San Francisco

Plus ca change

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› andrea@altsexcolumn.com

Dear Andrea:

Why, umpteen zillion years into the AIDS era (I used to volunteer for Gay Men’s Health Crisis in the 1980s), is there still no useful data about the risks of oral sex for men? Have we really learned nothing since the first appearance of "Low risk but not no risk"? With the understanding that not letting someone come (or precome) in your mouth is a start (but also loses a lot of the appeal), is there any sensible way to assess and reduce the risks of the common American blow job?

Love,

Loyal East Coast Reader

Dear Loyal:

Actually, the relative risks of the Great American Blow Job have been much on my mind of late. I’m working on an article about whatever happened to the heterosexual AIDS epidemic and what straight, middle-class ladies should do about HIV when they start dating again after their marriages break up. (Quick answer: nothing. They’re not going to encounter any, but while they’re taking unnecessary precautions against HIV they’re incidentally protecting themselves from real menaces like human papillomavirus and herpes.) Not that this applies at all to your question or your demographic; what’s sauce for the goose, after all, is not necessarily sauce for gander and gander.

Back when you were first volunteering in New York and I was out here gearing up to become a sex educator, nobody knew nothin’, and the safest thing to do was to lump everything that might possibly be dangerous into "Thou shalt not" and try to get people to take a "100 percent safe" pledge. I suspect that then, as now, the people most likely to achieve 100 percent safety weren’t at much risk to begin with, while the hard partiers continued to party hard-ly, no matter what their T-shirts said. I know for a fact that politically aware womyn at the time would not shut up about woman-to-woman transmission, which turned out to be so much poppycock — or poppyhen, as they might have had it. Likewise, the much-ballyhooed heterosexual AIDS epidemic never made it off the cover of the news magazines and into the bedrooms and bloodstreams of straight America.

So, your question. If there were a definitive answer to that, it would be coming out of a few labs here in San Francisco. But of course, HIV being a shifty bugger and human behavior being even worse, there isn’t. There are animal studies (using simian immunodeficiency virus, which is similar but by no means identical) demonstrating that you can easily spread the virus by swabbing monkey tonsils with an infected Q-tip. Then there are the epidemiological studies like HOT, the HIV Oral Transmission study, dedicated to finding those cases in which a guy gave blow jobs but never, ever, ever had unprotected anal sex and seroconverted anyway, and that is so complicated a business I’m going to let one of the researchers explain it:

"I’m going to conclude with the HOT study, in which, again, we interview men who we screen and rescreen to ascertain that, in fact, their only risk is oral sex. So they are a special population, and they are screened and rescreened, and they get their HIV test, and eventually we do another very in-depth interview, and after three corroborating screenings, or two screenings and one interview in which they say they’ve only had oral sex, 25 percent later report a higher risk exposure — anal sex in the same time period — after we get them in another environment with a different questionnaire and a face-to-face interview, and this is after they’ve been told that, in fact, they’re negative. And so we see this working many ways, and they’re, like, ‘Whew! Well, now I can tell the truth.’ But in fact, of those 363 men, we estimate that up to a quarter of them probably weren’t having only oral sex, and so I think that we have huge problems in terms of self-reported risk behavior."

That was from a very informative experts’ roundtable discussion I found on HIV Insite (hivinsite.ucsf.edu), a UC San Francisco site I have just declared required reading for the interested. The good news is that the best work currently being done is readily available to us for free. The bad news is that, due not to bad science or lack of science but to the vagaries of human memory and human motivation, they still can’t really answer your question. How many new HIV infections are caused by fellatio to ejaculation? I’ll let the above experts answer that. It’s funny but not, you know?

JK I think we agree it’s less than 5 percent, don’t we?

SB Uh, … yes, I’d probably say it’s — it may be less than 5 percent. I’d say 5 percent or less. But I wouldn’t say 1 percent either.

JK Well, 1 percent is less than 5 percent … [Laughter]

KS Well, I wouldn’t say "5 percent or less."

SB So I don’t know that we’re going to come to consensus on that.

And what’s the best way to reduce whatever risk there is? Not going down on HIV-positive men. Easy for me to say, sure, and awfully glib, but you can’t say it ain’t so.

Love,

Andrea

41st Anniversary Special: Private practice

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› gwschulz@sfbg.com

Low-income tenants cheered late last year when the San Francisco Department of Public Health ended its housing contract with the John Stewart Co. But no one expected the alternative would be a secret $5 million deal between DPH officials and a preferred vendor.

In fact, the DPH has opened a new chapter in privatization by creating a dubiously accountable, quasi-independent nonprofit while paying someone else to operate it with a sole-source contract.

The health department leases several single-room-occupancy hotels in San Francisco that house mental health and substance-abuse patients through a program called Direct Access to Housing, part of a laudable nationwide trend toward deinstitutionalizing such medical clients and changing how the formerly homeless receive services.

The Camelot on Turk Street and Le Nain on Eddy Street were among those managed by John Stewart until last autumn. Mercy Housing oversaw two more. But there were problems; tenants complained about the Stewart company’s management, and political organizers last year charged that desk clerks at some of the buildings prevented them from registering tenants to vote.

"If you’re part of a larger company that just sees themselves as a more generic property-management company," said Marc Trotz, director of the health department’s housing office, "there isn’t necessarily the training and skills development that needs to be there to handle the complexities that come up on a daily basis with the population we’re dealing with."

So the health department’s answer was to broker an exclusive $5 million contract with a nationwide nonprofit based in San Francisco known as the Tides Center. Tides doesn’t do any of the heartwarming outreach we tend to associate with nonprofits. Instead, the outfit handles the boring administrative functions like payroll and human resources for community projects created by others.

The project in this case is Trotz’s brainchild Delivering Innovation in Supportive Housing, which essentially exists as a nonprofit only on paper. There’s no board of directors. There are no federal tax forms outlining expenses and revenue. And Tides doesn’t itemize projects like DISH in its annual financial statements. So there’s no easy way for the public to track the money that goes into the project.

Yet DISH has so far never been forced to compete for property-management contracts like any other nonprofit wanting to do business with the city. That means the DPH gets the best of both worlds, paying someone in the private sector to manage its books and not having to subject its pet project to the competitive atmosphere of contract bidding.

Further, since Tides is technically the employer of record for DISH’s 60 or so employees, they exist in an ethereal world where they don’t fall under the city’s salary and benefits structure, but unions can’t reach them unless they’re willing to organize all 200 projects managed by Tides nationally.

Needless to say, none of this is sitting well with the nonprofits and unions that insist they weren’t informed of the plan until it was off and running.

"I feel like at union nonprofits, the turnover’s much lower, the training’s higher, and if a manager is abusing a tenant, for instance, a union worker can make a complaint to a city agency, write them up, do something without being afraid for their jobs," said Sarah Sherburn-Zimmer, a former organizer for the Tenderloin Housing Clinic. "And we just give better care."

The THC, whose workers are represented by Service Employees International Union Local 1021, says it was never formally invited to bid on DISH, despite the fact that it does extensive work with the city and manages more than 1,500 units of low-income housing.

"All they had to do to find out was send a letter or call us…. The fact that they made the effort to set up their own entity kind of shows that’s what they wanted to do," THC director Randy Shaw said.

The Tides contract so annoyed Board of Supervisors president Aaron Peskin that he drafted a resolution pointing out that Mayor Gavin Newsom signed an executive order in 2004 calling for maximum competition in city contracts.

"This Board of Supervisors has been on record for years in wanting to make sure contracts are competitively and fairly bid," Peskin told the Guardian. "This whole thing seems rather bizarre. The government was in essence contracting with itself."

The health department’s Trotz dismisses this criticism, saying sole-source contracts were designed in the first place to allow for agreements like the Tides deal, which he calls a pilot project. Next time, he promises, the department will open the contract to bids. Trotz added that Tides is responsible if a DISH employee screws up, and it faces an annual monitoring probe by DPH staffers, just like any other contractor.

"I know now that THC and the union seem to be upset by this," Trotz said. "What we’re saying is we’ve heard that and we are doing what we always intended to do, which is run a two-year pilot and put a [request for proposals] out on the street and ready for people to apply to prior to the start of the next fiscal year."

Of course, no one’s suggesting Tides and DISH will necessarily do a poor job handling supportive housing. Shaw said lefties were the first to argue nearly three decades ago that nonprofits could address public health much more sensitively than did Dianne Feinstein’s mayoral administration of the 1980s. Last year the health department did $174 million worth of business with nonprofits. While unions have been slow to organize nonprofits, the trend is growing, but Tides and DISH seem structured to stiff-arm them when covert, sole-source contracts haven’t done that already.

"This obviously was a secret decision," Shaw said. "[The DPH] never consulted with anybody. They just did it. I don’t want to comment on the health department beyond what I’ve said. But this experience has left people very cynical about dealing with the health department [and] the way they handled the whole thing."

41st Anniversary Special: Wrecked park

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› news@sfbg.com

The San Francisco Recreation and Park Department has a long history of maintaining parks, community centers, and other recreational offerings. In fact, it controls more land in the city than any other entity, public or private. But after seeing its budget repeatedly slashed during lean fiscal years, the underfunded department has become a prime target for some controversial privatization schemes.

There are ongoing efforts to privatize city golf courses, supported by Mayor Gavin Newsom and Rec and Park general manager Yomi Agunbiade (see “Bilking the Links,” page 22). And there are ongoing fears that the city intends to privatize its popular Camp Mather vacation spot, something the RPD studied a few years ago and Sup. Jake McGoldrick has fought and highlighted.

Rec and Park has identified $37 million in needs at Camp Mather — the product of a private study the agency has been unable to fully explain to the public (see “From Cabin to Castle,” 4/4/07) — but left Camp Mather off a big bond measure planned for February 2008.

“They say $37 million you need up here, and how much you got in there for the ballot measure? Zip, zero,” McGoldrick told the Guardian. “It’s a familiar pattern: you underfund the hell out of something, and then you turn around and say, ‘We, the public sector, cannot handle taking care of this.'<0x2009>”

Rec and Park spokesperson Rose Dennis denies there are plans to privatize Camp Mather or that its omission from the bond measure is telling. “Many people disagreed — including you — with the funding needs and whether we could back it up,” she explained as the reason for its omission from the bond measure.

In his Oct. 1 endorsement interview with the Guardian, Newsom said, “We actually made some commitments just this last week with Sup. McGoldrick to help support his efforts, because he’s very protective of Camp Mather, and I appreciate his leadership on this, to help resource some of the needs up there without privatizing, without moving in accordance with your fears.”

And while Newsom said he hoped to avoiding privatizing Camp Mather, he refused to say he wouldn’t: “I’m not suggesting it’s off the table, because I’m not necessarily sure that the conditions that exist today will be conditions that exist tomorrow, and I will always be open to argument.”

But at least the Camp Mather and golf arguments have been happening mostly in public. That’s what voters intended in 1983 when they passed Proposition J, which requires public hearings, a staff study, and a vote by the Board of Supervisors before city services can be privatized. Yet over the past couple of years, there’s been an effort to quietly shift operations at a half-dozen rec centers away from city programs and toward private nonprofits.

It’s called Rec Connect. Its supporters bill it as an innovative effort to bring much-needed recreation programs to underserved, low-income neighborhoods. “This is a pilot program to see if a collaboration between a community-based organization and a rec center yields a richer program and a more engaged community,” said Margaret Brodkin, director of the Department of Children, Youth and Their Families, which created the program and oversees that and other uses of the city’s Children’s Fund.

But to members of the Service Employees International Union Local 1021 — which includes most city employees and has filed grievances challenging Rec Connect — the program is a sneaky attempt to have underpaid, privately funded workers take over services that should be provided by city employees, who are better paid, unionized, and accountable to the public.

“The city took funds from the city’s coffers and gave them to the Department of Children, Youth and [Their] Families,” Margot Reed, a work-site organizer for the union, told the Guardian. “DCYF is using these funds, through Rec Connect, to contract out to private nonprofits work that rec staff were doing for a quarter of the cost.”

