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Gotham Gazette: Off the Farm and Into the Faucet

Wednesday, June 28, 2006
Off the Farm and Into the Faucet
by Sam Williams
28 Jun 2006

Like many U.S. farmers, Ulster County dairyman Tom Hutson is a businessman first and a romantic second. In New York City recently to accept a $10,000 Steward of the Land award from the American Farmland Trust, Hutson made a point of pulling a plastic bag of dirt out of his pocket and delivering a brief comment on its contents.

“I’m a farmer, so you just have to understand one thing,” said Hutson, holding up a sample of bottomland soil scooped that morning on his family’s 380-acre River Haven farm in DeLancey, N.Y. “This is gold to me.”

But the contents of Hutson’s little bag has significance for New York City residents as well. Hutson’s farm is within the Catskills/Delaware watershed, the city’s primary source of drinking water. What he does on his land has a direct impact on the purity of the water coming out of New York City’s taps – and on how much the city must spend to keep that water clean.

Hutson is a member of the Watershed Agricultural Council, a city- and state-sponsored organization designed to reduce organic pollution within the Catskills/Delaware watershed. He earned his award by letting his farm serve as a laboratory for testing the council’s land management recommendations. Starting in 1994, Hutson has retained “buffer strips” -- wide swaths of vegetation alongside streams – intended to protect the waterways on his farm from direct fertilizer runoff and bank erosion. He has built manure containment systems and implemented a rotational grazing program to minimize and distribute the impact his 108-animal herd has on the farm’s 100 acres of pasture. Hutson also adopted the Watershed Area Council’s forest management plan, limiting cutting and development on the 57 acres of woodland within his farm boundaries.

“Nobody cares more about protecting the land than a farmer,” says Hutson. “But when you’re developing a whole farm plan, there’s a real learning curve involved. Farming’s tough enough as it is.”
Good Environment, Good Business

To help Hutson make the adjustment, the city’s Department of Environmental Protection kicked in $100,000. The money is part of a $100 million effort to protect New York City’s drinking water at its source. The program has two goals, according to Barry Beckhardt, program director for the Department of Environmental Protection’s Watershed Agricultural & Forestry Program. It wants to encourage upstate farm managers to do the right thing environmentally and it hopes keep those farms in business instead of succumbing to development pressures.

“Instead of supporting farms through subsidies, we’re proposing that farmers be supported by the way they protect the land,” says Beckhardt.

Development in the city’s second major water source, the Croton Watershed, is already forcing the city to build a plant to filter runoff before the water. The plant, to be constructed in Van Cortlandt Park, is currently estimated to cost at least $1.3 billion. And to make room for it, the city is devoting a 10-acre portion of Van Cortlandt Park to the plant’s construction. Building a similar filtration plant for the Catskills water supply would cost an easy $4 billion, Beckhardt estimates.

In light of that, the $10 million a year being spent by Watershed Area Council makes economic sense. “This is clearly a more cost effective approach,” Beckhardt says.

The Watershed Agricultural Council owes its existence to a 1992 deal between the city and the U.S. Environmental Protection Agency. In exchange for preserving wild acreage and reducing runoff from the 300 farms in the Catskills/Delaware watershed, the city has been able to avoid the need to filter water from that region. Working through the council, the city has managed to pull 15,000 acres out of farmland development, and by 1995 had gotten at least 85 percent of the affected farms to sign up for a pollution prevention program. In return, the Watershed Agricultural Council doled out subsidies to cover the cost of wastewater diversion ditches, barnyard drainage systems and other pollution reduction strategies. The council also helped participating farms draw attention to their products under the “Pure Catskills” brand name.

“The goal is to strengthen the linkages between the producers upstate and the consumers in New York,” says Beckhardt. “It doesn’t make sense to do all this and have the farmers go out of business.”
Marketing the Catskills

“Pure Catskills” has helped farmers looking for a local edge in the commodity foods marketplace. Still, as Hutson notes, many farms have a hard time taking advantage of the program. The cultivated acreage on River Haven is devoted mainly to hay and other surplus forage crops that the farm sells to neighboring dairies. As for the milk, most of that is pooled and sold through regional cooperatives and routed to New York City via bulk distributors. Elmhurst Dairy, a Queens-based distributor that bills its milk as “New York’s Own” but not “Pure Catskills,” handles Hutson’s milk.

“Milk is such a perishable commodity,” Hutson says. “You’ve gotta move it every day, and that makes it hard to market as locally produced.”

While direct marketing of “Pure Catskills” milk may not yet make economic sense, the New York City greenmarket system has provided support to the upstate farm economy. According to the Council on the Environment for New York City, an organization that provides information on greenmarket produce and schedules, the city’s 51 markets have helped sustain 11,000 acres of cultivated farmland and keep 27,000-plus acres total out of development.

