Tech Boom

Man for the moment?

Andrew Lam
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25
Man for the moment?

steve@sfbg.com

This year’s supervisorial race in District 5 — representing the Haight, Panhandle, and Western Addition, some of the most reliably progressive precincts in the city — has been frustrating for local leftists. But as the long and turbulent campaign enters its final week, some are speculating that John Rizzo, whose politics are solid and campaign lackluster, could be well-positioned to capitalize on this strange political moment.

Appointed incumbent Sup. Christina Olague has been a disappointment to some of her longtime progressive allies, although she’s now enjoying a resurgence of support on the left in the wake of her vote to reinstate Sheriff Ross Mirkarimi. Now two allies of the mayor — tech titan Ron Conway and landlord Thomas Coates — are funding a $120,000 last-minute attack on Olague.

The campaign of one-time left favorite Julian Davis lost most of its progressive supporters following his recent mishandling of accusations of bad behavior toward women (see “Julian Davis should drop out,” 10/16).

The biggest fear among progressive leaders is that London Breed, a well-funded moderate candidate being strongly supported by real estate and other powerful interests, will win the race and tip the Board of Supervisors to the right. The final leg of the campaign could be nasty battle between Breed and Olague and their supporters, who tend to see it as a two-person race at this point.

But in a divisive political climate fed by the Mirkarimi and Davis scandals and the unprecedented flood of hundreds of thousands of dollars in real estate and tech money, it’s hard to say what D5 voters will do, particularly given the unpredictably of how they will use ranked-choice voting to sort through this mess.

Running just behind these three tarnished and targeted candidates in terms of money and endorsements are Rizzo and small business person Thea Selby, who described their candidacies as “the grown-ups in the room, so there’s an opportunity there and I’m hopeful.”

Selby hasn’t held elective office and doesn’t have same name-recognition and progressive history as Rizzo, although she has one of the Guardian’s endorsements. It probably didn’t help win progressive confidence when the downtown-backed Alliance for Jobs and Sustainable Growth recently did an independent expenditure on behalf of both Selby and Breed.

And then there’s Rizzo, who has been like the tortoise in this race, quietly spending his days on the streets meeting voters. Between fundraising and public financing, Rizzo collected about $65,000 as of Oct. 20 (compared to Breed’s nearly $250,000), but he’s been smart and frugal with it and has almost $20,000 in the bank for the final stretch, more than either Olague or Davis.

But perhaps more important than money or retail politics, if indeed D5 voters continue their strongly progressive voting trends, are two key facts: Rizzo is the most clear and consistent longtime progressive activist in the race — and he’s a nice, dependable guy who lacks the oversized ego of many of this city’s leaders.

“I see consistency there and a lack of drama,” Assembly member Tom Ammiano, an early Rizzo endorser, told us. “He’s looking not like a flip-flopper, not like he owes anyone, and he doesn’t have a storied past.”

 

PROGRESSIVE HISTORY

Rizzo, who was born in New York City 54 years ago, is downright boring by San Francisco standards, particularly given his long history in a local progressive movement known for producing fiery warriors like Chris Daly, shrewd strategists like Aaron Peskin, colorful commenters like Ammiano, bohemian thinkers like Matt Gonzalez, and flawed idealists like Ross Mirkarimi.

Rizzo is a soft-spoken family man who has lived in the same building on Waller Street in the Haight-Ashbury for the last 27 years. Originally, he and Christine, his wife of 25 years, rented their apartment in a tenancy-in-common building before they bought it in the early 1990s, although he’s quick to add, “In all the years we’ve owned it, we never applied for condoship.”

He supports the city’s limits on condo conversions as important to protecting working-class housing, although he said, “The focus should be on building new affordable housing.” That’s an issue Rizzo has worked on since joining the Sierra Club’s San Francisco Bay Chapter more than 20 years ago, an early advocate for broadening the chapter’s view of environmentalism.

He’s a Muni rider who hasn’t owned a car since 1987.

Michelle Myers, director of the Sierra Club’s San Francisco Bay Chapter, said Rizzo brings a wealth of experience, established relationships, and shrewd judgment to his role as the group’s political chair. “We really rely on John’s ability to weigh what is politically feasible, not just what’s ideal in our minds,” she told us.

Yet that political realism shouldn’t be confused for a lack of willingness to fight for big, important goals. Rizzo has been an advocate for public power in San Francisco for many years, strategizing with then-Sup. Ammiano in 2001 to implement a community choice aggregation program, efforts that led to this year’s historic passage of the CleanPowerSF program (with a key vote of support by Olague) over the objections of Mayor Lee and some business leaders.

“CleanPowerSF was carried by John Rizzo, who has been working on that issue for 10 years,” Myers said.

Rizzo is a technology writer, working for prospering computer magazines in the 1990s “until they all went away with the dot.com bubble,” as well as books (his 14th book, Mountain Lion Server for Dummies, comes out soon).

He sees the “positives and the negatives” of the last tech boom and this one, focusing on solving problems like the Google and Genetech buses blocking traffic or Muni bus stops. “On the one hand, these people aren’t driving, but on the other hand, they’re unregulated and using our bus stops,” he said. “We need to find some solution to accommodate them. Charge them for it, but accommodate them.”

That’s typical of how Rizzo approaches issues, wanting to work with people to find solutions. As president of the City College of San Francisco Board of Trustees, Rizzo suffered the bad timing of the district having its accreditation threatened just as his supervisorial race was getting underway, but he’s steadily worked through the administrative problems that predated his tenure, starting with the criminal antics of former Chancellor Phil Day and continuing with “a management structure still in place, and it had calcified.”

Despite being on the campaign trail, Rizzo called the trustees together six times in August to deal with the accreditation problems. “We now have a plan that shows all the things the district needs to do to keep it afloat. City College is back on track.”

 

WEAKNESS BECOMES STRENGTH

Eileen Hansen — a longtime progressive activist, former D8 supervisorial candidate, and former Ethics Commissioner — gave her early endorsement to Rizzo, who never really seemed to catch fire. “There hasn’t been a lot of flash and I would love for there to be more energy,” she admitted.

So, like many progressive leaders, she later offered her endorsement to Davis, believing he had the energy needed to win the race. But after Davis’ problems, Hansen withdrew that endorsement and sees Rizzo as the antidote to its problems.

“We are in such a mess in D5, and I’m hoping they will say, ‘enough already, let’s find someone who’s just good on the issues, and that’s John,” Hansen said. “As a progressive, if you look at his stands over many years, I’d be hard-pressed to find an issue I don’t agree with him on. He’s a consistent, strong progressive voice, someone you can count on who’s not aligned with some power base.”

Other prominent progressive leaders agree.

“What some people may have viewed as his weak point may end up being his strength,” said former Board President Aaron Peskin, who endorsed Rizzo after the problems surfaced with Davis. “A calm, steady, cool, collected, dispassionate progressive may actually be the right thing for this moment.”

Sup. Malia Cohen, a likable candidate who rose from fourth place on election night to win a heated District 10 supervisorial race two years ago, is a testament to how ranked-choice voting opens up lots of new possibilities.

“Ranked choice voting defies conventional wisdom,” Peskin said. “There may be Julian Davis supporters and Christina Olague supporters and London Breed supporters who all place John Rizzo as their second.”

In fact, during our endorsement interviews and in a number of debates and campaign events, nearly every candidate in the race mentioned Rizzo as a good second choice.

Yet Rizzo doesn’t mince words when he talks about the need for reconstitute the progressive movement after the deceptions and big-money interests that brought Mayor Lee and “his fake age of civility” to power. Lee promised not to seek a full term “and he broke the deal,” Rizzo said. “And it was a public deal he broke, not some backroom deal.” 

That betrayal and the money-driven politics that Lee ushered in, combined with the divisive political climate that Lee’s long effort to remove Mirkarimi from office created, has deeply damaged the city’s political system. “I think the climate is very bad It’s bad for progressives, and just bad for politics because it’s turning voters off,” Rizzo said.

He wants to find ways to empower average San Franciscans and get them engaged with helping shape the city’s future.