Brodkin was the longtime director of Coleman Advocates for Children and Youth — a perpetual thorn in the side of City Hall and the author of the measure that set aside some property taxes to create the Children’s Fund — before Newsom hired her to head the DCYF. She sees her current role as a continuation of her last one, and she sees Rec Connect as an enhancement of needed services rather than a privatization.

“There is a commitment that no jobs would be lost. I’m a big supporter of the public sector,” Brodkin said, while acknowledging that the RPD is chronically underfunded. “I am certainly aware of the resources issue at Rec and Park…. I’d be a happy camper if the Rec and Park budget was doubled. But I’d still believe in this program and say it offers a richer experience.”

Rec Connect began in 2005 with a study that looked at unmet recreational needs and evaluated facilities that might be good places to bring in community-based organizations to offer specialized classes. The whole program was financed through a mix of public funds and grants from private foundations. The three-year pilot program started just over a year ago.

“The Rec Connects,” Newsom told the Guardian, “are a way of leveraging resources and getting more of our CBOs involved and using these great assets and facilities, instead of limiting use to the way things have been done.”

Rec Connect director Jo Mestelle denied that the initiative is a privatization attempt.

“Rec and Park brings the facilities, the sports, and traditional recreation. The CBOs bring the youth-development perspective and nontraditional programming,” Mestelle said. “Hopefully, together we build a community that includes youth-leadership groups and advisory councils.”

Few would dispute the need for more after-school or other youth programs, particularly in the violence-plagued Western Addition, where some of the Rec Connect centers are. But the means of providing these programs is something new for San Francisco, starting with the fact that even though Mestelle works in the DCYF office, her salary is paid for entirely by private foundations.

That relationship and those funders aren’t posted anywhere or immediately available to the public, but Brodkin agreed to provide them to the Guardian. They include the Hellman Family Philanthropic Foundation ($50,000), the Hearst Foundation ($50,000), the San Francisco Foundation ($128,000), the Haas Foundation ($100,000), and the SH Cowell Foundation ($150,000).

Brodkin and Mestelle characterized those foundations as fairly unimpeachable, and Brodkin defended the arrangement as part of a national trend: “The thing that’s odd about SEIU’s perspective is this is happening all over.”

That’s precisely the point, SEIU’s Robert Haaland says.

“It’s been a strategy since the ’70s to, as [conservative activist] Grover Norquist calls it, ‘starve the beast,'<0x2009>” or defund government programs, Haaland said. “On a national level there is a lot going on that impacts us locally.”

Minutes from a recent Recreation and Park Commission meeting confirm that rec center directors have only about $1,000 each year to cover the cost of buying basketballs, team jerseys, referee whistles, and other basic sports and safety supplies. The SEIU grievance also notes that recreation staff positions have decreased by a third just as senior management positions increased by a third.

“We don’t have enough dollars for $20-an-hour rec center staff who are directly responsible for the kids and are well known to the community. We believe kids deserve great coaches, consistency, longevity, and commitment,” Reed said.

SEIU Local 1021 chapter president Larry McNesby is also the Rec and Park manager who oversees Palega Park, one of the Rec Connect sites. He told the Guardian that while his rec directors are “under pressure from the mayor to show him numbers of people that they are serving,” Rec and Park’s new online registration fails to reflect the “hundreds of drop-ins” that rec staff serve on a daily basis.

But he said the department has been set up to fail by chronic underfunding.

“I’d love Rec Connect and DCYF to be on a level playing field, because my directors could out-recreate theirs any day,” McNesby said. “You can’t just eliminate our jobs and replace them with someone who makes just above minimum wage.”

Actually, Brodkin and Mestelle note that negotiations with SEIU over Rec Connect have resulted in a guarantee that no jobs will be replaced and an agreement by the city as to 250 different tasks that the Rec Connect CBOs can’t perform. Still, they say the program brings innovation to a stagnant city agency.

“Before Rec Connect the rec centers always had a Ping-Pong table and some board games, but some of them were really poor, many were tired looking, none had computers or Internet. So we’ve had to think outside the box. Rec [and] Park is a big department, and it’s not always efficient,” Mestelle said.

Public records show that in 2006, the DCYF, whose primary function is to administer grants, sent $1 million in public money to Rec Connect from the Children’s Trust Fund, a pool of cash the city gathers each year by levying 3¢ per dollar of property tax.

Both Rec Connect and city workers stress the importance of offering a range of good programs to young people. “Our work is at a more social level,” McNesby says. “Every minute a kid spends in a rec center is a minute they’re not breaking into a car or victimizing someone or being victimized.”

The question is who should provide those programs. “It’s society’s value system that controls where the money goes,” Rec and Park spokesperson Dennis said. “It’s a really provocative discussion. There are some very compelling trade-offs argued in convincing fashion by intelligent people on both sides. These aren’t easy decisions.”

But the union people say that when it comes to Rec Connect, that discussion isn’t happening in public forums in a forthright way. As Reed said, “Gavin Newsom never went to the voters and said, ‘Here’s what we want to do: cut the rec staff and bring in private nonprofits.'”

41st Anniversary Special: Psych out

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> gwschulz@sfbg.com

San Francisco is a beautiful place. But it’s also a city where an extraordinary number of people suffer from mental health problems, sometimes quietly, sometimes visibly. City government has always taken on the burden of caring for those who really need it, but the Gavin Newsom administration has been trying to outsource that obligation in recent years.

Department of Public Health director Mitch Katz has tried for years to trim the number of psychiatric-care beds maintained by San Francisco General Hospital. He proposes to replace those services by contracting them out to local nonprofit Progress Foundation, which earned most of its $11.5 million in revenue last year from government sources.

The proposal is for Progress to develop and operate a community-based psychiatric treatment center as an alternative to SF General’s emergency-room and inpatient beds. A key difference would be that the alternative treatment would be voluntary and cater to those without severe symptoms.

Katz wants to eliminate 14 of SF General’s beds and reduce the number of patients it assesses by 30 percent. Add to that seven other beds that were stripped of funding two years ago, and it’s clear that mental health treatment in San Francisco is changing.

"It’s a problem we have to solve by coming up with alternatives," Katz told the board’s budget committee Oct. 10, "because it’s not right for that person, or for the cost to the system, that [they] be in a locked ward. It’s more downstream alternatives."

Opponents of the cuts, however, including psych nurses at SF General, led by the hospital’s chief of psychiatry, say the Progress proposal might complement SF General’s services but it would be dangerously shortsighted to think it can replace them.

Private-sector hospitals in San Francisco have already cut a combined 100 psych beds over the past 10 years, leaving behind only 75. Patients relying on Medi-Cal subsidies end up at SF General more than ever. Admissions, in fact, have climbed by as much as 50 percent in the past decade.

"I don’t want to be alarmist," said Alfredo Mireles, a psychiatric nurse at SF General who is opposing the cuts, "but we have this one guy who’s been in and out of here since his teens. He’s in his 30s now. He’s smart, college educated. But he has these violent outbursts with no remorse."

The man had assaulted a police officer just the night before, Mireles said. He recalled another patient who was so paranoid he wouldn’t come out of his room to eat. He had ended up in the emergency room after not eating for eight days.

Nonetheless, SF General’s psych ward maxed out last December for the first time in its history, forcing police offers to divert patients to jail or to hospitals unprepared to deal with them. All those facilities can do is strap down the patients or lock them in seclusion until a slot opens at SF General.

"You have to be very acute to get admitted," psych nurse Stacey Murphy said, referring to SF General. "But then we can’t get rid of people, because nobody wants them. They’re not acute enough to technically belong in our hospital, but they belong in a locked facility or in board and care."

Murphy explained that Progress won’t be able to handle certain patients now living in a sort of gray area at SF General — between being willingly and unwillingly hospitalized — such as the drug addled or violent. And that’s one problem with privatization in general: corporations and nonprofits will gladly take over profitable services, but the hard or expensive cases often fall to government … or simply through the cracks.

Progress argues that SF General spends too much time and money on patients who have serious mental health problems but aren’t so acute that they need to be locked up. Its idea is to put psych patients back into the city but help alleviate the misery they might otherwise endure alone or in a maddeningly sterile hospital. It seems to think the hard cases aren’t that hard.

"The time and resources devoted to this group of clients in a psychiatric crisis who are not hospitalized represents a cost to the mental health system that is unnecessary and avoidable if the intervention, triage, assessment, and treatment can occur in a community setting," the Progress Foundation’s June proposal reads.

"To the extent that there are people who would do better if we really wrapped services around them, shouldn’t we all focus on those people who would accept services voluntarily?" Katz asked the committee. "I think to focus a lot of our resources trying to convince people to take treatment against their will as outpatients when so many people would benefit from more loving, positive care, I don’t think it’s the right priority."

Piers Mackenzie still views Katz’s plan as poor public policy. His daughter, then 22, required a brief stay at SF General’s psych ward during a sudden mental health catastrophe four years ago. The event politicized Mackenzie, and he has since agitated against attempts by Katz to scale back psychiatric services at the hospital.

"I couldn’t think of a more retrogressive step, simple as that," Mackenzie said. "When there’s a proven need for more beds than there are presently, to cut them is just plain idiotic. I don’t understand it."

41st Anniversary Special: The perils of privatization

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Click here for Amanda Witherell’s exclusive interview with Columbia professor Elliott Sclar

› amanda@sfbg.com

Over the past few weeks almost every major news outlet in the country has reported on Blackwater, a private company the US government hired to do work in Iraq that was once the exclusive province of soldiers.

The deal hasn’t gone so well: on Sept. 16, Blackwater guards opened fire and, according to the Iraqi government, shot 25 civilians. The incident set off an international furor and has brought into focus the breadth of the company’s work for the US government. It’s prompted an investigation by the House Committee on Oversight and Government Reform, which showed that since 2001, Blackwater’s federal contracts have increased 80,000 percent. It’s revealed the massive pay inequalities between private security guards and US soldiers — the cost of one private guard could pay the salaries of six soldiers.

And it’s raised a question that’s critical to understanding how government increasingly works in the United States: should a private company be doing the work of the military?

Privatization of public services is all the rage in this country now, at all levels of government, from Washington DC to San Francisco. Supporters say the private sector can often work better and more efficiently than the old, bureaucratic, much-maligned government.

But Blackwater is a great example of the perils of privatization. And there are many more.

STARVE THE BEAST


Over the past few decades governments at all levels in this country have been in a near-perpetual state of deficit. Taxes are way down from their historic post–World War II levels, and except for a brief period during the tech boom, there is rarely enough money for even basic social services.

"It’s been a strategy since the ’70s to, as Grover Norquist calls it, ‘starve the beast,’<0x2009>" Robert Haaland, an organizer with Service Employees International Union Local 1021, told us.

And because politicians, even Democrats, are terrified of tax hikes, they’ve been looking for more efficient ways to use the money they have. The magic bullet goes by many names — privatization, public-private partnerships, competitive outsourcing, creative financing solutions — but the basic idea is to allow the power of competition, set free in an unregulated market, to provide the public with the best services at the lowest cost.

"To do or to buy is the question that all governments face," says Ken Jacobs, director of UC Berkeley’s Labor Center.

We’ve been buying. Since 2000, outsourcing of federal dollars has increased 100 percent, to $422 billion in taxpayer funds in 2006, according to a September study by the Washington DC US Public Interest Research Group. The US government is now the private sector’s largest customer.

San Francisco may be known as one of the most progressive cities in the country, but this town has also been wooed by public-private partnerships with promises of improvements to the golf courses, construction of a new power plant, and funding for the many civic needs we have.

PRIVATIZE MUNI?