“The good news is that New York City boasts the best greenmarket system in the country,” says Jeremiah Cosgrove, northeast regional director for American Farmland Trust. “The only thing missing right now is the consumer education component. We’re trying to make it so food buyers in the city recognize that the few cents extra they pay on local dairy products or local produce is actually a cost savings when you compare it to the amount they save on their taxes if the city has to build a new filtration plant.”
Eric Goldstein is co-director of the urban program at the Natural Resources Defense Council.

Gotham Gazette - http://www.gothamgazette.com/article/environment/20060628/7/1895

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NYT: Energy Needs Not as Urgent as Anticipated, City Says

Monday, June 26, 2006
The New York Times
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June 26, 2006
Energy Needs Not as Urgent as Anticipated, City Says
By DIANE CARDWELL

The city will be able to meet its growing power needs for at least four years longer than originally anticipated, potentially delaying the need for new power plants until 2012, according to a Bloomberg administration report to be released today.

Two years ago, a task force examining the energy supply concluded that the city would need about 25 percent more electricity by 2008 and recommended steps to meet that need, including building new power plants, which generally spark fierce opposition in the neighborhoods where they are to be located. The increased electrical resources would be needed, the panel said, for economic expansion, to make energy prices competitive with those in other cities and to fill a void created by plants that are mothballed.

But after putting in place measures to conserve energy and to make its production more efficient, the New York City Energy Policy Task Force is reporting, based on a Con Edison study, that no additional resources will be needed until at least 2012, and perhaps as late as 2014.

"It's not that we don't have to deal with this anymore but now we can plan for our future needs in a thoughtful way," said Gil C. Quiniones, a senior vice president of the Economic Development Corporation and chairman of the task force. "We really need a combination of solutions."

The city's population growth and construction boom have increased the demand for power, a trend that is expected to intensify as enormous new developments take shape, including those on the Far West Side of Manhattan, around ground zero and along the Brooklyn waterfront.

Responding to that need, the task force, created by Mayor Michael R. Bloomberg in 2003 and comprising more than a dozen utility executives, environmentalists and economic development officials, issued 28 recommendations the next year.

The recommendations included building new power plants, retrofitting existing ones, simplifying the processes for locating and financing them and making sure the city's zoning rules provided sufficient industrial land to accommodate the plants.

As the city is continuing those efforts, it is also pursuing ways to minimize the need for them.

One strategy has focused on upgrading and expanding existing plants. Since the task force's 2004 report, three projects fueled by natural gas, a cleaner form of energy, have been completed, including two new plants and one that has been upgraded.

The city is also looking into ways to tap excess power from upstate New York and from New Jersey, which are able to generate more energy than those areas need.

In addition, working with Con Edison, the New York State Energy Research and Development Authority and the Natural Resources Defense Council, an environmental advocacy group, the task force has begun a program to encourage conservation.

Aimed at lowering demand to reduce the risk of a system shutdown, that program includes offering consumers money if they cut back temporarily on electricity when use is highest.

The program also offers incentives to residents and developers to install systems and equipment that are energy efficient. Officials expect the program to save the equivalent of what a large power plant could generate, Mr. Quiniones said.

"It doesn't only defer the need for a power plant but creates environmental benefits and a reduction in power prices," he said. "It is important that we have sufficient and reliable power because it enables our growth and economic development."

The city has also enacted legislation requiring that its own new buildings meet higher environmental standards, and is pushing private developers to include so-called green strategies in their designs as well.

According to city officials, the Economic Development Corporation and the Department of Housing Preservation and Development are working on environmentally conscious development proposals worth more than $2.5 billion.

Copyright 2006 The New York Times Company

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The New Yorker: The Docks of New York

Tuesday, June 13, 2006
The Docks of New York
Issue of 2006-06-19
Posted 2006-06-12
This week in the magazine, William Finnegan writes about mobsters, terrorists, and the port-security threat. Here, with Amy Davidson, he discusses the article.

AMY DAVIDSON: You write this week about the Mob, the terror threat, and the docks of New York and New Jersey. How are those tied together?

WILLIAM FINNEGAN: Organized crime, meaning La Cosa Nostra and criminal syndicates such as the Colombian drug cartels, operate extensively and very profitably in and around the Port of New York and New Jersey. This suggests a significant degree of corruption, or at least very ineffective law enforcement. The government has been making a lot of noise lately about improving port security in the face of the international terrorist threat. I was curious about how much progress has actually been made, particularly in a place like New York Harbor, where the authorities have ostensibly been making serious efforts for fifty years or more to chase organized crime off the docks, with little apparent success. I was also curious about the awful possibility that terrorists planning an attack might be able to use the criminal networks already active in the port to further their plans.

How real is Mob control of the docks?

