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FROM THE EDITOR’S DESK
July 17, 2015
Michael Gareth Johnson Executive Editor
Cash-strapped authority may have to scrap plans to sell land to school
By Frank G. Runyeon
By Justin Sondel
Long-term solutions to three-quarter houses
By Jeff Stein
nonprofits By Sarina Trangle
REGINA CALCATERRA AND THE MORELAND COMMISSION
A questionable choice to lead Cuomo’s doomed ethics panel By Catrinel Bartolomeu from The Accountability Project
Living wage exemptions abound for
Landlords say the rent freeze will force them to cut services
Rent regulations and the outflow of affordable housing
SPOTLIGHT: MEDICAL MARIJUANA
Lawmakers, advocates fight to get PTSD covered ... companies are spending big competing for an uncertain market ... state lawmakers seek to reclassify
By Jon Lentz
marijuana on the federal level
Cover: Illustration by Guillaume Federighi
AGENCY SPOTLIGHT: MTA
BACK & FORTH
A Q&A with Thomas Prendergast … profiling agency leaders … Citizens Budget Commission on how to pay for the system … upcoming plans and projects
A Q&A with author and columnist Michael Wolff
city & state — July 17, 2015
he state legislation making medical marijuana legal on a very narrow basis is called the Compassionate Care Act. It’s easy to lose sight of that when you are talking about a topic like the use of marijuana, or cover stories about the big business that surrounds the cultivation and retail of the plant. For all the witty headlines press can write or valid concerns that the legislation will make recreational access to the drug easier, the primary goal of this bill is to help people. With that in mind, we found it a little ironic that many aspects surrounding the implementation of medical marijuana in the state were making people jump through hoops and play political games. In our spotlight, we dive deeper into several areas where we see this happening. Reporter Justin Sondel explores how the law is catered to big business, with many bidders accepting that they will probably be taking a loss early on, with the hope that they will recoup those costs as the law is expanded. Reporter Ashley Hupfl highlights some of the medical conditions that were left off the list, and the push to make sure they are covered. And our Wilder Fleming has a recap of how shifting federal regulations may impact the law here in New York. The political games we saw served as inspiration for the cover of the magazine and accompanying art (though the idea of spoofing Super Mario Bros. was the inspiration of Art Director Gui Federighi). Our intention is not to make light of marijuana. If we had wanted to do that, there were plenty of more notable pop culture references we could have drawn inspiration from. It was instead to drive home the point that this should be about care, and it so often isn’t. And while some disagree with this law, or medical marijuana in general, the debate is and should be about health care and not pot culture. Also in this issue, we feature an in-depth story written by the nonprofit The Accountability Project. It takes a look at a fascinating figure in state government, Regina Calcaterra, who served as the executive director of the oft-criticized Moreland Commission to Investigate Public Corruption. With so much attention still focused on ethics in Albany, after two legislative leaders were charged with corruption this past session, we felt a closer look at the person who headed up the tainted commission, and who has a long history of ties to New York state political players, was of note.
Letters to the
Editor district results indicate that some citywide and district community education council members were elected with one vote. How is that reflective of any parent participation? Runoff campaigns where candidates were tied in the number of votes included candidates with one vote. Then some of these one-vote wonders managed to get elected to their education councils. This is democracy in action?
June 15, 2015
—Ellen McHugh, public advocate appointee to the Citywide Council on Special Education, and Teresa Arboleda, public advocate appointee to the Citywide Council on English Language Learners CIT YANDSTATENY.COM
In the June 15 magazine, City & State reporter Sarina Trangle reported on how mayoral control of schools in New York City became inevitable.
city & state — July 17, 2015
Mayoral control cannot be made permanent without meaningful checks and balances on the mayor’s powers, some of which are described in Public Advocate Letitia James’ May 2015 policy report, “Our Schools, Our Voices.” New York City mayors are term-limited and no one knows what the next mayor may decide to change. Children have been pawns in this political gamesmanship and their parents and the community must have more say in what happens to their education. The state Legislature must properly debate, gather information from the public and enact amendments to the governance law that gave the mayor of New York City control of public schools. The one-year extension provides legislators with an excellent opportunity to hold hearings with all stakeholders, including parents, students, teachers, administrators and the community. Amendments to the law that will increase parent powers and provide for more meaningful engagement of parents, staff, administration and communities need to be debated. These include the makeup of the Panel for Education Policy, qualifications of the schools chancellor, assuring that superintendents are the educational leaders of their districts and the process of elections to citywide and district education councils. While community school board elections had a low voter turnout, at least they were an attempt at a fair and democratic representation of the schools’ communities, allowing all parents who had children registered in a school and registered voters the opportunity to vote. The present system of three parent officers from each school selecting education council members is undemocratic and must be changed to allow all parents in the schools to vote for those who represent them. The recent election required votes from three parent association or parentteacher association members at each of the 1,800 schools that the Department of Education administers, for a total of 5,400 electors. Numbers published under separate
