Tuesday, November 30, 2010

Black and Bloomberg

It's a good thing that Cathie Black is a quick study, because this chancellor thing could become pretty messy if she doesn't get rapidly up to speed. But, as the NY Times reports, we really shouldn't be worried about this-because Black has hit the ground running: "Cathleen P. Black spent part of her first morning on the job as schools chancellor-designee on Tuesday reading to a classroom of first graders from a wooden rocking chair, a purple stuffed dog cradled in her lap. “It would be great if the class could give this dog a name,” she told them, before she started reading the book, “Caps for Sale,” a 1940 classic. “Sally!” one child called out. Done. If only all the tasks she faced were so easy."

Indeed, if only. Seriously, though, things are going to be tougher than her first day's tasks-a walk in the park compared to our first day teaching the, "Opportunity Class," in Washington Heights eons ago. But the Black appointment says something more instructive about the mayor's lame duck term-and Greg Davis underscores this in Crain's: "Many of those who opposed Ms. Black are opponents of mayoral control. But I have also found opposition among people who I regard as being both generally supportive of the mayor and uneasy with his style of governing. By choosing Ms. Black, someone with no education experience, in a process that was conducted in total secrecy, the mayor pushed those people into the arms of his opponents. It will take some doing to win them back."

His time for doing so is, however, limited: "The administration also seems to have missed another crucial rule of third terms: The window for effective action is two years at the most. Barring a crisis on the order of 9/11, the mayor will become a caretaker after the coming years as the 2013 mayoral campaign gets underway. After 10 years of the Bloomberg era, mayoral contenders will all want to explain how they will turn the page.That's why next year is so crucial for the mayor and his administration."

And, as we have said, the vultures are circling because the mayor has committed an unforced error, and his support has eroded as a consequence. But Bloomberg exacerbates the situation with his typical hauteur: "Cathie Black may have to share parts of her new job but Mayor Bloomberg says there will be no confusion about who’s the boss, he said. “There will be one person in charge. Make no mistake about that,” Bloomberg said this morning at a press conference in Brooklyn."

That person is, in our view, really Mike himself-but it will be Black in the public eye, and her inexperience will become a lightening rod when the first crisis hits-as it most certainly will, given the fact that the Klein regime was no Valhalla. The Times outlines some of this in its editorial today: "The change of leadership could not have come at a more sensitive time for the nation’s largest public school system. New policies promulgated by the State Board of Regents earlier this year will require schools all over the state to retool in several different areas at once. Most crucially, they will need to redesign curriculum to conform to rigorous standards developed by the National Governors Association along with state superintendents and embraced by the regents as part of New York State’s application for the Obama administration’s Race to the Top competitive grant program."

Critics will almost certainly have the long knives out for Black-who will be skewered for the shortcomings of her predecessor as well as her own.  And probably the most sensitive area in this regard is the failure of the Kleinberg regime to narrow the racial achievement gap-in spite of all the yeoman efforts of Al Sharpton in this area. Given Black's class background, this is one issue that bears close scrutiny-and how she approaches this will speak volumes.

In the end, the mayor has weakened his rule, and opened himself up for an attack that would have been avoidable if he hadn't been so arrogant. This could signal the beginning of the end of his unchallenged hegemony. Mike Lupica goes to the heart of this-and we'll give him the last word:

"Is she the one to figure out the growing problem of scores going down as tests get harder? Is Cathie Black - with a Bloomberg-appointed guardian, Shael Polakow-Suransky, at her side - the person to solve the problem of test scores that are likely to fall again this year because passing grades will be raised? Is she really the best choice in town to run a constituency of children as large as the population of Dallas? No one has any idea. Starting with the mayor of New York. You could follow this story from Dallas and see Black as an arbitrary choice, whether you like the way this mayor operates or not. "We can't solve all the problems in the world," Mario Cuomo said once, "we just have to manage them." But good managers don't go out of their way to create problems. It is exactly what Bloomberg has done with his new schools chancellor. He acts like he's lucky the Mets didn't beat him to her.

Reduce the Cigarette Tax-and the Crime that Goes With It!

The NY Post has a scathing editorial this morning on the NY State cigarette tax-and recommends, at least until there is some degree of enforcement, that the levy be lowered: "How pathetically predictable: Albany raises taxes on cigarettes to such onerous levels that purchasing them legally becomes all but unaffordable. So what happens? Folks buy them illegally. (Duh.) As reports in The Post last Friday and Saturday show, that's what's happening: underground sales of 7.3 million packs a month."

Stores who are trying to legally sell cigarettes simply cannot in the City of New York-not in a climate of lawlessness: "Legal sales, by contrast, plunged 27 per cent, from 41 million packs a month to 30 million, between June and July -- when Albany jacked up butt taxes to as much as $5.85 a pack in the city. That's far more than the 8 percent to 10 percent dip that the state projected. And it comes with a price: "We see lots of [rip-offs] and violence with drug-trafficking," ATF special agent Ron Turk told The Post. "As volume and money go up, the stakes get higher."

NYS needs to take prompt action-and remove the criminal incentives: "But with tax-free cigs so ubiquitous and so much cheaper, why should smokers be expected to resist them? They buy levy-free packs in lower-tax states, on Indian reservations or at local bodegas. State enforcement agents complain that budget cuts are curtailing their operations, which no doubt they are. But the answer's not restoring the cuts. The answer is bringing cigarette taxes into equilibrium with national norms -- thereby removing the chief incentive for buttleggers and Indian reservations to break the law in the first place."
All of this will soon be place right on new Governor Cuomo's lap-and with wholesalers biting the dust and bodega owners dropping like flies, immediate attention is needed. We are creating an insidious environment for criminality to flourish-and it could be cleansed if Cuomo and the legislature take the action that the Post asks for: "No one has reliably shown that sky-high cig taxes curb tobacco use enough to justify the added crime. Nor are the tax hikes bringing in revenues anywhere close to what was projected, since legal sales have dropped. Meanwhile, the growth of the underground market, and the attendant crime and violence, are reason enough to shut down this ill-begotten exercise in social engineering once and for all. Lawmakers created this mess. They can end it with the stroke of a pen. It's time to do just that."

Cart Them Away

The movement against the proliferation of street peddlers-and the impunity with which they often operate-is gaining steam from an important business entity. As the NY Post reports: "Scofflaw street vendors, who routinely ignore hundreds of thousands of dollars in fines, ought to have their carts confiscated, the head of a Midtown business group said. "We have reached a point where the city must act to confiscate these carts, and more importantly, the good cart permit," Tom Cusick, president of the Fifth Avenue Business Improvement District, told The Post. "The city can then sell the cart and reissue the permit to someone on the long waiting list," he said.

And if enforcing the law leads to a winnowing of the number of peddlers, well, that's only to the good for the community: "Fifth Avenue is among the most crowded [spots] in the city," Cusick said. "When they ignore the 10-foot rule, they block part of the sidewalk and constrict the pedestrians into a more narrow path." The problem is especially heightened now at peak season for shopping in Midtown, he said."

It isn't only, Fifth Avenue that's inundated-and for a city supposedly looking to reduce congestion, there has been remarkably little enforcement of the proliferation of these street cloggers. Former Council member-now Comptroller-John Liu was a vigilant overseer of this issue as chair of the council's transportation committee; but we are looking for new chair, Jimmy Vacca, and Dan Garodnick, the new chair of the consumer affairs committee, to double team this issue.

Peddler enforcement, as we have belabored, is both a nightmare and a joke. But we sense that the tide has finally turned. We need a rational system of peddler placement and enforcement-the current regime is hopeless and needs a thorough overhaul.

Wal-Mart Hearing a Go

As Crain's is reporting, the city council hearing on Wal-Mart is on for the 14th of December: "With Walmart officials making it clear they intend to open stores in the five boroughs, the City Council has scheduled a hearing next month to review the impact the mega-retailer would have on small business and communities across the city. The hearing, set for Dec. 14, has been titled “When Wal-Mart Comes to Town” and will offer a “historical and prospective view” of the Arkansas retail giant's impact, according to a Council notice. It will be a joint hearing of the Small Business, Community Development and the Economic Development committees."

And the council will get an earful-with studies showing that the first major Wal-Mart in Northern urban setting has not provided nearly the bang for its bucks that the Walmonster's shills have alleged. As we commented yesterday, there are collateral damages aplenty-but in the supermarket niche Big Wally is particularly a pernicious category killer. With the Speaker having issued her major policy initiative, "Foodworks," the question of whether Wal-Mart will work against her policy goals, should be a major focus of the hearing.