It depends who you ask, but history makes it clear that New York Harbor has been thoroughly “mobbed up” for more than a century. Before La Cosa Nostra began to consolidate its control, in the thirties, the harbor was run by Irish mobs. These days, the rough division of territory has the Genovese crime family controlling the New Jersey side of the port and the Gambino family running the New York side. I’d say the Mob’s presence on the docks is less visible, more subtle, than in the bad old days, when wiseguys supposedly shot anyone who looked at them sideways on the piers. There’s more “paper stealing” now—accounting fraud and looting of union health and pension funds, along with the old standard scams like no-show jobs and bribes paid by waterfront employers in exchange for “labor peace.” The Mob can still play rough, of course. Last fall, two top officials of the longshoremen’s union and one Genovese crime-family captain from Newark were on trial together in Brooklyn federal court, charged with conspiracy to commit extortion and fraud. In the middle of the trial, the Mob guy, Lawrence Ricci, disappeared. Everybody, including his lawyer and his family, seemed to assume that he had been killed. The trial continued, and all three defendants were eventually acquitted. A few weeks after the verdict, Ricci’s body was found in the trunk of a car parked behind a diner in Union, N.J. I still haven’t heard a good explanation for why he was murdered.

Can a port be considered secure if the Mob has a strong presence in it?

In a word, no. But the Port of New York and New Jersey is unique in the United States. With the partial exception of Miami, where a number of mobsters moved after a series of prosecutions in New York in the seventies, this is really the only port in the country with a serious Mob problem. Which is not to say that any large port can ever be made entirely secure. Ports are sprawling places, both physically and commercially, with many ways in and out, both on the land side and on the water side, and cargo and people coming and going all the time. International shipping is an open system. The vulnerabilities are essentially endless. But obviously, with all the security headaches already present in any large port, the last thing you want is a powerful criminal syndicate operating on the docks, and the corruption that inevitably comes with that. Also, New York’s is not just any port; it’s the largest by far on the East Coast. Something like forty million people live within a fifty-mile radius of the port. Any disaster, such as a terrorist attack, that closed New York Harbor would have cascading economic effects that are incalculable.

You point out that many Americans have an image of the old docks that comes from the Elia Kazan film “On the Waterfront,” from 1954. How true to life was that, and what has changed since it was made?

The film was a melodrama, with a triumphant-rank-and-file ending, and in that sense it was fantasy. On the other hand, it was based on a great series of investigative articles by Malcolm Johnson that had appeared in the New York Sun in the late forties, and won a Pulitzer Prize, and the film’s depiction of the waterfront rackets and the victimization of longshoremen by the Mob, often through their own union, was highly accurate. The film led more or less directly to some significant reforms, including the abolition of the “shape-up”—the old practice, vividly dramatized in the movie, of assembling desperate longshoremen at the foot of the pier each morning and handing out jobs for the day in return for kickbacks and other favors. The job has more dignity and basic labor protections now, and the pay is much, much better. The work itself has changed, too. It’s less dangerous, less physically strenuous, as a result of automation. The Mob is still around, of course, but their henchmen on the docks are less likely to “drop a load” on a longshoreman who has dared to cross them, making a hit look like an industrial accident. These days, a Mob-connected pier foreman or hiring agent might punish a troublemaker just by failing to call him for a job that’s rightfully his, making it hard for him to earn a living. People are still afraid, though, and serious dissidents—workers actively trying to reduce Mob influence in their unions, say—still need a lot of courage. They’re certainly courting trouble.

One person you write about is Tom Hanley, a veteran longshoreman. What did you learn from him?

How bad it used to be, back when personnel changes at the union local, for instance, routinely involved horrendous violence, including murder. How the whole question of Mob influence on the waterfront often isn’t black-and-white. I spent a lot of time looking at Hanley’s union local, 1588, in Bayonne, New Jersey. It’s currently under government trusteeship, imposed by a federal judge, because of its long, blatant involvement with organized crime. As a result, there were clean elections for union posts, in which Hanley, who, on the pier where he works, is known for his hostility to organized crime, was elected shop steward. He told me it was the first election he’d seen at the local for that post in his five decades on the docks. But the climate of fear and intimidation on the docks doesn’t go away just because the Feds ride into town. The vast majority of dockworkers are honest, hardworking people who would dearly love to see organized crime chased off the waterfront for good. But it’s never happened, and there’s really no reason to believe that it will anytime soon.

One case that you describe is what the New York City Police Department called the Garment District Plot, which involved Al Qaeda, not the Mob. What happened in that case?

