive Recology to improve service and cut rates? Absolutely. That why most municipal contracts are put out to bid on a regular basis.

But there’s a larger question here, one that the supervisors also should consider. Why does San Francisco have private garbage collection anyway? All over the country, cities handle that task as a part of the function of government.

There are several distinct advantages to evaluating a public option for refuse. For starters, the city is in desperate need of money — and Recology is making a nice profit off its local gig. It’s entirely possible, even likely, that the city could take over garbage collection, keep the rates at the same level, and bring in millions to the general fund. It’s also possible that city officials would decide to forego some of that income and cut rates to make life easier for residents and businesses.

Since the 1932 charter provision is getting a new look anyway, the supervisors at least ought to look at the possibility of ending private garbage collection. A fairly basic study should be able to establish how much revenue Recology takes in, what expenses are involved, and whether it’s worth pursuing municipalization.

Editorial: Better options for garbage

9

One of the biggest, most important municipal contracts in San Francisco is never put out to bid. It’s awarded to the same company, automatically, and has been since 1932. Recology Inc. (formerly known as Sunset Scavenger, Envirocal, and Norcal Solid Waste Systems) is the only outfit licensed to pick up trash in the city. It’s also the only company that has a monopoly guaranteed in the City Charter.

Its residential rates are set every five years by an agency almost nobody’s ever heard of, the Refuse Collection and Disposal Rate Board, which consists of the city administrator, the controller, and the general manager of the San Francisco Public Utilities Commission. Commercial rates are set by Recology alone; there’s no appeal or oversight.

San Francisco is the only major city in the United States that contracts out solid waste collection to a private company. And it may be the only city of any size that does it without competitive bidding.

Now that city officials are discussing where the garbage should go — that is, what landfill should hold it — there’s a perfect opportunity to open up the 1932 deal, amend the charter, and fix this.

Sups. David Campos and Ross Mirkarimi are working on a measure that would mandate competitive bidding for the contract to pick up commercial and residential trash. “It’s not in the interest of the ratepayers to have a monopoly,” Campos told us.

It’s true that Recology has worked with the city on reducing the waste stream and developing a curbside compost and recycling plan. And Recology is an employee-owned company.

But that doesn’t mean the city or its residents and businesses are getting the best possible deal. Could another company do the same job better — and for less? Maybe. Would the prospect of a competitive bid drive Recology to improve service and cut rates? Absolutely. That why most municipal contracts are put out to bid on a regular basis.

But there’s a larger question here, one that the supervisors also should consider. Why does San Francisco have private garbage collection anyway? All over the country, cities handle that task as a part of the function of government.

There are several distinct advantages to evaluating a public option for refuse. For starters, the city is in desperate need of money — and Recology is making a nice profit off its local gig. It’s entirely possible, even likely, that the city could take over garbage collection, keep the rates at the same level, and bring in millions to the general fund. It’s also possible that city officials would decide to forego some of that income and cut rates to make life easier for residents and businesses.

Since the 1932 charter provision is getting a new look anyway, the supervisors at least ought to look at the possibility of ending private garbage collection. A fairly basic study should be able to establish how much revenue Recology takes in, what expenses are involved, and whether it’s worth pursuing municipalization.

 

Hellman and Obama feel your pain

29

The Bay Citizen has a detailed report on the backroom discussions taking place around pension reform, and there aren’t any real surprises. The cops and firefighters seem to be leading the talks from the public-employee union perspective, although the other unions are there, and Mayor Lee has taken over the gavel from financier Warren Hellman. Sean Elsbernd is involved, but they’ve kept Jeff Adachi out. (And what the hell is Nathan Ballard doing in this mix?)


But what got me when I read the story this weekend was the quote from Hellman:


In an interview Thursday afternoon, Hellman said the group must come up with annual savings of $300 million to $400 million. (Proposition B was to have saved the city $120 million.)


“I hate that it comes out of the hide” of city workers, particularly those making modest salaries, Hellman said. “It is going to be really painful.”


It reminds me of Obama’s comments on his budget cuts: They’ll be painful and he hates to do it, but these tough decisions have to be made for the good of all of us.


My question: Why doesn’t anything ever come out of the hides of the billionaires?


From the start of this recession, working-class people, public employees and the poor have taken huge hits. Nothing — nothing — has happened to the top echelon of society. If anything, they’ve only gotten richer. The bankers who destoryed the economy with financial instruments even they didn’t understand? They’re not in the poor house. They haven’t had their homes foreclosed. They’re all doing just fine.


In fact, the United States government just kindly allowed them to keep their tax cuts for another two years.


Obama isn’t going to miss any meals. His kids will still have their fancy private school. He won’t have to worry about his pension vanishing or eating cat food in his old age. Same goes for Hellman; there’s nothing in the world that he could possibly want to buy that he can’t have.


So it makes me really mad to hear them talk about feeling bad about budget cuts and reducing pensions. If they feel bad, then why not do something about it?