“We need a new strategy. We need to regroup and think about things long and hard. I think it’s not working here. We’re doing the same things and it’s not working out. The money is winning.” He doesn’t think the answers lie in continued conflict, or with any individual politicians “because people are flawed, everyone is,” Rizzo said.

Yet Rizzo’s main flaw in the rough-and-tumble world of political campaigns may be that he’s too nice, too reluctant to toot his horn or beat his chest. “That kind of style is not me. That aggressive person is not who I am,” Rizzo said. “But I think voters like that. Voters do want someone who is going to focus on policy and not themselves.”

San Francisco Stories: The literary life

Andrew Lam
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9
San Francisco Stories: The literary life

tredmond@sfbg.com

A few months before I graduated from college, a group of Distinguished Literary Figures came to my Fancy Eastern University and gave a special seminar on careers in literature. At least 150 of my classmates showed up in their $80 Frye boots and their shirts with the alligators on them and the attitudes they’d carefully honed during a life in which things pretty much went their way.

After an erudite discussion of the lofty (the philosophy of writing) and the mundane (write every day and don’t send bad photocopies of your manuscript to your publisher), one of the DLF’s asked for a show of hands: How many of you are planning a career as a writer?

Every hand in the room shot up. And I looked around and said to myself:

No you aren’t.

No, most of you people will never be writers. Because you’re too fucking happy. Because you’re all well-adjusted young men and women with real futures, who will want jobs that pay and apartments with heat and decent food and cars that start and clothes that look cool, and cappuccino that someone else makes for you, and vacations in nice places where the sun always shines.

You’ll never be writers. You don’t know enough about life.

*****

A year or so later, I was sitting in the makeshift loft of my $175-a-month illegal storefront apartment, and my fingers were so cold that I couldn’t work the cheap and nasty typewriter very well, and there wasn’t any heat and the only way to get rid of the chill was to turn on the oven, which was a very bad idea because a banged-up British motorcycle shared the concrete floor of my room with me and the gas tank leaked, not enough to spill but enough that after five or six hours the collected aromatic hydrocarbons in the air were probably enough to ignite and consume me and half the neighborhood in a cataclysmic fireball. So: we sat in the cold.

My girlfriend had left me; her cat was gone but the place was full of fleas, and I’d picked one out of my mustache that morning when I tried to shave. I was finishing a story about antinuclear protests for a magazine that would soon fold, but maybe not before I got my $200 check, and all I could think about was:

I still have a couple cold beers, and Brian Eno on the box, the toilet hadn’t overflowed yet this week — and fuck: This is about as good as it gets.

This is how young writers live.

We don’t ask for much, writers. We don’t need better iPhones or wifi at Union Square or tax breaks. What we need, and have always needed, is chaos, misery, and grit. We need places where money doesn’t rule and where everything isn’t comfortable. We need, more than anything, a kind of cheap that isn’t cool.

You go to the Salvation Army or Goodwill these days and you don’t see many writers who have day jobs as temps in the Zone buying the crummiest suits and ties they can get away with; it’s all, like, hipster fashion.

Writers need real cheap. They need $2 beers and $4 burritos and crappy places to live that cost less than you can make selling a story or two a month. They need to exist, for real, not just for fun, in a world outside the bubble — and they need a city that makes room for that to happen.

I love where I live, but it’s failing me. And I sometimes think that nobody in charge really cares.

*****

The Bay Guardian turns 46 this week. I’ve been part of it for more than half its life, since I sold my first story to the paper in 1982, a shocking expose about police harassing homeless people for sitting on the sidewalk. I got paid $50. It was a huge deal. I ran right out and bought a bottle of whiskey.

The Guardian was always more of a reporter’s paper than a writer’s paper — we wanted news, facts, information more than we wanted flair. And that’s as it should be in a newspaper. But we’ve also always appreciated the local literary scene, and have always been a place where young (and old) writers could find their voices and tell stories.

Now the paper’s under new ownership, and for our birthday, we contacted some of the best writers we could find in town and asked them to tell us their San Francisco story. What is the city’s literary narrative? What, to use a horrible cliché, do we talk about when we talk about San Francisco?

I’m not surprised that some of what we got was about rent — about the fact that nobody like us can live here anymore without rent control, that the housing crisis brought on by the latest tech boom has made it a terribly unfriendly city for writers.

But they also talked about beauty and passion and the reasons that, despite it all, we remain.

*****

One day after I’d been in San Francisco a few years, my brother called me from Boulder, Colorado, where he’d enrolled as a University of Colorado student. “I can’t stand it here,” he said. “There aren’t any fucking problems.”

Yep — everyone he saw in Boulder was rich and white and clean and educated and healthy. He dropped out pretty quickly, and went back to his America, where it’s nasty and you fight for every scrap and life sucks and then you die — but along the way, you meet the greatest people in the world and you live and love and get in some awesome kicks.

Me, I stayed in my city, a place worth fighting for.

I spent my childhood and college years in New York and Connecticut; I grew up in San Francisco. This is my place in the world, and, as the late great John D. MacDonald said of Florida, “It is where I am and where I will stay, right up to the point where the Neptune Society sprinkles me into the dilute sewage off the Fun Coast.”

And for better and for worse, San Francisco is a great story, a world of love and hope and fear and greed and all these people who wake up every morning and try to make it and the world a better place, often against the greatest possible odds.

Herb Caen said it once: “Love makes this town go ’round. Love and hate, pot and booze, despair and buckets of coffee, most of it stale.” We are strange, and we are proud, and we are freaks, and while our local politicians try to tamp us down and make us normal, the rest of the world treats us as special because of who and what we are.

We are immigrants, most of us, and we all love the city we once knew, and those of us who have been here a while are the worst kind of radicals, the ones who hate change … but inside us, inside the ones who know and care and believe, there’s a heartbeat that says: We have something special here, and part of it comes from tradition, and part of it comes from the shabby underclass side of life, from the fight against greed and landlords and smart-eyed speculators who want to charge for what San Francisco once gave away free.

And that’s a kind of style and class that doesn’t fit into anyone’s portfolio of stock options.

I can talk about policy options all night. It’s a disease you get when writing becomes journalism and the fight goes out of the pen in your hand and into the pen where the decisions that change your life get made. I could tell you a thousand ways that San Francisco can stop becoming a city of the rich and too fucking cool for words and could give a little, tiny bit of its soul to the population that made it great.

I could say that the dot.com booms that ruined so much of this city’s crazy madness would never have happened without the Beats and the Summer of Love, and that we ought to honor our ancestors — even if it means the newcomers have to do what everyone else did, and live a little lower for a while.

I could make the case that housing in San Francisco ought to be treated like a public utility, dispensed by seniority, so the folks who worked for 30 years trying to build community without making a lot of cash get priority over the ones who arrived yesterday, with gobs of money and no concept of what the people who came before them did to make this city great.

But mostly I want to say this:

It’s not pretty, being a writer. The ones who succeed are few, and the ones who fail are many, and the city’s poorer for every one who is force to give up because the city would rather have rich people than people who live on the edge.

But in my San Francisco, some people still make it. I love them all. It gives me hope.

Compromise measures

Andrew Lam
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3
Compromise measures

news@sfbg.com

San Franciscans are poised to vote this November on two important, complicated, and interdependent ballot measures — one a sweeping overhaul of the city’s business tax, the other creating an Affordable Housing Trust Fund that relies on the first measure’s steep increase in business license fees — that were the products of intense backroom negotiations over the last six months.

Mayor Ed Lee and his business community allies sought a revenue-neutral business tax reform measure that might have had to compete against an alternative proposal developed by Sup. John Avalos and his labor and progressive allies, who sought around $40 million in new revenue, although both sides wanted to avoid that fight and find a compromise measure.

Meanwhile, Mayor Lee was having trouble securing business community support for the housing trust fund that he pledged to create during his inaugural address in City Hall in January. So he modified his business tax proposal to bring in $13 million that would be dedicated to the Affordable Housing Trust Fund, but that didn’t satisfy the Avalos camp, who insisted the city needed more general revenue to offset cuts to city services and help with the city’s structural budget deficit.