Cheerleaders for privatization look at someone like Nathaniel Ford, executive director of San Francisco’s Metropolitan Transit Authority, and see everything that’s wrong with the public sector. Ford’s salary is nearly $300,000, plenty high enough to attract a talented leader. But the Muni system he runs keeps the average San Franciscan waiting on the corner in the morning, delivers that person to work at an unpredictable hour, and lurches them homeward every night aboard a standing-room-only bus. Nobody thinks Muni is performing well.

That makes the case for privatization seem almost appealing.

"The public has been schooled to think that government is the problem, not the solution," Elliott Sclar, professor of economics at Columbia University, told us. In his 2000 book on privatization, You Don’t Always Get What You Pay For: The Economics of Privatization (Cornell University), he writes, "American folk wisdom holds that, by and large, public service is uncaring, unbending, bureaucratic, and expensive, whereas competitively supplied private services such as FedEx are efficient and responsive."

Competition, the privatizers say, drives innovation. Less red tape means more efficiency. A lack of unions and collective bargaining agreements translates to lower labor costs. Large-scale multinational operations can reduce redundancy and streamline their processes — all of which adds up to a lean-running machine.

But this country has a lot of experience with privatization, and the record isn’t good.

One hundred years ago private companies did a lot of what we now call government work. "Contracting out was the way American cities carried out their governmental business ever since they grew beyond their small village beginnings," writes Moshe Adler, a Columbia professor of economics, in his 1999 paper The Origins of Governmental Production: Cleaning the Streets of New York by Contract During the 19th Century. At one time private companies provided firefighting, trash collection, and water supplies, to name just a few essential services.

But according to Adler, "By the end of the 19th century contracting out was a mature system that was already as good as it could possibly be. And it was precisely then that governmental production came to America. The realization that every possible improvement to contracting out had been tried led city after city to declare its failure."

For example, the 1906 earthquake and subsequent fires in San Francisco were what prodded the city to municipalize water service after the company charged with the task, Spring Valley Water, failed to deliver while the fires raged.

In Philadelphia as well as San Francisco, the business of firefighting was once very lucrative — for both the firefighting companies and the arsonists who were paid to set fires for the former to fight. And corruption was rampant. "Large amounts of public contracting out historically created lots of opportunities for fraud and nepotism," Jacobs said.

So public agencies stepped in to provide basic services as cheaply and uniformly as possible. Towns and cities took on the tasks of security with police and firefighting, education with schools and libraries, and sanitation with trash collection and wastewater treatment. Nationally, the federal government improved roads and transit, enacted Social Security benefits, and established a National Park System, among many other things.

And then, about 30 years ago, the pendulum started to swing the other way. Driven by University of Chicago economist Milton Friedman, enacted in a massive policy shift by Ronald Reagan, proliferated by Grover Norquist and the neocon agenda, and fully appreciated by corporations and private companies, privatization came back.

In Reagan’s first term, he cut taxes 25 percent overall; the rich got a 40 percent cut. Domestic spending fell by half a trillion dollars in the 1980s, although any savings were countered by a rise in the defense budget.

Harvard economist Lawrence Summers, quoted in Looking Back on the Reagan Presidency (Johns Hopkins University), put it this way: "The Reagan budgets will influence the government for the rest of this century. Just as the Great Society left an imprint of Federal commitment to help the indigent and equality of opportunity, the Reagan budget deficits will leave an imprint of non-involvement."

Such a massive realignment of money coupled with tax breaks too politically painful to reinstate led to a boom in the outsourcing of public services. Private companies began doing more municipal work, while nonprofit organizations tried to fill the gaps in funding for social services, welfare, housing, health care, and the environment.

The George W. Bush era has seen even more overt outsourcing. These days no-bid contracts are preferred, and at times government services are completely turned over to the private sector in "direct conversions," and the public agency that once did the job is not allowed to compete to keep it. The Washington Post recently reported that no-bid government contracts have tripled in the past six years.

This doesn’t really sound like the competitive free market espoused by the theory of privatization.

FLUNKING THE TEST


To field-test the primacy of privatization, the Reagan administration sponsored a transportation experiment in the early ’80s: Miami’s Metro-Dade Transit Agency got to compete against Greyhound. The two providers were each given five comparable transit routes to manage over three years, and 80 new buses were bought with a $7.5 million grant from the federal government.

After 18 months 30 of the Greyhound buses were so badly damaged that they had to be permanently pulled from service. Passenger complaints on the Greyhound line were up 100 percent, and ridership was down 31 percent over the course of a year.

Why? There was no incentive in Greyhound’s contract to maintain the equipment or retain riders. The company’s only goal was to deliver the cheapest service possible.

The Miami transit contract could have contained clauses calling for regular inspections or guaranteed ridership, but that would have significantly increased the cost of the work — perhaps to the point where it would have been competitive with what the city provided.

That’s an important lesson in privatization politics: when you add the cost of adequately protecting the public’s interest and monitoring contract compliance, the private sector doesn’t look so efficient.

Which is why many say privatization only succeeds as a theory — and why, for all the problems with Muni, no private company is likely to be able to do a better job.

"Market fundamentalists present an idealized, simpleminded notion of competitive markets in which buyers and sellers have equal knowledge," Sclar told us. "Anyone can be a buyer, anyone can be a seller, everyone can evaluate the quality of the good. In this never-never land, that’s often the way the case is made for privatization by this particular group of economists."

In the real world a number of issues arise when a service goes private. "Accountability gets to be a really big problem," Ellen Dannin, professor of law at Penn State University, said in an interview. "There are predictions about how much money will get saved through privatization, but no one ever goes back to check."

The September study by the US Public Interest Research Group profiled several companies that do government work, including Bank of America, LexisNexis, ChoicePoint, KBR (formerly Kellogg, Brown, and Root), General Electric, and Raytheon, and found instances of illegal behavior in all cases. There were often massive errors in the companies’ work.

Bank of America and LexisNexis had security breaches compromising the data of at least 1.5 million customers they were handling for the government. ChoicePoint allowed identity-theft scams amounting to more than $1 million in fraud. KBR overcharged the government millions of dollars for work in Iraq and Kuwait. GE made defective helicopter blades for the US military. Raytheon failed to fully test the systems of new aircraft. These companies are all still employed by the government.

When companies take over services that aren’t typically part of a competitive market, all sorts of unexpected problems occur. Jacobs points to the rash of contracting for busing services in cash-strapped school districts. Not only did costs eventually rise in many places, but when schools tried to go back to providing their own service, the skilled drivers who knew the routes, knew the kids, and were able to do much more than drive a bus were gone.

Sclar and Dannin agree that any service that lacks competition should be public. Sclar presented the example of electricity. "It’s a natural monopoly," he said. "Essentially it’s either going to be a well-regulated industry or it’s got to be done publicly."

Corporations exist to make money. And although graft, mismanagement, and scandal have always been present in City Halls around the country, in the end the legislative, judicial, and executive branches were not designed to generate profits. That alone means contracting out is financially dubious.

Hiring mercenaries is a classic example. "It costs the US government a lot more to hire contract employees as security guards in Iraq than to use American troops," Walter Pincus wrote in an Oct. 1 article in the Washington Post. "It comes down to the simple business equation of every transaction requiring a profit."

As Pincus details one of the many contracts between the security firm and the US, "Blackwater was a subcontractor to Regency, which was a subcontractor to another company, ESS, which was a subcontractor to Halliburton’s KBR subsidiary, the prime contractor for the Pentagon — and each company along the way was in the business to make a profit."

Blackwater charged Regency between $815 and $1,075 per day per security operative. Regency turned around and charged ESS a slightly higher average of $1,100. After that, the costs dissolve into the enormous bill that KBR regularly hands the federal government.

When the US Army is paying the bill the costs are far lower. An unmarried sergeant earns less than $100 a day. If you’re married, it’s less than $200. If you’re Gen. David H. Petraeus, it’s about $500 — less than Blackwater’s lowest-paid workers.

Very little about the Blackwater contracts would be known by anyone outside the company if it weren’t for the federal investigation, since private businesses are not subject to the same public-records laws as the federal government. They don’t have to open their books or publicize the details of their bids and contracts, and they often fiercely lobby against any regulations requiring this, which leaves the door wide open for corruption — which is what brought sunshine laws to government in the first place.

Sclar said that when it’s a good call to contract out, corporations, private companies, and nonprofits should be required to abide by public-records laws in addition to adhering to a five-year wait for employees departing the public sector for the private. "I think transparency should always be the goal," he said. "As much information as possible." If a company doesn’t want to make its records public, he told us, "[it shouldn’t] go after public work."

THE AIDS LESSON


Privatization comes in many forms and emerges for what often seem like good reasons.

In the early 1980s gay men in San Francisco were starting to get sick and die in large numbers — and the federal government didn’t care. There was no government agency addressing the AIDS crisis and almost no government funding. So the community came together and created a network of nonprofits that funded services, education, and research.

"The AIDS Foundation was founded in response to the epidemic at a time when there wasn’t a response from the federal government," Jeff Sheehy of the AIDS Research Center at UC San Francisco told us.

At first, activists all over the country praised the San Francisco model of AIDS services. Over time the nonprofits began to get government grants and contracts. But by the 1990s some realized that the nonprofit network was utterly lacking in public accountability. The same activists who had helped create the network had to struggle to get the organizations to hold public meetings, make records public, and answer community concerns.

That, Sheehy said, shouldn’t have come as a surprise.

"There isn’t that same degree of accountability that you would have" with the public sector, he told us. "SF General is not going to turn you away at the emergency room, but nonprofit hospitals are less and less interested in running ERs."

Sheehy said he’s seen cases where difficult clients have been banned from accessing help from nonprofits. Unlike at public institutions, "the burden is not on the agency to provide the service. It is with the client to get along with the agency," he said.

Sheehy outlines other issues: nonprofits run lean and are more apt to make cuts and resist unionization, which means workers are often paid less, there can be higher turnover, and upper management is often tasked with fundraising and grant writing and distanced from the fundamental work of the group. There’s no access to records or board meetings. "If service takes a sudden downward shift, what can you do?" Sheehy asks. "You can’t go to board meetings. You can’t access records. What’s your redress?"

And that perpetuates the problem of government not stepping up to the plate. More than half of the social services in San Francisco are run by nonprofits, a trend that isn’t abating.

"When the services are shifted from the public sector to the nonprofit sector," Sheehy said, "that capacity is lost forever from government."

THE LOTTERY TICKET


When Dannin teaches her students about privatization, she uses the analogy of personal finance. "If I find my income does not meet my expenses, I can cut my expenses, but there are certain things I have to have," she said. To meet those needs a person can get a second job. In the case of the government, it can raise taxes.

But "that is not an option governments see anymore," she told us. "So the third option is to buy a lottery ticket — and that’s what privatization is."

When a publicly owned road is leased for 99 years to a private company, the politician who cut the deal gets a huge chunk of cash up front to balance the local budget or meet another need. When the new owner of the road puts in a tollbooth to recoup costs, that’s the tax the politician, who may be long gone, refused to impose. What option does the voting driver have now?

Public goods, from which everyone presumably benefits, are frequently and easily falling out of the hands of government and into the hands of profit-driven companies. In New Orleans, charter schools have replaced all but four public schools. In about 15 municipalities public libraries are now managed by the privately owned Library Systems and Services. (In Jackson County, Ore., it’s being done for half the cost, but with half the staff and open half the hours.) At least 21 states are considering public-private partnerships to finance massive improvements to aging roads and bridges. User fees have increased in the national parks as rangers have been laid off and some of the work of park interpretation is picked up by private companies, as is the case with Alcatraz Island.

Dannin also asks her students to consider who really owns a job. The easy answer is the employer. "But there is another claimant of ownership of that job," she says. "That is the public. Employers depend on roads for their employees to drive to work, a public education system to train their workers. They depend on housing, police, the court system, the system of laws. That is a huge amount of infrastructure we tend not to think about.

"We live within an ecosystem. We’re having a hard time seeing that ecosystem, that infrastructure that we’re all in. That’s what your taxes pay for."