Also in the June 15 issue, City & State reporter Justin Sondel explored whether the ouster of Sheldon Silver as Assembly speaker will pave the way for changes to the state’s Scaffold Law, a controversial worker safety statute. In City & State’s excellent story about the Scaffold Law, opponents of reform continued to spout half-truths about this odious statute. Assemblyman Francisco Moya claimed that the Scaffold Law “doesn’t punish responsible construction companies,” yet that is precisely what the law does. The Scaffold Law unjustly apportions liability for injuries to contractors and property owners who, to quote the Court of Appeals, “had nothing to do with the plaintiff’s accident.” Reformers are asking that liability be apportioned based on fault determined by a jury, just as it is done in every other state and every other part of our civil justice system. This would ensure that responsible contractors are not punished for injuries for which they were not at fault. The other claim is that there needs to be more data. There is an abundance of data on the cost of the Scaffold Law: approximately $200 million to the cost of the Tappan Zee Bridge, $215 million additional cost to the School Construction Authority and over $1 billion in wasted public dollars statewide. All for a law that does not improve safety, and only increases liability. Another important issue is insurance availability. Most admitted insurers do not write construction policies in New York, despite providing coverage in every other state. The inability to find and afford insurance is the reason groups like the Association of Minority Enterprises and Habitat for Humanity have called for reform. MWBEs and disaster relief organizations cannot find insurance, because the insurers have left the market due to the Scaffold Law. It is abundantly clear that no amount of data would convince Mr. Moya and the trial lawyers. Absolute liability means an easy payday, and despite all the evidence, despite the growing costs to state, our infrastructure and our schools, they are not going to give up their Scaffold Law racket. —Tom Stebbins, executive director, Lawsuit Reform Alliance of New York
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city & state — June 15, 2015
THE D O PE WHAT YOU NEED TO KNOW ABOUT NEW YORK’S MEDICAL MARIJUANA PROGRAM
New York’s medical marijuana legislation has a seven-year sunset clause, after which the program would expire if it is not renewed.
New York’s law allows for up to five registered organizations located in the state to grow, manufacture, distribute and dispense marijuana for medical use. Each registered organization may operate up to four dispensing facilities statewide.
Compared with other states, the list of medical conditions that qualify for medical marijuana are few, but the state Health Department commissioner has the authority to add new illnesses at any time.
city & state — July 17, 2015
Gov. Andrew Cuomo successfully pushed for a ban on smoking medical marijuana—making New York the only state besides Minnesota to do so.
Medical marijuana producers will only be able to use five brands of marijuana.
The state Department of Health has the authority to end the state’s medical marijuana program at any time.
Medical marijuana must be grown in-state and will be taxed at 7 percent.
CONGRATULATIONS TO THE HONOREES OF ABOVE & BEYOND: HONORING THOSE WHO SERVE Join City & State on July 30th, as we honor and celebrate the work of our 10 Above & Beyond Honorees who serve the veteran and military communities through public service, volunteerism, government, or civic engagement - truly going above and beyond the call of duty. The honorees will be profiled in our Veterans Special Issue premiering at the event.
WELBY ALCANTARA, USMC, Military & Veteran Services Coordinator, John Jay College JOSEPH A. BELLO, Founder, NY Metro Vets WALTER BRIDGERS, Team Leader, Harlem Veterans Center KENNETH CURLEY, President & CEO, Raymond Associates LLC TOM GRAY, Senior Vice President, Capalino & Company AARON LEONARD, Executive Director, Project Rebirth STEVE NEUHAUS, County Executive, Orange County DAN MCSWEENEY, Incoming President, United War Veterans Council REGINA MARENGO, President, Ensign Engineering KELLY SAELI, Director of Operations, NYC Helmets to Hardhats
Pace University 1 Pace Plaza, New York, NY 10038 July 30, 2015 • 12:00pm – 4:00pm
Keynote Remarks by:
Loree Sutton, Commissioner, Mayor’s Office of Veteran Affairs
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FESTA 2015! Lawmakers, labor officials and community leaders gathered at the New York Conference of Italian-American State Legislators’ annual Festa event in Troy, New York. Attendees included Gov. Andrew Cuomo, Senate Majority Leader John Flanagan, Assembly Speaker Carl Heastie, Assemblyman Peter Abbate and others.
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city & state — July 17, 2015
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CORPORATE RESPONSIBILITY AWARDS City & State Reports honored the winners of its prestigious Corporate Social Responsibility Awards for New Yorkâ€™s banking, finance and insurance sector on June 11 at Hunter College in Manhattan. The breakfast ceremony featured New York City Comptroller Scott Stringer, Hunter College President Jennifer Raab and prominent journalist and author Michael Wolff.