Less than a day before the competing business reform measures came before the Board of Supervisors on July 24, a compromise was finally struck that would bring $28.5 million a year, with $13 million of that set aside for the affordable housing fund, tying the fate of the two measures together and creating a kumbaya moment at City Hall that was reminiscent of last year’s successful pension reform deal between labor and the business community.

But there was one voice raised at that July 24 meeting, that of Sup. David Campos, who asked questions and expressed concerns over whether this deal will adequately address the “crisis” faced by the working class in a city that will continue to gentrify even if both of these measures pass. Affordable housing construction still won’t meet the long-term needs outlined in the city’s Housing Element that indicates 60 percent of housing construction would need public subsidies to be affordable to current city residents.

It’s also worth asking why a business tax reform measure that doubles the tax base — just 8.4 percent of businesses in San Francisco now pay the payroll tax, whereas 16.4 percent would pay the gross receipts tax that replaces it — doesn’t increase its current funding level of $410 million (the $28.5 million comes from increased business license fees). Some industries — most notably the technology and restaurant industries that have strongly supported Mayor Lee’s political ambitions — could receive substantial tax cuts.

Politics is about compromise, and Avalos tells us that in the current political climate, these measures are the best that we can hope for and worthy of progressive support. And that may be true, but it also indicates that San Francisco will continue to be more welcoming to businesses than the working class residents struggling to remain here.

 

SOARING HOUSING COSTS

As Mayor Lee acknowledged during his inaugural speech, the boom times in the technology industry has also been driving up commercial and residential rents, he sought to create “housing for the 100 percent.”

The median rent in San Francisco has been steadily rising, jumping again in June an astounding 12.9 percent over June of last year, according to real estate monitor RealFacts, leaving renters shelling out on average an extra $350 a month to landlords.

Driven by a booming tech industry and a lag in new housing, the average San Francisco apartment now rents for $2,734. That’s an annual increase of $4,000 per unit over last year, in a city that saw the highest jumps in rent nationally in the first quarter of 2012. Even prices for the average studio apartment have edged up to $1,800 a month.

The affordability gap between housing and wages in the city is stark. Somebody spending a quarter of their income on rent would need to be making $85,000 a year just to keep up with the average studio. With a mean wage of $64,820 in the San Francisco metro area, even middle class San Franciscans have a difficult time affording a modest apartment. For the city’s lowest paid workers, even earning the country’s highest minimum wage of $10.25 an hour, even devoting every earned dollar to rent still wouldn’t pay for the average small studio apartment.

For those looking to buy a home in the city, it can be a huge hurdle to put aside a down payment while keeping up with the city’s high rents. Almost 90 percent of San Franciscans cannot afford a market rate home in the city. The average San Francisco home price was up 1.9 percent in June over May, climbing to $713,500, or a leap of $50,000 per unit over last year’s prices.

In the 2010 census, before the recent boom in the local real estate market, San Francisco already ranked third in the nation for worst ratio between income and home ownership prices, behind Honolulu and Santa Cruz.

But as the city leadership grapples to mitigate the tech boom’s effects, the lingering recession and conservative opposition to new taxes have gutted state and federal funds for affordable housing. Capped off last December by the California Legislature’s decision to dissolve the State Redevelopment Agency, a major source of money for creating affordable housing, San Francisco has seen a drop of $56 million in annual affordable housing funds since 2007.

Trying to address dwindling funding for affordable housing, the Board of Supervisors voted 8-2 on July 24 to place the Affordable Housing Trust Fund measure on the fall ballot. Only the most conservative supervisors, Sups. Sean Elsbernd and Carmen Chu, opposed the proposal. Sup. Mark Farrell, who has signaled his support for the measure, was absent.

“Creating a permanent source of revenue to fund the production of housing in San Francisco will ensure that San Francisco is a viable place to live and work for everyone, at every level of the economic spectrum. I applaud the Board of Supervisors,” Mayor Lee said in response.

At the heart of the program, the city hopes to create 9,000 new units of affordable housing over 30 years. The measure would set aside money to help stabilize the ongoing foreclosure crisis and replenish the funds of a down payment assistance program for those earning 80 to 120 percent of the median income.

To do so, the city anticipates spending $1.2 billion over the 30-year lifespan of the program, with a $20 million annual contribution the first year increasing $2.5 million annually in subsequent years. It would fold some existing funding in with new revenue sources, including $13 million yearly from the business tax reform measure. Language in the housing fund measure would allow Mayor Lee to veto it is the business tax reform measure fails.

The board was forced to delay consideration of the business tax measure until July 31 because of changes in the freshly merged measures. That meeting was after Guardian press time, although with nine co-sponsors on the board, its passage seemed assured even before the Budget and Legislative Analysts Office had not yet assessed its impacts, as Campos requested on July 24.

“I do believe that we have to ask certain questions when a proposal of this magnitude comes forward,” Campos said at the hearing, later adding, “When you have a proposal of this magnitude, you’re not going to be able to adjust it for some time, so you want it to be right.”

The report that Campos requested, which came out in the late afternoon before the next day’s hearing, agreed that it would stabilize business tax revenue, but it raised concerns that some small businesses exempt from the payroll tax would pay more under the proposal and that it would create big winners and losers compared to the current system.

For example, it calculated that between the gross receipts tax and business license fee, a sample full service restaurant would pay 69 percent less taxes and a supermarket 33 percent less taxes, while a commercial real estate leasing firm would pay 46.7 percent more tax and a large engineering firm would see its business tax bills more than double.

Board President David Chiu, who has co-sponsored the business tax reform measure with Mayor Lee since its inception, agreed that it is a “once in a decade reform,” calling it a “compromise that reflects the best sense of that word.” And that view, that this is the best compromise city residents can expect, seems to be shared by leaders of various stripes.

 

BACKING THE COMPROMISE

The business community and fiscally conservative politicians have long called for the replacement of the city payroll tax — which they deride as a “job killer” because it uses labor costs to gauge the size of company’s size and ability to pay taxes — with a gross receipts tax that uses a different gauge. But the devil has been in the details.

Chiu praised the “dozens and dozens and dozens of companies that have worked with us to fine-tune this measure,” and press reports indicate that representatives of major corporations and economic sectors have all spent hours in the closed door meetings shaping the complicated formulas for how they will be taxed, which vary by industry.

When the Guardian made a Sunshine Ordinance request to the Mayor’s Office for a list of all the business representatives that have been involved in the meetings, its spokespersons said no such list exists. They have also asked for a time extension in our request to review all documents associated with the deliberations, delaying the review until next week at the earliest, after the board approves the measure.

But the business community seems to be on board, even though some economic sectors — including real estate firms and big construction companies — are expected to face tax hikes.

“The general reaction has been neutral to favorable, and I expect we’ll be supportive,” Jim Lazarus, the vice president of public policy for the San Francisco Chamber of Commerce, who participated in crafting the proposal but who said the Chamber won’t have an official position until it votes later this week.

Lazarus noted the precipitous rise in annual business license fees — the top rate for the largest companies would go from just $500 now to $35,000 under the proposal, going up even more in the future as the Consumer Price Index rises — “but some of it will be offset by a drop in the payroll tax,” Lazarus said.

He also admitted that the new tax system will be “hugely complicated” compared to the payroll tax, with complex formulas that differ by sector and where economic transactions take place. But he said the Chamber has long supported the switch and he was happy to see a compromise.

“I’m assuming it will pass. I don’t believe there will be any major organized opposition to the measure,” Lazarus said.

Labor and progressive leaders also say the measure — which exempts small businesses with less than $1 million in revenue and has a steeply progressive business license fee scale — is a good proposal worth supporting, even if they didn’t get everything they wanted.

“We fared pretty well, the royal ‘we,’ with the mayor starting off from the position that he wanted a revenue-neutral proposition,” Chris Daly, who unsuccessfully championed affordable housing ballot measures as a supervisor before leaving office and becoming the political director for SEIU Local 1021, the largest union of city employees.

Both sides say they gave considerable ground to reach the compromise.