Hellman’s not a bad guy. I’ve met him, he’s pleasant and polite and sincere about wanting to help the city. I couldn’t reach him on the phone today, but I’ll keep trying, because I have a question:


Over the past five years, city employees have given back hundreds of millions of dollars in wage and benefit concessions. Social programs have been cut by hundreds of millions more. And the rich in this town have given back nothing. Mr. Hellman: Is that fair?


I’ve got a suggestion for the pension reform negotiators. Why not talk a little about parity.


Yes, pensions have to be fixed; let’s start at the top. Maybe nobody should have a pension of more than $100,000 a year; certainly, a former police chief shouldn’t get $250,000 a year for life. Maybe the highest-paid city employees should have to pay more into the pension system to protect the pensions of the people who make less. I could easily support progressive pension reform that would save the city money.


I just think tax reform should also be part of the equation.


Hellman wants $300 million in pension savings? Good — how about pairing it with $300 million in new taxes on the wealthy? How about big business and rich people give up something this time around, instead of all of the cuts falling on public employees and poor San Franciscans?


I’m good with pension reform, really I am. And I’m not involved in the negotiations. But I’m a San Francisco progressive who will have to vote on the ultimate outcome. Give me something to work with here, guys.


 


 

Obama’s going to screw California

6

The giant cuts proposed by the Obama Administration (and worse ones suggested by the GOP) will hurt the economic recovery, hurt the poor, hurt the nation’s future — and hurt California. Let’s remember, as Brian Leubitz notes at Calitics, we live in a net donor state — for every dollar Californians send to Washington, the state gets 80 cents back. And now the president wants to make cuts that will further mess up the state budget — and since Gov. Jerry Brown is sending a lot of Sacramento’s work back to the counties, the shit will keep rolling downhill.


It’s true that Obama is also talking about tax hikes, but that’s going to be hard to get through the House. And even if he gets his higher taxes on oil and gas producers and high-income individuals, he still wants to cut spending — that is, non-military spending.


So over the next few months, as Washington politicians try to out-cut each other and talk about “living within our means” (except for wars that nobody wants to pay for but we keep fighting anyway), look for the budget crisis in Sacramento and San Francisco to get worse.


One ray of hope: If Jerry Brown is willing to back up his “local-government-does-it-better” campaign by giving local government the right to raise taxes abit more easily, then he’ll support Sen. Mark Leno’s bill to allow counties to raise the Vehicle License Fee. That might even come close to saving SF what Washington and Sacramento take away.

Dick Meister: Scapegoating Public Empoyees

7

Dick Meister, formerly labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor, politics and other matters for a half-century.

Let’s pause for a moment to recognize some of our most important, yet most maligned workers. They are teachers and librarians. Police officers and firefighters. Bus drivers, doctors and nurses. Judges, lawyers, gardeners. They’re laborers and other maintenance and construction workers, and many others who provide us vital services.

They are public employees. There are millions of them, who every day do the essential work that keeps our country going.

It is they who keep our streets and highways, our parks and playgrounds safe and clean, who collect our trash. It is they who help educate our children, who provide emergency health care, who convey us to our jobs and back home after our day’s work, who sometimes risk their very lives to protect us from harm.

Yet despite all that – and more – public employees have come under heavy bipartisan attack by politicians who find them easy targets to blame for the budget shortfalls that have beset government at all levels.  Labor costs, after all, make up the bulk of government spending everywhere.

There’s no way around that basic fact. So if we want all those vital services public employees provide – and we do – that’s the price we must pay, and should be happy to pay. Certainly no group of workers has done more for us, none who are more important to our welfare, none more deserving of their wages.

Yet we seriously shortchange many of those workers. And some people, including political leaders who obviously know better, ludicrously cite public employees as a major cause of the economic recession that just won’t go away.

The blame, of course, clearly rests elsewhere. The culprits, as the Portside Labor website noted, include “the super-rich who will continue to enjoy immensely lucrative tax breaks enacted during the Bush administration,” and the Defense Department officials who want “a budget blowing $78 billion over the next year to fund the endless wars in Iraq and Afghanistan and maintain a military machine that spends more than all its rivals combined.”

No, it’s not obscenely wealthy tax-dodging greedheads or the war-happy folks at the so-called Defense Department who’ve caused  record budget deficits. Oh, no. It’s that “greedy public employee who pulls in an outrageous $19,000-a-year pension.” You know, one of those public employees Gov. Mitch Daniels of Indiana actually characterized as members of  “a new privileged class.”

Public employee unions are striking back at such foolishness. For instance, the American Federation of State, County and Municipal Employees is waging a nationwide “Stop the Lies” campaign. Union President Gerald McEntee has been arguing that “hundreds of thousands of public employees, just like private sector employees, have been laid off, and taken pay and benefit cuts – even as Wall Street executives lined their pockets with taxpayer money and took home huge bonuses.”

The union’s retirees, meanwhile, are getting rich on pensions of, indeed, $19,000 a year.

There’s this, too: Government workers generally get less in pay and benefits than workers holding similar jobs in the private sector. As Portside Labor and others have pointed out, public sector workers don’t seem to resent the fact that their pay lags behind pay in private employment, “because most choose public service for other reasons than pay.” That’s obvious, and another reason to quit scapegoating the under-compensated workers who are among our most valuable.