city & state â€” July 17, 2015
LANDLORDS SAY RENT FREEZE WILL FORCE THEM TO CUT SERVICES By FRANK G. RUNYEON
city & state — July 17, 2015
ets vs. Yankees. Cuomo vs. de Blasio. Matt Stonie vs. Joey Chestnut. New York City has never been short on rivalries, but there is no more bitter— or more enduring—animosity than that between the city’s tenants and their landlords. And the city Rent Guidelines Board has not helped ease tensions between them this year. The board’s historic decision to freeze stabilized rents with a zeropercent increase on one-year leases late last month has tenants celebrating and landlords fuming. Now, representatives for the city’s landlords say their constituents may forgo maintenance and building services on their properties due to the board’s decision. “You can’t have costs that go up and rents that are frozen in place,” said Jack Freund of the Rent Stabilization Association, which represents the interests of the city’s landlords. “That’s not a practical way to run buildings.” Landlords say the costs of maintaining buildings have outpaced the rent they receive from tenants in rent-stabilized units for over a decade. They cite data that show building expenses will increase 6 percent while rent-stabilized tenants will only pay a 1 percent increase in their rent over a two-year period. “Ultimately, if this keeps up— and I believe these inordinately low increases will continue—then owners are going to have to cut back somewhere,” Freund said. Those cuts, he said, will likely come in the form of building services and repairs. Some of the largest expenses, like oil for heating and hot water, are fixed by city regulations mandating that landlords provide those basic services. This may leave other maintenance or service expenses on the chopping block. “If you don’t have the money to put into the building, you know who’s going to suffer?” Freund asked. “The
A TIMELINE OF RENT INCREASES ON STABILIZED APARTMENTS ALLOWED INCREASE ON A ONE-YEAR LEASE RENEWAL PERCENT (%)
6 The first time it ever hit zero. 3
landlord will suffer, but the tenants will also suffer.” For larger buildings and management companies that employ more workers, this could mean layoffs. One major owner of rent-regulated apartments told RSA they are planning to cut staff, Freund said. For smaller building owners, property upkeep, cleanliness and maintenance will likely be postponed or neglected, landlords say. “My phone is ringing off the hook every day, people are so disappointed and disgusted,” said Chris Athineos, head of the Small Building Owners of New York, who also rents stabilized units. “We talk about preserving and creating new affordable housing, but we have to preserve the affordable housing that we have now.” Athineos says he is weighing what
1990 maintenance and repairs he will have to forgo on his own buildings as a direct result of the decision to freeze rents. A prewar building he owns needs to be completely rebricked, but he says he can’t afford to do that. It is just one example of the kind of halfmeasures landlords are going to have to take, he says. “You have a leaking roof. It creates mold, mildew in top-floor apartments. Are you considering putting on a new roof? No, you’re just going to patch it. More patches, more patchwork.” Without income that goes above and beyond the building’s operating costs, Athineos and others argue, landlords have to shift from a proactive, preventive maintenance approach to a reactive approach, because they say they simply don’t have the funds to take on major projects like replacing
plumbing or reroofing an apartment. “It’s frustrating. I want to do the right thing,” Athineos said, adding that he runs violation-free buildings and has good relationships with his tenants. “These are my customers. I want to provide them the best service I can. But it’s very hard to do when your income is so severely restricted.” Small operators will be the most affected by these rent freezes, according to several landlord advocates. “I just got off the phone myself with a small owner about an hour ago,” Athineos said. “And she said, ‘After this law passed in Albany and after what happened at the Rent Guidelines Board, I’m going to sell and just get out of the city. It’s not worth it anymore.’ ... You just get hit from all ends.” And Freund said more small owners will likely follow. “We’ve been cit yandstateny.com
The allowed increase on rent-stabilized units hit zero for the first year in the RGB’s history. cit yandstateny.com
he Rent Stabilization Association and the landlords they represent should stick to facts and the law instead of promoting illegal and malicious threats. In an article published by City & State, the association’s president, Jack Freund, said that freezing rent in the face of rising building costs is “not a practical way to run buildings.” Considering that the price index of operating costs is lower than it’s been in over 10 years, and that landlords have enjoyed rent increases for the past five decades, this is a willful and transparent mischaracterization of the situation. The article sets a grim tone. This is justified; the housing climate in New York City is certainly dire— just not for landlords. In the past 10 years, our city has lost far too many rent-regulated apartments due to steady rent increases. Albany recently enacted detrimental rent laws that could eliminate approximately 90,000 affordable housing units due to deregulation over the next four years—units that do not just provide an affordable price point for tenants, but offer protections against arbitrary evictions as well. Separately, due to Albany’s inability to close unresolved loopholes with preferential rent, approximately 27 percent of tenants could see their rent go up by thousands of dollars, regardless of the Rent Guidelines Board’s decision to freeze rent and without advance notice. In the face of these deplorable legislative missteps, however, there are some signs of hope. New York City is determined to provide relief for its residents, and with the goal of building and preserving 200,000 units of affordable housing by 2020, Mayor Bill de Blasio and the City Council aim to improve affordability for all. New Yorkers deserve more affordable housing and legislative
initiatives that would allow them to stay in rent-stabilized apartments. There are sensible and obvious ways that we can do this. For example, the Urstadt Law, which allows upstate legislators to determine New York City rents, should be repealed. Landlords would benefit from this as well. The current system lumps all landlords—both good and bad actors, small and large—into one category, making it impossible to separate those that put their tenants in harm’s way to turn a profit from those that would legitimately struggle with operating costs under a rent freeze. If city government controlled our housing laws at the local level, sensible solutions for both landlords and tenants could easily be negotiated. Landlords should be able to earn a profit, but that profit should be balanced against the expenses tenants face when struggling to keep a roof over their families’ heads. It is also important to note that if any landlord finds that the cost of building maintenance exceed the amount of money that they glean from rent, they can apply for a hardship. I would be happy to support such an owner who legitimately needs a hardship determination. Landlords, by law, are required to make repairs that ensure their buildings are safe, functional and up to code. It is not conditional on rent payment, and not conditional on decisions made by the RGB. Reluctance on the part of some selfish landlords to maintain their units is nothing new. Many, including some in the Rent Stabilization Association, are listed by Public Advocate Letitia James as the worst landlords in New York City. The RSA should not use this rent freeze to condone their behavior. Instead, it is my hope that the RSA highlights the majority of owners who have always done the right thing by their tenants, and I hope they continue. Freund should also remind his members about the requirements of the law, rather than turning to frivolous and false scare tactics. If the RSA needs assistance, rest assured that the elected officials in this city are here to ensure their message is heard across the five boroughs.