“Did we envision $28.5 million in new revenue? No,” said Lazarus, who had insisted from the beginning that the tax measure be revenue-neutral. “But we also didn’t envision the Affordable Housing Trust Fund.”

Daly and Avalos also said the measures need to be considered in the context of current political and economic realities.

“We were never going to be able to pass — or even to craft — a measure to meet all of the unmet needs in San Francisco,” Daly said. “Given the current political climate, we did very well.”

“If we had a different mayor who was more interested in serving directly the working class of the city, rather than supporting a business class that he hopes will serve all the people, the result might have been different,” Avalos said. “But what’s significant is we have a tax measure that really is progressive.”

Given that “we have an economic system that is based on profits and not human needs,” Avalos said, “This is a good step, better that we’ve had in decades.”

 

THE HOUSING CRISIS

The tax and housing measures certainly do address progressive priorities — bringing in more revenue and helping create affordable housing — even if some progressives express concerns that conditions in San Francisco could get worse for their vulnerable, working class constituents.

“I don’t know if the proposal before us is aggressive enough in terms of dealing with a crisis,” Campos told his colleagues on July 24 as they discussed the housing measure, later adding, “As good as this is, we are truly facing a crisis and a crisis requires a level of response that I unfortunately don’t think we are providing at this point.”

Not wanting to let “the perfect be the enemy of the good,” Campos said he still wanted to be able to support both measures, urging the board to have a more detailed discussion of their impacts.

“I wish this went further and created even more funding for critically needed affordable housing,” Sup. Eric Mar said before joining Campos in voting for the proposal anyway. “I think they need to build 60 percent of those units as below market rate otherwise we face more working families leaving the city, and the city becoming less diverse.”

Yet affordable housing advocates are desperate for something to replace the $56 million annual loss in affordable housing the city has faced in recent years, creating an immediate need for action and potentially allowing Lee to drive a wedge between the affordable housing advocates and labor if the latter held out for a better deal.

Many have heralded the mayor’s process in bringing together developers, housing advocates, and civic leaders to build a broad political consensus for the measure, particularly given the three affordable housing measures crafted by progressives over the last 10 years were all defeated by voters.

“One of the goals of any measure like this is for it to gain broad enough support to actually pass,” Sup. Scott Wiener said at a Rules Committee hearing on the measure.

In the measure’s grand bargain, developers receive a reduction in the percentage of on-site affordable housing units they are required to build, from 15 percent of units to 12 percent. The city will also buy some new housing units in large projects, paying market rate and then holding them as affordable housing — the buying power of which could be a boon to developers while creating affordable housing units.

At its root, the measure shifts some of the burden of funding affordable housing from developers to a broader tax base and locks in that agreement for 30 years, which could also spur market rate housing development in the process.

A late addition to the proposal by Farrell would create funding to help emergency workers with household earnings up to 150 percent of average median income buy homes in the city, citing a need to have these workers close at hand in the event of an earthquake or other emergency.

While some progressives have grumbled about the givebacks to developers and the high percentage of money going to homebuyer assistance in a city where almost two-thirds of residents rent, affordable housing advocates are pleased with the proposal.

“Did we gain out of this local package? Yes, we got 30 years of local funding. We came out net ahead in an environment where cities are crashing. We essentially caught ourselves way early from the end of redevelopment funds,” said Peter Cohen, executive director of the San Francisco Council of Community Housing Organizations.

Without it, Cohen says many affordable housing projects in the existing pipeline would be lost. “This last year was a bumpy year, and we will not be back to the same operation level for a number of years,” Cohen said. “There was a dip and we are coming out of that dip. It will take us a while to get back up to speed.”

The progressive side was also able to eliminate some of the more controversial items in the original proposal, including provisions that would expand the number of annual condo conversions allowed by the city and encourage rental properties to be converted into tenancies-in-common.

With ballot measures notoriously hard to amend, the Affordable Housing Trust Fund measure is a broad outline with many of the details of how the fund would be administered yet to be filled in. If passed, it will be up to Olson Lee, head of the Mayors Office on Housing and former local head of the demised redevelopment agency, to fill in the details, folding what was essential two partnered affordable housing agencies into a single local unit.

But even the most progressive members of the affordable housing community said there was no other alternative to addressing affordable housing in the wings — which is indeed a crisis now that redevelopment funds are gone — making this measure essential.

As Sara Shortt of the Housing Rights Committee of San Francisco told the Rules Committee, “We lost a very important funding mechanism. We have to replace it. We have no choice.”

Mecke joins crowded District 5 supervisorial race

Sasha Cuttler
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26
Mecke joins crowded District 5 supervisorial race

Progressive activist Quintin Mecke jumped into the District 5 supervisorial race today, echoing gentrification concerns raised this week by the Guardian and The New York Times and promising to be an independent representative of one of the city’s most progressive districts, a subtle dig at Sup. Christina Olague’s appointment by Mayor Ed Lee.

“The City is at an economic crossroads. As a 15 year resident of District 5, I cannot sit idly by while our City’s policies force out our residents and small businesses, recklessly pursuing profits for big business at whatever cost,” he began a letter to supporters announcing his candidacy, going on to cite the NYT article on the new tech boom that I wrote about earlier this week.

“What we do next will define the future of San Francisco; the city is always changing but what is important is how we choose to manage the change. One path leads to exponential rent increases, national corporate chain store proliferation, and conversion of rent-controlled housing. The other path leads to controlled and equitable growth, where the fruits of economic development are shared to promote and preserve what is great about this City and our district,” Mecke wrote.

Mecke came in second to Gavin Newsom in the 2007 mayor’s race and then served as the press secretary to Assembly member Tom Ammiano before leaving that post last week to run for office. Mecke joins Julian Davis and John Rizzo in challenging Olague from her left, while London Breed and Thea Selby are the leading moderates in a race that has 10 candidates so far, the largest field in the fall races.

Although he never mentioned Olague by name, Mecke closed his message by repeatedly noting his integrity and independence, a theme that is likely to be a strong one in this race as Olague balances her progressive history and her alliance with the fiscally conservative mayor who appointed her.

“Politics is nothing without principles; and it’s time now to put my own principles into action in this race,” Mecke wrote. “District 5 needs a strong, independent Supervisor. I am entering this race to fight for the values that I believe in and to fight to preserve what is great about District 5 and the city. I have brought principled independence to every issue I’ve worked on and that’s what I’ll continue to bring to City Hall.”

In an interview with the Guardian, Mecke said he sees the campaign as a “five-month organizing project” to reach both regular voters and residents of the district who haven’t been politically engaged, including those in the tech sector. He’d like to see the perspective of workers represented in discussions about technology, not simply the narrow view of venture capitalist Ron Conway that Mayor Lee has been relying on.

“Local politics needs new blood,” Mecke said, “it needs to hear from these people.”

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marke@sfbg.com

SUPER EGO So many things I want to write about this week, if only my delicate, exquisite hands could stop doing these fluttery bird-like motions in front of my gorgeous face. Girls, I’ve got a serious case of the Vogues, which along with Perma-Nod, Fist Pump, “Woo!”-itis, Twirlfoot, Strobe-eye, and Record Bag Shoulder will soon flood hospital wards and special care facilities nationwide with my rapidly aging (mid-20s) club generation.

That’s why universal healthcare is so very important! Have we learned nothing from disco’s untreated polyester scars, the shaken sacroiliacs of funk, Rave Damage, Swing Elbow, Goth Pout, the horrible social stigma of Breakdancer’s Breath? Shit staaank. Don’t laugh, teenage Post-Millennials, it’s coming for you. One day you’ll be holding your phone up to record that underground light show, when you’ll realized with horror that no one uses phones as cameras anymore, not even you. You’ll only be holding your phone up in your mind. And then you’ll catch Skrillexatosis.