The latest and perhaps best defense of the scapegoated public employees has come from President Harold Schaltberger of International Alliance of Firefighters .

Schaltberger notes the attacks on public employees are “like a tsunami rolling across the country.” He says the attacks have never been greater, more serious or as vicious.”  As he says, “Wall Street’s recklessness, not public employee pensions, caused our nation’s financial collapse. Scapegoating workers won’t solve anything.”

In a full-page newspaper ad, Schaltberger noted that “Firefighters and paramedics are dedicated to the lives of our neighbors. Whether it’s a natural disaster, terrorist attack or another tragedy, we answer the call. We understand that many Americans are hurting because of the recession, but we will not apologize for putting our lives on the line, the dangerous work we do, or the pensions we’ve earned.”

Part of the reason for the strong attacks on public employee unions is that they have become the vanguard of the labor movement. They’ve been growing as unions in private employment have declined. Union membership overall dropped by about 600,000 last year, lowering the percentage of union members in private and public employment combined from just above12 percent to slightly below that figure.  The percentage of public employees belonging to unions also shrunk slightly, but still stood at about 36 percent.

So, more than one-third of the country’s public employees now belong to unions, but only about 7 percent of workers in private employment are unionized.  Which explains why the country’s anti-union forces are concentrating so heavily on public employees, and seeking to enlist broad public support for their anti-unionism by blaming public employees for our serious economic troubles.

Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor and politics for a half-century. Contact him through his website, www.dickmeister.com, which includes more than 250 of his columns.

Twitter tax break could help a well-connected landlord

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Opposition to the proposal to give millions of dollars in city payroll tax breaks to Twitter and other companies that open for business in the mid-Market area has focused on the bad precedent of caving into demands for corporate welfare and the lead role that two people who call themselves progressives – Sup. Jane Kim and Board President David Chiu – are taking in pushing the deal.

But behind-the-scenes, there’s another aspect of the deal that is troubling to advocates for transparent government that acts in the broad public interest, rather than that of powerful individuals. And once again, the specter at the center of this insider deal-making is none other that former mayor Willie Brown, whose close allies seem to once again have the run of City Hall.

The mid-Market property that Twitter wants to move into is San Francisco Mart, a million-square-foot building at Market and 9th streets, which sources say has been having a hard time finding tenants to fulfill its ambitious plan to “transition and reinvent” the old furniture outlet as a modern home for high-tech businesses. Most recently, they were unable to seal the deal with Twitter – until the tax break proposal popped up.

The building is owned by millionaire developer Alwin Dworman, founder of the ADCO Group and someone who has had a 30-plus-year friendship with Brown, who sang Dworman’s praises in this 2007 article from the San Francisco Business Times discussing this property and others. The property is also operated by Linda Corso, longtime partner of Warren Hinckle, a local media figure with close ties to Brown (as well as Gavin Newsom, who last year named Hinckle as his alternative representative to the DCCC). Reached by phone yesterday, Corso said she wasn’t directly involved in the negotiations with Twitter and would have someone call us, but nobody did.

Brown’s name has been popping up quite a bit in recent months as he and his allies re-exert their deal-making influence on the city, starting four months ago with his stealth support for Kim’s campaign and continuing with his role in elevating his protege Ed Lee to the interim mayor post (the way the pair ran City Hall when Brown was mayor is also the subject of an investigative report in this week’s Guardian) and placing ally Richard Johns onto the Historic Preservation Commission over progressive objections that he was unqualified.

Reached on his cell phone, Brown refused to comment, telling us, “I don’t want to talk to the the Bay Guardian ever in my life. Goodbye.” There is no indication that Brown or other representatives for Dworman lobbied the supervisors over the deal, and both Kim and Chiu say they weren’t contacted. “I’ve never spoken to the man and I don’t know much about his business,” Chiu said of Dworman, although he said that he was told by people in the Mayor Office, which brokered the deal, that Twitter was looking at moving into Dworman’s building.

Kim has maintained that she has very little contact with Brown and doesn’t know why he supported her candidacy. And she said the benefits for Dworman and other big mid-Market landlords who will profit from her legislation wasn’t a factor in her decision to sponsor it. In a prepared statement to the Guardian, she wrote, “I am not aware of any lobbyists for the Mid-Market legislation and therefore certainly have not met with any.  I have communicated directly with Twitter, who are [sic] excited to be a part of revitalizing the Mid-Market corridor and about partnering with community-based organizations and schools who serve the neighboring communities of SOMA and the Tenderloin.  Our office has convened neighborhood stakeholders who will be directly impacted by this legislation and they are currently committed to being a part of this dialogue over the next month.”

Kim told us last week that she philosophically opposes business tax breaks, but that she wanted to help stimulate the mid-Market area and keep Twitter from following through on its threat to leave town. Despite calling himself a progressive, Chiu has supported using targeted tax breaks as a economic development tool, including the biotech tax credit. And yesterday, he told us, “I would love to bring more companies in the mid-Market area…If we don’t do this policy, we will see future years of zero economic activity in that area.”