We are busy compiling the inventory of local supermarkets in the trade area for the proposed East New York Wal-Mart, and we believe that it will encompass over two dozen independently owned stores that employ hundreds of New Yorkers. Supermarket growth in underserved areas is a major component of the Foodworks doctrine, and we expect that the council will pay scrupulous attention to the Wal-Mart zero/sum game.

As we pointed out yesterday: "Wal-Mart poses a large challenge to policy makers. Changes in the way the city does land use are essential to meet the Walmonster's out sized threat. The first step in this direction involves the deconstruction of the Wal-Mart myths that bolster the false conception that the retail giant is an overall plus for New York." The council should devote some of its own resources to examining just how a proliferation of Walmonsters or even Little Wallies will effect the city's supermarket niche and its immigrant business class that is heavily represented in the food business.

One thing that must be analyzed, is the interrelation between local food retailers and their wholesale suppliers. Foodworks spends a considerable time examining the importance of food wholesaling-particularly the centrality of the Hunts Point Market. We have asked store owners to make lists of their local suppliers-meat and produce in particular-and we will contrast this local nexus with the way in which Wal-Mart brings so much of its inventory in from outside the city.

Keep in mind, that this has never been done before-and certainly not in the context of a comprehensive economic impact analysis. This should be Priority 1 for the city council-as Crain's points out: "The planned hearing is an oversight one, and not a gathering to debate any piece of legislation. But labor groups opposed to Walmart are likely to push the Council to consider a law like one passed earlier this month in San Diego. The city council in San Diego passed a measure to require retailers of more than 90,000 square feet who sell groceries to conduct an economic impact analysis before proposed stores can be approved. The 5-to-3 vote in favor of the law came despite public opposition from Walmart, which took out newspaper and television advertisements arguing against it. A similar bill passed by the Maine legislature in 2007 requires cities and towns to conduct impact studies and only approve the stores if it's found they have no adverse impact on jobs, local businesses and municipal finances."

Wal-Mart, as Crains reminds us, is getting smarter-but we won't go overboard about that yet: "Steven Restivo, Walmart's director of community affairs, said the company would do what it can to help inform the discussion in New York. The retailer is “proud” of its record in creating jobs, helping people save money and spurring economic development, he added. But he said he did not see the need for a city council hearing."

It's our experience that there are good reasons why folks don't want to have hearings-and it is usually because they are well-healed interests more comfortable doing insider trading than public defending: "With too many city residents out of work and living without access to healthy food, we don't entirely understand the desire to spend time and resources on a Walmart-specific hearing, especially when we don't have a store or an announced project here,” he said."

Perhaps Mr. Restivo is just being bashful-or maybe he hasn't yet been able to get his AstroTurf campaign fully mobilized. In Chicago, the Walmonster seeded the political landscape with a whole bunch of shills and toadies: "The lack of good options available to people that live on the South and West sides of Chicago has been well-documented, and it’s very plausible that there is a substantial and passionate movement in those neighborhoods to bring Wal-Mart to their communities as a solution. Wal-Mart would have us believe that such a sentiment exists, but it turns out that support for their expansion into the city is being manufactured by the Chicagoland Chamber of Commerce, a local public relations powerhouse, and by Wal-Mart itself."

Keep  a close eye on this tactic in NYC-and, as we have seen, the Walmonster has been trying to make inroads with the Hispanic Chambers of Commerce, using a paid puppet as its fifth column: "While Wal-Mart certainly has the right make its case to Chicago, the way they’ve gone about this - creating a fake community group that purports to represent a community's residents and interests - is sneaky and underhanded. If what they have to offer Chicago is such a great deal, why did they need to go through the Chicagoland Chamber of Commerce to set up a bogus grassroots group? When I started asking questions around their tactics, they refused to talk to me, except on their own terms."

Get ready NYC! But our focus will be on finally shedding sunlight on all of the propagandistic utterances of the Wal-Mart chorus-and those like the mayor who champion its interests against those of indigenous, mostly immigrant entrepreneurs. As we told Crain's: "Richard Lipsky, a lobbyist for the Retail Wholesale and Department Store Union, said the hearing was needed, especially because the Brooklyn site was approved by the Council for major retail use but without considering the prospect that it might include a Walmart. “When the Council considers an application without having a clear understanding of exactly what is going to be in the development, there should be some kind of process by which the economic impacts of a development are reviewed,” he said. “We need to understand that what we're getting is not as beneficial as city would have us believe.”

Monday, November 29, 2010

Wal-Mart's Fresh Challenge

NYC-and NY State as well-are committed to insuring that New Yorkers have greater access to fresh food. It is a linchpin of this policy that providing better access will help address the state's obesity epidemic-a problem that the First Lady has made her priority as well. One of the central features of these initiatives is trying to attract more supermarkets to areas that have been designated as, "underserved."

One underlying rationale for the two programs has devolved from the stark fact that NYC has lost hundreds of neighborhood supermarkets over the past decade. David Gonzales highlighted this in the NY Times over two years ago: "A continuing decline in the number of neighborhood supermarkets has made it harder for millions of New Yorkers to find fresh and affordable food within walking distance of their homes, according to a recent city study. The dearth of nearby supermarkets is most severe in minority and poor neighborhoods already beset by obesity, diabetes and heart disease."

A year later, the Times followed up with a rosy view of the Bloombergistas supermarket initiative: "The Bloomberg administration, in its ever-expanding campaign to make New Yorkers eat better, has already clamped down on trans fats, deployed fruit vendors to produce-poor neighborhoods and prodded corner bodegas to sell leafy green vegetables and low-fat milk. Now, in a city known more for hot dogs and egg creams than the apple of its nickname, officials want to establish an even bigger beachhead for healthy food — new supermarkets in areas where fresh produce is scarce and where poverty, obesity and diabetes run high."

City Planning Commissioner Amanda Burden captured the essence of this policy challenge: "This is about being able to walk to get your groceries in those areas that are really, really underserved and basically have no place to buy fresh produce,” said Amanda M. Burden, the city planning commissioner. Residents in such areas, she said, have been spending “their grocery dollars at Duane Reade and CVS on chips and soda.”

So, what's the goal of the Fresh Program? 15 supermarkets in ten years! But Gonzales pointed out that the city had already lost hundreds of local markets-most in those areas that have been identified as underserved. Some of these losses-most?-can be seen as a result of city policy itself.  Here's what we said at the time: "The fact that we have lost so many markets is the elephant in the room in all this policy discussion. And it's no wonder Bloomberg doesn't want to address this embarrassing issue. It just might have something to do with taxes and regulations-and the over all high cost of doing business in Mike Bloomberg's New York. So, what does all that say about the benefits of the current initiative?"

Even more problematic, however, is the fact that the administration is also encouraging box store development all over the city-and the mayor is rightfully seen as the biggest promoter of Wal-Mart, a supermarket category killer if there ever was one. This is what's known in academic parlance as cognitive dissonance. As one web site points out: "Supermarkets aren't havens from recessions anymore. Wal-Mart's gunning for them, and will continue to do so. Grocers are already losing market share, and unfortunately for them, this trend shows no signs of abating."

And, as an academic study out of the Kellog Center has pointed out, "Hansen, Blattberg, and Singh’s research suggests ways local retailers can meet the challenge of an incoming Wal-Mart supercenter. They cited a 2003 Wall Street Journal article that showed 25 out of 29 supermarket bankruptcies in the past decade had been caused by the arrival of a Wal-Mart. Wal-Mart is now the number one player in the grocery industry. It has been able to gain and maintain this position because it keeps its costs below the industry level..."

Costs that are mostly attributed to wages and benefits-and the entry of Wal-Mart into an area means that grocery competitors are forced to try to lower their employee compensation as well. A real race to the bottom. This is something that should be central to the collateral damage side of understanding what Wal-Mart means for the city's economy.

In addition, as the authors of the Kellog study alert us, in a separate research analysis, business isn't added, it is shifted from existing stores: "Our results show that the incumbent store lost 17% volume amounting to a quarter million dollars in monthly revenue following Wal-Mart's entry. Decomposing the lost sales into components attributed to store visits and in-store expenditures, we find that the majority of these losses were due to fewer store visits with a much smaller impact on basket sizes."