What am I even talking about? The things I most want to tell you are these. 1) Mimosas and house dancing on Sunday mornings 6am-2pm at Monroe in North Beach are rad, especially the second and third Sundays of each month, hosted by the Pressure! and Forward crews respectively. 2) The Entertainment Commission is actually considering the use of mimes to help control rowdy nighttime crowds, for realz. (Read more on SFBG.com’s Noise blog.) 3) Flaunting its global fan base, amazing weekly Honey Soundsystem is now simulcasting its Sunday night parties at www.mixlr.com /hnysndsystm — so you can kiki out while doing your dishes at home. 4) I just about died when rap prodigy Azaelia Banks broke into the Prodigy’s “Firestarter” at Coachella, did you see it? More please.

 

THE TUBESTEAK CONNECTION 8-YEAR ANNIVERSARY

Have you noticed we may be going through another heavy period of gentrification? DJ Bus Station John started his weekly Thursday night club in reaction to the last tech boom’s more blanding effects, drawing upon underground queer ’70s culture to keep the gay ’00s freaky, slutty, and disco-lickingly funky (also cell-phone free: don’t Tweet in this room, love, keep it between us.) “A reliable source of good music and fresh meat delivered w/love (& refreshingly w/o irony) by a 50-something bear qween,” is how BSJ himself describes it. “You won’t believe what you just 8!” is how I do.

Thu/19 and every Thursday, 10pm, $5-7. Aunt Charlie’s, 133 Turk, SF.

 

ROCK IT SCIENCE LABORATORIES DOUBLE ANNIVERSARY

Seven years of parties, two years as a record label, and always keepin’ it ravey-styley — local player Eric Sharp started off throwing Afterglow undergrounds at the storied Infinite Kaos venue and has become a bedrock of the Bay Area dance music (and an early handlebar mustache pioneer), now celebrating with DJ Fame, Eric Reilly, and his RISL (www.rislabs.com) family, which is us, of course. Expect craziness.

Fri/20, 10pm-late, $5 before 11pm. Public Works, 161 Erie, SF. www.publicsf.com

 

JEFF MILLS

As “The Wizard” on Detroit’s WJLB FM in the ’80s, the genius Mills cut ‘n scratched electro, hip-hop, house, and techno into breathtaking, highly influential conflagrations of party-starting awe. Now he not only beams genius slices of intelligent techno down from the Mothership — he basically is the Mothership, often on multiple turntables, and will deliciously demolish Public Works, along with beloved Detroit house legend Terrance Parker, LA heavy technoist Drumcell, our own Icee Hot DJs, Mossmoss, and more. Sat/21, $15–25. Public Works, 161 Erie, SF. www.publicsf.com

Bounce to this: Rusty Lazer does Mardi Gras

Andrew Lam
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Due to health problems, Big Freedia had to cancel her and Rusty Lazer’s Noise Pop gig at Public Works Sat/25. The event been transmutated into a big gay dance party with Double Duchess, DJ Bus Station John, and more. You should still read this interview, though.

With all its technicolor thrift flair, Mardi Gras costumes in state of midway-preparedness, and sleepy passels of breakfast-cooking houseguests, Jay Pennington’s New Orleans clapboard house is pretty hallucinatory on the Saturday afternoon of Carnaval weekend. Staring out the window waiting for the bounce DJ to call me up for our interview, I was to be excused for imagining that the shed in the side lot was producing actual chords while the New Orleans monsoon that raged outside hit it.

When I come across him in his bedroom, Pennington – who is also known as Rusty Lazer, and is the now-famous transgender NOLA bounce artist Big Freedia’s DJ and informal manager – is threading colored paper onto a string. He was going to be Hanuman the monkey god at the Mardi Gras parades on Sunday, his day off from work over Mardi Gras weekend. Around him, the city has ballooned with tourists and locals chucking beads at targets, high-stepping through brass numbers, eating frosted king cake, and peeing in inappropriate places.

I braved the rain that afternoon to talk about bounce music and Mardi Gras with Pennington, so it was kind of a surprise when our conversation swerved into the intricacies of 501(c)3 registration. It shouldn’t have been. He is a lot like New Orleans itself, a town that counts as a centuries-old melting pot, where the frat boys hang at the same bars as the career jazz musicians hang at the same bars as the pretty queer kids who sometimes party at dark gay leather bars (I was privy to this last comingling within six hours of landing in the Big Easy, at Daddy Aki’s Peacock party at the Phoenix Eagle Leather Bar where Pennington and his new managee Nicky Da B spun). [Correction: An earlier version of this article identified Peacock as Jay Pennington’s party. It is actually organized by Daddy Aki. Our bad.]

If you are a NOLA entertainer, Mardi Gras weekend counts among the most hectic of the year. Pennington had evenly informed me that my suggested meet-up time of noon was at least two hours too early considering the aftermath of the night shift on the decks he’d pulled before and that he would surely pull again that evening. But it’s two thirty now and for the moment, he’s able to focus on Hanuman, and attempt to tell me what’s so special about his city.

Hands-on Hanuman: Rusty Lazer in mid-Mardi Gras repose. Guardian photo by Caitlin Donohue

Though the DJ is playing less and less a role in Big Freedia’s career as she blows up and sells out shows around the country, Pennington continues to be a driving force in bounce’s dispersal outside NOLA. He signed his first official managerial contract with Nicky Da B, an adorable local whose track with Diplo hit Soundcloud last week. Bounce is indigenous to New Orleans — like Chicago’s juke and Detroit’s jit — a Caribbean-inflected dance music that is well known for the way its dancers pop their hips at machine gun rates.

Pennington is also is the co-founder along with Delaney Martin of New Orleans Air Lift, an international program he made to support local artists post-Katrina. This loosely-incorporated organization (it’s not 501(c)3 and relies instead on private donations, like the sales of the work of Swoon, one of the few females in the upper echelons of the street art world – her intricate, delicate wheatpastes blanket the fence next to Pennington’s house.) The Airlift Project has sponsored trips by New Orleanian artists to Berlin, even the import of Siberian breakdancer Ivan Stepanov to New Orleans.

This last story illustrates one of Pennington’s biggest turn-ons — fostering the artistic combustion that happens when a bunch of different energies get together. As illustration, he shows me a high fashion video shoot made by Lady Gaga’s stylist Nick Knight featuring the 19-year-old local bounce dancer Quack. 

After seeing a video of the improbably Barbie-bodied dancer, Knight contacted Pennington to ask if she’d care to do the same dance wearing Alexander McQueen for a fashion film series. Quack didn’t have a passport, but she went and got one with Pennington. The next day they went to London, found themselves “sitting in a room with nothing but Amazonian models.” Quack danced for eight hours to make the video, which turned out to be a testament to not just the extreme sexuality of bounce music, but also its athleticism, and emotional panacea. 

“This is the music that makes people forget that they’re hungry,” Pennington tells me, excitedly clicking through videos of schoolkids bouncing in rec centers, and endless YouTube clips of home bounce practice, done against a wall, ass to the camera. “It’s finally tuned to helping you forget your problems.” He wants to “take a New Orleans plane full of people all over the world,” to teach bounce to the masses. “In case anybody around here has forgotten how to have fun.”

The music lends itself to teaching — singers often give specific commands in songs, a popular request being for everbody to bend over and keep their ass popping. “Bounce is all instructions,” Pennington says.

The ability to move among social groups is one of the reasons why Pennington fell in love with New Orleans. 

“Here, you’re part of a community, not just part of a scene,” he reflects. “The difference is that the communities include all the people in your community. I don’t feel that in Portland or Austin.” He says the young arrivals in other artsy, liberal towns “hang out in mirrored social groups. I don’t know if that means anything, but it makes sense to me.” Pennington considers the neighborhood connections he’s made through participating in NOLA’s famous informal second line parades as, if not more, crucial than the ones he’s made with fellow travelers who have alit upon New Orleans as a haven for weirdos and music freaks. “New Orleans black community is nothing if not family-oriented,” he says.

Those mirrored social groups are a concept that should make sense to those beyond DJ Rusty Lazer. Part of what makes gentrification such a bummer is that when young bohos move into low-rent, family-oriented neighborhoods, they don’t form connections with the existing culture, imposing their own wacky adventures on top of the landscape as though they’re the first to really enjoy it. 