Google’s gentrification shuttle

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OPINION Cari Spivek thought it was wasteful that so many employees like her were driving to work in different cars. Her idea became the Google Shuttle, a private transit network made of biodiesel-powered, wi-fi-enabled, air-conditioned buses transporting employees from around the Bay Area to Google headquarters in Mountain View, south of San Francisco.

At first it was used by a hundred employees from the entire area. But Google has been growing and now shuttles more than 1,200 Googlers every day, many from the Mission District, which has recently added a second bus.

Anyone who has ever taken a population class knows that every migration has a countermigration. In addition to all of the Google employees already living in the city and doing less environmental damage by taking the shuttle, many employees are choosing to move to the city because there is now a comfortable shuttle to take them to work. And many want to be a short walk to one of the stops.

When one takes into account the cost of gentrification, which is destroying the arts in San Francisco and forcing many low-income workers out of the city, the Google Shuttle no longer looks so environmentally friendly. Low- and middle-income wage earners are forced to commute to the neighborhoods they can no longer afford to live in. Their commute can take more than an hour, and they can’t afford environmentally friendly cars.

It’s very possible the Google Shuttle is doing as much harm to the environment as good. And the young Google employees, many making well over $100,000 a year, who move to places like the Mission for the art and diversity, are unintentionally devastating the neighborhood they love. Soon there will be no economic diversity in the Mission, and the young rich who have driven the rents so high will wonder how they ended up living in a place that resembles Greenwich, Conn.

Ending the Google Shuttle is not the only solution. It’s not even the best solution. A much better alternative would be for Google to make substantial investments in low- and middle-income housing in the areas it’s transforming, like the Mission and the Tenderloin, where its employees are clustered.

Google could give back to the community by donating $5,000 per employee living in the Mission to a fund that offsets the costs incurred by tenants forced from their homes by owner move-ins or loss of primary leaseholder, with the rest of the money going to fund neighborhood artists and new middle-income housing. Annually, we’re talking between $5 million and $10 million, a cost Google could easily afford. It would be good for Google in other ways, keeping this an area its creative employees still want to live in, before they follow the rest of the artists to Portland, Ore., or Detroit.

It’s hard for people to admit that their mere presence is doing damage, that their ability to pay exorbitant rent is destroying the neighborhood they love. But the Mission cannot endlessly absorb renters with six-figure incomes. In many ways, including the use of biodiesel shuttle buses, Google has behaved like a responsible profitable corporation should. Now it has a responsibility to help the Mission maintain its diversity. Otherwise, Google needs to stop shuttling its employees from 24th and Mission and stop encouraging them to live in a neighborhood that simply can’t afford them.

Stephen Elliott

Stephen Elliott is the author of six books. He has lived in the Mission for eight years.

Green City: Meeting the Climate Challenge

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› news@sfbg.com

GREEN CITY It is easy to become discouraged by environmental problems, but a few San Franciscans are reminding us that we have collective power to make positive change. And we might even have a little fun along the way.

Paul Scott came up with the idea of the San Francisco Climate Challenge, a citywide contest to reduce household energy consumption. Scott is a lawyer and founding member of One Atmosphere — a nonprofit created by North Beach neighbors concerned with sustainability and conservation. "I think a lot of folks are concerned about climate change, but frustrated by the seeming inaction by the government to solve the problem," Scott told the Guardian. "The purpose of the San Francisco Climate Challenge is to give people something they can do right now."

A joint project by One Atmosphere, the Sierra Club, and SF Environment, the Climate Challenge officially starts Oct. 25 and registration ends the day before. Two top prizes of $5,000 (cash!) will be awarded for greatest overall energy savings and greatest percentage reduction in energy use. Winners will be determined by comparing last November’s Pacific Gas and Electric Co. bill with this November’s bill, so participants must pay their own utility bill and have lived in their current home — apartment, condo, or house — for at least a year.

Private residences account for about 20 percent of San Francisco’s carbon emissions, so the SF Climate Challenge is specifically focused on reducing household emissions. "Hopefully, this contest will increase people’s awareness of what they can do and the environmental damage done by normal activities," said Jonathan Weiner of One Atmosphere. "Simple changes can have significant impacts."

And what are some of these simple changes to make at home? Turn off lights when you leave a room, replace incandescent lightbulbs with compact fluorescents, wear a sweater instead of turning up the heat. And something that people often forget is that appliances use energy even when they’re turned off. So plug your television and stereo into a power strip and, when you’re done watching TV or listening to music, turn that power strip off.

"Eliminating unnecessary, wasteful use and being more efficient with the energy we do use is important," said Aaron Israel of the Sierra Club’s San Francisco chapter. "But you don’t have to eat in the dark or live like a monk. There are very easy things you can do if you’re just a little bit more aware."

Contest participants can sign up for the Climate Challenge as individuals or teams. So far, there teams have been created by neighborhoods, social groups, and sports teams. Even the Board of Supervisors has formed a team, with supervisors Michela Alioto-Pier, Aaron Peskin, and Sean Elsbernd already committed to participating. Word on the street is that even the Mayor’s Office may compile a team.

The Climate Challenge is also about building community. "This is an initiative to bring together a bunch of folks around how we, as residents in the city, can do things differently," said Mark Miller of One Atmosphere. "The more we see how we’re connected, the more we see how much we affect each other."

Making simple, painless changes at home is a great place to start taking responsibility for the health of our communities, city, and planet. Hopefully, the San Francisco Climate Challenge will inspire people to think about the environment in terms of the positive changes we can make instead of the overwhelming problems we feel helpless to fix.

"We need to paint a vision of our own lives that is better in the future than it is right now, so we are all motivated to take action," said Cal Broomhead of SF Environment. "How can we transform our neighborhoods so they’re more sustainable? We have collective power to make change."

To register for the San Francisco Climate Challenge, or to see a list of sponsors, prizes, and energy-saving tips, go to www.sfclimatechallenge.org. Or attend this upcoming event to learn more: ClimatePalooza, Fri/Oct. 19, 7 p.m., $12 or free with sign up for the SF Climate Challenge, at the Swedish American Hall, 2170 Market, SF. Live music by Ryan Auffenberg, Hyim, Valerie Orth, Sheldon Petersen, and Pixie Kitchen. Call (415) 861-5016 for more information. *

Comments, ideas, and submissions for Green City, the Guardian‘s weekly environmental column, can be sent to news@sfbg.com.

41st Anniversary Special: Connect the Connects

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› steve@sfbg.com

Mayor Gavin Newsom has created an entirely new branch of city government that is private, funded by undisclosed corporate donations, staffed by volunteers who are often city employees or his campaign donors, and unaccountable to any internal controls or outside scrutiny.

Yet rather than being a cause for concern, Newsom has touted San Francisco Connect and its four subprograms — Project Homeless Connect, Tech Connect, Green Connect, and Project Children and Families Connect — as his proudest achievement, a model he is actively exporting to other cities.

According to its Web site, "The mission of SF Connect is to mobilize residents and sectors for a stronger San Francisco. SF Connect is about engaged residents volunteering their talent and time for the City, as well as innovative partnerships between the private, public, and social [nonprofit] sectors."

Green Connect (and "partners" that include Pacific Gas and Electric Co. and Oracle), does cleanup and tree planting. Tech Connect (and partners Netgear.com and Hewlett Packard) works on "digital inclusion." And Project Homeless Connect (Gap, Visa, AT&T, Blue Shield, IBM, the Hotel Council, and Charles Schwab among its partners) does homeless outreach events.

During his endorsement interview with the Guardian, we asked Newsom about the programs and how they allow the private sector to take a more active role in delivering public services on behalf of city government, sometimes with the help of public resources. Is that a model he likes?

"Oh, you’d better believe that!" Newsom said. "Am I for actual responsibility and civic service and duty? You’d better believe it. I think it should be mandated for everyone who graduates from our public education system. I think they should be forced to give back and contribute in community service. What the Connects are all about is community service and connecting the dots. The Rec Connects, which may be what you’re referring to, is a way of leveraging resources and getting more of our [community-based organizations] involved."

All of those involved with SF Connect also seem to sing its praises. But there’s another side to Newsom’s feel-good approach to delivering public services: they often displace social services delivered by qualified providers, supplement underfunded city services with private providers rather than simply fixing and funding them, provide wedges for corporations to take over public spheres (as the Google-EarthLink wi-fi deal through Tech Connect very nearly did), and allow corporations to buy influence with unregulated contributions to a politician’s pet program.

"If you look at the ways of privatizing, volunteering is one, and it sounds nice," said Margot Reed, an organizer with Service Employees International Union Local 1021.

Yet that volunteerism sometimes replaces services that previously were provided by government or nonprofit agencies whose contracts and performance could be scrutinized. But Newsom’s approach through SF Connect doesn’t allow that kind of transparency.

To illustrate the problem, the Guardian made a Sunshine Ordinance records request to the Mayor’s Office, asking for a complete breakdown of the budgets of all the Connect programs. The office refused to provide the information, referring us instead to SF Connect, but that organization has a history of refusing to provide the Guardian and other media organizations with its budget and donor lists.

Last year the San Francisco Chronicle fought the Newsom administration for two months to get it to reveal the donor list, finally winning the release of the names of donors who had agreed to be disclosed (some asked for their money to be returned instead). SF Connect’s donors included PG&E, which gave $25,000; Google investor Ron Conway, who gave $100,000; Wells Fargo Bank, which gave $20,000; and Carmen Policy (the former 49ers top dog who was recently named to push a June ballot measure on a new stadium that Newsom wants to build), who gave $2,500. Other donors included Newsom appointees, contributors, and companies that do business with the city.

When we tried to get a current list of donors, staffers didn’t respond to Guardian phone calls or e-mails.

We also asked Newsom’s office for a complete breakdown of city staff time, money, and other resources that have gone into supporting the Connect programs, knowing that city staff have been involved in their events and e-mails have gone out from city offices.

"There is no line item in any budgets nor any reporting within our office on time spent coordinating with SF Connect," Joe Arellano from the Mayor’s Office of Communications responded by e-mail after repeated requests for answers.

That’s probably because there seems to be no clear line drawn between where the private SF Connect ends and where the public-sector Mayor’s Office begins. Call the phone number on the San Francisco Connect Web site for Project Homeless Connect, and it rings at the desk of Judith Crane in the Department of Public Health.

Even getting a list of privatization proposals by Newsom hasn’t been easy. The Mayor’s Office cited technical inadequacies when we asked it to search all of Newsom’s speeches, press releases, e-mails, and other documents for the words "public-private partnership," a favorite Newsom phrase.

We know that he’s unsuccessfully sought to privatize jail health services, security at the Asian Art Museum, and the city’s golf courses (see "Bilking the Links," page 22) and to create a citywide wireless Internet system run by Google and EarthLink.

But ask Newsom about it, as we did, and you’ll hear his semantic gymnastics: "Privatization is failing, so I’m not pro-privatization. I don’t look to privatize. I look for ways to manage more creatively and more efficiently."

John Barleycorn must die

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› molly@sfbg.com

"There was three men come out o’ the west, their fortunes for to try,

And these three men made a solemn vow, John Barleycorn must die.

They plowed, they sowed, they harrowed him in, throwed clods upon his head,

And these three men made a solemn vow, John Barleycorn was dead."

From an old English folk song

It’s a dark, rainy Friday night, and Larkin Street is eerily quiet except for one beacon of light: the John Barleycorn pub. Inside this almost 40-year-old watering hole, logs crackle in a fireplace built with cobblestones from old San Francisco streets.

Neighbors, law students from a nearby university, and longtime regulars cluster together on cable car benches and onetime church pews, tippling and talking quietly beneath a ceiling made from the beams of an old Petaluma chicken coop.

Behind the bar, owner Larry Ayre, with rosy cheeks hugged by a pair of spectacles, serves drinks and good cheer the same way he has for more than three decades. Some of his customers have been coming here for just as long.