But notice, "the incumbent store." Typical analysis of Wal-Mart's impact centers on communities where there is a single major supermarket-and the NYC environment is way different. We have found that large suburban-style supermarkets have led to four, and even five, closures for smaller local food stores-and we can't imagine that a Wal-Mart supercenter would have less of an impact.

These underlying issues need to be examined by the upcoming City Council hearing scheduled for December 14th. But it isn't only supermarkets that will be hurt if Big Wally sits its fat ass down all over town. As one wag observes: "The other key here is convenience. Who wants to drive around, park, go in, and stand in lines at multiple stores? Most consumers want one-stop shopping."

That giant sucking sound you hear is the exodus of shoppers off of the 200 neighborhood commercial strips-not a great economic bargain for NY; and an environmental danger to the carbon conscious mayor's grandiose global warming antidotes. This is serious business folks. And there is a need for serious analysis-along with some legislative remedies that will address the proliferation of box stores.

Wal-Mart poses a large challenge to policy makers. Changes in the way the city does land use are essential to meet the Walmonster's out sized threat. The first step in this direction involves the deconstruction of the Wal-Mart myths that bolster the false conception that the retail giant is an overall plus for New York. As Wal-Mart critic Al Norman says-and he is commenting on the Loyola University Chicago Wal-Mart study of  the retailer's entry there: "They don't teach "Wal-Math" in American high schools, but here's how it works: 1 job created - 1 job destroyed = 1 job. Wal-Mart has never admitted the difference between gross jobs and net jobs."

We'll give the study's authors the last word-and Chicago should be seen as a cautionary tale: "What we're seeing here is that placing a Wal-Mart in an urban setting is basically a 'wash' in terms of sales revenue for the city and jobs for local residents," explains the study's co-author David Merriman, head of UIC's economics department. "This means that communities around the city should not see Wal-Mart, and other big-box retailers, as a panacea to local economic struggles."

Indian Giving to Governor Cuomo

The Indians of NY State continue to give the tax payers severe agita-and the fiscal results aren't very pretty. As the NY Post reported, tax evasion-from Indian as well as non-Indian sources-have created a huge budgetary shortfall: "The underground tobacco market is spreading like a fast-growing cancer in the wake of tax hikes that make New York cigarettes the most expensive in the nation -- and it's costing the state tens of millions a month in lost tax revenue, a Post analysis has found. Illegal cigarettes are pouring into neighborhood bodegas by the truckload from neighboring Indian reservations, lower-tax states in the South and even as far away as China, authorities say."

This is the gift that the accidental governor is bequeathing to us all-but particularly to the new occupant of the office who will be faced with trying to make Indian buttleggers follow the law: "Government data show that New York state is being smoked out of as much as $20 million a month from all these illegal cigarette purchases -- an estimated 7.3 million packs a month sold off the state tax radar...Sales of taxed cigarettes have plummeted 27 percent since July, when state lawmakers raised the excise tax to $4.35 a pack on top of the city's tax of $1.50, making the average price of Marlboros here $11.60, with some shops charging as much as $14."

What the state did-but it was Governor Paterson's foolish play-was irresponsible. You don't raise the tax before there is an enforcement mechanism in place-as we cried out in the Albany wilderness at the time. But it is the state's convenience stores that are being beaten bloody by the tax inequities-and the resulting unfairness has led to desperate store owners looking to stay in business by joining the lawlessness.

The Post has this story as well: "It doesn't take much coaxing to get otherwise legitimate Big Apple businesses into the illegal cigarette trade. "They come out here like they are salesman from Pepsi or the potato-chip company," said the owner of a north Bronx bodega that sells smuggled Newports and Marlboros for $8 a pack. "I don't know how the city is going to stop it. The city is losing a lot of tax money," he said. "They are killing themselves, because no one is paying $12 for a pack of cigarettes, and I'm not paying taxes on the money I make selling them." His supplier provides him with cartons between $45 and $50 a pop, which gives him a $30- to $35-per-carton profit."

What the bodegueros are doing is exactly what the Indian scofflaws are doing-and it was these pioneers of lawlessness who have set the trend in an environment where state government has abdicated its law enforcement role. The state has even reduced its enforcement presence at just the moment when the tax evasion has metastasized: "Budget cuts are snuffing out the state Department of Taxation and Finance's ability to properly combat tobacco smugglers, veteran investigators told The Post. Large-scale stings and intense surveillance are all but impossible because of belt tightening that has nearly eliminated overtime for the approximately 100 law-enforcement officers assigned to the state agency, the sources said. "We are under orders to have no overtime and no undercover investigations," said a source within the tax department's Petroleum, Alcohol and Tobacco Bureau. "The only thing we're doing is going store to store giving summonses."

As always, the only enforcement when there is basically no enforcement, is on the victimized legitimate retailers-the source of all of the problem is left alone while federal courts wind their way to the inevitable upholding of the constitutionality of making Indian retailers obey NY's tax statutes. In the meantime, however, tobacco wholesalers, retailers, and tax payers will continue to suffer as Indian buttleggers squeeze the last drop of illicit profit out of the cigarette business.

Will Related Get the Point?

In Friday's Wall Street Journal, the paper reported on the bidding process for the right to develop Hunters Point on the water's edge in Queens-and, wouldn't you know it, the Related Company is one of two finalists: "The Bloomberg administration has zeroed in on three finalists vying to develop a major housing complex on the Queens waterfront envisioned as a bastion of middle-class housing. Narrowed from a field of seven, the short list includes Douglaston Development; a team led by TF Cornerstone; and a joint venture of Related Cos., Phipps Houses and Monadnock Construction, according to people familiar with the bidding process. A spokesman for the city's housing agency declined to comment."

Now this is one massive development: "The 1,000-apartment project, known as Hunters Point South, would sit across the East River from the United Nations on city-owned land near Long Island City. It would be the first phase of a far larger complex totaling more than 5,000 apartments, built alongside new parkland. The current bid is for two towers at the north end of the 30-acre site."

And, as is usual, the city is subsidizing the affordable housing component: "Planned for more than four years, the development has been positioned as something of a Stuyvesant Town of the 21st century. City officials want to restrict at least 60% of the apartments to middle-income tenants making between $63,000 and $130,000 for a family of four. With a city subsidy of as much as $90,000 being offered to the developer for each restricted-income apartment built, the project attracted considerable interest from the development world. The bidders included the Durst Organization, AvalonBay, and the Richman Group, all of which were passed over when the city narrowed the field."

While it always amazes us how Related manages to consistently achieve its Most Deserving label from the Bloombergistas (well, not so amazing, is it?)-the fact that Steve Ross' Little Real Estate Company That Could is in the running here does raise some interesting issues for a little contretemps over Wal-Mart at Related's expanded Gateway Mall in Brooklyn. What the struggle over Hunters Point highlights is that Related will be looking to do a wide range of new developments in the upcoming years, and by promoting Wal-Mart in Brooklyn, it is running a risk.

As we said last month: "Put simply, even if it manages to get past the demonstrations and expected law suits, it will be certain to face a black list for the next three years from the city council-and into the future as far as we can see, since the next mayor and council will likely to be much less inclined to do the Related's bidding. This is a far cry from the past nine years where the incestuous relationship between Deputy Dan Doctoroff and Steve Ross has led to a favored nation status that bore fruit in two mega deals-both appropriately named Gateway; in these cases gateways to no-bid riches."

The Hunters Point project may or may not require additional city council actions-the original ULURP was six years ago. But we have a hunch that there will be some changes that will require a re-look by the council. If so Related, if it gets designated, might just be cutting off its nose to spite its face. But if not Hunters Point, perhaps it will be the huge development on the Far West Side that is being done by the Bobbsey Twins Ross and Roth (Vornado Realty and Distrust). Or even some new project that is yet to be determined.

The bottom line here is that we believe that the council leadership has considerable leverage with Related-and that, combined with all of the ill will they are generating with their Walmonster project, should give them some second thoughts about their expansion plans at Gateway Estates. The ill will is about to get real serious this week-something to stay tuned for.

One last point on Hunters Point. The city council in approving the rezoning without any development plan may have left itself open to the same problem that was created when the Gateway expansion was approved with no restrictive covenant against Wal-Mart. As the Department of City Planning tells us: "The proposal would create opportunities for about 300 housing units in new buildings that will blend into the established neighborhood scale. While continuing to sustain light manufacturing development in the area, the zoning changes would also allow a broad range of commercial uses, including stores, restaurants, artist studios, small theaters and custom printers more widely throughout the neighborhood."