In early 2003, a young Pakistani man, Uzair Paracha, was introduced to three Al Qaeda operatives in Karachi. The Al Qaeda men, who included Khalid Sheikh Mohammed, the mastermind of the September 11th attacks, said that they wanted to invest in Paracha’s family’s import-export firm, which had an office in the garment district. Uzair Paracha had grown up partly in New York City, and had a green card. He wasn’t particularly interested in jihad, but he was interested in the Al Qaeda men’s money. So he agreed to help one of them, Wajid Khan, establish a fictitious presence in the U.S. for immigration purposes. Meanwhile, Khalid Sheikh Mohammed was seized in Pakistan, and he soon gave up Paracha’s name to interrogators. Paracha was arrested in the garment district in March, 2003. The most interesting aspect of the case, though, is that Khalid Sheikh Mohammed reportedly told interrogators that his interest in the Parachas’ business—they primarily exported apparel to the U.S.—stemmed from his interest in smuggling explosives into the country in shipping containers. It’s doubly interesting, I think, because one of the Parachas’ customers was Kmart. Now, Kmart is one of this country’s largest importers, and, as such, qualifies, under one of the container-security programs that helps U.S. Customs decide which containers to inspect, as a “trusted shipper,” whose containers normally pass through a “green lane” in which very few shipments are delayed for extra inspection. In other words, Al Qaeda was poised to exploit this green lane in order to smuggle weapons into the United States.

You write that the basic shipping container is sometimes referred to as “the poor man’s ICBM.”

Ninety per cent of international cargo today travels by the basic intermodal container—a steel box, usually eight feet by eight feet by forty feet, that can go directly from ship to truck to railcar. More than eleven million containers arrive in the U.S. each year. If a terrorist group wanted to get a weapon of mass destruction into this country, sticking it in a container would be an obvious way to do it. And unless you wanted to bring world trade, and the world economy, to a screeching halt, it’s impossible to open every container and inspect its contents. So U.S. Customs and Border Protection relies on a variety of programs and protocols to select certain incoming containers for inspection—either at the foreign port where they are being loaded or after they arrive here. Still, less than seven per cent of all containers are inspected, and the great majority of these are simply X-rayed, not opened. Of the containers selected for extra inspection, less than two per cent are actually opened and physically inspected. Slightly more than half of all arriving containers now pass through “radiation portals” as they leave American ports, and that number is expected to rise. The problem with that is the phenomenal rate of false hits—it seems that all sorts of things, including pottery and kitty litter, emit radiation at detectable levels—and the discouraging likelihood that an actual nuclear weapon or a so-called “dirty bomb,” properly packed in a lead sheath, would pass through the radiation detectors undetected.

A few months ago, there was a great deal of controversy about a Dubai company taking over the management of several American ports, including Newark’s, in New York Harbor. How much does it matter if foreign companies control our ports?

Foreign-owned corporations run most of the shipping terminals in the United States. That doesn’t mean that the people working at U.S. terminals are all foreigners—quite the contrary—and I’ve never heard of a case in which a U.S. terminal’s foreign owners were accused of any activity, criminal or otherwise, that threatened U.S. national interests. Obviously, it was the fact that Dubai Ports World is an Arab-owned company that set off alarms in the United States. I actually thought the security review of the deal conducted by the federal government sounded cursory and inadequate. But the controversy was not our finest political hour, since xenophobia seemed to be its leading element.

Why can’t American companies simply step in?

International shipping is a vertically integrated industry. The big steamship lines tend to own large logistics businesses as well as operating their own marine terminals. Also, there is no major American shipping line. The last one was sold to a Singapore company in 1997. So there is really no American player in the global big leagues in this field. There are, of course, American terminal operators—the biggest is based in Seattle—but none with the capacity to take over a great many terminals if, for instance, Congress were to decide that foreign companies could no longer be allowed to operate our marine terminals. Such a decision would close a lot of ports and throw international shipping into chaos. It won’t happen.

You write that some American companies, like Wal-Mart, are actually not happy about some port-security measures. Why not?

There is a built-in tension between commerce and security. Big importers (Wal-Mart is by far the largest American importer), shipping lines, and terminal operators all fear the extra costs involved in strengthening port security. Wal-Mart, working through a Washington lobby that it dominates, has worked hard and successfully to defeat a series of post-9/11 legislative proposals to increase container and port security.

You mention that, while longshoremen are unionized, other port workers, like truckers, are not. Is this a labor issue or a port-security issue?

It’s both. Port trucking was deregulated in the nineteen-eighties. It’s become a chaotic industry, with drivers who are, for the most part, badly paid, overworked, and uninsured, with no safety training, professional licensing, or benefits. It’s a key industry reserved, effectively, for the economically desperate. Most of the truckers at the major ports are Latino immigrants, many of them undocumented. That’s a labor problem. Then, a Department of Homeland Security study, leaked in March, took a close look at nine thousand truckers working in the Port of New York and New Jersey. All had been issued identification cards that gave them access to every area of the port. What D.H.S. found was that nearly half the drivers had criminal records, and that more than five hundred were carrying phony drivers’ licenses. The police, in other words, had no idea who many of the drivers actually were. That’s a port-security problem.