Jumaane Williams is a New York City councilman representing the Brooklyn neighborhoods of Flatbush, East Flatbush, Flatlands, parts of Midwood and Canarsie.
NO EXCUSE FOR THREATS
city & state — July 17, 2015
buildings.” The low rent increases will likely continue in future years, but so will the unintended consequences of the board’s decisions, he said. Maier says this argument both mischaracterizes the board and the facts it weighed in making its decision to freeze rents. “I do not believe that a rent freeze, given the market, is actually hurting any of these buildings,” she said. “The only reason the Rent Guidelines Board voted for a rent freeze was that landlords made record profits for so many years in a row that it was justified this year. Landlords will still be able to pay their bills while making a profit.” “I think it’s offensive that they have the gall to say a rent freeze is going to hurt tenants,” she said. Before the vote, she said, tenants called her saying that if the board voted for a new increase on rent-stabilized apartments, they would be forced to move out of the city. The irony in this landlord-tenant spat is that both sides decry the same problem: They don’t have the money to keep up with rising costs. Tenants say they cannot afford the cost of rent and landlords say they cannot afford the cost of operating a building in New York City—and in the long run, both groups say they will have to pick up and leave if things don’t go their way. While tenant advocates may not believe that building owners won’t have enough money to take care of their buildings, they do believe landlords when they threaten to not make repairs. “Now they have an excuse to do it,” Maier said. “But they’ve been doing it for so long that it’s just going to be another day in a stabilized unit.”
through this cycle of disinvestment before,” he said. “Hasn’t happened in a while, so maybe people are short on memory. Nobody on the board probably lived through that period of time when the Bronx was burning.” Tenant groups dismissed such gloomy forecasts and rejected landlords’ claims that the Rent Guidelines Board’s decision was unfair. “I think the landlord objections to a rent freeze are not only false, but laughably offensive to tenants,” said Ilana Maier at the Metropolitan Council on Housing. “The idea that they’re going to have to cut back on services is absurd. So if landlords stop giving services, it’s because they’re greedy, not because they’re having financial problems.” Building owners in New York City, she contends, are still turning a profit every year. The Rent Guidelines Board agreed. The board, which voted 7 to 2 to freeze rents, cited a consistent rise in landlords’ income after expenses over the last decade. Nevertheless, building owners say the statistics and research carried out by the board was flawed. Moreover, they say, the board’s decision was based on politics—citing de Blasio appointees who dominate the board. “They’re playing the wrong game here,” said Freund, who argued the board’s proper role is balancing affordability with building expenses, not trying to solve income inequality. “It’s a game that’s going to hurt the people they’re trying to protect.” “You know,” Freund continued, “I just see an administration that doesn’t understand that it costs money to run
LONG-TERM SOLUTIONS TO THREE-QUARTER HOUSES
city & state — July 17, 2015
llegal boarding houses that rent beds in overcrowded, unsanitary rooms to New York City’s most vulnerable inhabitants— formerly incarcerated individuals, street homeless and recovering drug addicts—have long been recognized as a persistent problem at the nexus of housing, substance abuse and criminal justice. However, recent high-profile cases involving so-called three-quarter houses have brought such concerns to the forefront of policy discussions, with nonprofit advocates, elected officials and government agencies debating—and in some cases, testing—possible solutions. In early June, the de Blasio administration announced the formation of an emergency task force to investigate three-quarter houses. The announcement came in the wake of a sprawling New York Times investigation implicating a twice-convicted Brooklyn landlord in a host of illegal activities considered symptomatic of such properties, which often trap tenants in squalor while using those tenants’ access to entitlement funds in schemes to defraud the government. These properties—though they receive a monthly $215 shelter allowance per tenant from the Human Resources Administration, and collectively account for millions of dollars in Medicaid outpatient treatment funds doled out by the state Office of Alcoholism and Substance Abuse Services—remain unregulated entities. And though many tenants are referred to three-quarter houses by reputable organizations, they are often greeted upon arrival by untenable living conditions, such as rooms with no working heat and several tenants packed into a small room, or the sort of rampant substance abuse that they came to escape. Most immediately, the emergency task force is focused on enforcing building codes and identifying other safety violations, as well as finding
A former three-quarter house tenant protests illegal evictions. alternatives for tenants residing in unsafe properties. “The short-term, immediate priority is to make sure that residents are safe,” a spokesperson for the HRA said in an email. “The emergency task force has now inspected the threequarter houses identified to date and taken steps to address immediate safety concerns. These steps have included relocating residents to address occupancy levels that are too high.” However, as city agencies grapple with how to confront the problem in the immediate future, advocates are hoping for long-term reform. One advocate, Tanya Kessler, an attorney at MFY Legal Services who has brought several successful lawsuits on behalf of tenants of three-quarter houses for wrongful evictions, hopes that the mayoral task force will balance the desire for immediate enforcement with a willingness to establish longterm solutions. “The task force is looking at immediate safety concerns, which are very important,” Kessler said. “But the real task going forward is to think about what housing options can exist in New York City for the population
that currently has to resort to threequarters housing.” Kessler is one of several advocates who say the HRA-administered shelter allowance, which has not been raised since 1988, must be increased in order to improve conditions. “The shelter allowance is obviously grossly inadequate for the current New York City housing market,” Kessler said. The HRA agrees, and has called on the state to increase funding levels. “The inadequacy of this allowance has been a major driver of the longstanding problem of three-quarters houses, and we will be seeking an increase in the state-set $215 per month grant level,” a spokesperson for the HRA said in an email. Kessler and other advocates argue that a specific housing subsidy for this population, much like the one offered through the Living In Communities, or LINC, rental assistance program, would be an effective use of city funds. “Given what we know about the Medicaid billing practices that are associated with many of these houses, and the horrible cycle that many go through with homelessness and outpatient treatment, a housing