Ah yes, the devil's in the details, isn't it? Once again, a pig in a poke with no clear development plan. Which is precisely why there needs to be legislative changes that insure an economic review of proposals that go through ULURP sans developer or any development plan. This is one administration-but it should apply to any mayoralty-that should never be given carte blanche on its development schemes. We have seen close hand how disastrous some of the these plans have been-and the council should legislate against this repeat performance.

Sunday, November 28, 2010

Black Eyed Appease

For a man who's used to coming home driving his own bakery truck-when he's not driving the bakeries out of town-Mike Bloomberg was forced to settle for half a loaf. In the end, it was the mayor who blinked. He was forced to swallow on Commissioner Steiner's insistence that he appoint a deputy for Cathie Black, one who had a wider breadth of experience than the ill suited chancellor choice-in other words, almost anyone.

Bloomberg had only two choices here-either admit total defeat and withdraw Black's name; or accept Steiner's compromise. The NY Times has the story that broke late on, appropriately, Black Friday: "Mayor Michael R. Bloomberg reached a deal Friday to save the tottering candidacy of Cathleen P. Black to be the next chancellor of New York City schools, agreeing to appoint a career educator who started as a classroom teacher to serve as her second in command. As a result, the state education commissioner, David M. Steiner, has agreed to grant Ms. Black, a media executive, the exemption from the normal credentials required by state law for the position, according to a person with direct knowledge of the negotiations."

For Mayor My Way or the Highway, this was humble, and not pumpkin pie, he was forced to eat this Thanksgiving: "The move was a significant concession by Mr. Bloomberg, who has often resisted efforts from outside City Hall to meddle in his affairs. The mayor’s hand was forced on Tuesday when Dr. Steiner questioned her readiness for the position. Ms. Black, the chairwoman of Hearst Magazines, has spent a lifetime in the media business, does not hold any advanced degrees and has had little exposure to public schools."

Keen observer, Doug Muzzio sums up the punking in the WSJ-but observes that it was still a half loaf consumed: "Doug Muzzio, a professor of public affairs at Baruch College, said the mayor "ultimately got what he wants. The mayor wisely acceded to this; otherwise he didn't get Black....This other person is going to report to Black. So Black is the boss," Mr. Muzzio said. "He still has a black eye—he looks imperious. He looks like he doesn't care about what people think. His attitude is 'my way or the highway.' Now, in this case, he confronted a situation that he just couldn't ignore and wisely bowed to it but essentially he still got his way."

That is one way to look at this unusual mayoral concession, but we see it a bit differently. This was a major challenge to the mayor's autocracy-and it will embolden his critics to further explore chinks in the Blooomberg armor. It is the real beginning of Bloomberg's lame duck term-and we believe that our friend Doug is too kind in his view of the Bloomberg triumph.

As the Times points out:

"The deal reached Friday capped a week of frantic talks between the city and the state. Mr. Bloomberg, who was given control of city schools in 2002, has said that transforming the school system will define his legacy as mayor. Mr. Bloomberg viewed Dr. Steiner’s challenge as a critical test of his authority over the school system. The mayor told people involved in the negotiations that a rejection of Ms. Black would undermine the model of mayoral control and set a dangerous precedent. At one point while the negotiations were under way, Mr. Bloomberg said publicly that the law requiring the schools chancellor to hold education credentials was obsolete and should be abolished. Mr. Bloomberg had initially believed he could build enough public pressure to force Dr. Steiner to approve Ms. Black, according to the person with knowledge of the negotiations. Business executives, former mayors and celebrities like Whoopi Goldberg flooded Dr. Steiner’s offices with messages in support of Ms. Black. But Dr. Steiner remained skeptical, and he said on Tuesday he would consider her appointment only if Mr. Bloomberg installed an educator at her side."

In essence, Bloomberg's attempt-and it was both frantic and determined-to Bogart Steiner failed: "The talks with the mayor about that possibility grew more serious after an eight-member panel advising Dr. Steiner on Ms. Black’s qualifications on Tuesday mustered only two votes unconditionally in support of her, unexpectedly throwing the selection process into disarray. Mr. Bloomberg typically loathes intrusions into his management of the city. But throughout the negotiations for the waiver, he showed an unusual willingness to compromise to preserve Ms. Black’s candidacy. To the surprise of his own associates, he held his tongue in public, refusing to challenge Dr. Steiner and the panel that rebuked his choice for chancellor."

He ultimately held his tongue because he was holding a losing hand-and is now forced to make a silk purse out of a sow's ear in a climate of  enhanced enmity and reduced authority. And, as WSJ tells us, the vultures are circling the carcass: "While the appointment of a chief academic officer may appease Mr. Steiner, some others are still unmoved. State Sen.-elect Tony Avella, a critic of the mayor's education policies who encouraged Mr. Steiner to deny the waiver, said he is disappointed with the resolution. "We still have somebody who is not an educator running the ship," he said. Assemblyman Hakeem Jeffries, a Brooklyn Democrat and a lawyer by trade, said he is considering filing a lawsuit to block the waiver. "We need a chancellor who stands on his/her own merit, not one who needs to be ushered around the Department of Education by an academic chauffeur," Mr. Jeffries said. "The law does not permit Commissioner Steiner to grant a waiver based on the educational or professional credentials of someone other than the applicant."

This climate of hostility doesn't bode well for the inexperienced Black: "City Council member Robert Jackson, chairman of the council's education committee and a critic of mayoral control over the schools, said he's worried that Ms. Black may ignore Mr. Polakow-Suransky's advice on pedagogical issues. If that happens, Mr. Jackson predicted, "all hell is going to break loose."

So, in our view, this is only Act One-and Black and Bloomberg may regret what they wished for. The NY Daily News captures some of this: "Caving to pressure from the state, Mayor Bloomberg accepted a compromise Friday to save his pick for schools chancellor... Yesterday, some lawmakers said they considered the deal illegal and threatened to fight it in court. "It's unfortunate that in order to give the mayor his way, Steiner is willing to designate a chauffeur who can usher Ms. Black around the Education Department," said Assemblyman Hakeem Jefferies (D-Brooklyn). "The only problem is the chauffeur is more qualified to lead the school system than Ms. Black."

So Bloomberg was forced to back down in order to get Black enthroned. Steiner, as an appointee, did about as much as could be expected in this situation-considering the pusillanimous actions of our craven state legislators-not to mention the shucking and ducking UFT. But the mayoral armor has been seriously cracked, and we can expect that Bloomberg will be forced to endure similar diminutions of his regal pretensions in the last three years of his mayoralty. He still maintains an out sized power that is derived from his great wealth, but the winds of change are beginning to blow, and if Mike Bloomberg doesn't adjust, he will find that the Black backtrack is simply the begging of the end.

Wednesday, November 24, 2010

Pride and Processed

The old saw the pride goeth before the fall, was reaffirmed yesterday when Mike Bloomberg's chancellor appointee, Cathie Black, was unceremoniously nixed by State Ed Commissioner David Steiner: "In a stinging rebuke, the panel unexpectedly gave a thumbs-down Tuesday to granting a waiver so that media exec Cathie Black could lead the city schools."

In today's NY Daily News, Adam Lisberg zeroes in on the cause of the unexpected downfall: "Mayor Bloomberg doesn't mind picking a fight. But after nine years in office, he should have learned to pick his battles. He has famously tried - and failed - to build a West Side football stadium, charge tolls into lower Manhattan and turn the Kingsbridge Armory into a huge shopping center. There was no shame in those losses, though. No matter what you thought of them, they were legitimate ideas with solid backing that deserved a hearing. Trying to put a magazine executive in charge of the city schools is a different story."

Well, since we were involved in two of those defeats, we might be inclined to raise their profile and significance-however, we do happen to agree with Lisberg that the current defeat has much greater import: "Bloomberg may have been the only person in New York who didn't see a downside in naming Cathie Black to be schools chancellor." And therein lies the problem.

Bloomberg has become so full of himself that, like the lawyer who represents himself, he has a fool for a client. Michael Goodwin in the NY Post goes straight to the arrogant Achilles Heel: "Memo to Mayor Bloomberg: Check the mirror. Your comment after a round of golf that President Obama is "the most arrogant man" you ever met is boomeranging. Many New Yorkers are saying the same thing about you because of your recent behavior. Picking Cathie Black to run the schools was sure to raise eyebrows, but your claim to have conducted a "public search" is provably false. The unforced error undercut Black and contributed to the advisory panel's recommendation that she not get the job."