"There’s only one bar you call your home bar, and somehow, they have to take you in," Ayre said. "In here, you can be whoever you want to be."

Unfortunately for the Barleycorn, its lease is up, and it’s part of a building that was recently purchased by Louisa Hanson, a controversial local entrepreneur who owns several other properties in the area, including Louisa’s on Union Street and Delaney’s in the Marina. Hanson refuses to renew the Barleycorn’s lease, and it’s rumored she plans to turn the building into a new restaurant.

So tonight the mood is bittersweet. Ayre’s birthday is tomorrow, and neighbors are already stopping by. But no one’s forgetting that the pub’s doom is imminent, and unless a miracle happens the beloved bar will shut its doors October 26. For good.

Pub supporters nonetheless began appealing to Hanson last December when they heard of her plans not to renew the ‘Corn’s lease. They tried to make the case that the popular pub is the right size and scale for the neighborhood, that any other venture would be hard to support in such a tough retail environment, and that the bar is so well loved, Hanson would alienate potential future customers by closing it.

But the notoriously elusive Hanson — who’s obtained licenses for more than 22 businesses in the past two decades, most of which closed within two years or never opened at all — wouldn’t discuss the future of the ‘Corn, much less consider their pleas.

In an effort to save it, weekend bartender and longtime patron Tony Antico helped found the Save the John Barleycorn Coalition. Volunteers gathered more than 4,000 signatures from friends and fans in 30 countries and 20 states. They staged a demonstration outside Hanson’s Union Street restaurant. They lined up formal support from the SF Appreciation Society, the Polk Corridor Business and Middle Polk Neighborhood associations, Lower Polk Neighbors, and Sup. Aaron Peskin, who represents the district. The Board of Supervisors even passed a resolution commending the pub and recommending it be kept open.

"In America you can be a mean nut, and if you own property, the law protects you," Peskin told the Guardian.

Despite all the effort, Hanson is heavily invested in the property and appears to have little incentive to back off now. Public records show that she first bought it for $2.3 million in autumn 2005 and then took out two loans against it totaling $2.5 million.

She seems so eager to develop the property, in fact, that in June city building inspectors found ongoing construction work being conducted at Barleycorn’s neighbor, the former Front Room, without a permit, including taking out a wall and removing fixtures.

But Hanson is no stranger to conflict. Superior Court records show that she’s been the target of a fairly steady stream of litigation since the 1980s, ranging from allegations that she refused to pay contractors or employees to charges that she disregarded contractual agreements with business partners.

One case, brought against Hanson in 2003 by the former owners of her Marina restaurant, alleged that she agreed to a purchase but then withheld payments in hopes of forcing a better deal when the sellers grew desperate. According to the suit, the "alleged secret intent" of Hanson "constitutes an intentional misrepresentation, deceit, or concealment of a material fact that has caused injury" to the former owners. A judge ruled against Hanson and demanded that she pay the plaintiffs $183,674.

That case didn’t surprise Vickie Hall, who had a similar experience when she tried to sell her coffee shop in Amador County to Hanson earlier this year. After agreeing to pay full price for Hall’s homegrown business, Hanson allegedly held the deal in escrow, and therefore off the market for sale to someone else, until Hall would agree to a lower purchase price.

Hall claims that when she begrudgingly agreed but asked for a higher deposit, Hanson simply never responded to the counteroffer. Hall says Hanson couldn’t be reached for six weeks to sign over the original deposit money.

"It was a bad situation with a woman who I think is ruthless and could give a hoot about how her business practices are handled," said Hall, now living in Arkansas, who only sold the business because she and her partner are now on disability.

Look Hanson up on Yelp.com and you’ll find a litany of complaints from former employees, neighbors, business partners, and customers. There’s even a blog dedicated to the "eccentricities and out-and-out weirdness of San Francisco’s worst entrepreneur," located at Luisaconfidential.blogspot.com.

In fact, Barleycorn supporter John Clark, who has lived in the city 25 years and worked in local restaurants for eight years, was warned by peers not to pursue a job in any of her restaurants, so he avoided them.

"She’s a bad businesswoman and unscrupulous," Clark said. And the Barleycorn "is a great little English pub. I’m tired of the character that makes this city what it is getting sucked out of it. This is just another long-standing neighborhood institution being closed because of greed."

So far, Hanson has refused to discuss the Barleycorn, not returning calls from Ayre, Peskin, or the Guardian for this story. Her response to the demonstration outside her Union Street business was to give pub supporters the Italian version of the bird (video posted at savethebarleycorn.org).

In fact, the only thing anyone, including government officials, can do now is make it hard for her to open a new business in the building by changing zoning laws or refusing permits — actions that may hurt Hanson in the long run but won’t change the Barleycorn’s fate.

For now, the ‘Corn’s supporters are trying to maintain their optimism while being realistic. At Ayre’s birthday party Oct. 13, patrons continued to add their names to the petition at the end of the bar while Ayre’s wife explained where in their house the couple would put the historic wooden countertop once the bar closes. But no one will be done enjoying the establishment, or fighting to keep it open, until the last minute of its last day.

"I always believe that little miracles can happen," Peskin said. "I’m waiting for one."

41st Anniversary Special: Bus stop

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› gwschulz@sfbg.com

There’s a money room in the basement of 1 South Van Ness, where the Municipal Transportation Agency, which operates Muni, is headquartered. Workers literally count by hand bags of cash and coins taken in as fares from passengers throughout the day.

When Muni recently needed to pull some of those unionized bean counters away from the money room to staff kiosks around the city where transit passes are sold, its managers hoped to replace them with workers from a private contracting outfit.

The plan unsettled the Service Employees International Union Local 1021, which persuaded Muni against the idea and instead encouraged it to create 10 new full-time city positions to cover the work that was needed. But the MTA’s immediate turn to the private sector is telling.

Powerful local unions would no doubt fight it, but public-transit consultants working with the city have insisted that the outright privatization of San Francisco’s municipal transit system is worth consideration. Advisors to the Transit Effectiveness Project, first unveiled by Mayor Gavin Newsom during a 2006 speech, insist nothing is too controversial for debate.

"There’s nothing we’ve been told to take off the table," a consultant hired by the city told the San Francisco Chronicle late last year.

The Transit Effectiveness Project’s final recommendations are expected next year, when it’s likely Newsom will be starting his second and final term. Big segments of Muni have already been privatized over the years. In fact, Controller’s Office records show the MTA has privatized far more formerly public services over the past two decades than any other city department by far.

In 1983 voters passed Proposition J, authorizing the city to contract out services performed by city workers who’d passed civil service exams to prove their skills as long as the Board of Supervisors passed a resolution certifying a cost savings. The MTA issued $46.5 million worth of private contracts last year covering 689 positions, according to figures maintained by the Controller’s Office.

Muni has used private security guards since 1975, and 400 private workers handle paratransit services, which aid the disabled. Towing, janitorial, meter-collection, and citation-information services have all been privatized. In total, the MTA’s purported cost saving is as much as $20 million per year.

But that’s a sliver of MTA’s $680 million budget, and there are perennial fears of more privatization pushes. This fall’s Muni reform measure, Proposition A, nearly went to the ballot with language that could have allowed millions of dollars in new privatized work at Muni without review from civil service commissioners, but it was removed at the insistence of labor leaders.

San Diego privatized many of its transit services in the ’80s, gradually contracting out services as public employees retired. By last year about half of San Diego’s bus routes were managed by three private contractors, including Violia, an Illinois company that also runs Muni’s paratransit services. Labor leaders say service in San Diego suffered under privatization, and they oppose similar changes here.

"Whenever you contract out a department, whenever you let go of control, then you don’t have control of the product," Cristal Java, an organizer for SEIU Local 1021, told the Guardian.

Prop. A’s language was changed to preserve union jobs if new routes and lines are introduced that may otherwise have been susceptible to privatization, but there are no assurances that city officials won’t eventually point to Muni’s widely bemoaned system deficiencies and claim that further contracting out is necessary.

"We see the same operational problems, and hiring new full-time, permanent people is a way to deal with it instead of contracting out," Java said. "The unions, allies, and MTA got together to make Prop. A something that worked for everyone."

41st Anniversary Special: Privatize the airport?

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› gwshulz@sfbg.com

In August 2006 the five commissioners who oversee San Francisco International Airport discussed renewing a small contract with a consulting outfit called John F. Brown Co.

The contract’s value doesn’t matter as much as the advice the outfit was giving. Brown is helping San Francisco prepare for 2011, when an agreement SFO maintains with several airlines is set to expire.

This, the folks at the airport realize, is a very big deal — one that could cost the city hundreds of millions of dollars and tempt city officials to try to privatize one of San Francisco’s most lucrative assets.

The contract that will expire four years from now is basically a lease the airlines pay in exchange for using SFO facilities like runways and terminals. The agreement was established in 1981 as part of a legal settlement with the airlines, and it permits the city to draw millions of dollars in concession revenue from the airport into San Francisco’s General Fund. Last year the city received nearly $22 million from the airport.

But San Francisco is one of the few cities in the nation that are allowed to take money that the airlines pay for landing and use it to subsidize other city services. And the airlines have shown little desire to keep paying fees that are above what the airport needs to break even on its operations.

Nobody is talking publicly about what will happen after 2011, but it’s entirely possible that the airlines, with the support of the federal government, will refuse to keep subsidizing San Francisco’s General Fund. So $22 million per year in city revenue could suddenly dry up.

If the mayor is someone like Gavin Newsom, he or she will be looking for an easy answer — and a lot of people will argue that San Francisco should follow the trend set by airports in Chicago, Indianapolis, and Pittsburgh and head toward a private management contract.

The Reason Foundation, a libertarian Los Angeles think tank, concluded in the 1990s that SFO could be worth as much as $888 million to the private sector; that number is almost certainly higher now. Imagine, for a moment, the deal the city would be offered: lose $22 million per year in revenue — or get close to $1 billion in cash by turning over the airport to a private operator on a long-term contract.

But the airport’s past experiments with privatization suggest that giving SFO to the private sector might not be such a good idea.

In 2001, Congress created a pilot program in which five cities, San Francisco among them, privatized their security screening of passenger, checkpoint, and baggage operations. Federal airport officials here hired Illinois company Covenant Aviation Security.

An investigation last year revealed that Covenant and SFO officials relying on surveillance cameras conspired to tip off personnel working at checkpoints when undercover federal inspectors were on their way to test possible security breaches.

A whistle-blower first revealed the scheme. Covenant, which partnered in the security venture with global weapons designer Lockheed Martin, was nonetheless rehired by the federal Transportation Security Administration late last year with a $314 million contract lasting until 2010, signed just weeks after an inspector general for the TSA’s parent bureaucracy, the Department of Homeland Security, revealed the results of its probe.

What is perhaps the airport’s greatest privatization disaster began in 1997 and didn’t end until earlier this year. Managers at the airport formed a private, for-profit company called SFO Enterprises, which they hoped would join a consortium of other airports doing consulting and managing work around the world. The initial consulting contract was with a Honduran airport.

The plan turned into a disaster, leaving the airport in Honduras worse off. By the time San Francisco’s controller caught up with the scheme in an investigation completed in January, he declared the city could lose as much as $1.5 million, with much of it poorly accounted for.

Editor’s Notes

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› tredmond@sfbg.com

These are some of the things that Mayor Gavin Newsom has moved to turn over to the private sector in the past four years:

Housing for the mentally ill

Public golf courses

Camp Mather

The entire city broadband infrastructure

The city’s new power plants

Homeless outreach

Environmental cleanup

Recreation programs

Jail health services

Security guards at public institutions

Development of tidal energy

Reconstruction of public housing

And, of course, Pacific Gas and Electric Co. still controls the city’s power grid (illegally).

Yet when we talked to the mayor about privatization recently, he told us he’s generally against it. "Privatization is failing," he said. "So I’m not pro-privatization. I don’t look to privatize."