subsidy could be a huge money saver with regards to this population,” Kessler said. Advocates also cite other barriers to housing as areas that must be addressed by city government. JoAnne Page, president and chief executive officer of The Fortune Society, a nonprofit organization that provides services to formerly incarcerated individuals, said that the New York City Housing Authority policy of “permanently excluding” people with criminal records is particularly troubling, given data collected by John Jay College’s Prisoner Reentry Institute estimating that 72 percent of three-quarter housing tenants have been imprisoned. “When people leave the prison system, they are not coming out to much of anything,” Page said. “They certainly can’t return to NYCHA without jeopardizing their families’ living situations.” NYCHA, however, has continually defended the policy, with the agency describing permanent exclusion as “a critical tool to protect the rights of residents and a means to preserve the tenancy of non-offending family members.” While advocates stress the importance of changing city policies, some also suggest the city can learn from a pilot program instituted in Suffolk County. The program, established by the Suffolk Healthy Sober Home Act of 2013, is experimenting with regulating a small number of threequarter houses, requiring inspections and strict adherence to federal, state and local building codes. Suffolk County Legislator Kate Browning, who chairs the Sober Home Oversight Board, which has been tasked with overseeing the pilot program, says that rampant heroin use has further decayed an already lacking housing system. Without regulation, Browning says, such houses have become increasingly unsafe, at best continuing a cycle of addiction and at worst directly leading to dire medical consequences, such as the heroin overdose of one of her constituents in an unregulated property. cit yandstateny.com
TANYA KESSLER / MFY LEGAL SERVICES
By Jeff Stein from NEW YORK NONPROFIT
New York Nonprofit is a sister publication of City & State, a news source for the state’s nonprofit organizations.
THREE-QUARTER HOUSES IN NEW YORK CITY
Our Perspective Our Perspective
New York’s Medical New York’s Medical Marijuana Marijuana Law Law Promotes Promotes Good Good Jobs Jobs in in New New Industry Industry By Stuart Appelbaum, President, Retail, Wholesale and Department By Stuart Appelbaum, President, Store Union, RWDSU, UFCW and Department Store Union, Retail, Wholesale RWDSU, UFCW ew York’s newest industry, medical marijuana, has the potential to create ew York’s newest industry, medical good jobs both upstate and downstate. marijuana, has the potential to create And that’s ofupstate a key component of the goodbecause jobs both and downstate. Compassionate CareofAct — labor harmony. By And that’s because a key component of the requiring playersCare in New Compassionate Act York’s — labormarijuana harmony. By industry agree in to New laborYork’s peace, the requiringtoplayers marijuana Compassionate Act has created industry to agreeCare to labor peace, the an this new industry to be environment for Care Compassionate Act has created an developed responsibly and create to good for this new industry be jobs that environment will make our communities stronger. developed responsibly and create good jobs that Under the law that created New York’s medical marijuana will make our communities stronger. industry, all of those applying to enter the medical marijuana Under the law that created New York’s business all agree to “labor peace.” This the industry, of those applying to enter By providing a path means that all oftothe state’s medical business agree “labor peace.” This to the By unionization, providing a path marijuana dispensaries will have to agree means that all of the state’s medical law has the potential to unionization, the to remain neutral when itwill comes marijuana dispensaries have to to their agree to good jobs lawcreate has the potential workers’ join aitunion. to remainwishes neutraltowhen comes to their throughout the state. to create good jobs Management won’t harass or intimidate workers’ wishes to join a union. throughout the state. their workers, or engage in any of the Management won’t harass or intimidate manyworkers, labor-laworflouting their engagetactics in any we’ve of theseen far too often in other industries. many labor-law flouting tactics we’ve seen far too often in other This is important because unions are the single best way to industries. ensureThis jobsisin this new because industry are good jobs. a union important unions are the Through single best way to contract, workers will have the power they need to negotiate better pay ensure jobs in this new industry are good jobs. Through a union have a better voice inpay and working conditions, andthe most importantly, contract, workers will have power they needthey’ll to negotiate the And, companies won’t waste operating funds on costly a voice in andworkplace. working conditions, and most importantly, they’ll have efforts to derailAnd, organizing campaigns. the workplace. companies won’t waste operating funds on costly RWDSU and one campaigns. of its New York locals, Local 338, have effortsThe to derail organizing been leaders in theand effort the Compassionate The RWDSU onetoofensure its Newthat York locals, Local 338, Care have Act included laborinharmony provisions. been leaders the effort to ensureRWDSU that therepresentatives Compassionatevisited Care Act other states with medicalprovisions. marijuanaRWDSU and talked with workersvisited and included labor harmony representatives those in the industry. other states with medical marijuana and talked with workers and learned that the concerns of medical marijuana workers are those We in the industry. the same as workers other industries — they want fair pay, a voice We learned thatinthe concerns of medical marijuana workers are on job,asand the ability to negotiate scheduling thethe same workers in other industriestheir — they want fairand pay,working a voice conditions. And,the by working legislators New York,and we working fought for on the job, and ability towith negotiate their in scheduling a law that recognized the importance of labor harmony. conditions. And, by working with legislators in New York, we fought for The law providesthe a safe and reliable form harmony. of pain relief to New a law that recognized importance of labor it most, and,and by providing a path to unionization, YorkersThe who lawneed provides a safe reliable form of pain relief to Newhas the potential to create goodand, jobsbythroughout state. By establishing it most, providing athe path to unionization, has Yorkers who need labor harmony, lawgood is a landmark model for the potential to the create jobs throughout thehow state. By establishing to properly and the responsibly develop new industries labor harmony, law is a landmark model for how in state.and responsibly develop new industries to our properly in our state.