Precisely so-it was more the process than the actual qualifications-or lack thereof-of the surprising choice that submarined the mayor. It revealed him as nothing he's done before. Lisberg underscores this argument: "Bloomberg's inner circle could have told him that - had he bothered to tell them about Black before he made up his mind. "He went into this by himself, and in fact it was revealed that the emperor had no clothes," said Baruch College political scientist Doug Muzzio. The mayor's team could have quietly reached out to state Education Commissioner David Steiner to see how he would react, or to at least give him an early heads-up. Instead, the aides who get paid to build support for his controversial ideas - like lifting the charter school cap or extending term limits - were playing defense from the start."

All of which makes the bleatings of the Bloomberg editorial claque satisfyingly laughable. First the disappointed Post-lashing out at the old guard scapegoat: "The old guard of the city's educational establishment -- the people who turned New York's schools into places for everything but learning -- won a big one yesterday. The biggest losers are the kids themselves -- and the city at large. A so-called "rubber stamp" panel, appointed by state Education Commissioner David Steiner to evaluate Chancellor-designate Cathleen Black, voted to deny her the imprimatur she needs to take charge of the school system."

So, let's get this straight. The entire educational establishment that blasted Steiner's panel as a, "rubber stamp," managed to suborn all of those folks in a 24 hour span to act in its behalf? But forgive the Post for its emotional pain, after all, the Black rejection is as much a slap in the Post's face as it it is a comeuppance of the mayor.

And then there's Morticia's geshrie of outrage over at the News-demanding that Steiner overrule his own panel: "Steiner apparently believes that a chancellor must have more than the high managerial talent Black has shown throughout her career. In his view, further schools credentialing - as bogus a sole criterion as you can imagine - is a must."

Now we don't believe that credentials are the sine qua non of  the qualification to be chancellor, but to argue that Steiner feels that having educational experience is a sole criterion misreads the widespread view that that Steiner reflects: Black's background was so devoid of connection to public education and public service that the appointment is way too risky-especially by someone who is in his lame duck term.

But the Post and News are simply continuing their public disservice in regards to all things educational. Having hyped the Kleinberg regime to blimp-like proportions, both papers went into full damage control when it was determined that the edifice was constructed on sand. They still, however, persist to this day in over hyping the departing chancellor's achievements. A more sober assessment of the entire educational reform effort awaits-and will likely not be forthcoming until Bloomberg departs the municipal stage.

The current debacle, though, is monumental-and goes further in blackening the mayor's reputation than anything else he has done in nine years. But the final act has yet to be played-as NY Magazine points out: "The next move is Bloomberg’s, and none of them are easy. He could elevate one of the “pedagogical experts” he says Black would have leaned on anyway — but that would essentially admit that Black is a figurehead and not the “visionary” Bloomberg had touted. He could refuse to install a No. 2 who’s a real educator and have Steiner reject Black, leaving the school system rudderless — not likely. Bloomberg could withdraw Black’s application and admit defeat — even less likely. Or Black could back out, saving some face but leaving the mayor to start over. My wagering, however, is that Bloomberg, through intermediaries, spends the next several days trying to get Steiner to change his mind or put some time limit on the Black-helper. And if Steiner doesn’t budge, Joel Klein may need to ask Rupert Murdoch for an extension on that new job."

One thing is sure, however, There will be a million promi$es made in the next forty eight hours, as Mike Bloomberg pulls out all stops to salvage his nominee and his reputation. Unfortunately, the Fat Lady has yet to sing.

Black and Blue

We've updated this post on the heels of the stunning slam dunking of the Cathie Black waiver request-and we owe the panel and the commissioner an apology for the snarky discrediting. Gotham Schools has the jaw dropping and unexpected turn of events: "In a rebuke to Mayor Michael Bloomberg, an eight-member panel of education experts recommended this evening that State Education Commissioner David Steiner deny publishing executive Cathleen Black a waiver to become the next schools chancellor. And Steiner told the panel that his own preference is to wait to grant the waiver until the city also installs a top educator with some independent power, the panel’s chair said."

Wow! And now the Times weighs in on the reversal of fortune-updating its own online account that was written before the panel vote: "The candidacy of Cathleen P. Black, Mayor Michael R. Bloomberg’s choice to be chancellor of New York City schools, was in jeopardy on Tuesday as both a panel weighing her credentials and the state official who will determine her fate expressed deep doubts about her readiness for the job."

Commissioner Steiner really manned up here: "But Dr. Steiner did not rule out ruling no entirely, expressing skepticism about Ms. Black’s ability to master the intricacies of the nation’s largest school system. Her cause was further undermined on Tuesday when six of the eight members of a panel Dr. Steiner appointed to evaluate Ms. Black’s background voted to deny granting an exemption. The erosion of support for Ms. Black, a publishing executive, was a serious rebuke to Mr. Bloomberg, who had enlisted powerful business and political allies to lobby Dr. Steiner."

But Steiner did allow the mayor an exit strategy-as we alluded to in our earlier observation that can be found below. The NY Post has this-and with a picture of Black looking just like Dr. Seuss's Grinch: "The panel's vote was a recommendation to State Education Commissioner David Steiner, who is tasked with making the final determination. But he told reporters yesterday that he was the one who urged them to vote "not at this time," -- suggesting that his final decision may put the ball back in Bloomberg's court."

Which brings us back to our first observations...
The NY Times is reporting that State Ed Commissioner David Steiner is looking for a graceful exit strategy on Mayor Bloom berg's waiver request for Cathie Black. Steiner, feeling the heat from a formerly somnolent public, is suggesting that he might deny Black a waiver -unless: "David M. Steiner, New York State’s education commissioner, has deep concerns about the selection of Cathleen P. Black, a publishing executive, to be chancellor of the New York City schools and will reject her appointment unless an educator is installed to help her run the system, according to a person familiar with the discussions."

In our view, this is not a bad finesse move-and takes away some of the heat Steiner's been feeling because of the slipshod manner in which he appointed the waiver review panel. Making this even more delectable, is the handkerchief swat across the punin Steiner is giving to His Highness: "Dr. Steiner’s move would be a sharp rebuke to Mayor Michael R. Bloomberg, who has worked feverishly to rally support for Ms. Black, the chairwoman of Hearst Magazines, enlisting powerful business and political allies to lobby Dr. Steiner."

Your move, Mr. Mayor-and, for someone not used to insubordination from his lessors, this could lead to pyrotechnics: "But believing Ms. Black’s inexperience in education to be a liability, Dr. Steiner intends to deny the mayor’s request unless Mr. Bloomberg agrees to appoint a chief academic officer to oversee teaching, learning and accountability and serve as the No. 2 person to Ms. Black."

And now Steiner-leaking like a sieve-is expressing the following: "But despite the considerable pressure, Dr. Steiner, a former dean of the Hunter College School of Education, remained unconvinced. From the start, he was “deeply troubled” by Mr. Bloomberg’s choice, the individual said, and he worried that she would be unable to master the intricacies of curriculum, assessment and the overhaul of failing schools."

Given the mayor's far reaching clout, Steiner may have found a way for him to save face: "Dr. Steiner, according to the individual, believes a compromise could satisfy Mr. Bloomberg while also helping to allay the concerns of parents, teachers and students, who have expressed reservations about Ms. Black and the highly secretive process leading up to her appointment."

It will be fascinating to see Mike Bloomberg's response to the push back: "It is possible that Mr. Bloomberg may be able to satisfy Dr. Steiner’s request by simply promoting someone within the Department of Education. But the mayor has traditionally resisted outside efforts to meddle in his decisions."

Unused to any checks and balances, that is. We just might have misjudged Steiner-and the supine panel certainly sat up and barked loudly.

Bloomberg's Day Tripper

The Bloombergistas are grasping at straws to demonstrate that Cathie Black has at least some connection to public schools. Yesterday, City Room reported on Black's one day sojourn in a South Bronx school-immediately undercutting all arguments militating against her appointment: "She patrolled the halls of a South Bronx public school, mediated a fight between students and went an entire workday without lunch. Though Cathleen P. Black, the chancellor-nominee of New York City’s public schools and the chairwoman of Hearst Magazines, has been criticized for her lack of experience in her new field, 10 years ago, she got something of an education in education — at least eight hours’ worth — at what is now Junior High School 125 Henry Hudson."