But progressives say these tax breaks are nothing but corporate welfare that will exacerbate the city’s budget deficit. During a benefit event for Lyon Martin Health Services last night at the Buck Tavern, which is owned by Kim predecessor Chris Daly, signs plastered throughout the bar urged the public to oppose the Twitter tax break in order to preserve public health and other vital city services.

San Franciscans show solidarity with Egyptians

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“Yesterday we were all Tunisian. Today we are all Egyptian. Tomorrow we will all be Free,” read one sign on at last weekend’s protest in solidarity with the wave of uprisings across the Arab world, an event drew thousands of people into the streets of San Francisco.

The crowd was diverse, from a variety of cultures and age groups. Sabreen Abdelnahmen is an 11-year-old Egyptian American who said she is “very proud there are people of many cultures and many religions fighting for the same thing.”

The events in the Middle East reverberate in San Francisco as well as many major cities, with everyone watching Egypt teeter toward democracy. To understand more about the events in Egypt, we spoke with local activist Yasmeen Daifallah, who helped organize the solidarity events and has connections in Egypt, where she attended Cairo University for six years. She is an activist, a political science doctoral student at UC Berkeley, and a singer in the Arabic music ensemble, ASWAT.

SFBG: Why protest in San Francisco?

YD: Two things were important to us. The first was to express solidarity… when [images of protests here] are transmitted to Tahrir Square [the central square where thousands of Egyptians have been remaining against government orders for two weeks]… it is definitely very uplifting. The second is to spread awareness in San Francisco…and in the U.S, to express a message to the American public and the American government. There should be respect for the people’s rights of self-determination and a cutting back on a strict consideration of self or national interest.

SFBG: Tell us about Tahrir Square, which has been at the heart of the protests, and who is leading the protests.

YD: I am amazed at the intensity of the steadfastness because many protestors are struggling to make a living. They all strike you as struggling to make a living and would not do anything to jeopardize making a living and these same people come out and say ‘we are staying here, we don’t care about bread, we care about dignity, we are not moving from here until [President Mubarak’s] regime falls.’

One of the most interesting things about this protest—there is no particular organization or person or even a group of organizations leading. Actually, the organizations are trying to piggy bag on the people and the momentum that is created by the public. For the leaderless nature that is has, it is remarkably organized.

SFBG: Why did the people rise up? Tell me a little about Egypt under Mubarak.

YD: The economic condition was abysmal and this is because when Mubarak came to power, the country started structural adjustment policies, which gave way to mass privatization. These have particularly intensified in the past 5-10 years. What this has translated into is massive unemployment and having to do several jobs in order to survive. On the day-to-day basis life under Mubarak is a life of economic hardship and social immobility.

When we start talking about the middle class, about politics and the political concerns probably [what is important] are fraudulent elections, rigging elections after people have actually voted but also preventing people from opposition movements from entering the ballot box to begin with. So this a very flagrant political repression. It takes place across the board. The second thing is the repression of the right to freedom of expression, whether in writing and the detention of journalists or in demonstrating. There is a law preventing the right to assemble. Then there is the bureaucracy and inefficiency, which all citizens suffer from on a daily basis. Their energies are exhausted in… getting their daily life going whether on the economic level, the bureaucratic level, or just the transportation level.

SFBG: You were just in Egypt and left 10 days before protests erupted. Do you wish you were there still? How does you feel as an Egyptian at this moment?

YD: Yes, very much so. I wish I were there—we all have a sense that there is something historic happening. We never had this number of people protesting against the regime and putting out demands that are this vocal and this radical. I wish I was more a part of this moment, I am just part of this moment from afar. I feel proud to be an Egyptian, which is a feeling you don’t get often, unfortunately.

On the one hand it feels bad because I wanted to be there to actually be a part of it. On the other hand, I have been convincing myself that there is a role that maybe I was destined to play being out here instead of out there.

SFBG: What do you think about the fears and concerns that democratic elections will lead to the rise of an Islamic government in Egypt?

YD: The question itself is unacceptable in the sense that fear and Islamic government put together should not be an issue. The issue is that people should have the right to determine who they want to govern them and whoever comes out of this is a legitimate leader.

The second thing is, you can easily see…this uprising is not an Islamic uprising—there is no foundation for this concern. The Islamic opposition, which has been among the most powerful if not the most powerful opposition movement will play a role and has to play, rightly, because they have been [part of the opposition]. There is no reason for concern, whether we look at it from the perspective that this is not an Islamic uprising or from the perspective that the nature of the Islamic opposition in Egypt is moderate in the sense that it is not militant and not violent and buys into a lot of democratic rhetoric and human rights rhetoric that is around.

SFBG: The other concerns have been around the lack of stability.

YD: This is not such a bad thing. The state of affairs in this point in time in the region is stability with no justice which in turn is bound to create instability and we have seen the instability of the intifada, we have the instabilities with the war on Gaza. Whatever we think of as stability in the Middle East is a fake and frail notion of stability. One would hope that if a new regime comes in Egypt that is more democratic that it would try to address some of the injustices that have been taking place so far regarding the Middle East peace process, but even this is not a guarantee.