You also visited a very different place—the Scrap. A federal official told you that if he wanted to smuggle a nuclear device into the country, he’d do it through the Scrap. What did you find there?

The Scrap is a marine terminal in Jersey City that ships scrap metal to recyclers. It’s kind of a hellish place, very loud and dirty, and it looks a bit like it’s been through a cataclysmic explosion. For some obscure reason, the people who work there don’t need to go through the criminal-background checks that most workers in and around New York Harbor do, so it’s known as a place where rough characters can get jobs. I don’t actually think it’s at all likely that a smuggled nuclear weapon—what the Coast Guard calls a “low-probability, high-consequence event”—would come through the Scrap pier. But it is a good example of the gaps in security that can presumably be found somewhere, if not in many places, in every port.

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Gotham Gazette: Building Stadiums, Losing Revenue

Friday, June 09, 2006
Gotham Gazette - http://www.gothamgazette.com/article/finance/20060608/8/1876

Building Stadiums, Losing Revenue
by Glenn Pasanen
08 Jun 2006

With the baseball season about a third over, New York fans can begin dreaming once again of a subway series. Certainly they have a lot to cheer about, with the Mets leading their division by several games and the Yankees neck and neck with their traditional rival, the Boston Red Sox.

Many fans (particularly those who frequent Shea Stadium) may also be applauding the new stadiums planned for both teams. But some of the financing arrangements for the new stadiums raise important questions.

One issue concerns the city’s recent reliance on so-called PILOTs (payments in lieu of taxes) to promote economic development projects such as the stadiums. The use of these payments raises questions about overall revenue projections for the city, Mayor Michael Bloomberg’s bold but curious priorities, and his ad hoc, unilateral style of executive budgeting. Further, the deals the city crafted to help the Mets and Yankees build new stadiums may be a model for the future, since PILOTs have been proposed as key to the city’s financing of West Side development.
What Are PILOTS?

The mayor certainly has the power to negotiate PILOTs with private developers and other property owners. But since such payments can cause the city to gain or lose hundreds of millions of dollars in potential tax revenues, critics believe the process needs a lot more discussion and transparency than it has yet received.

A payment-in-lieu-of-taxes is, at one level, a simple concept. To encourage economic development, the city agrees to accept a negotiated payment instead of the standard property tax. These payments are generally less than what the property's full value would normally dictate. The difference in payment -– the lost revenue to the city –- is technically called a “tax expenditure,” but most people would consider it a tax break.
Complex Deal With Yankees and Mets

Stadium financing in general -- and PILOTs in particular -- can be quite complex. Take the deals with the Yankees and Mets approved by the City Council in April. Although the teams will build the stadiums themselves, the taxpayers will pay for related items, such as parking lots and, at Yankee Stadium, new parks. According to the mayor, the city and state will spend about $235 million for the Yankees’ project and $180 million for the Mets’ stadium.

But the bill gets bigger when one adds in lost revenues. Up to now, the city owned the baseball stadiums and the land under them. The teams did not pay property taxes but did pay rent to the city. Good Jobs New York has said the Yankees rent totaled $26.43 million between 2000 and 2004, and the Mets paid $24.55 million in rent to the city over the same period. Admittedly much, though not all, of that was eaten up by maintenance costs, which the city paid under the old arrangement but will not have to pay under the new one. But now there will be no rent at all.

And there will not be a property tax either. While the mayor has objected strenuously to Madison Square Garden’s property tax exemption (which costs the city $12 million a year in lost revenues), the baseball teams also remain exempt from the property tax. The Yankees will therefore save -- and the city will lose in revenue -- $144 million over 40 years. The Mets will save $72 million. Such a major revenue decision deserved more debate than it got.

In addition, the Bloomberg administration's interpretation of federal law has led them to assert that the Yankees and Mets can use tax-exempt bonds to finance the building of the stadiums -- as long as they repay the bonds with PILOTS. Tax exempt bonds carry lower interest rates. And so qualifying for tax-exempt financing could save both teams a total of $216 million by one estimate, quoted in an explanation of this financing by Neil deMause in the Village Voice. For both teams, the Independent Budget Office has said the ability to use tax-exempt financing is the biggest single benefit in their stadium financing packages. Most of this cost, though, will be borne by the federal government, not the city or state.

But federal officials have yet to approve this tax-exempt financing. The IBO has told the City Council that allowing tax exempt financing “relies on an aggressive interpretation” of the federal internal revenue code. But it became clear at a City Council hearing this spring that, even if the federal government rejects the city’s argument -- which would require the Yankees and Mets to resort to more costly taxable financing -- the stadiums would nevertheless retain their property tax exemption.
Future West Side vs. Past Battery Park City Financing

Some see the stakes in these stadium deals dwarfed by those in the forthcoming West Side financing. The potential savings through the use of PILOTS to private developers –- and revenue losses to the city –- are vastly higher given the scope of that project’s residential and commercial goals.