Well, that settles the experience issue. Well, perhaps not-as one parent commented: "This week near the school, Carlos Jimenez, who was a student there in the 1990s before Ms. Black visited and who now works at a pizzeria, said he thought she deserved a chance to prove herself. But Brenda Rodriguez, whose 10-year-old daughter will will start at the school next year, was not impressed to hear of Ms. Black’s visit. “Maybe if she had been there for at least a year,” said Ms. Rodriguez, who was buying snacks for her children at a bodega. “To learn ‘What are we going to focus on? What are we going to fix?’” She paused. “One day?” she said. “It’s nothing.”

But with Bloomberg, money for nothing may be all you can hope for-since the panel that was established for reviewing Black's credentials is certainly no hanging jury: "State Senator Eric Adams on Monday called for the removal of a member of the education panel evaluating Mayor Michael R. Bloomberg’s choice for the next city schools chancellor. Mr. Adams, a Democrat, called on the panel member, Louise Mirrer, to recuse herself from the deliberations because of her many close ties to Mr. Bloomberg, which she did not appear to have disclosed. “She should not sit on the panel,” said Mr. Adams, who represents Brooklyn. “The mayor has great influence on her vote.”

Civil rights attorney Michael Myers, in a response to the City Room blog post, captures the essence of this ongoing farce-and the supine role being played by the commissioner of education:
"NYS Education Commissioner David Steiner’s judgment and his own personal integrity are at issue here, as well as the independence and disinterestedness of the panel he has named to advise him on whether to grant the waiver to unqualified Cathleen Black, which she needs in order to assume the post of NYC Public Schools Chancellor.

Why did not Commissioner Steiner ask each panelist whether they had any personal or financial ties to Mayor Bloomberg, to the New York City government and/or to any of Bloomberg’s philanthropic entities, including his foundation and the Carnegie Corporation which has channeled his gift-giving to many not-for-profit, civic and other “charitable” institutions."

Equally troubling is that several of the panelists have worked under Chancellor Joel Klein, and therefore for Mayor Bloomberg."

The NY Times delves into this messy melange: "As new revelations surfaced about extensive ties between Mayor Michael R. Bloomberg and members of the panel evaluating his choice for school’s chancellor, state officials acknowledged on Monday that they did not screen the panel members for conflicts of interest or connections to the Bloomberg administration before appointing them."

Or, as Karl Marx asked, "Who will educate the educator? "The commissioner is trying to contain the fallout as parents and elected officials question the process by which the mayor has sought to install Ms. Black, saying it is secretive and is unlikely to lead to any result other than a rubber-stamping of the mayor’s wishes."

Susan Lerner from Common Cause captures the inanity of this process: "There are real questions about whether this is an objective process,” Ms. Lerner said, “or whether it has been compromised by the selection process. Is it legitimate to say, is this tilted, is there a thumb on the scale — not a super heavy one, but a thumb on the scale?” Ms. Lerner asked. She then answered her own question: “Yes.”

But the Bloomberg cash stash has built, not a bridge to nowhere, but one that sails smoothly over troubled waters-and Master Geppetto's strings are far reaching and effective. Liz Benjamin has the story: "Opening up a new front in the Cathie Black offensive, a group of 28 prominent New York women have written to state Education Commissioner David Steiner and urged him to approve her waiver so the ” the largest public school system in the country will, for the first time, be headed by a woman.”

Oh, that's great, obfuscating Black's experience gap with a toxic brew of  non sequitor identity politics-but look at the roster assembled here: "The letter is signed by a wide variety of women – including a number with ties to Mayor Bloomberg, like NARAL Pro-Choice NY’s Kelli Conlin, whose organization has endorsed the mayor; US Sen. Chuck Schumer’s wife, Iris Weinshall, who served as DOT commissioner under Bloomberg and his predecessor, Rudy Giuliani; and actress Whoopi Goldberg, who was one of the mayor’s many celebrity endorsers in 2009."

A choir that sings wonderfully from the Bloomberg libretto-while at the same time, NYC's public issues a strong contrary thumbs down: "Today’s Q poll finds NYC voters are generally not supportive of Cathie Black, Mayor Bloomberg’s pick to succeed Joel Klein as schools chancellor. Most residents (64 – 26) say education experience matters more than management experience when it comes to overseeing the city’s vast network of public schools."

Ah, public opinion, a nasty bit of irrelevancy when it comes to our elected oligarch-who shrugs off the rabble's crticism with practiced ease: "Mayor Bloomberg shrugged this morning’s Q-poll showing voters - especially public school parents - casting doubt on his school’s chancellor pick. “This is not a popularity contest,” Bloomberg told reporters..."

But we'll give Q-Poll's Mickey Carroll the last meaningless word on this charade-and wonder how the next three years will treat the mayor who has finally begun to show his true off colors: "The City Hall spin machine better shift into high gear,” said Q pollster Mickey Carroll. “So far, all the negative news stories are murdering Cathleen Black – and not doing Mayor Michael Bloomberg much good, either.

Tuesday, November 23, 2010

Avella Calls Out EDC

We are in receipt of a letter that State Senator-Elect Tony Avella has sent to NYSDOT Commissioner Gee. The letter asks Gee to insist that NYC EDC release the revised ramp report that the agency has been holding on to in spite of the legal requirements-under FOIL-that the document be released to Willets Point United on request.

As Avella says, "It has come to my attention that various FOIL requests have been submitted by Willets Point United Inc., to NYCEDC regarding these proposals and the agency has not been fully forth coming with the requested documentation. Most significant amongst the various FOIL requests was a request for a revised version of the Access Modification Report (AMR) on this project which NYCEDC has apparently refused to provide."

Now, given the extent to which WPU's Brian Ketcham sliced and diced the original ramp report, it is hardly surprising that EDC is reluctant to be transparent and compliant a second time. That being said, having acknowledged that WPU had a right under FOIL to the first report, the agency hasn't a leg to stand on if it wishes to deny the revised report to the impacted businesses-and the community groups that support them.

Avella makes this clear: "I find it very disturbing that NYCEDC would deny public access to a document that the agency knows full well it is required to release pursuant to both state and city FOIL laws.  Furthermore, given the tremendous impact that this project is expected to have on the surrounding communities it is imperative that the public have knowledge of this information so that there is an opportunity to respond to the planned proposals in an informed and intelligent manner."

The entire foot dragging scheme is designed to limit the exposure of the ramp report to any independent review-and attempt to rush the revision through the regulatory agencies with as little scrutiny as possible. However, given the deficiencies in the original submission, it behooves DOT to make sure that the current report is as thoroughly vetted as possible. And, if as we suspect, the revised report is found lacking, it would make an even stronger case for sending the entire issue out for independent analysis-as two leading environmental groups have asked for.

The secrecy of the current revision process doesn't bode well for the public interest-and we suspect that the revised ramp report will play as well as the appointment of Cathie Black to be schools chancellor. Stay tuned.

Indians Send State Budget Up in Smoke

As the Ithaca Journal reports, the state's ongoing failure to collect the tax on Indian cigarettes has blown a hole in this year's budget: "Legal challenges from the state's Indian tribes have kept New York from collecting any of the $150 million officials hoped to receive from the sales tax on cigarettes sold on reservations, pushing the state's enacted budget further out of balance. The state's Indian tribes are moving forward with their legal actions against the state, which has left the proposal in a state of limbo. "I don't think it was unreasonable to expect some cigarette tax revenue, but they had to know they weren't going to get it without a fight," said E.J. McMahon, the director of the Empire Center for New York State Policy."

This is the price you pay for fecklessness-and the governor's actions and inactions have come home to roost: "The state planned to start its long-sought enforcement of the tax Sept. 1. State lawmakers thought they were on solid legal ground when the plan was approved earlier this year, citing a U.S. Supreme Court case as precedent. But Indian tribes challenged the collection plan, which would have allowed reservation residents to participate in a coupon program. The revenue will not be collected directly from a reservation, but from the wholesaler.But after tribes raised objections, a federal judge in western New York placed issued two orders to halt the collection plan at all reservations."

What the state should have done was too threaten to cut off all state aid to these felons-and resisted raising the cigarette tax before the enforcement question was resolved. Instead, Paterson't follies have given Indian tobacco retailers a windfall that they are using to sue the state with-crying, in essence, with a full loaf under their arms.