For more information, visit For more information, visit www.rwdsu.org
www.rwdsu.org *Source: NYU’s Furman Center for Real Estate and Urban Policy cit yandstateny.com
Until larger action is taken, advocates say a large responsibility lies with organizations that refer clients to three-quarter houses. Kessler argues that all agencies that deal with three-quarter houses should embrace guidelines adopted by the New York City Department of Homeless Services, which state that facilities with code violations or complaints registered with the Department of Buildings cannot receive tenant referrals. She also stressed the importance of recognizing red flags before sending vulnerable clients into a dangerous situation. “If a house asks a tenant to sign a waiver of rights that allows the house to evict without court process, that client is at risk of ending up on the street at a moment’s notice,” Kessler said. “Social workers need to think very carefully before sending a client to a house that uses this tactic.” Page echoed Kessler’s concerns, saying that her organization has established relationships with houses viewed as the lesser of two evils. “We go out and visit houses, and rely heavily on feedback from former clients,” she said. “The sad truth is that as bad as these homes can be, some are far better than the other options: a homeless shelter or the street. The real heartbreaker for us is when we know that supportive housing would make all the difference for a client, but we have to refer them to a less than ideal option.”
city & state — July 17, 2015
“Unregulated homes have become a plague on our community. People cannot find safe options where they can get clean, leading to tragic consequences,” Browning said. The Suffolk County pilot program, which is administered in partnership with the state Office for Alcoholism and Substance Abuse Services, provides significantly increased funding for each tenant: a flat $995.70 for each of the 45 individuals currently enrolled in the program, as opposed to the $475 room and board entitlement available to the county’s Department of Social Services clients outside of the program. Browning says investing more money at the beginning of the recovery process will both immediately benefit those in need and prevent recidivism, saving millions of taxpayer dollars. “When you talk to experts, clearly this is the best route,” Browning said. “If people are living in a safe environment while they are doing their outpatient program, they are much more likely to be successful. We want to show the state that it is worth it to spend the money up front.” But the current system of funding, Browning says, places the burden for providing services overwhelmingly on localities. Browning says Suffolk County is responsible for funding 71 percent of the pilot program services, with the state providing the balance. “I want the state to see that this can work,” Browning said, “but we need to change the state funding. The funding levels have really hurt us. Really, this type of program should not just be in Suffolk County—it should be a statewide mandate.”
WHEN RULES DON’T APPLY LIVING WAGE EXEMPTIONS ABOUND FOR NONPROFITS By SARINA TRANGLE
city & state — July 17, 2015
it (though HPD is currently developing a compliance regimen, according to de Blasio’s office). De Blasio heralded his expansion of the living wage law as offering thousands of breadwinners a better shot at supporting their families. His order built on the 2012 Fair Wages for New Yorkers Act, requiring projects receiving $1 million or more in city subsidies to pay $13.13 an hour or $11.50 an hour plus benefits, with raises indexed to changes in the consumer price index. The initial legislation did not cover nonprofits, small businesses, affordable housing, manufacturers, supermarkets operating in food deserts or organizations taking advantage of benefits extended to all qualified applicants, such as property tax
abatements. Once in office, de Blasio dropped Bloomberg’s legal challenge to the measure and extended the law to include future developments in the Hudson Yards area and commercial tenants in subsidized sites. When asked which city agencies’ work falls under the law, the de Blasio administration said those “most likely” to administer benefits tied to living wage mandates included the Brooklyn Navy Yard Development Corporation, the Department of Housing Preservation and Development, and the New York City Economic Development Corporation. But the Navy Yard said it has not overseen any deals that would trigger the measure. HPD is in the process of gathering documents that must be made available
to the public under the law, de Blasio spokesman Wiley Norvell said. The Economic Development Corporation, however, has adhered to public disclosure provisions and collected annual certificates showing which projects are complying with the living wage law and which are exempt. An analysis of certificates for Economic Development Corporation projects signed off on from January 2014 to mid-May 2015 shows that 34 of 45 projects—or 76 percent— were not subject to living wage rules. This amounts to $1.04 billion of $1.29 billion associated with the initiatives falling outside the mandate. (Assessing the actual value of city benefits is not possible, but City & State followed fiscal experts’ advice to count bonds
ROB BENNETT/MAYORAL PHOTOGRAPHY OFFICE
ine months after New York City Mayor Bill de Blasio signed an executive order broadening the scope of the living wage law, some are suggesting he revisit exemptions written into the legislation. The nudge comes after City & State compiled data showing 76 percent of projects administered by the New York City Economic Development Corporation since de Blasio took office have been exempt from the living wage law. The law requires projects receiving $1 million or more in city subsidies to pay a living wage; the majority of the organizations excused from those wage stipulations were exempt because they are nonprofits. City Council Economic Development Chairman Daniel Garodnick said the statistics show it is time to examine the law’s efficacy. “Some limited exemptions from our wage laws may make sense, but it is troubling if they are being invoked to the point that the laws appear largely ineffectual,” Garodnick said in a statement. “This deserves a deeper look, particularly since we know from previous deals—like the parking deal at Yankee Stadium—the term ‘nonprofit’ can be applied to all kinds of things.” It is difficult to suss out how political ideology may have impacted the policy. Many of the Economic Development Corporation deals closed under de Blasio were initially taken up under then-Mayor Michael Bloomberg. The data examined by City & State includes initiatives pushed by both administrations under various renditions of the legislation. Accurate analysis is further complicated by Bloomberg’s opposition to the measure; his administration did not require the city Department of Housing Preservation and Development—the other city organization with projects under the law’s purview—to enforce