What’s going on here?

Well, for starters, the mayor isn’t being entirely candid. Newsom’s administration has been moving aggressively to adopt programs with names like "public-private partnerships" to take over jobs that ought to be in the public sector. Even when there’s something that is clearly the job of government — like building the information highway that will be more important than roads and bridges in the future — the mayor tries first to get the private sector to do it. "I look for ways to manage more creatively and more efficiently," Newsom said.

That’s in part because, for all his talk of bold initiatives, the mayor is a timid chief executive. At a time when politicians of all stripes around the nation are afraid to talk about tax hikes, afraid to talk about the value of the public sector, afraid to do anything that might remind people that Ronald Reagan was wrong, letting the private sector take the lead is easy and painless. As Sup. Jake McGoldrick told us, "I suspect that [Newsom] succumbs to the path of least resistance there because of the tremendous amount of pressure that the private sector puts on trying to gain control over public assets."

It would take a fair amount of effort and public money to keep, say, the golf courses under city control. Giving them to a private company is easy. Maybe the courses ought to be turned into soccer fields; that costs money too. Perhaps the easiest thing is to let the Fisher family, of Gap fame and fortune, pay for it (the way the family paid for the new playing surface at Garfield) — and then put up big "Gap Field" signs with blue jean ads, let the Fishers hold private parties there on Sundays, or charge admission … or something else "creative and efficient."

That’s how it works these days: instead of taxing the rich and spreading the benefits around through a democratic system, we let the rich set the agenda. If Don Fisher’s willing to pay for new soccer fields, then we get new fields. Maybe he (or some other private outfit) wants to save the golf courses; OK, we’ll do that instead.

Newsom isn’t Reagan or Grover Norquist; he’s not a rabid ideological promoter of privatization. He’s just a tame elected official who won’t stand up and fight, who won’t make it clear that San Francisco isn’t for sale, who won’t put his immense political capital on the line to preserve the public sector for the public. And for that, he is a failure.

41st Anniversary Special: Blast from the past

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33 YEARS AGO (OCTOBER 5, 1974)


Dianne Feinstein takes off her gloves

By Katy Butler


White gloves still haunt Dianne Feinstein’s political life. She has been wearing them ever since she first went to dancing class, and fellow politicians have accused her of refusing to take them off for politics. Her old political allies bring up the image again and again: those little white gloves seem to crystallize their irritation with her Pacific Heights femininity, the world of the Junior League, the chauffeur and the Goody Two Shoes approach to politics. In 1971 during her disastrous campaign for Mayor, she did her best to reach beyond her background. She promised a Hunters Point crowd she’d never shuck or jive. But she was still wearing those little white gloves.

The white gloves are off now. Feinstein learned from her 1971 defeat and she doesn’t want to lose this time around. She is jostling with state senators Milton Marks and George Moscone for first place at the starting gate in next year’s Mayor’s race, and she is no longer a political dilettante operating on intuition and integrity.

The new Dianne Feinstein is a canny political animal, assiduously cultivating the "homeowner vote" in the foggy reaches of the Avenues while nursing along her original liberal constituency. "She’s dropped the Goody Two Shoes act and she’s willing to play hardball politics," one of her fellow supervisors says admiringly. "She’s moving toward the center and she’s getting very good advice."

"How can you be for the vice squad, for police helicopters, against nude shows and for gay rights?" asks Harvey Milk, a gay former candidate for supervisor. "It doesn’t add up."

31 YEARS AGO (OCTOBER 8, 1976)


Staggering with Bukowski

By William Graham


The beer, the day, whatever the reason, [poet Charles] Bukowski is not reading well — with little enthusiasm, little animation, little inflection in his voice, save the long drawl on certain words. He rarely looks up from his script while reading, as if he hasn’t seen the poems before. Hunched over, his glasses reflect the two spotlights and act as mirrors, blocking the audience from his eyes. At his best he is poetical, distant. At his worst, he is an old man reading the news. And finally the warning, "This is going to be my next-to-last poem." A few say "No, no." Bukowski asks, "Are there any questions?" Again, mixed shoutings answer, a few voices mimic animals, and far from the rear, the high nasal voice says "Bullshit". Bukowski replies, "Lay off that cheeeeeep, rot-gut wine or you’re not going to live a weeeeeeek. If the wine doesn’t get youuuuuuu, I might." The crowd likes this. Shifting gears, the poet says, "Any young girls want my phone number — try Joe Wolberg." Several replies follow, many sound dubious, and the poet says, "Okay, Babe-A."

31 YEARS AGO (OCTOBER 8, 1976)


EVEN COWGIRLS GET THE BLUES. By Tom Robbins. Houghton-Mifflin, $4.95.

Reviewed by Don McClelland


Tragedy ensues but is softened by the cosmic good humor that shines throughout the book. For this world and its languages, Robbins shows an infectious love that is constantly leading him into literary excesses guaranteed to get him hanged in more proper circles. Didactic, discursive, anthropomorphic, loaded with enough outrageous similes to send a basketful to each poet in the American Academy, Even Cowgirls Get the Blues operates on the refreshing premise that the whole world is alive. This book will make you laugh out loud in the elevator. This book should have champagne and tears spilled on it. This book is Cervantes born again. Thank you, Tom Robbins.

31 YEARS AGO (OCTOBER 29, 1976)


The Film Festival

By Robert Di Matteo


The 20th Annual San Francisco International Film Festival, which was held at the Palace of Fine Arts Oct. 13-24, was another one of those Sacred Monster affairs that exist above and beyond almost anything that can be said about them.

For me, there was the added excitement this year of the Guardian‘s Banned-from-the-Festival status (see Guardian 10/8, 10/22/76). Because of our reporting on the Film Festival last year, the Guardian was not allowed to attend this year’s event on the same basis as the 98 acceptable representatives from the press. But we went ahead and bough some tickets on the sly, and on the nights of the showings I slunk in to take my place in the audience, glancing furtively around to make sure I hadn’t been spotted. As something of a natural-born outsider, I found the role of a party crasher to fit like a glove.

Still, my perspective on the festival has not really changed. I doubt that I could ever really resolve my attitudes about culture to fit the festival’s concept of Culture. Movies are still just movies to me, and charging an extra dollar to see them does not alter that fact.

26 YEARS AGO (NOV. 4, 1981)


From the personal ads:

Plug Me In

Says my refrigerator. Very attractive lesbian who lacks only cooking skills would like sympathetic Jewish woman to offer either her knowledge of the art or dinner for the rest of my life. Write P.O. Box 11528 SF CA 94101

Wanted: Wife

Long hours, no pay. For a good-looking San Francisco man, 29. Qualifications: must be beautiful, intelligent, easygoing. No experience necessary. Please, no Republicans.


WM, 38, angry, depressed, timid, gentle, understanding seeks similarly minded F with whom to wait for Godot and/or etc.

My Marriage Was No Fun

Finally my wife and I figured out that we would be happier if we weren’t together. Since then, I have discovered freedom, but it hasn’t been in single bars. It has been squeezing the toothpaste any way I please, or being able to change plans at the last minute. I am 44, nice-looking, secure, and I would be interested in meeting a woman, younger or older, who would like to share her freedom with me.

I am an R.C. priest who takes his religious calling very seriously. But God also made me a man. I have thought about leaving the Church, but feel that that would be very wrong. God didn’t create us to live half lives, He will understand. While I’m sexually inexperienced, I am attractive, accomplished and sincere. Obviously discretion is a must.

Women Are Taught to Say "No"

This one is happy, bright, and attractive, and she is ready to begin saying "Yes." Now, what are the questions?

41st Anniversary Special: The privatization of San Francisco

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› tredmond@sfbg.com

William M. Tweed was one of the greatest crooks in American political history, a notorious Tammany Hall boss in New York who managed in the course of just a few years, starting in 1870, to steal more than $75 million (the equivalent of more than $1 billion today) from the city coffers. The way he did it was simple. As Elliott Sclar, a Columbia economist and expert on privatization, notes, Tweed took advantage of the fact that much of the work of city government was contracted out to private companies. Boss Tweed controlled the contracts; the contractors overcharged the city by vast sums and kicked back the money to Tammany Hall.

This is a rather extreme example, but not, Sclar argues, an atypical one: the worst corruption scandals in American history usually involve private contractors and public money. In fact, he argues, privatization is almost by its nature a recipe for scandal and corruption.

Nothing in the public sector — no incompetence, no waste, no bureaucratic bungling — begins to compare with what happens when private operators get their hands on public money. And the cost of monitoring contracts, making sure contractors don’t cheat or steal, and forcing them to act in ways that reflect the public interest is so high that it dwarfs any savings that privatization seems to offer.

That’s the message of the Guardian‘s 41st anniversary issue.

It’s relatively easy to investigate government malfeasance. The records are public, the players are visible, and the laws are on the side of the citizens.

But when Bruce B. Brugmann started the Guardian in 1966 with his wife, Jean Dibble, he realized that the real scandals often took place outside City Hall. They involved the real powerful interests, the giant corporations and big businesses that were coming to dominate the city’s skyline and its political life. The details were secretive, the money hidden.

One of the first big stories the paper broke, in 1969, involved perhaps the greatest privatization scandal in urban history, the tale of how Pacific Gas and Electric Co. had stolen San Francisco’s municipal power, to the tune of hundreds of millions of dollars. The famous Abe Ruef municipal graft scandals of the early 20th century, the Guardian wrote, were "peanuts, birdseed compared to this."

When I first came to work here, in 1982, Brugmann used to tell me that daily papers, which loved to try to expose some poor soul who was collecting two welfare checks or a homeless person who was running a panhandling scam, were missing the point. "If you look hard enough, you can always find a small-time welfare cheat," he’d tell me. "We want to know about corporate welfare, about the big guys who are stealing the millions."

And there were plenty.

In his new book Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (Knopf), Robert Reich, the economist and former secretary of labor, argues that during the cold war, when American politicians railed against the socialist model of economic planning, this country actually had a carefully planned economy. The planning wasn’t done by elected officials; it was done by a handful of oligarchic corporations and military contractors.

Modern San Francisco was born in that same cauldron. During World War II, captains of industry and military planners took control of the city’s economy, directing resources into the shipyards, collecting labor from around the country to build and repair Navy vessels, and making sure the region was doing its part to defeat the Axis powers. It worked — and when the war ended the generals went away, but the business leaders stayed and quietly, behind closed doors, created a master plan for San Francisco. Downtown would become a new Manhattan, with high-rise office buildings and white-collar jobs. The East Bay and the Peninsula would be suburbs, with a rail line (BART) carrying the workers to their desks. Private developers, working under the redevelopment aegis, demolished low-income neighborhoods to build a new convention center and hotels.

Nobody ever held a public hearing on the master plan. And it wasn’t until the late 1960s that San Franciscans figured out what was going on.

By 1971 the fight against Manhattanization began to dominate the Guardian‘s political coverage. It would play center stage in San Francisco politics for two more decades. The paper ran stories about high-rises and freeways and environmental impact reports, but the real issue was the privatization of the city’s planning process.

Ronald Reagan soared into the White House in 1980, rolling over a collapsing Jimmy Carter and a demoralized, moribund Democratic Party. Reagan and his backers had an agenda: to dismantle American government as we knew it, to roll back the New Deal and the Great Society, to get the public sector out of the business of helping people and give the benefits to private business. "Government," Reagan announced, "isn’t the solution. Government is the problem."

The Guardian was firmly planted on the other side. We supported public power, public parks, public services, public accountability. We had no blinders about the flaws of government agencies — I spent much of my time in the early years writing about the mess that was Muni — but in the end we realized that at least the public sector carried the hope of reform. And we saw San Francisco as a beacon for the nation, a place where urban America could resist the Reagan doctrine.