Still, the state is left with reg egg on its face: "Earlier this month, state Division of Budget Director Robert Megna said lower-than-anticipated income tax revenues combined with soaring Medicaid costs created the mid-year hole. "The budget was tenuously balanced at the time," McMahon said. "Now the cards are beginning to tumble." But Megna also cited the lack of revenue from the collection plan. "The cigarette tax estimate was lowered to reflect the inability to implement enforcement on Native American reservations due to the current Federal Court injunction," Megna wrote in a report on the deficit."

Something that should have stayed the tax increase, but didn't: "Paterson pushed for collection of the tax, which exempts Indian tribe members, who can opt into a voucher program when purchasing cigarettes. The plan was coupled with a $1.60 hike on cigarettes sold elsewhere, and a tax increase for all tobacco products, from 46 percent of the retail price to 75 percent. The tax hike took effect July 1; the collection plan for Indian reservations was due to go into effect Sept."

Indeed. And NY tax payers are left holding the bag-not to mention the struggling convenience stores and their legal wholesalers. But we'll give Assembly Minority Leader Kolb the last word-a comment that is so confused that it defies understanding; but may underscore why Republicans remain so severely in the minority: "But Assembly Minority Leader Brian Kolb, R-Canandaigua, Ontario County, said he was skeptical the state would ultimately be successful. "You have judges not just in New York state, but around this country that are legislating from the bench," Kolb said. "The only people who are making money in this are lawyers."

More on the Shoddy Chancellor Paneling

We have dramatized the fixation of the State Ed's chancellor panel-but this is the gift that keeps on giving-as City Room points out: "

She has lobbied Mayor Michael R. Bloomberg’s office for financing. She is chairwoman of an academy for which Mr. Bloomberg has helped raise millions of dollars. She runs a museum to which Mr. Bloomberg has personally donated $475,000. And she was the recipient of an award from Mr. Bloomberg two years ago at Gracie Mansion.

Louise Mirrer’s connections to New York City’s billionaire mayor are varied, longstanding and deep — they are personal, as well as professional.

But it does not appear that Ms. Mirrer disclosed those ties when she was selected to serve on a panel that is to evaluate Mr. Bloomberg’s choice for the next schools chancellor, Cathleen P. Black.

Even more, the woman takes umbrage at the suggestion that she should have: "If I had something I thought I should disclose, I would have disclosed it,” Ms. Mirrer said, adding that her ties to the mayor were irrelevant to her work on the panel. Nor does it appear that the state official who appointed Ms. Mirrer to the panel, David M. Steiner, the state education commissioner, asked members of the panel to disclose any ties to Mr. Bloomberg."

Davis Steiner ought to be ashamed, and if they ever do another remake of Clueless, Steiner deserves star billing. Given the mayor's well known use of his own-and others'-money, Steiner should have been more rigorous in his vetting-if only to keep up the appearance of neutrality. Now, however, he looks corrupt: "Asked repeatedly if Dr. Steiner had requested information about ties between members of the panel and the mayor’s office, a spokesman, Tom Dunn, refused to answer."

We're left wondering whether Steiner asked the mayor's permission to name this group of phony overseers-and the conflicts are reaching comical proportions: "At least three members of the panel chosen by Dr. Steiner have previously worked for the Bloomberg administration in the department of education — a credential Dr. Steiner has called “a plus” in evaluating Ms. Black. Ms. Mirrer, however, stands out, because the institution she runs, the New-York Historical Society, has lobbied the Bloomberg administration in recent years, city records show, and has received large annual donations from the mayor, ranging from $50,000 to $100,000."

Since the mayor is such an avid golfer we hope that he-or someone else with greater gravitas and independence-will call for a mulligan on this motley crew that Steiner has assembled. The entire fiasco keeps getting better and better-and two law makers are asking for a delay in order to allow for legislative oversight of the mayor's chancellor choice: "Two lawmakers want the state education commissioner to delay granting businesswoman Cathie Black a waiver for the city's top schools job -- until the Legislature can pass a bill allowing them to vote on the process. State Assemblyman Marcos Crespo (D-Bronx) and state Sen. Eric Adams (D-Brooklyn) hope to fast-track a bill to let the Legislature vote on any education chancellor needing a waiver. They want state Education Commissioner David Steiner to hold off on a decision when he meets with an advisory panel tomorrow while they try to push through a bill when the Legislature reconvenes next Monday."

All of this demonstrates the degree of the mayor's arrogance-he didn't deign to do even a cursory due diligence. City Hall reports: "After a surprising and scathing backlash to its choice for the new schools chancellor, the Bloomberg administration finds itself in a strange and unfamiliar place: on the defensive. In response, the administration has been scrambling to marshal Cathie Black backers wherever they can find them. The lack of prepared surrogates seems yet another byproduct of the intense secrecy that shrouded Black’s appointment. “I don’t think anyone but the mayor knew this was coming,” said one Bloomberg ally. “The administration was taken completely off guard.”

So the vaunted Bloomberg administrative efficiency is trumped by his hubris-and there has to be a collective cry here of, "No Mas!" The Black appointment needs to be challenged legally and politically-and Steiner needs to be put on notice that his supine actions are not acceptable. It's time that the people of the City of New York reclaimed their city from the elite usurpers.

Hot Dogging Fines

In yet another example of how the city's street vendor situation is out of control, the NY Post reported yesterday on the scofflaws who thumb their noses against the fines they've received: "The city will apparently never "ketchup" to these scofflaws. Four Midtown hot-dog vendors collectively owe more than $700,000 in unpaid summonses for a slew of safety violations -- and they have no intention of ever paying up. "Last year, I got 29 tickets in one day. That's $15,000 in [fines] in one day! How can I pay that?" griped Turky Abdelrehem, 26, who sells shish kabobs and frankfurters on East 55th Street near Fifth Avenue. Abdelrehem owes a total of $164,050 for a series of summonses dating back to 2007, city records show. Actually, "I owe a lot more than that," the vendor conceded."

What the hell is going on here? If a local restaurant was in the same situation that would be a big fat F on the front window-that is, if in fact the food outlet could even hope to stay open. So once again we have a double standard-and legitimate tax paying businesses are treated with disdain while street peddlers are allowed to violate the laws of the city with impunity.

The reason this has deteriorated to this extent, is that the mayor's office has refused to reform a corrupt and inoperable enforcement regime-as we have said before on numerous occasions: "We are working with the city council to address this collapse of enforcement and the nonsensical system of licensing. That we have to push so hard, is indicative of the unremitting negative attitude that the current mayor has to store owners-and the total lack of concern for remedying the unlevel playing field."

The Post has dramatized the chaos-citing the IBO report on the problem:

"If you're going to have violations [and] you don't collect on them, they become somewhat meaningless," IBO spokesman Doug Turetsky said. He also said the vendors cost the city at least $7.4 million in 2009, most of which is the cost of funding the NYPD's street-peddling enforcement unit that operates south of 59th Street in Manhattan.

Part of the problem, Turetsky said, is that street vendors exist in a messy web of bureaucracy: The Consumer Affairs and Health departments license them, the NYPD, Health and several other agencies issue fines, the Department of Finance collects those payments and the Office of Administrative Trials and Hearings makes judgments on appeals."

What is encouraging is the fact that we may have a new sheriff in town-as CM Dan Garodnick has taken over the Chair of the Consumer Affairs Committee at the City Council. But he has a daunting task in front of him if he wants to remedy the peddler problem. A more sensible placement system needs to be devised-one that prevents locating peddlers in front of stores that sell the same products, but with greater overhead so that there isn't a level playing field.

In addition, there needs to be one agency dedicated to enforcement-and when a peddler is a predicate felon and scofflaw, he or she should be prevented from purveying wares on the city's streets. The rule of law and simple notions of fairness and a level playing field dictate that the city does no less.

Monday, November 22, 2010

Invasion of the Booty Capitalists

Daniel Massey's Crain's article on Wal-Mart's astroturf efforts to generate support for its anticipated NYC invasion, brings to mind all of our discussions of "booty capitalism," over five years ago-and most recently the efforts of the Walmonster to undermine the NYC Federation of Hispanic Chambers of Commerce through the use of the inestimable Frank Garcia: "Looking to strengthen its hand in any battle against unions and elected officials over its planned entry into the New York City market, Walmart has launched an effort to win over local black leaders. Earlier this month, the Rev. Al Sharpton was among at least half a dozen prominent black New Yorkers who traveled to Bentonville, Ark., to participate in a three-day “stakeholder summit” organized by Walmart as part of its long-term efforts to brand itself as a good corporate citizen."