At this point what one should focus on is who are the people at Tahrir, what are they demanding, and how can the international community help them get what they demand because this is not a violent uprising. This is not even an organized uprising. This is not a single actor uprising. It’s a crosscutting uprising and it is legitimate, which calls for respect and support and solidarity and anything less than that is betrayal.

SFBG: Where can people get the best information on what is happening in Egypt?

YD: Al Jazeera-English has been doing a good job at covering the events. It has definitely been the prime source of information to the extent that there is a huge campaign now demanding that Al Jazeera be available through satellite and cable providers in the United States. [For now,] you go online and click on live broadcast.

SFBG: Daifallah incorporates music into her politics through the Arabic musical ensemble ASWAT. Here’s a clip of their performance on Saturday:

http://www.youtube.com/watch?v=6fjZ0XjaJU8&feature=player_embedded

 

 

SF’s redevelopment miracle

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OPINION While many of us (and most of the rest of the state) can tire from time to time when we hear San Francisco “exceptionalism” being touted, especially when Gavin Newsom is doing the touting, there are some cases in which it’s justified. One of the most salient is the way San Franciscans transformed the city’s Redevelopment Agency and used tax-increment financing to build housing and infrastructure that served its residents, not elite developers.

This is an exceptional story that Gov. Brown does not want to hear. He should both listen and learn from San Francisco’s experience.

The San Francisco Redevelopment Agency started out like all others: destroying low income neighborhoods to create what the San Francisco Planning and Renewal Association, a strong agency supporter at the time, called ” ‘clean’ industries [and a] population … closer to ‘standard white Anglo-Saxon Protestant’ characteristics … ” But the big difference was that San Franciscans fought back.

In the 1960s in the Western Addition and SoMa, community organizations were formed that sought legal assistance and stopped the agency in its tracks. In the 1970s, new community coalitions were formed to deny the agency new federal funding. By the 1980s, the agency was broke and its mission of urban renewal so blocked and discredited that SPUR changed the last two words in its name from “Urban Renewal” to “Urban Research.”

In 1988, Mayor Art Agnos brought in the opponents of redevelopment and asked them how to redesign the agency. The product of that collaboration was a new mission statement and an ordinance fully integrating the agency into city government — transforming it into a financing agency, with no operational role.

Since 1990, the agency has become the major funder of affordable housing in San Francisco, pouring more than $500 million into low-cost housing both inside and outside redevelopment areas. More than 10,000 units have been built for working and low-income residents, more than half of those units for families with children. The urban infrastructure needed to transform Mission Bay from a toxic rail yard to a residential and biotech center came from the agency. Since 1990, not one neighborhood has been bulldozed by the agency and two new ones are being created (Mission Bay and Transbay).

Yes, some of the tax increment has been used to do some infrastructure work at ATT Park, and former Mayor Gavin Newsom wanted to entice the 49ers with agency funds for a new stadium at the shipyard. And yes, former Mayor Willie Brown gave Bloomingdale’s some agency money for its Market Street store. But the reality is that 50 percent of all tax increment since 1990 has gone to affordable housing development, and the bulk of the remaining 50 percent has gone for critical needed infrastructural work that has produced new property taxes more than paying for the investments. As the state and federal government turned their backs on central cities it was the only form of financing available.

And now Gov. Brown wants to end tax-increment financing. He points to the excess of other redevelopment agencies in other places. He does not, however, look to us and our experience. He should. San Francisco should be the model for what is required of all redevelopment agencies.

After serving as mayor of Oakland, Brown is probably tired of hearing about how different San Francisco is, how exceptional we are. That’s too bad, because in this case it isn’t hype. It’s real. *

Calvin Welch lives and works in San Francisco.

Dirty business

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rebeccab@sfbg.com

The owner of a certified minority-owned business in San Francisco is suing the city, charging that his telecommunications company went belly up after city officials falsely accused him of participating in a fraudulent kickback scheme within the city’s Department of Building Inspection (DBI).

The case and depositions of high-ranking officials offer a rare window into the inner workings of city government at a time when corruption was rife within DBI and regulations governing city contracting were considerably less strict. They also provide a glimpse at how city business was sometimes conducted under the administration of Mayor Willie Brown, a powerful figure who has resurfaced recently in San Francisco politics.

In addition, the case alleges inappropriate behavior by current Mayor Ed Lee when he was the city’s purchasing director. One of the depositions includes allegations that Lee, at Brown’s direction, approved a city contractor who was utterly unqualified and was later accused of being part of a criminal scam.

The plaintiff in the lawsuit — James Brady, CEO of Cobra Solutions — closed up shop years ago and moved to Sacramento with his wife and business partner, Debra. But he’s been locked in an ongoing legal battle against powerful forces in City Hall since 2003, when he claims the city stopped issuing payments to his company, terminated its contract, and declined to award it a new contract on suspicions of bribery.

“They want to make us look like we’re Bonnie and Clyde,” Brady told the Guardian. “We’ve never done a thing.”

Nancy Fineman, an attorney with the firm Cotchett, Pitre & McCarthy, which is representing the city in the case, said the corruption allegations against Cobra still stand and she emphasized, “The city attorney was not involved in doing anything wrong.”