Unfortunately, the mayor of San Francisco in the Reagan years might as well have been a Republican. Dianne Feinstein’s faith in the private sector rivaled that of the new president. She turned the city’s future over to the big real estate developers. She vetoed rent control and gave the landlords everything they wanted. And when the budget was tight, she ignored our demands that downtown pay its fair share and instead raised bus fares and cut library hours.

When gay men started dying of a strange new disease, there was no public money or service program to help them, from Washington DC or San Francisco. So the community was forced to build a private infrastructure to take care of people with AIDS — and years later, as Amanda Witherell notes in this issue, those private foundations became secretive and unaccountable.

In 1994 we got a tip that something funny was going on at the Presidio. The Sixth Army was leaving and turning perhaps the most valuable piece of urban real estate on Earth over to the National Park Service … in theory. In practice, we learned, some of the biggest corporations in town had come together with a different plan — to create a privatized park — and Rep. Nancy Pelosi was carrying their water. Every detail of the Presidio privatization made the front page of the Guardian — and still, the entire Democratic Party power structure (and much of the environmental movement) lined up behind Pelosi. Now we have a corporate park on public land, with that great pauper George Lucas winning a $60 million tax break to build a commercial office building in a national park.

And still, it continues.

Mayor Gavin Newsom, a rising star in the Democratic Party, who told us he’s no fan of privatization, demonstrated the opposite in one of his signature political campaigns this year: he tried (and is still trying) to turn over the city’s broadband infrastructure — something that will be as important in this century as highways and bridges were in the last — to a private company. That’s what the whole wi-fi deal (now on the ballot as Proposition J) is about; the city could easily and affordably create its own system to deliver cheap Internet access to every resident and business. Instead, Newsom wants the private sector to do the job.

The Department of Public Health is running public money through a private foundation in a truly shady deal. The mayor’s Connect programs operate as public-private partnerships. Newsom wants to privatize the city’s golf courses, and maybe Camp Mather. He’s prepared to give one of the worst corporations in the country — Clear Channel Communications — the right to build and sell ads on bus shelters (and nobody has ever explained to us why the city can’t do that job and keep all the revenue). Housing policy? That depends entirely on what the private sector wants — and when we challenged Newsom on that in a recent interview, he snidely proclaimed that the city simply has to follow the lead of the developers because "we don’t live in a socialist society."

This is not how the city of San Francisco ought to be behaving. Because when you give public land, public services, public institutions, and public planning initiatives to the private sector, you get high prices, backroom deals, secrecy, corruption — and a community that’s given up on the notion of government as part of the solution, not just part of the problem.

You start acting like the people who have been running Washington DC since 1980 — instead of promoting a city policy and culture that ought to be a loud, visible, proud, and shining example of a different kind of America.

San Francisco Whiskyfest

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PREVIEW There’s a reason rich people are so productive: they don’t get hangovers. And it’s not the unlimited access they have to Tylenol PM–Ambien cocktails that keeps them good the morning after. No, it’s the unlimited access to rare and expensive whiskeys. Rich people tell me they can drink near a liquid ton of the handcrafted stuff and still wake up with a fresh-enough head to whip their servants. Yes, it’s true. The best hangover cure is to settle down with a pricey bottle of whiskey the night before.

For the past several months, under the cover of night and in back alleys, the wheels have been set in motion to bring an occasion of drinking such expensive whiskey to the masses. For the not-too-cheap price of $105, attendees of the San Francisco Whiskyfest can enjoy samples of 200 of the world’s finest, rarest, and most expensive single-malt and blended whiskies. Yes, this is supposedly America’s largest whiskey celebration, but there will be high-end rums, tequilas, and beer on hand for the more adventurous. That’s not to mention the expansive buffet and Fiji Water for tasters to clear their palettes. Of course, such an evening would go to waste if there were no knowledge to be gleaned. Besides conducting priceless and slurred give-and-takes with the whiskey vendors, festgoers can attend straight-up presentations from people like Fred Noe, the great-grandson of Jim Beam.

SAN FRANCISCO WHISKYFEST Tues/23, 6:30–10 p.m., $105. Hyatt Regency San Francisco, 5 Embarcadero Center, SF. (415) 788-1234, www.maltadvocate.com/whiskeyfest-sf.asp

Ken Garcia is right!

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Wow, never thought I’d write that sentence.

But Garcia picked up on a story today that I’ve been following, too, and he’s got the point basically right: A property owner whose case is coming up tomorrow before the Board of Appeals claims that Clear Channel tried to shake him down, demanding he accept a lousy contract — and when he didn’t, the company pulled a billboard off his building and made sure that he could never lease the space to anyone else.

The building owner, Cheon Hool Lee, isn’t exactly an impoverished victim; he’s a retired dentist who owns several commercial properties in the city and lives in Hillsborough. He’s a Korean immigrant who has done well in the United States, and one of the things he did was buy a piece of property on Market Street that had a billboard on top — a valuable billboard in a prime location. In legal papers, Lee and his son Tony assert that they’vbe been told similar billboards in similar places rent for $10,000 – $15,000 a month (and that’s about what I’ve seen from my experience watching the cost of political ads on billboards, too.)

Clear Channel had a lease on the billboard at 2283 Market and was paying the Lee family $697 a month.

Lee wanted more, and when the lease expired, he tried to raise Clear Channel’s rent. According to the legal briefs, Tony Lee contacted other competing billboard companies and other industry professionals who told him that comparable properties rented for “in excess of 10 to 30 times” what Clear Channel was paying.

“I spent hundreds of hours in the last few months trying to be reasonable with them,” Tony Lee told me.

And here, according to the legal filings, is what Clear Channel said: Take our deal — or you get nothing at all.

That’s because city law says that no new billboards can be constructed in San Francisco — and if an existing billboard comes down, it can’t be replaced. So Clear Channel one Sunday evening showed up with a crew and took the billboard structure on Lee’s building down. Now he gets no rent at all — and can’t replace it.

Although Lee technically owned the structure and the building it sat on, and could have rented it to a Clear Channel competitor, it’s gone now — and unless the Board of Appeals supports the Lee’s plea, it will be gone for good.

The message: Mess with mighty Clear Channel, refuse to accept our bad contract, and we’ll screw you.

There are, of course, complicated legal issues here: Who exactly has the “right” to a billboard, the building owner or the company that leases the space and resells it? Did Clear Channel have the right to put a crew on top of Lee’s building without his permission and take down a structure? Does the city’s ban on new billboards apply even when a billboard was improperly taken down?

I’m no fan of billboards, and I’m not a lawyer, so I’m not going to try to sort that all out. I’ve called Clear Channel’s lawyer, who said he can’t comment and sent me to the company’s government affairs office, where I’ve left a message and haven’t heard back. I’ll keep trying to get the company’s response and will update this post when and if I get it.

But I will say that at this point, it sure looks like one of the biggest media companies in the nation is doing something pretty damn sleazy.

Examiner sells out San Francisco

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The San Francisco Examiner called Prop. H “a veritable minefield of unintended consequences. It could actually take away parking, harm business, reduce new housing and drive out neighborhood retail. By now, Californians should be wary of unexpected mischief unleashed from propositions that legislate by direct referendum.”
We should also be wary of self-serving Republican billionaires like Don Fisher, who is sponsoring Prop. H, and Phil Anschutz, who owns the Examiner and has used its editorial page to attack progressives values like smart planning and reasonable regulation of greedy capitalists who would harm the public interest.
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Why would I say such things about the Examiner, whose editorial also noted that “If the initiative organizers had faced harder questioning, they might have recognized that merely adding parking to a fast-growing downtown is likely to make already-bad congestion dramatically worse.”? Well, because it wrote this honest assessment of the measure back on Aug. 2, and even though Prop. H hasn’t changed since then, the Examiner yesterday used its front page endorsements to urge a “yes” vote on Prop. H. There was no explanation or arguments, just a simple position change on the most heinous and far-reaching ballot measure in years.

Not dead yet

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Guardian photo by Charles Russo
Chicken John Rinaldi’s quest to become the first San Francisco mayoral candidate to qualify for a grant of taxpayer money is still lumbering along like the zombies that attacked him last week, more than a month after the Aug. 28 deadline for raising $25,000 from at least 250 city residents. The Ethics Commission last night voted unanimously to allow Rinaldi one more submission of proof that those who gave to him through PayPal are city residents, overruling Ethics director John St. Croix that Rinaldi doesn’t qualify. At issue are whether to count contributions from city residents whose current addresses doesn’t match their drivers license addresses, a fairly common circumstance for the artists and techies who make up Rinaldi’s base. If the campaign can satisfy Ethics, it gets $50,000, and so its quest inches forward like the undead.

Sprechen Sie Hubba Hubba?

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By Amber Peckham

Mag ich ein Bier haben, bitte?

That’s German for “May I have a beer, please?” Memorize it, because burlesque-style Oktoberfest has come to San Francisco at last, thanks to the combined efforts of the Hubba Hubba Review and the DNA Lounge. The lederhosen-clad lovelies of Hubba Hubba will kick off the festivities around 10:15 this Friday with the best burlesque show this side of Bavaria, followed by magic and comedy acts, a DJ, and the swing stylings of local band Lee Presson and the Nails.

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Mein Gott! So hot! Sparkly Devil and Kingfish strut their stuff onstage during a performance.

Today’s Ammianoliner

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San Francisco finds solution to Halloween, calls in Blackwater.

(On the voice mail of Sup. Tom Ammiano) B3

Arnie takes over ferries, does Newsom take ferry?

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Gov. Arnold Schwarzenegger’s calvacade zoomed past me today as I left Alameda island. They were coming from the Alameda ferry terminal, where Arnie and SF Mayor Gavin Newsom and Oakland Mayor Ron Dellums had just held a press conference to mark the formation of a new agency.

It’s called the San Francisco Bay Area Water Emergency Transportation Authority, or WETA,and it’s aimed at bolstering ferry service as a fallback if a disaster takes out area bridges and highways. Like an earthquake or a Maze meltdown, we guess.

WETA was created by a bill that the Governor signed on Friday, October 12, and will get $250 million in infrastructure bonds passed last November to begin building more ferries and ferry terminals.

I suppose that means that there won’t be money for more free rides if and when emergencies happens. Remember the Maze meltdown earlier this year? At the time, I naively thought they’d make the ferries free for as long as it took to replace the freeway connector that had melted to toffee after a truck driver lost control of his rig and crashed.

But, no-oooo.

Fast, cheap, and out of control

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tredmond@sfbg.com

Click here for the Guardian‘s interview with Robert Reich.

The fall of the Berlin Wall in 1989 led a lot of pundits to talk about “the end of History.” The big battle of our lives, the defining philosophical and political conflict of the century, was over. Communism lost. Capitalism won.

But in the United States, the real war was just getting under way, a conflict between two visions of society: in one, the public sector, operating under a democratic system, dominated economic and political life; in the other, the central players in the game of life were private corporations. This war, which drags on today, poses a profound question: does the capitalist economy work for us — or are we slaves to its whims? The answer continues to transform almost every aspect of American life.

Clinton-era labor secretary Robert Reich, now a professor at UC Berkeley’s Goldman School of Public Policy, takes on a big piece of this epic struggle in his new book, Supercapitalism: The Transformation of Business, Democracy and Everyday Life. The cogent, well-documented, and critically important argument he makes is that the American people have prospered as consumers and investors at the expense of their role as citizens.

And in the end, we’ve been hurting ourselves.
This is the essential paradox of modern global capitalism: you can buy high-end electronics cheap, get amazing bargains at Wal-Mart, enjoy the growth of your 401(k) plan — and in the process, become poorer. Because the race to the bottom of the price chain and the top of the market has costs, and in the end, we’re all paying them. The only solution, Reich says, is a more aggressive government: more regulation, higher taxes, and, quite possibly, some consumer and investor sacrifices.