With all due respect to the self evident charms of Jennifer Lopez, the title of this post refers not to contemporary body references, but to the observations of Max Weber and Karl Marx: "...Weber explained that “booty capitalism” blocks the urge to search for the profits which make capitalism to develop. He argued that rational entrepreneurial capitalism, which in the West found its specific locus in industry, was handicapped in China by the ramifications of a patrimonial system in which the office and the “benefits” which accrue there from are more important than capitalist accumulation."

In this case, a patrimonial system implies an antideluvian, fuedal relationship: " "patrimonial system" is defined as any form of political domination or authority based on personal and bureaucratic power exerted by a royal household." And the reference goes on to underscore the following-whose relevance we will touch upon shortly: "Administration is under direct control of the ruler. This means it involves the employment of retainers or slaves, mercenaries and conscripts, who themselves possess no independent basis of power, that is, are not members of traditional landed aristocracy."

Hence the term, "booty," an indication that the recipients, lacking any "independent basis of power," are looking to extract some booty from the powerful lords. The idea that Wal-Mart is terming these kinds of get togethers as, "stakeholder summits," is thoroughly risible since it is the Walmonster that holds the stake-along with the front man Related-as in the case of East New York.

The retail giant is attempting to gain a purchase in NYC politics-and, lacking any real grass roots support, the best method it has is purchasing it: "They met with Walmart U.S. Chief Executive Bill Simon and participated in sessions on the company's efforts to sell cheaper prescription drugs, hire more veterans and minorities, and give employees the chance to earn college degrees. They also heard from the president of the Walmart Foundation, Margaret McKenna, who highlighted the company's charitable giving, which includes $9 million in grants to New York City nonprofits in the past three years."

All of these efforts at converting a skeptical public through the use of the cash nexus underscores the dire need of analyzing-apart from the Bentonville Greeks baring gifts-the real impacts that a metastasizing Wal-Mart in NYC would mean to the city's diverse neighborhoods and small business communities-something we have already laid out in some detail in our extrapolation from the Chicago Wal-Mart study: "The results of the Chicago Wal-Mart study provides us with a cautionary tale. For all those who promote the Walmonster in the name of economic development, these results indicate that the retail giant-unlike almost any other retailer-generates the kind of collateral damages that yield a net loss for the host community. And this analysis doesn't take into consideration what Stacy Mitchell calls, "the big box swindle;" the fact that these box stores like Wal-Mart generate much fewer local dollars than do the local competitors that they so often replace."

This is all especially compelling since the city council has staked out a claim to a comprehensive food policy for NYC. As the NY Times reports: "The report, called “Food Works,” lays out environmental, economic and health goals, some of which the Council can accomplish through legislation and many of which it cannot. The study was commissioned by the Council speaker, Christine C. Quinn."

Since the speaker wants to make food policy her signature issue-and a central feature of this has always been supermarket growth and retention-then the council needs to examine very carefully the deleterious impact that a Wal-Mart invasion would have on the achievement of greater access to fresh food. As we have pointed out, "And, as the national record shows, Wal-Mart has been responsible for the disappearance of supermarkets all over the country-with low wage workers replacing union employees. And then there's the impact on the smaller businesses in a community. Study after study has demonstrated how Wal-Mart wipes out downtown shopping areas-in effect, creating an oasis in one place and desert everywhere else."

And if the council can utilize its resources for a magnum opus on food policy, it certainly can devote equal measure to the examination of the impact of Wal-Mart in this area. By doing so, Quinn could begin to chill the efforts of Wal-Mart at divide and conquer by exposing how the trough feeders were being self serving at the expense of the greater good. Now if Sharpton, et al, were actual stakeholders in the Wal-Mart incusion, it would mean that they were real partners, and not crumb seekers whose booty was trivial in comparison to the rich bounty accruing to Wal-Mart and Related. But that's another story.

We'll give Bertha Lewis the last word on the sordid nature of this Wal-Mart bait and ditch policy: "If I were Walmart, I'd go after and try to recruit as hard as I could folks I think will lend some credibility,” says Bertha Lewis, the former CEO of Acorn who is now the president of the Black Institute. “But I don't care who they sequester in Bentonville, they're going to get a fight.”

Empty Rooms at the EDC Inn

As we mentioned the other day, the touted Muss development in Flushing is floundering-an it bodes ill for the ultimate success of both Willets Point and Flushing Commons. The WSJ has the story: "In one of the largest cases of buyers remorse in New York, scores of people who agreed to purchase apartments in a new development in Queens filed suit Monday seeking the return of their deposits. The suit, filed in federal court in Brooklyn, could throw a wrench into the marketing efforts of Sky View Parc, a huge shopping center and condominium development that is planned to eventually include nearly 1,100 apartments in six towers. The complex is a few blocks from the heart of the Flushing commercial district. It has been controversial because of its size and the impact it might have on local business and traffic."

The possible failure of this project tells us a few things about how economic development projects are evaluated in New York. In the first place, much too great a reliance is placed on the oversight of the NYC EDC-an agency that uncritically reflects the values of the city's real estate community. EDC functions as a revolving door/employment agency for NY's big real estate companies.

Secondly, the city's land use review process does not do anything approaching an adequate job in evaluating the economic and job-creating merits of projects that come before it-and it takes an unusual set of circumstances for the council to reject any development that comes before it for a vote. With well connected real estate companies-aided by building trades eager to get their folks to work-pushing a project, little time is given over to reviewing the costs, as well as the benefits, of any given project.

But let's go from the general to the specific here. The Muss development was partially sold on its ability to provide affordable housing-a clever tactic that often leads to the development of a myopia when it comes to the overall impacts of a project-and traffic is a central concern when it comes to a development, "a few blocks," from down town Flushing (as we have pointed out time and again). But as far as we know there was little analysis of either the potential profitability of the residential complex, or the impacts that the development's box stores would have on the Flushing retail community.

Some of this, we argued last summer, should have been taken into consideration when the city council reviewed the Flushing Commons project-but that battle underscored the flawed nature of the review process, one that is exacerbated when a local council member swims in the developer's fish tank. So, while Muss is floundering, Flushing Commons will be usurping Muni Lot1-and creating further gridlock for an already challenged local road network and mass transit infrastructure.

Flushing Commons, however, underscores how ULURP is badly in need of remediation. The city council has no mechanism-let alone inclination-to undertake its own impact analysis of any given project. It therefore allows itself to be the handmaiden of either the mayor- or a particular developer who proffers "studies" that are a reflection of self interest, and certainly not the public interest. Exacerbating a bad situation, is the fact that none of these individual projects are seen in any larger context-and the cumulative impacts of, let's say, Muss, Flushing Commons, and Willets Point, are either ignored or downplayed by self interested parties.

Keep in mind here that Willets Point envisions 5,500 condos but, much as New London, in overly optimistic fashion, envisioned a mixed use development anchored by Pfizer, there are few guarantees that-after billions are spent-there will be a market for these residential units. And there is a real chance that, just like New London, the City of New York will be left holding the billion dollar bag for the cost of a white elephant that trampled on the property rights of little guy land owners.

This kind of cautionary tale is underscored by an article on the floundering Xanadu project in New Jersey in today's NY Times: "It wasn’t a pretty view on the 13-minute train ride Sunday from Secaucus to New Meadowlands Stadium — old landfills, mud flats, the garish bulk of the stalled Xanadu project. But it might as well have been paved with money. The 2.3-mile train line to the Meadowlands, opened last year, offers a unique tour of inflated and deflated dreams, poor decision-making and, most of all, enormous spending — a fair amount of it from taxpayers, and a fair amount that will never be recouped — in the inimitable New Jersey style."

All of this should give NYC officials pause, especially since the Willets Point scheme is being moved forward in a climate of sever fiscal austerity. So, while New Yorkers are being asked to do with less, Mike Bloomberg wants to spend billions on his own legacy project. In our view, the local council member and her colleagues should be calling for a moratorium on any Willets Point related expenses because not a single firehouse should be closed while EDC and the mayor continue to spend money like drunken stockbrokers on a speculative real estate venture.