This missed connection leads newcomers away from frequenting established neighborhood businesses, and doesn’t provide for enough interconnectedness to get any kind of organizing come when rents start to rise and the condos come in. So good for New Orleans, and especially the rapidly changing Bywater neighborhood if they can avoid the typical storyline of minority community attracting broke artists attracting yuppies who can pay first, last, second, and third months’ rent in cash. 

Not the town doesn’t have other defense mechanisms. “The heat, the bugs, that lack of industry, the violence — that keeps it from growing out of control,” says Pennington. “It keeps the excessively ambitious away. When this place piles it on, it really piles it on. You can’t just casually live in New Orleans.” Wise words to the San Franciscan exodus that will surely come in the next months after tech boom 2.0. 

And for the record, I wasn’t hallucinating the house making music. The Ninth Ward’s musician mad scientist Quintron installed a rain organ into the Music Box, a small village of structures built in Pennington’s sideyard by 70 people to be played like a symphony, complete with Quintron playing conductor and a capacity crowd crammed into bleacher seating and crouching amid the structures themselves. At recent performances during last fall, 750 people showed up to watch the show. There was space for 250 in the sidelot. 

Editor’s Notes

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“San Francisco’s economy is moving in the right direction,” Mayor Ed Lee told the Examiner last week. “My economic development and job creation policies are setting San Francisco on a path toward economic recovery.”

The normally modest mayor is making a rather sweeping statement there — the US economy is improving in general, and I don’t think the mayor can take credit for all of it. But he’s absolutely correct that he’s promoted policies that are aimed at bringing more tech companies in to San Francisco, and over the next few years, they will no doubt create a lot of high-paid jobs for people with specific skills that require a high degree of training and education.

Is that “the right direction” for the city? I lived here the last time that San Francisco was part of a tech boom, and I’m not so sure.

See, bringing all sorts of new wealth into town sounds good on the surface, and for some people — particularly real-estate speculators, landlords and purveyors of high-end services — it is. But in a city that has limited space and nearly unlimited demand for housing, lots of new rich people and lots of high-paid people looking for places to live puts pressure on the existing residents, particularly the poor and the working class. It screws the middle class, too — if you’re a teacher or a nurse and you want to buy a house in San Francisco during a boom, you’re S.O.L. You can barely afford to rent — and if you’re already renting, you’re constantly at risk of losing your home, and your ability to live in this city, because your landlord can make more money kicking you out and selling the place as a tenancy in common to someone with more money.

There’s no way to build enough new affordable rental housing, or housing that middle-class families can buy, to keep up with the demand. It’s impossible. Developers won’t do that — there’s too much money to be made in high-end housing for anyone in the private marketplace to waste time on anything else.

The only way to preserve the middle class in the upcoming boom that Lee is promoting is to aggressively protect existing rental housing stock — which means preventing condo conversions and TICs and the stuff that gets promoted as “middle-class housing.” The only way to prevent massive displacement of people and existing businesses is to regulate space in the city more tightly than anyone has ever done — which will, by its nature, make it harder for the newcomers and new millionaires to find places to live.

That’s the tradeoff. That’s the fact that Lee and his allies don’t seem to want to grasp

Avalos campaign revives the progressive movement

Sasha Cuttler
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As I walked into the John Avalos campaign party in Roccapulco around 11 pm, Sup. David Campos told me, “It’s the best party in town!” And he was right. The speeches were just getting underway on the stage and there was a palpable energy in the large crowd even though many of them had been out campaigning since early in the morning.
Avalos’ wife, veteran progressive organizer Karen Zapata, set the tone. First, she recognized Eric Quezada, the longtime housing rights activist who died in August, and the rest of the progressive leaders, such as Tom Ammiano and Chris Daly, who laid the foundation for a campaign that finished the night strongly in second place, less than 13 percentage points behind with voters’ second and third choices still to be tallied.
If Ed Lee hangs on to win, she said, “We could be screwed unless we work together and organize.” It was a theme and a feeling that would permeate the event, this sense that Avalos and the progressives are enjoying a resurgence in the last month thanks to what’s happening in the streets, both with this campaign and the OccupySF movement that Avalos has taken a lead role at City Hall in supporting.
“We have to stick together and we have to push from outside the system. We have to push John and we have to push everyone in the system,” Zapata said, firing up the young crowd as she introduced her husband.
Avalos praised the campaign for having so much heart and with filling his. “This has been a campaign of the people,” Avalos said, seeming genuinely touched by the energy in the room.
The progressive movement has been fighting for the soul of this city for a long time, he said, citing the anti-displacement movement that became a political force in 2000-01, a struggle that continues today with the latest tech boom. “In a way, we’re embracing change that is accelerating our displacement here in San Francisco,” Avalos said.
But he said people are waking up to the idea that the people need to stand up to the super rich and their political enablers. “The Occupy Wall Street movement is changing the consciousness of this country,” Avalos said, noting how it is echoing themes that progressive San Franciscans have been sounding for years. “Everyone is talking the same language we’ve been talking, because we’ve been talking about the 99 percent for a long time.”
But between that movement and this campaign, he said the battle was just beginning, praising the “new generation of leadership, that’s what this campaign is about. We’re going to take back this city one way or another!”
And he closed with a chant from the streets: “Whose city?” Avalos shouted, and the crowd roared back, “Our city!”

Straw

Andrew Lam
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Straw

paulr@sfbg.com

We don’t typically use the expression “start-up” when talking about restaurants — the phrase belongs to Techtopia and implies, at least to me, oceans of venture capital and huge salaries for people who run companies that don’t make money. But if we did, Straw would be an ideal one. It’s the sort of place one saw quite a few of in the early to mid 1990s, in that interval between the disasters of stock-market-crash-earthquake-war-fire and the start of the first tech boom. In that moment, people seemed to feel a renewed sense of optimism but didn’t have pots of money. The result was a sequence of new restaurants offering superior food, high value, and modest (sometimes DIY) décor. If you couldn’t afford to have Cass Calder Smith design your dining room, you could still somehow let it be known, through the medium of unprepossessingness, that you were reserving your best efforts for the food and service.

Straw, in this important sense, feels like a throwback from 1995. The restaurant (which opened in January) is small and slightly scruffy and is in an old building — a small oddity along Octavia Boulevard, which is newness itself and has been the occasion for all sorts of fresh construction in the past few years. The white walls, slightly scuffed, are hung with carnival posters, and some of the window seating seems to have been salvaged from a ride at a state fair somewhere. We haven’t had a place like this in more than a decade, I don’t think, not since the days when 3 Ring tried to make its circus theme fly in the old Val 21 space (now Dosa) on Valencia.

What kind of food would you expect to find at a carnival? Straw does provide some witty answers to this question, but the menu ranges gracefully beyond the obvious, which is to say the fried. Still, the fried stuff is good — a basket of little corn dogs ($7.75) made of Niman Ranch beef and looking like batter-fried musket balls. These were wonderfully crisp and juicy, and the trio of dipping sauces — nacho cheese, spicy ketchup, and ranch dressing — each had a strong enough personality to make them distinct, one from the others. The prawn ceviche ($7.75), boldly seasoned with habanero, lime, cilantro, and red pepper was presented in a fried tortilla cup, the kind tortilla salads come in, along with some tortilla chips on the side. These turned out to be good for dispensing with the last of the corndog sauces.

But not everything is fried, and the kitchen helps itself to a wide variety of influences. Grilled cobs of corn ($4) sprinkled with feta cheese, cayenne, and chili powder and presented with fresh lime and what the menu calls, with charming redundancy, “garlic aioli,” seemed to have Mexican roots, while the mac ‘n’ cheese ($5), fortified with bacon and slices of apple (an excellent idea) was a nice little crock of Americana.

The menu is also vegetarian-friendly — and not just in the small dishes, though quite a few of those are meatless, among them the tomato soup, pretzel bites, and several of the salads. An entrée called samba on subuco ($12), festively joined chunks of butternut squash and eggplant in a slightly sweet (but not cloying) coconut-milk curry broth reminiscent of many a hormak talay in Thai restaurants. This dish succeeded for me, despite the eggplant, which managed to be both rubbery and mushy.