In a complaint filed Jan. 7, attorney G. Whitney Leigh — law partner of former Board of Supervisors President Matt Gonzalez — alleges that a host of city officials are responsible for precipitating Brady’s financial ruin.

According to Leigh’s version of events, Cobra was dragged into an overzealous campaign to hold someone accountable after a contractor the city alleged was corrupt vanished, leaving a number of subcontractors unpaid and the city “with egg on its face.”

Leigh subpoenaed Ed Harrington, former city controller and current head of the San Francisco Public Utilities Commission; Deputy City Controller Monique Zmuda; former officials from the Office of Contract Administration, and others to testify out of court during discovery. Leigh describes the case as “a Shakespearean tragedy combined with a cartoon combined with a soap opera.”

For City Attorney Dennis Herrera, it might be more like a zombie flick. The city attorney is gaining momentum in his campaign for mayor and has taken an early lead in fundraising against his opponents. The Cobra Solutions saga might be one that he — and other top city officials — would rather forget.

 

CONFLICTS AND CRACKDOWNS

Appeals in the case have reached all the way to the California Supreme Court, which ruled that Herrera had a conflict of interest that should have disqualified his office from suing Cobra. Beginning in September 2000, before he was elected city attorney, Herrera provided legal representation to Cobra while working with a private firm called Kelly, Gill, Sherburne & Herrera.

Due to the disqualification, Herrera could not discuss specifics in the case. But he did offer us a general comment. “I’ve made it very clear that me and my office are going to have zero tolerance for corruption and individuals who would violate the public trust,” he said. “This case, I think, represents that philosophy.”

When Herrera was campaigning for city attorney in the November 2001 race, he ran on a platform of cracking down on fraud and corruption. The DBI case began as a triumphant delivery of that campaign promise.

In 2003, following a yearlong investigation by a Public Integrity Task Force that Herrera had convened, a corrupt DBI official named Marcus Armstrong got busted by the feds. He’d allegedly falsified the qualifications on his resume and set up shell companies to funnel money out of city coffers for his own personal gain. He pleaded guilty to corruption charges brought by the U.S. Attorney, and spent time in prison for cheating the city out of about $500,000.

Herrera brought a civil suit against Armstrong and a DBI contractor, Government Computer Sales, Inc. (GCSI), which allegedly partnered with Armstrong in a kickback scheme. Questions surrounded GCSI from the start. It only gained certification as a city contractor after being rejected multiple times by city staff as unqualified. Deborah Vincent-James, who directed the city’s Committee on Information Technology (COIT) at the time and has since died, testified in a 2008 deposition that GCSI was “fraudulent” and got the contract only because of ties to Mayor Brown.

Herrera hit a stumbling block when he amended the complaint to name Cobra Solutions and its management company, TeleCon Ltd., as another city contractor in on Armstrong’s kickback scheme. (Debra Brady was president of TeleCon, which predated Cobra. Although the Bradys insist the two entities were separate, Herrera named TeleCon in the suit as an alter ego of Cobra.)

Cobra struck back, claiming the City Attorney’s Office wasn’t entitled to file suit against the company because Herrera’s old firm had represented Brady. Herrera told us the whole thing came about “because of the 18 minutes that I billed to work for Cobra.”

Herrera’s office initially denied any conflict of interest. “Immediately upon discovery of Cobra’s role, the office screened Herrera off from further involvement in the investigation and all matters related to it in accordance with a stringent ethical screening policy Herrera established when he took office,” according to a statement issued by the City Attorney’s Office.

But the Supreme Court disagreed in a 2006 ruling. “The possibility that the City Attorney’s former client might be prosecuted for civil fraud by the City Attorney’s office may test public faith in the integrity of the judicial system,” the ruling stated, “raising the specter of perceptions that the former client will be treated more leniently because of its connections, or more harshly because of leaked confidences.”

 

COBRA’S CASH

The city’s lawsuit alleged that Cobra paid Armstrong about $240,000 in bribes in exchange for $2.4 million worth of business with DBI from April 1999 through 2000. The allegation was based on checks Cobra sent to Monarch Enterprises, which the city said was an Armstrong front. The investigation found that GCSI paid Armstrong about 10 percent of the contract amount in a similar fashion.

“Armstrong used these and all other funds received from Cobra for his personal benefit and gain,” the suit claimed. The complaint also charges, “Cobra … knew that Monarch enterprises was wholly owned and controlled by Armstrong, and that any payment made by Cobra was in fact a payment to Armstrong.”

But Cobra’s suit claims an FBI investigation into Cobra’s involvement found no wrongdoing. Additionally, “We turned all of our records over to the U.S. Attorney,” Leigh noted, and that didn’t lead to a criminal prosecution.

Brady calls the corruption allegation “a big lie,” and says his company’s name has been wrongfully sullied. He says Armstrong led him to believe Monarch Enterprises was an Internet company performing training, support, and computer security upgrades as a subcontractor. The bills came in, and Cobra believed it was responsible for paying for the service, Brady said. “We mailed the checks, and never thought about it.”