As discussed in earlier columns , the city has proposed using an upfront, across-the-board PILOT for West Side developers, promising them they can pay some percentage (50 percent? 90 percent?) of their property tax bill.

A useful reference point here is the biggest PILOT deal in town -- the Battery Park City Authority. The authority has a 99-year lease on land owned by the city, and, as a state-authorized public authority, has the power to collect PILOTs from all commercial and residential owners in Battery Park City. These PILOTs are the equivalent of full property taxes that would otherwise be paid to the city. The city assesses all the Battery Park properties at full market value and the authority bills the owners for what they would owe.

The authority thus has a guaranteed revenue stream, which reached nearly $180 million in 2005, according to the city finance department. The authority uses the money primarily to pay the debt service on bonds that it has issued to pay for developing Battery Park’s infrastructure. After additional administrative and other costs have been paid, the authority sends the bulk of the surplus revenues to the city.

This annual payment to the city, which, rather disingenuously, is also called a PILOT -- but is a partial payment -- can vary substantially from year to year, depending on what the authority spends and saves in a given year. For instance, according to city tax expenditure reports, the PILOT from the authority to the city was $52 million in fiscal 2003 and $101 million in 2005.

The big difference between the Battery Park City Authority financing model and the proposed West Side model is that all Battery Park property owners pay full property taxes after certain time-limited abatements. And paying full freight has not slowed the enormous success of Battery Park City, even after the 9/11 attack.

Why then, based on the downtown record, would one structure West Side financing with a PILOT that is a fraction of full value?
Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.

Gotham Gazette - http://www.gothamgazette.com/article/finance/20060608/8/1876

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Teamsters: Changing to Win?

Wednesday, June 07, 2006
Teamsters: Changing to Win?
by WILLIAM JOHNSON

[from the June 12, 2006 issue of The Nation]

Chances are you haven't heard of Silver Capital, a small, now-defunct Chicago-based company that used to manufacture mirrors, frames and glass-cutting boards.

Silver Capital's workers were mostly Mexican immigrants, working for substandard wages and zero benefits--no healthcare, no pensions, no sick days. And no matter what the auto companies tell you, manufacturing work is not fun. Silver Capital workers suffered severe injuries (fingers chopped off, limbs gouged) and rarely saw a dime of compensation.

If only they had a union, right? Actually, Silver Capital workers did have a union. They were members of Teamsters Local 743, a 13,000-member local representing workers throughout Chicago. "The union never helped anybody," says Marcela Garcia, who worked at Silver Capital for seventeen years. "You'd go to them with a problem, they'd say, 'It's not my problem. Talk to the company.'"

So when Silver Capital announced in September 2004 it was closing down for good--and offered employees like Garcia little to no severance--workers took matters into their own hands. They struck: a one-day walkout without union approval.

Union leaders responded quickly and decisively. Local 743 vice president José Galvan (who did not respond to calls for comment) went straight to the picket lines--where he told the workers that if they didn't get back to work pronto, he'd call immigration.

State of the Union

Welcome to the International Brotherhood of Teamsters (IBT), a 1.4-million-member behemoth of a union led by the man with the biggest name in labor: James P. Hoffa. While Hoffa's grip on the union remains strong, he is facing an election challenge at the IBT convention in June from reformer Tom Leedham, principal officer of Local 206 in Portland, Oregon. The contest is one that ought to command the attention of the broader progressive community, since a healthy Teamsters union is key to a revived labor movement.

On paper the IBT is a force to be reckoned with; every day, hundreds of thousands of Teamsters load, ship and unload the goods that keep America's corporate powers fully stocked and in the black. With members handling cargo at critical points throughout the US economy's supply chain, the IBT has enormous potential power.

And though Hoffa, IBT secretary-treasurer Tom Keegel and four IBT international vice presidents refused to comment for this article, they have not been shy about trumpeting their commitment to building labor power, organizing new members and restoring "Teamster pride." Hoffa was a major player in the drama last summer when the AFL-CIO split and the IBT defected to labor's new Change to Win Federation.

So why are Local 743 officials--lauded by Hoffa for their "proven and experienced leadership"--intimidating immigrants and cutting deals with management at a little mirror-making company like Silver Capital? The short answer is, Teamster leaders often have a complicated agenda. Or, as Leedham argues, "There's a big disconnect between the PR coming from Hoffa and the reality of what's going on in our union."