Mayor Bill de Blasio signs an executive order enacting an expansion of the Fair Wages for New Yorkers Act on Sept. 30.
EXEMPTIONS ON PROJECTS ADMINISTERED BY THE EDC NUMBER OF PROJECTS
AMOUNT OF FINANCES INVOLVED
EXEMPTIONS (ORGANIZED BY TYPE)
FRESH program, which supports supermarkets in food deserts
Hudson Yards District1
Multiple exemptions apply
PROJECTS WITHOUT EXEMPTIONS
eliminated for deals made after de Blasio’s executive order
issued with the city’s support, payments made in lieu of property taxes and mortgage, sales and other tax waivers toward an estimate of the finances at stake.) Of the 34 exempted projects, 23—or 68 percent—were excluded from the wage requirements because they involved nonprofits. Although Garodnick called for an examination of exemptions, others went further. James Parrott, chief economist at the Fiscal Policy Institute, said the Economic Development Corporation’s work has not historically been geared toward small organizations, and those sophisticated enough to successfully navigate the corporation’s application process should be able to pay a living wage. “There should be no exemptions,” Parrott said. “The idea is that companies that voluntarily enter into subsidy agreements with the city—so the city is providing some benefit to them—it seems to me that they should be paying their workers the living wage levels that the city requires, which after all are pretty minimal. It’s like $13.13.” The Federation of Protestant Welfare Agencies, Inc., for example, a nonprofit that received tax-free bonds for office space in downtown Manhattan, intended to pay personnel as little as $9 an hour, according to the Economic Development Corporation’s cost-benefit analysis. The Hebrew Home for the Aged, a nursing home in the Riverdale section of the Bronx, which secured tax-free bonds to refinance loans, noted it intended to cit yandstateny.com
give its lowest-compensated employees $8.03 an hour. The de Blasio administration did not respond to a request for comment. Parrott noted that the exemption applied carte blanche to all nonprofit organizations, from groups whose sole revenue source was city contracts to prep schools, such as Packer Collegiate Institute in Brooklyn Heights. “This is an organization where tuition is probably $30,000 to $40,000 a year. Very wealthy people send their kids there,” Parrott said. “The city is making a subsidy to those entities because it’s losing taxes on the tax-free bonds. I think it’s problematic that you have a lot of prep schools that are pretty well off financially being subsidized by the city.” Many such exempt prep schools indicated they planned to pay more than $13.13. The Economic Development Corporation issued or refinanced tax-exempt bonds for Packer Collegiate Institute, which planned to give its lowest-paid personnel $17 an hour; Horace Mann School, a Bronx prep school that envisioned paying its lowest-compensated employees $19.54 an hour; Trinity Episcopal School Corporation, a Manhattan institution that anticipated giving some personnel $16.20 an hour; the Birch Wathen Lenox School, a Manhattan prep school which expected its lowest full-time salary to be $45,000; and the Berkeley Carroll School, a Brooklyn private school which anticipated its lowest-paid full-time personnel making $32,000 annually, according
to cost-benefit analyses by the Economic Development Corporation. The Economic Development Corporation said it would be difficult to craft guidelines specifying which classes of nonprofits had the means to pay a living wage and could be mandated to do so. The corporation oversees two organizations that administer benefits: the New York City Industrial Development Agency, which focuses on creating and retaining jobs in the city through a variety of initiatives, and Build NYC Resource Corporation, which serves as a conduit to both tax-free and taxable bonds for nonprofits. Build NYC underwrites bonds for all qualified
TOP 5 NONPROFITS WITH EXEMP TIONS NONPROFIT
AMOUNT OF FINANCES INVOLVED
Q Student Residences, LLC
Metropolitan College of New York
The Hebrew Home for the Aged at Riverdale
The New York Methodist Hospital
Horace Mann School
city & state — July 17, 2015
nonprofits that seek its assistance, so applicants are not vying for a finite amount of financing, the Economic Development Corporation said. Under this setup, several parochial schools have accessed tax-free bonds by agreeing not to use the financing for construction or renovation of spaces that will be used for religious purposes, including Bais Ruchel High School, a Brooklyn yeshiva that intended to pay its lowest-paid full-time employees $20,000 annually; Congregation Yeshiva Beis Chaya Mushka, which operates a Jewish school in Brooklyn and did not have wage info in the costbenefit analysis; and Yeshiva Beth Hillel of Krasna and Zichron Moshe, which sought to open a new yeshiva building in Borough Park and said it planned to pay all full-time employees at least $35,000 annually. Although all nonprofits working with Build NYC are technically exempt from the living wage law, the Economic Development Corporation said it has done its due diligence to urge them to pay parallel wages. The corporation said the de Blasio administration’s move to mandate living wage in buildings constructed in the Far West Side dwarfed the number of jobs involved in Build NYC and Industrial Development Agency projects. In April the city announced Brookfield Property Partners’ new office building would generate more than 10,000 jobs subject to the living wage law. Two more towers slated to finalize plans in the next year and a half will also bolster the ranks of those earning living wage, the corporation said.