Reich goes back to what he calls the “Not Quite Golden Age,” the roughly 25 years after the end of World War II that were marked by continuous economic growth, relative prosperity, and remarkable (compared with today) economic equality. The top tax rate, for the very rich, was 91 percent (compared with 35 percent today). American industry was controlled by an oligopoly, in which a handful of businesses held the reins — and because they faced little competition, they were able to share their profits with labor. Back then, companies didn’t distribute their wealth to investors; it went to the employees.

For all the denunciation of socialism and idolization of the free market that goes on in American politics today, Reich points out that cold war America was defined by centralized economic planning. It just wasn’t the government doing that job; it was private industry.

He doesn’t contend that the model in operation back then was perfect — and anyone who has followed the postwar transformation of San Francisco, driven by secret private-sector planning, knows the painful impacts of such policies. But public resources were adequate to pay for massive infrastructure advances (the interstate highway system), gigantic educational benefits (the GI bill), and phenomenal tax breaks for home ownership. Labor unions, dealing with domestic companies that didn’t face competitors with cheaper offshore labor, were able to negotiate a division of the wealth that helped create the modern American middle class.

The gap between rich and poor was much, much smaller during that period than it is today; as Reich notes, “the potent incentive of great wealth was often absent,” so the economy was far more equitable and stable. High taxes on the rich didn’t slow a period of remarkable economic growth. And in 1964, 75 percent of the American public thought the government could be trusted to do the right thing most of the time — a statistic that seems inconceivable today.

That was, of course, before Vietnam, before Watergate, before the (first) energy crisis, stagflation, the California tax revolt, and cultural disillusion with the public sector, factors Reich doesn’t discuss in great detail.

But he does point to the changes that came in the 1980s and later: Deregulation, which transformed the banking industry, turning savers into investors. Globalization, which created a cutthroat type of capitalism promoting low prices and high returns at any cost. And government policies — such as the creation of private retirement plans and the promotion of the stock market as the central tool of investment — that encouraged Americans to focus on their own bottom line and ignore the larger issues facing society.

The result today, Reich says, is a supercapitalist world, in which you can fill your house with amazing piles of cheap stuff — but in the end those bargains wind up hurting you. “Consumers get great deals because workers get shafted,” he notes. “Ironically, they’re often the same people.”

Unlike a lot of people on the left, Reich doesn’t go around bashing big corporations and blaming them for society’s ills. In today’s ultracompetitive world, he says, corporations are simply doing what they have to do to survive: cutting costs, fighting for the bottom line, striving for the best possible returns for investors. There is no such thing as corporate social responsibility, he argues; under supercapitalism, it’s all about making money.
Instead of complaining about corporate greed, he says, we need to think as citizens and demand new rules, new laws and regulations, that force companies to do what we want them to do. We have to take back control of the American economy — and to do that, we have to reclaim democracy.

Reich places a large part of the blame on the role money has assumed in politics. He suggests that corporations, which are in reality just paper constructs, should be stripped of any rights to legal standing, any rights to participate in the public process — any rights to act as anything but pieces of paper. Campaign contributions should all be put into blind trusts: anyone could give money to a candidate, but that candidate would never be allowed to know who gave what.

Those reforms would be tough, and they might not happen anytime soon. But the value of this book isn’t in promoting any specific policy prescription. It’s about waking up and educating several generations of Americans who can’t seem to understand that you can’t have it all for free: that a decent society with universal health care, good public education, safe cities, and a commitment to protecting the environment requires some sacrifice; that the very rich (and even the run-of-the-mill well-off) among us have to pay taxes and accept responsibility for a decent nation and a decent world. That means creating a public sector we can trust — and not dismissing out of hand the notion that government has a positive role to play.

It’s the most important message anyone can impart today to the deluded, selfish population that makes up so much of modern America.

READING
Oct. 16, 7:30 p.m., free
Moe’s Books
2476 Telegraph, Berk.
(510) 849-2087, www.moesbooks.com

SUPERCAPITALISM: THE TRANSFORMATION OF BUSINESS, DEMOCRACY AND EVERYDAY LIFE
By Robert Reich
Knopf
272 pages
$25

Bilking the links

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By now, even most non-golfing residents of San Francisco have heard the dire refrain coming out of City Hall: San Francisco’s public golf courses are sucking millions of dollars from the city treasury! Dozens of media stories have trumpeted these bleak pronouncements, and city leaders are using the shortfall to push for outsourcing control of the century-old open spaces. But a Guardian review of the “Golf Fund” shows that the links are not nearly as down and out as pro-privatization forces have led us to believe.

Recreation and Park Department accounting documents we obtained show revenues at the city’s six publicly-owned golf courses last year were up nearly $1.5 million from 2005-2006 and over $2.2 million dollars from 2004-2005, an increase of nearly 30 percent. But the costs of a lavish contract with a large, out-of-state golf management corporation have risen precipitously over the same time frame and drained off most of these new funds.

For the 2006-2007 fiscal year, the city shelled out more than $3.25 million to Kemper Sports Management to operate the pro shop and clubhouse at the Harding Park Golf Course and its nine-hole neighbor, Fleming. By comparison, in 2004-2005, Kemper’s tab at Harding and Fleming was a still eye-popping $2.07 million, but that number was nearly $1.2 million less than what the city had to pay last year. These increased costs, as well as a hefty loan repayment for Harding Park’s botched remodel in 2002 and 2003, have eaten up the links’ improved revenues and forced the city to throw in an extra $1.4 million from the General Fund to keep golf solvent.

“What’s going on up at Harding is a disaster,” Bob Killian told the Guardian. Killian ran the city’s golf operations profitably for two decades until 2001. “When I was in charge, we had contracts with various managers for the pro shops and the restaurants and they made us money. They paid us. Now, Harding is run at a deficit. Where the fuck is the money going? What’s it for? Nobody knows. It’s all this big secret … It’s a scandal.”

Kemper’s seven year deal is unique, to say the least. At every other publicly managed course, the city leases control of the pro shops and clubhouses to outside companies. In exchange for a flat fee paid into city coffers, those companies bear all the risk, and reap most of the rewards, for operating the facilities. But at Harding, the city pays the Illinois-based Kemper $192,000 a year, regardless of their performance, to act as an on-site manager, plus a 5% “incentive fee” for gross revenues over $6 million. But those guaranteed sums are only the beginning of the bill.

Kemper hires staff, rents golf carts, and orders the supplies to be sold in the pro shop and the clubhouse. Unlike the city’s lease arrangements at other courses, though, they bear none of the risk. They simply invoice the city for their expenses and the city signs the tab. And the tab just keeps growing.

One public golf insider who declined to be identified for fear of retribution grumbled, “They’ve got this enormous staff there, managers and assistant managers and assistants to assistants of managers. It’s a golf course, not a hospital! I hear the payroll for the restaurant alone is like $600,000. And it’s only open for one shift a day … They stock their pro shop with top of the line gear that just sits there. If they order 20 Arnold Palmer shirts and only sell two, who cares? The city still pays for all 20.”

In an email to the Guardian, Kemper’s general manager at Harding, Steve Argo, told us they have between 60 and 80 employees, depending on the season. Citing this seasonal variability and “competitive reasons,” he did not break those numbers down between management and non-management, as we requested.

Both Argo and Katharine Petrucione, Rec and Parks’ Chief Financial Officer, attributed much of the added costs at Harding to the opening of a new “permanent clubhouse” there in late 2005. Argo said the increased revenues from the clubhouse have “more than covered the city’s increase in payments.” But while Rec and Parks’ ledgers do show that concessions revenues at Harding and Fleming have gone up since the clubhouse opened, the increase in Kemper’s bill has gone up nearly as much. All in all, with Kemper’s multimillion dollar deal and loan payments for the over-budget remodel at the course, accounts still put the course at more $500,000 dollars in the red – even though a round of golf there now costs well over $100 and Kemper is still making a handsome profit.

It doesn’t end there. Petrucione said Kemper’s contract actually costs taxpayers even more than meets the eye. Because the company submits monthly and yearly budget projections, as well as reams of invoices and expenses for reimbursement, Rec and Park staffers spend hours examining Kemper’s paperwork and activities – essentially managing the manager. When we asked her for an accounting of how much the Kemper contract costs the city in staff hours for these oversight duties, Petrucione replied, “It definitely requires more time and effort … than a lease agreement [like those at every other course] would.”

During a recent radio interview, Sup. Jake McGoldrick called Rec and Park’s deal with Kemper, “The worst contract I’ve ever seen…We don’t have a golfer problem,” he added. “Golfers are coming out and playing. We have an accountancy problem.”

The golf insider we spoke with echoed McGoldrick’s sentiments, “Business is up like 30% this year, but Kemper’s contract is jeopardizing the whole department … If we redid the greens, tees and fairways [at the other courses besides Harding], just Band-aid stuff like that, we would have the premiere municipal system in the country. But instead they’ve given this cushy deal to a company from Chicago with no connection to San Francisco. It’s so unfair.”

Despite the controversy over Kemper’s all-expenses-paid arrangement, Mayor Gavin Newsom, Rec and Park general manager Yomi Agunbiade, and others at City Hall have been using the deficits largely brought on by Kemper’s contract to push for more private control over the city’s links. In June, the Mayor’s office put forward a plan to outsource not just clubhouse and pro shop management, but all golf operations at the city’s premiere courses, including Harding. The proposal was tabled after several contentious hearings at the Board of Supervisors, but many observers expect that it will make its way back to the Board in the near future.

“In a perfect scenario the city could [manage the courses efficiently] but the city has proven that it doesn’t have the ability to do it,” Supervisor Sean Elsbernd told us back in July. Elsbernd has been one of the most vocal supporters of bringing in private golf management.

But McGoldrick, Killian and other opponents of the idea point out that the city provided quality, inexpensive golf for nearly 100 years. They worry that private managers will find profit in higher greens fees, more part time workers, and lower salaries and less benefits for full time staff. But beyond those concerns, they see the Mayor’s plan as yet another example of publicly owned assets being offered up for private gain.

The courses, McGoldrick told us, are “priceless … we can’t just dump [them] because you’ve got folks from the Mayor’s office and his Rec and Park department who don’t want to be bothered.”

SFist thinks we’re commies

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So the folks at SFist have decided that we’re all commies over here because we think it’s okay to tax the rich and provide services for the homeless.

I thought we were all too intelligent in these circles to resort to stupid quips about the “proletariat,” and I’ve posted a response on SFist. But since I’ve had to have this fight since I was an economics major at Wesleyan way back in the dark ages, I have to make a point here:

The Soviet Union as we knew it in the post-War era was not built by Karl Marx. There were some guys named Lenin and Stalin who built a political system in the name of his economic theories. Neither of them had much use for democracy or freedom. One of them was a savage butcher.

That said, you have to admit that Marx was, and remains, one of the most important economists of the modern era. You can’t understand capitalism just by reading Adam Smith and John Maynard Keynes. The critique of capital that Marx put forward was brilliant; I never fully understood the role of labor in productivity and the way labor-price theory actually works until I studied Marx. So yeah, he should be on the reading list of anyone who wants to talk intelligently about economics.

I would add Robert Reich’s Supercapitalism to Steve’s reading list, too; I did an interview with him last week which will be posted on sfbg.com shortly.

The theory of money — how it’s created, what it is, how it effects the economy — is that stuff of dozens of textbooks and a thousand doctoral theses. But the bottom line is, money today is not a direct measure of labor productivity; it’s a far more artifical construct, as Steve points out. Money is created by the federal reserve and by private banks. At times, the government in effect prints more money at the mint to inject it into the economy. In practice, money — the dollar — is an internationally traded commodity, and the money supply in the United States is desperately hard to even track,much less manage or control.

Yes, taxes come from labor. But these days, a sane system would tax investment income and speculative income much higher than what we typically think of as labor. And a lot of the economy today is built on investment income and speculation that has nothing to do with productive labor.

Yeah, it’s all more complicated than that, but folks: If you can’t understand that money doesn’t directly equal labor, and that you can use Marx’s economic analysis without being a commie .. geez. I thought people in San Francisco were smarter than that.

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