According to the PR, things are looking up for the Teamsters. Last October Hoffa announced that the Teamsters "may be the only [union] growing." IBT organizing director Jeff Farmer says that Teamsters organizing activity "has ramped up" and adds, "the commitment of the leadership of our union to organizing is as high as it's ever been."

Now's a good time to put those claims under a microscope.

Thinking Big

Greg Tarpinian, executive director of Change to Win, says that the IBT isn't just talking about organizing: "At Cintas, the biggest laundry company in the world, the Teamsters have a campaign with UNITE HERE [the hotel, restaurant, and garment workers union]. The Teamsters are working with SEIU [the service employees union] on organizing school bus workers across the country. The Teamsters are as active as any of [Change to Win's] affiliates."

Farmer adds, "We have to do more--that's part of the reason for the split. We're taking on major multinational employers in huge industries, and there's no silver bullet. If there's any hope, it's to think on a scale like never before."

Thinking big--big unions, big campaigns, big ideas--seems to be the hallmark of the Change to Win unions. SEIU vice president Gerald Hudson gave a talk during the lead-up to the AFL-CIO split in which he outlined SEIU's vision for restructuring the labor movement; his refrain was "Size matters."

Says Tarpinian, who's been an adviser to Hoffa, the heads of other Change to Win unions and New York Governor George Pataki, "We're focused on growth. We realize that without rapid remedial action, we won't have the critical mass necessary to reverse course.... As far as restructuring the Teamsters for growth, Hoffa's done more than any Teamsters president."

The problem, says Leedham, is that the Teamsters aren't growing. "It's all been rhetoric and press releases. Check with the National Labor Relations Board. Hoffa hasn't been winning anything."

The Teamsters have indeed been losing members on Hoffa's watch, though they've kept their membership numbers level at 1.4 million since 2001 by absorbing smaller unions in the railroad and printing industries. (The AFL-CIO grew slightly, from 13.2 million to 13.6 million, in the same span of time.) According to the NLRB, the IBT, which won over 400 private-sector organizing drives in 1998, won only 248 in 2004. And according to the union's own reports to the Labor Department, the Teamsters have lost about 150,000 members since Hoffa's 2001 re-election.

Given that a key tenet of the Change to Win program is building power by organizing in "core industries," the IBT's lackluster organizing record in trucking is especially worrisome. Sandy Pope, president of IBT Local 805 in New York, says the Teamsters' power comes from "the truckers and UPS. If we don't shore up that power, the whole union suffers."

Truckers, as Pope suggests, have enormous power. As manufacturing jobs continue to be outsourced and offshored, truck drivers--who move auto parts from manufacturers to suppliers, groceries from warehouses to retail outlets--have more and more potential to disrupt the global chain of goods and services. Industry expert Michael Belzer, an associate professor at Detroit's Wayne State University, calls trucking "the glue that sticks the economy together." Edna Bonacich, a professor at the University of California, Riverside, who specializes in supply-chain issues, says that companies like Wal-Mart--which depend on the timely delivery of goods from offshore manufacturers--rely heavily on truckers. "There's a vulnerability there," she says. "If any group in this supply chain were to go on strike, it would cost [the companies] millions. A coordinated strike could cost them billions."

Bonacich's theory was borne out in the spring and summer of 2004, as port truckers on the East and West Coasts launched a series of strikes--without the backing of any major union--that shut down ports across the country and severely disrupted the flow of imported goods.

Unfortunately, while coordinated supply-chain disruption may be labor's greatest source of leverage in the global economy, Bonacich believes that "organized labor has not risen to the occasion." In trucking, while corporations have focused their resources on gaining control over the supply chain, Teamsters leaders have elected not to focus at all. "We have from A to Z in our union, airline pilots to zookeepers," president Hoffa told The Nation in August 2005. "We will always be a general union."

Indeed, Hoffa's organizing approach has become increasingly scattershot, with some of the IBT's biggest organizing victories coming in healthcare and the public sector. In recent years, says Belzer, "there's been so little activity in trucking organizing that there isn't anything to write about."

Centralize to Win?

In the Teamsters, says Pope, the Change to Win approach seems to have less to do with organizing core industries than with "a push to centralize the union, taking power away from the local level."

Both Pope (who's running for vice president on Leedham's slate) and Tarpinian note that the IBT has a long tradition of local union autonomy, and that this tradition does not fit neatly with Change to Win's focus on centralized strategic planning. UNITE HERE general president Bruce Raynor--one of Change to Win's architects--says this can be a weakness when it comes to national campaigns. "Local autonomy has to give way to centralized, national leadership," says Raynor, "when you're going up against a centralized national corporation."

Leedham agrees with Raynor that "we need national coordination to beat national employers." But, he argues, "strong campaigns are built from the bottom up, by involving local leaders and mobilizing Teamster members." Leedham says that "the Hoffa administration's approach is to air-drop staffers from DC.... They bring cookie-cutter marching orders but don't offer any real resources."