Before the trouble started, Cobra Solutions was in a growth phase, having gone from four employees to 35 in just a few years. James and Debra Brady moved from Colorado to San Francisco in the late 1980s with nothing. James Brady worked as a manager in several SROs, became a member of the Tenderloin Merchant’s Association and helped establish a credit union serving low-income residents.

The couple established TeleCon Ltd. and started out as city subcontractors providing voicemail services. At first, they had very limited resources. “Prior to being able to afford an office, Debra frequently used the telephones in the women’s lounge at Nordstrom to conduct business,” according to her bio.

Cobra was established after Vincent-James urged the Bradys to submit a bid for an upcoming contract. The city had opened up a Request for Proposals (RFP) for vendors who wanted to be admitted to the Computer Store, an entity created to speed up municipal orders for technical services.

Before then, it could take six months for the city to purchase so much as a desktop computer. A Human Rights Commission vetting process, designed to ensure that city contractors adhered to environmental and social justice criteria, caused long delays. Then-City Purchaser Ed Lee created the Computer Store to solve this logistical challenge. Vendors who applied for membership were vetted in the RFP (minority-owned businesses were given preference), admitted as certified contractors, and granted preference by city departments in need of IT services.

Cobra’s first departmental contract through the Computer Store was a $1.3 million agreement to provide technical services for DBI, working with Armstrong. Things got off to a rough start.

“We could never find the guy, he would never be at work, and when we did see him, he was complaining,” Brady recounted. According to Cobra’s complaint, “it ran into a series of disputes with DBI and Armstrong over the scope of work and particular payment issues,” and Cobra was eventually awarded a settlement reflecting services it provided after Armstrong changed the scope of the work.

Brady says he sought city help in dealing with Armstrong. According to Cobra’s complaint, he appealed for assistance to COIT, which oversaw the Computer Store. Cobra’s relationship with Armstrong soon soured, and the DBI deal dissolved.

According to the description of Vincent-James, “The relationship between James Brady … and Marcus got worse … Marcus got another company involved because James Brady would not do what Marcus wanted to do.”

The other company was GCSI.

 

NEW PHASE

Things got better for the Bradys before they got worse. Cobra became one of the city’s largest technology services providers, netting $14.5 million in contracts with various city agencies by 2003. They relocated to a nicer, more spacious office in the Financial District.

A partnership with IBM granted them access to higher credit limits than ever. The couple had a home custom-built in El Sobrante. When GCSI vanished without a trace, Vincent-James called on Cobra to hire some of the GCSI subcontractors who had gotten burned in the process, according to a deposition from former city purchaser Judith Blackwell.

By 2003, the Public Integrity Task Force’s DBI investigation was in full swing, but Brady didn’t know it. He says he started experiencing problems getting paid, yet couldn’t get an explanation from city agencies.

According to Cobra’s complaint, “The city intentionally frustrated payments to Cobra and TeleCon because investigators hastily and incorrectly concluded that the companies had conspired with Armstrong in a GCSI-type scheme to defraud the city.”

Fineman, the city’s attorney, said she strongly disagrees with “the idea that we just stopped and left them in the lurch,” emphasizing that there had been a whole separate legal proceeding arising out of the fact that “Cobra was not paying its subcontractors,” in violation of its contract.

The city defended its decision to delay Cobra’s payments by pointing to the GCSI scandal, which had left city agencies high and dry. “By the time the City discovered GCSI’s fraud and stopped making payments to GCSI, GCSI had already received millions of dollars in city payments that were not then passed on to the subcontractors,” a letter from the City Attorney’s Office to Brady’s attorneys explained. “Once the city started investigating the payments to GCSI that Marcus Armstrong authorized, GCSI’s assets, officers and staff disappeared. … The city has an obligation to its taxpayers to prevent the GCSI scenario from unfolding with regard to Cobra / TeleCon.”

Brady insists that because Cobra couldn’t get paid, it couldn’t pay its subcontractors, or its creditors, either — and the financial holdup triggered a cascade of losses. “I’ve got IBM, Booz Allen Hamilton, and American Express breathing down on me like a dragon,” he said. “Everybody wants to get paid. We owed folks after we couldn’t collect our receivables.”

The bills were piling up. “We were sinking fast,” said Debra Brady, “so we sold our house in El Sobrante.”

Brady said he was stunned to learn that Cobra had been named in Herrera’s suit.

“I have 37 employees, and I had to go in and tell them. I was all choked up and the phone was ringing, and it was my attorney on the line telling me that the FBI was coming. I could not believe that after everything we had achieved in the last three years, my former attorney was filing a lawsuit against me.”

 

CLEARING THEIR NAMES

After filing the complaint against Cobra, the City Attorney’s Office called on the company to submit to an audit — but Cobra refused on the basis that Herrera’s firm had represented it in the past. “The City Attorney’s assumption of the role of auditor seems calculated to exacerbate and expand the existing conflict of interest,” Cobra attorney Ethan Balogh wrote in an April 2003 letter. “This problem could easily be solved by allowing an agency other than the City Attorney to conduct the audit.”

In a lengthy back-and-forth, Herrera’s office responded: “You have never explained why your client, having been caught sending over $240,000 in cash to a San Francisco IT manager who authorized over $2.4 million in payments to Cobra/TeleCon during the period of time which he received those payments, has elected not to immediately … open its books and records to the city. Instead … you have raised a host of constantly-shifting objections and arguments as to why the city’s demand was inappropriate.”