Places are found for flesh too, often cleverly. We were particularly impressed by the satchemo ($15), a bed of creamy white grits carefully inlaid with sautéed prawns, leaves of linguiça, and green filet beans. Apart from being flavorful and well-balanced, the dish was beautiful to look at: like a tile taken from the palace of an Ottoman pasha.

I was a little less impressed with the picadilly ($14.75), if only because I wonder if a fish as marvelous as ahi tuna needs to be turned into fish sticks. Ahi, like beef, can stand on its own and is generally best when standing on its own. It doesn’t take all that kindly to elaborate treatments and back-room, hardball techniques like breading and frying. Doing that to a nice piece of ahi is a little like getting out your best lead crystal to serve some Diet Coke. The accompanying mayonnaise was astounding, however.

No carnival would be complete without a root beer float, and Straw offers a nice one ($5.50), made with root beer gelato and served with a straw (!)— not exactly radical ideas but sound ones. The more radical idea was laying little sticks of candied bacon atop an almost impossibly creamy peanut butter pie ($6) in a chocolate crust. Peanut butter and chocolate are one of sweetdom’s divine combinations (also totally New World), and I’d never heard the pair were looking for a third, certainly not pork. The truth is that the pie would have been fine without it. But the meat brought a bit of salty-sweet chewiness for contrast, and the result was better than fair.

STRAW

Dinner: Mon.-Sat., 5-10 p.m.; Sun., 5-9 p.m.

Brunch: Sat.-Sun., 10 a.m.-3 p.m.

203 Octavia, SF

(415) 431-3663

www.strawsf.com

Full bar

MC/V

Noisy

Wheelchair accessible

 

Prophet sees

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› kimberly@sfbg.com

SONIC REDUCER "I’m going to start smoking again. I’m going to start eating bad and quit working out."

Here, have a few determinedly daft new year’s resolutions from an old hand at San Francisco music-making from Chuck Prophet, who happens to be headlining the old year out at Starry Plough Dec. 31. Don’t say he never gave you anything. But seriously, our Prophet?

Actually ’09 vows are the last thing Prophet wants to be burdened with. "I’m just lazy," the singer-songwriter confesses from his South of Market mini-HQ. "Why would I put any more assignments on myself?"

You know what he means. New Year’s resolutions — what better way to hang an albatross round the old oak tree and set yourself up for FAILblog? Still, ’tis the season, and I have a few ideas on how to institute change in this recession-wracked music scene, inspired by the last time the pink slips flew round the turn of the century, post-tech boom. Call these my "Keep the Scene Strong Goals for ’09," all related to stamping out the scourge of many a creative milieu: passive consumption. Though, hell, who even has the time and cash to consume very much these days?

— Engagement. It’s as simple as talking to the performer after the show. And no, I don’t mean hit on the band. Instead, start a dialogue — of either the positive or constructively critical ilk — with your friendly neighborhood musicmaker. Who wants to play into a void, to a passive, glazed-look blank generation? Feedback ain’t just a whole lotta noise. If the spirit moves you, feel free to buy those hard-working musicians and DJs a round of drinks. The Hemlock’s $1 bag of hot peanuts is a nice gesture.

— Dance. OK, the early ’00s saw a rock crew shook it up at shows, but San Francisco is slipping, regaining that bad reputation of resembling zombie-like, arms-folded slabs of tofu. Hold up your end of the bargain and get a move on.

— Stretch. Yes, stretching before dancing helps with muscle aches. But I mean listen to new sounds. If you’re a metal dude, lend an ear to weird new America-style folk — think about Zep’s connections betwixt loud and languorous. If you’re an indie rock chippie check into Fania salsa reissues; a gangster rap head, a bit of death metal or a dab of indie-literati-pop.

— Prepare yourself for the worst — and possibly the best. Everyone’s wondering if they’re going to be laid off or face a work drought in ’09. Instead resolve to put that anxious energy and restless imagination to good use. Come up with some nice, meaty, beaty post-layoff projects. Take up an instrument, even if it is simply a shareware synthesizer. Switch up your recorded listening by swapping records or MP3s with pals — or dive into an affair like KUSF-FM’s Rock ‘n’ Swap on Jan. 11 (www.kusf.org/rocknswap.shtml). Throw a show at your abode, or better yet, put on a free music happening in a public space (i.e., the Toxic Beach throw-downs, mobile Flag Day jamboree).

Sure, everyone knows resolutions are made to be broken. Even Prophet spurned his faux resolutions after we spoke, via e-mail: "So last night after eating cereal for dinner, passing out watching the Food channel, I’ve decided my NY resolution is to cook more often. Taking up smoking is a bit daft, I have to admit." Tasty words — and food — for thought.

CHUCK PROPHET

Wed/31, 9:30 p.m., $26.50

Starry Plough

3101 Shattuck, Berk.

www.starryploughpub.com

For more from Chuck Prophet, go to Noise blog at sfbg.com.

THE MOST INTRIGUING READER TOP 10: MITCH CARDWELL

"Budget Rock-er, zine scribe, lover, drunkard"

1. Hank IV, Refuge in Genre (Siltbreeze) They’ve made SF home to Earth’s greatest punk band once again.

2. Nothing People, Anonymous (S-S) They only play great shows, release great records, etc.

3. The Hospitals, Hairdryer Peace (Stonehouse) Ear-splitter of the year, without question.

4. Buzzer, Disco Kiddz EP (Douche Master) Glam, proto, pub — it’s all here.

5. Nobunny, Love Visions (Bubbledumb) Punk parody is always a winning concept.

6. Colossal Yes, Charlemagne’s Big Thaw (Ba Da Bing) Piano pop-psych crafted in a totally winning fashion.

7. Wounded Lion, "Pony People" 7-inch (S-S) Pop that is both brainy and fun.

8. Mayyors, both 7-inches (self-released) Mayyors wow with sheer force of volume.

9. Scarecrow and the Shuckers at the Stork Club

10. Thee Oh Sees, The Hounds of Foggy Notion CD/DVD (Castle Face) I’ll take this over their recent hit LP.

PRESSURE TO PERFORM: A FEW MORE NYE OPTIONS

LES CLAYPOOL


The Bay Area original makes the leap from his longtime NYE venue at the Fillmore. With Zappa Plays Zappa and Tim Fite. Wed/31, 8 p.m., $69–<\d>$126. War Memorial Opera House, 301 Van Ness, SF. www.goldenvoice.com

BORTS MINORTS AND THIS BIKE IS A PIPE BOMB


NYE Hemlock reg This Bike is joined by the SF troupe Kelley Stoltz describes as "fun SF weirdness without the Burning Man remorse." Wed/31, 9 p.m., $10. Hemlock Tavern, 1131 Polk, SF. www.hemlocktavern.com

MOS DEF


Most definitely "Sneakers Required" with DJs like Apollo and Sake One. Wed/31, 9 p.m., call for price. Yerba Buena Center for the Arts, 701 Mission, SF. (415) 978-2787.

LAUGHTER AGAINST THE MACHINE


Funny fellahs W. Kamau Bell, Bucky Sinister, and Nato Green issue their response to all the ‘WHOOOOOOHOOOOO!’ that typically goes down on NYE. Wed/31, 7:30 and 10 p.m., $30 (friendofkamau discount code for $10 off). Phoenix Theatre, 414 Mason, SF. www.brownpapertickets.com/event/50525

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."

Off the record

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› gwschulz@sfbg.com

Among the mansions and box stores popuutf8g Silicon Valley are several major tech firms at the heart of a stock option backdating scandal that has metastasized through corporate America over the last two years.

The hall of shame includes Juniper Networks, McAfee, Nvidia, Brocade Communications Systems, and most notably for this story, a Mountain View–based firm called Mercury Interactive, which came under scrutiny in late 2004, making it one of the earliest companies identified for allegedly tampering with the lucrative stock options given to employees.