Given Leedham's emphasis on the bottom-up approach, it's not surprising that his "Strong Contracts, Good Pensions" slate has been endorsed by Teamsters for a Democratic Union, the reform caucus that's been a consistent critic of the Hoffa administration. Tarpinian believes TDU is "not that relevant," noting that "Teamsters leadership is elected by the rank and file. It's a democratic organization." But formal democracy and functional democracy are not the same thing. Which brings us back to Chicago and Local 743.

As you can imagine, Silver Capital workers like Marcela Garcia were not happy when their union officers sided with management. All this happened during a union election year, while longtime 743 and TDU member Richard Berg was leading a campaign to unseat Local 743 president Bob Walston's administration (including José Galvan). Garcia decided to join Berg's "New Leadership" slate and run for vice president.

When the ballots were first counted in October 2004, the election was too close to call, but it looked like Berg would come out on top. So Local 743 officials stopped the count and ordered a new election.

"The rerun was a complete sham," says Berg. The New Leadership slate filed charges with the Teamsters' Chicago Joint Council 25 and the International, which responded with a deafening silence. They also filed charges with the Labor Department, which, shockingly, proved more responsive. On August 12, 2005, the department sued Local 743 for election fraud. But the appeals process moves slowly, leaving New Leadership in limbo.

About That Gorilla

"Corruption in the union," says Dan Scott, principal officer of IBT Local 174 in Seattle, "comes in a lot of shapes, sizes and forms." With the Teamsters, though, even after a decade of federal oversight, when people hear the word "corruption," they usually think about the mob. (Of course, it doesn't help that the search for Hoffa Sr.'s body--recently resumed at a Michigan horse farm--continues to get headlines from coast to coast.)

Scott, who's also running for vice president on Leedham's slate, says corruption remains "a very significant issue. It's important when we try to organize new workers. Management's unionbusting materials often feature the history of the Teamsters and its ties to organized crime. People want to know they're joining a clean union."

Shortly after he became IBT president, Hoffa assembled a task force to investigate and eliminate Mafia influence in the IBT. Led by former US Attorney Ed Stier, Project RISE began in 1999 with Hoffa's blessing. A couple of years in, however, Stier says, he began to experience "resistance and outright interference" from top-level Hoffa advisers. On April 29, 2004, Stier and the entire staff of Project RISE resigned in protest. The IBT remains under federal supervision, and Project RISE has yet to be replaced. According to Sandy Pope, there are still "remnants of the mob" in parts of the union, but the perception of corruption can be equally damaging. "People get mad that we've spent millions of dollars bringing people in to clean up the union--and what has it accomplished? For the membership's benefit, we need to figure out how to clean up our union ourselves."

Changing to Win?

It's hard to imagine labor gaining a foothold in the age of Wal-Mart without a strong IBT. To many truckers, however, the union is a thing of the past. Today, says Edna Bonacich, "the big, over-the-road trucks are mostly nonunion. The intermodal part of the industry [truckers who transport goods from one part of the supply chain to the next--from ports to warehouses, for example] has become nonunion."

The de-unionization of trucking has coincided with steady job growth. According to Michael Belzer, there are more trucking jobs today than ever before. As employment has increased, says Belzer, working conditions have deteriorated. "Compensation overall has likely declined by about a third, and working conditions are very tough...and drivers are not making enough per mile to make ends meet, so they just work more hours, drive more miles."

After six years of stagnation under Hoffa's leadership, it's not just the veteran reformers who are getting restless. Some of Hoffa's supporters from the union's powerful freight (trucking) division, including eastern region freight director Dan Virtue, have reportedly broken ranks and are looking to challenge Hoffa. IBT vice president Tom O'Donnell, who raised more than $100,000 for Hoffa's last campaign, has announced his opposition and may run for president--or ally with Leedham.

As an incumbent wielding substantial resources, Hoffa remains a formidable opponent. His spokespeople maintain that Leedham lacks the support to mount a serious challenge. However, Leedham supporters won more than half of the convention delegate elections they contested, setting the stage for heated battles at June's convention and in this fall's IBT elections.

Divisions within the Teamsters may seem just another symbol of organized labor's continued fragmentation. But the most important split inside the movement remains the chasm between union leaders and the rank and file. Bridging that gap is the core of Leedham's vision for rebuilding the Teamsters.

"Workers want clean unions," says Leedham. "Workers need to know that the organizations they are a part of are democratic. In every area--organizing, winning the best contracts, political action--the more we can involve rank-and-file workers, the stronger the labor movement will be."

The upcoming IBT elections will have serious consequences within and beyond the union. A strong Teamsters union would be a powerful weapon in the fight for all working people. But the Teamsters need to clean up their own house before they can rebuild labor's.

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