Cobra’s lawsuit charges that the City Attorney’s Office never informed the Controller’s Office that Cobra would have allowed an audit by another party. At the same time, it charges, city attorneys weren’t allowing Cobra to communicate with the controller directly, due to the legal dispute.

“The question of who would do the audit and whether or not the City Attorney was doing the audit was not something that I was aware of or certainly had not agreed to,” Deputy City Controller Monique Zmuda said during her deposition.

Meanwhile, Cobra had received the highest Human Rights Commission score of any bidder for a renewal on the Computer Store contract, an HRC document shows. Brady received a letter stating that his company would be awarded a new Computer Store contract — but shortly after, he got a second letter reversing that award.

Judith Blackwell, who oversaw city purchasing under Brown’s administration, explained why during her deposition with Leigh. After Cobra’s bid evaluation, Blackwell testified, her office moved to award the contract — but the controller intervened, saying Cobra shouldn’t be awarded a new contract because of the Armstrong scandal. Blackwell wasn’t willing to throw Cobra out, however.

“I learned from watching politics that I cannot afford to bend the rules,” Blackwell testified. “If I step outside the precise boundaries in any way, or if any African American administrator does, they are probably not going to be interpreted in the same way as if anyone else did it. Based on the … procurement code, there is no way that I could, as the purchasing director, just throw them out.”

Blackwell testified that Zmuda requested that she sign paperwork denying Cobra the contract, and Blackwell received a warning when she refused. “She told me that I needed to remember that when [Mayor Brown] was gone that they, the Controller’s Office, and [Chief of Staff Steve Kawa] — I knew that is what she was implying — were in charge,” Blackwell said. Once Mayor Gavin Newsom replaced Brown, Blackwell was let go. She now lives in New York City.

Blackwell testified that losing her job came as a surprise, since she’d worked on Newsom’s campaign and expected to keep her position. “I had asked him something about why it happened and he said … he knew nothing about it and people were acting without, you know, basically not at his direction,” Blackwell testified. “I said, well, Mayor Newsom, you are in charge. And his response was, oh, I wish that were so.” 

 


ED LEE APPROVED UNQUALIFIED CONTRACTOR ACCUSED OF CORRUPTION

GCSI — a company accused of defrauding the city after improperly being given a city contract by Ed Lee, allegedly at the urging of then-Mayor Willie Brown — is long gone.

“I don’t think they’re around,” Nancy Fineman, an attorney representing the city, told the Guardian. “We’ve just been focused on Cobra and TeleCon.”

The story of how GCSI came to be a city contractor may be the most fascinating part of this case, one that could have repercussions today, even though it happened in the late-1990s.

Like Cobra Solutions, GCSI was a contractor with the city’s Computer Store — gaining admission after being repeatedly rejected by city staff, according to a 2008 deposition with former COIT director Deborah Vincent-James, who has died.

Vincent-James testified that GCSI didn’t meet the minimum qualifications and recounted how, during an interview with city officials about the bid, a member of the City Attorney’s Office noticed a wire peeking out from the suit of a GCSI representative who had been surreptitiously taping the meeting.

“San Francisco was not aware of GCSI’s wrongful conduct, financial problems, or legal difficulties at the time it hired GCSI to work on the DBI projects,” a city lawsuit claimed. Nor had the city realized that, “GCSI’s president and owner had been arrested and imprisoned by a federal judge for contempt of court and for disbursing funds in an effort to avoid …efforts to collect its loan.”

GCSI principal Robert Fowler resided in both Washington, D.C., and California, was believed to be a citizen of Sweden, and was also the director and owner of a bank located on the Caribbean island of St. Vincent, according to Herrera’s complaint.

“From day one, I knew that they were not qualified,” Vincent-James’ deposition transcript reads. She went on to say that the official city process for evaluating contractors was “totally bypassed.” Nonetheless, “We had to admit them to the Computer Store.”

“Who told you, you had to admit them to the Computer Store?” attorney Whitney Leigh asked.

“The director of purchasing,” states Vincent-James’ deposition transcript. “Ed Lee.”

She went on to testify that Lee had been acting under the direction of Mayor Brown. According to her deposition, “[Lee] was directed by the Mayor’s Office and told to do an evaluation process. They evaluated them. They were put in the store.” She also testified, “Principals of GCSI hired an attorney who had been in the State Legislature with Mayor Brown and … GCSI had felt that because we were asking intrusive questions during the oral interview, such as ‘Why do you have that wire hanging out of your coat?’ … They felt that biased the committee toward … not hiring them.”

Neither Brown nor Mayor Lee’s office responded to requests for comment.

GCSI is still a codefendant in the complaint, but the principals of the defunct company seem to be off the hook. A 2008 story from the Anchorage Daily News noted that Fowler had emerged as the head of a natural gas company in Alaska. The Bradys, meanwhile, are getting ready for another court date in March. “We keep going to court,” Debra Brady said. “I’m kind of like, when is the end coming?”