While some of the half-billion-dollar backdating mess at Mercury has appeared in the business press already, additional details contained in a civil lawsuit filed by investors are under seal in Santa Clara County Superior Court, and three news outlets want them opened up by a judge.

"These companies fleeced investors, and the public has a right to know," Karl Olson, an attorney for the outlets, told Judge James Kleinberg during a hearing Jan 5. Olson is representing the San Francisco Chronicle, Bloomberg News, and the Recorder legal newspaper. He added the defendants have "not shown an overriding interest that supports sealing any of these records."

Attorneys for the company and its fallen former executives have not cited trade secrets or proprietary information — commonly used excuses in corporate litigation — as reasons for keeping the filings sealed. Instead, they seem to be worried the documents will paint an even more sordid picture of executive misdeeds than what’s already come out, and they want to block the press from telling the full story.

But there is an interesting irony to the Chronicle insisting it is entitled to access this information. The newspaper’s parent company, the Hearst Corp., asked a federal judge to withhold from the public some of its own company records unearthed amid a federal civil suit leveled against it and other media giants over the summer.

San Francisco real estate mogul Clint Reilly filed an antitrust claim against Hearst and its rival–cum–business partner, Denver-based MediaNews Group, owner of several Bay Area newspapers, arguing that a bid between the companies to share business expenses was illegal. The Guardian has joined an effort with the nonprofit Media Alliance to unseal records related to Reilly’s suit.

But in the Mercury case, attorneys for the company and its former executives complain individuals not listed as defendants "would have their identities revealed and be implicated in alleged misconduct."

Mercury certainly would like to forget its troublesome past. Computer giant Hewlett-Packard is closing out its purchase of the company for $4.5 billion, taking on Mercury’s liabilities and obviously hoping to put the backdating matter to bed.

Nationwide, somewhere between 150 and 200 companies (reports vary) are internally investigating options problems or have received inquiries from the Securities and Exchange Commission (SEC), the federal agency charged with ensuring publicly traded firms reveal essentially every major move they make.

Mercury was founded in 1989 and produces business software for companies worldwide. In another bit of irony, Mercury specializes in making a group of applications designed to help corporate clients fully comply with the new federal financial disclosure rules passed by Congress as part of the Sarbanes-Oxley Act following Enron’s implosion.

Amnon Landan, the former Mercury CEO who resigned in November 2005 under pressure following an internal probe, is said to have exercised $5.5 million worth of options and sold 1.04 million company shares for a total of $73.6 million "during the period of wrongdoing," according to another suit filed by investors in federal court last spring.

Two additional executives resigned at the same time as Landan. The list of plaintiffs in the federal suit, which charges that Mercury’s backdating imbroglio greatly damaged the company’s market value, includes the retirement system for New Orleans municipal employees.

The value of a stock option is determined by its closing price per share on the day the option is granted. Instead of listing that particular date when the options are later exercised, backdating an option generally involves picking a spot earlier on the calendar. That way, employees of companies that make it big can reap huge windfall profits far bigger than they were entitled to receive. As Duke law professor James Cox somewhat famously described backdating, it’s like betting on a race and knowing who the winner will be.

Silicon Valley’s start-ups during the tech boom relied on hopes and dreams more than directly available cash assets to flashpoint their growth. To attract the best executive talent around, they offered stock options in exchange for hefty salaries. If the top suits performed well from the beginning, when the stock price was low, they could sell the shares much later when their value had climbed sky-high.

But some of the still relatively young companies that dot the fringes of Highway 101 where it weaves toward downtown San Jose are today being charged with failing to inform investors and government regulators just how many zeros were involved in those enriching IOUs.

Defense attorney James Kramer made an important point about backdating, however, to Judge Kleinberg during last week’s hearing. "There is nothing about backdating that is illegal," he said. "The issue is whether you properly account for it."

Yet Mercury didn’t properly account for more than $567 million in compensation expenses over a 12-year period in its SEC filings. And that’s what is illegal. The IRS heavily taxes earnings from backdated stock options, which are akin to tax-free bonuses that aren’t reported to the SEC. Investors say the failure to disclose the backdating exposed the company to heavy tax penalties, money that came from shareholders.

"Throughout the development of the options scandal, Mercury Interactive has been one of the most significant companies for the public to watch, due to both the primacy and seriousness of its options problems," Recorder reporter Justin Scheck wrote in a declaration to the judge last week. The Recorder, which serves about 20,000 readers in the state’s legal community, asked Jan. 5 for Kleinberg to open the records.

Recorder attorney Olson, who regularly represents the Chronicle in such open-records cases, argued in a memo to the court that the desire to shield top Mercury execs from "adverse publicity" and "potentially embarrassing corporate documents" doesn’t justify withholding up to 17 exhibits that Mercury wants to keep away from the press and the public. Petitions submitted to the court regarding the sealed portions of the case are public and were obtained by the Guardian last week.

The defendants’ attorneys said the investors signed a confidentiality agreement early in the suit so that evidence could be more freely exchanged with Mercury during discovery, and they want that promise kept.

"The plaintiffs in the [Santa Clara] suit are not roving attorneys general who are tasked with pursing every defendant who they believe has done something wrong or caused harm to someone else," Brandon Wisoff, a defense attorney in the case, said in a phone interview. "The purpose of a derivative suit is for a shareholder to recover on behalf of a corporation in which he or she owns stock, because he or she is indirectly impacted by any harm that allegedly occurred to the corporation."

The Santa Clara suit’s status as a derivative claim could lead Judge Kleinberg to toss it out, since HP has purchased Mercury. For that reason, Wisoff says, documents produced before the sale aren’t going to be used in court and so shouldn’t be accessible to the public.

"Non-defendant third parties also would have their identities revealed and be implicated in the alleged misconduct" if the records were opened, attorney Thomas Martin wrote in a declaration to the court. In other words, the documents could suggest how much was known about the problems with backdating at Mercury. And that might be of concern to more than just the company’s investors.

Martin, who declined to comment over the phone for us, is representing Kenneth Klein, a former Mercury chief operating officer who left the company in 2003 and has not officially been linked by Mercury to backdating problems but is nonetheless listed as a defendant in the Santa Clara suit.

Thomas and the other defense attorneys argue the investors’ court filings openly cite sealed discovery material, which presumably includes references to Klein’s alleged involvement in or knowledge of backdating, given his status as a defendant, as well as the names of others possibly listed in the documents. They’re arguing Mercury and its executive defendants could not publicly rebut suggestions made by the media about their involvement.

While Kleinberg seemed sympathetic to the notion that the press doesn’t always do the best job reporting on civil allegations, he said it’s a fact of life that most civil complaints — even ones that say "very outrageous things about people and institutions" — fall into the public domain.

But Amber Eck, an attorney for the investors who are now advocating for the filings to be opened, says the complaints made in the suit are far from frivolous and the company’s own board investigation identified who had participated in the misconduct and who knew about it. She said the whole story hasn’t been told.

"There’s a lot saying there was backdating and the amount of the [SEC financial] restatements," Eck said in a phone interview. "But what I was explaining to the judge was that as far as the details on the manner and the process in which it happened … that isn’t really out there yet, and that’s contained in our complaint and the exhibits."

Janet Guyon, an editor at Bloomberg News in New York who has watched the options backdating scandal unfold, told the judge in a declaration that the public deserves a "window into this litigation" to ensure fairness for investors who are expected to trust promises of transparency made by public companies.

"More than 80 companies have announced earnings restatements totaling over $8.8 billion, including $84 million most recently by Apple Computer, which admitted it forged documents recording a directors’ meeting to award its CEO backdated options," Guyon stated. "At least 65 executives or directors have resigned and 300 lawsuits have been filed against 100 companies. Yet little light has been shed on how this practice got started and why it continued." *

Declaration by Bloomberg News editor Janet Guyon to judge Kleinberg on why the Mercury records should be unsealed.


Declaration by local reporter Justin Scheck on why the Mercury records should be unsealed.

Application by attorney Jared Kopel for defendant Kenneth Klein on why the records should continue to be sealed.


Declaration by attorney Thomas Martin for defendant Kenneth Klein on why the records should continue to be sealed.

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