ROOM FOR RENT?
RENT REGULATIONS AND THE OUTFLOW OF AFFORDABLE HOUSING
KEVIN P. COUGHLIN / OFFICE OF THE GOVERNOR
By JON LENTZ
16 Assembly Speaker Carl Heastie, Gov. Andrew Cuomo and Senate Majority Leader John Flanagan announce the end of the session, which included a four-year rent regulations renewal.
city & state — July 17, 2015
ov. Andrew Cuomo said last month that
the renewal of rent regulations for another four years would be the best extension “that has ever been passed.” In an attempt by lawmakers to slow the flow of apartments out of the system, the new law raises the rent level at which owners can employ “vacancy decontrol” to begin charging market rates for an empty rent-controlled or rent-stabilized apartment. The law also aims to help tenants by locking in automatic annual increases to the vacancy decontrol threshold and stiffening penalties for landlords who harass their tenants until they move out. But despite the legislative tweaks approved in Albany, the stock of truly affordable rent-regulated units in New York City may well continue a steadily downward trend. The vacancy decontrol threshold was raised this year by $200, to $2,700. Although the new level will be pegged to increases set by the New York City Rent Guidelines Board, the $200 bump is less than half as big as in 2011, when lawmakers raised the threshold by $500. “Since that time, we’ve lost more than 35,000 units from the system, and that was with a $500 increase in the threshold,” argued Delsenia Glover,
“Since (2011), we’ve lost more than 35,000 units from the system, and that was with a $500 increase in the threshold. This threshold increase is $200 for a four-year deal. Do the math.” - Delsenia Glover, of Alliance for Tenant Power
the campaign manager of Alliance for Tenant Power. “This threshold increase is $200 for a four-year deal. Do the math.” Landlord and business-friendly groups say tenant
advocates need to check their own math. Official figures show that the total stock of rent-regulated units in New York City is actually on the rise. After years of large declines, the city has experienced an overall increase in the number of rent-stabilized units in recent years, according to numbers compiled by the RGB. There was a net increase of 1,087 units in 2013, and another 169 in 2014. Citing such figures, the Citizens Budget Commission in May called it a “myth” that the number of rent-regulated units is rapidly declining. In Crain’s New York Business, columnist Greg David pointed to the same numbers to make the case that the rent regulation system is “growing, not shrinking.” But tenant groups say that the figures aren’t so black and white. Out of more than a million rentregulated apartments in the city, a shift of 1,087 units is a statistical blip. More importantly, advocates argue that because the RGB’s numbers are reported by landlords, they don’t account for owners who remove apartments from regulation but don’t report the change, which gives the false appearance of a slower decline—or of no decline at all. “I think the true numbers are probably twice what’s reported for deregulation,” said Thomas Waters, a housing policy analyst with the Community cit yandstateny.com
Still, some experts on both sides of the issue acknowledge that the rate of loss has at least slowed, if not stabilized. Yet even if the total number of regulated units is holding steady, it is little comfort to tenant groups. What is balancing out or at least slowing down the net loss of rent-regulated units via vacancy decontrol is the addition of new regulated units driven by the 421-a, 420-c and J-51 tax incentive programs. These newly regulated units, including those added through 421-a, had a median rent of nearly $3,000 in 2014, according to state figures. By contrast, the median rent for all rent-regulated units was $1,200. What’s more, new units are only temporarily subject to rent regulation, while older units are covered permanently, unless they are removed through vacancy decontrol. The 421-a law is currently the subject of negotiations between real estate and labor unions, but if it’s extended, it will continue to reshape the city’s affordable housing landscape— while the era of rent-controlled and rent-stabilized apartments slowly fades away. “All of these units that come in under 421-a or by virtue of the J-51 program, these are generally very high-rent units,” Collins said. “So while the overall numbers in the stock may be fairly stable, the number of units that are really affordable are increasingly declining.”
NET CHANGES IN RENT STABILIZED UNITS, 2003-2014
Keeping Electricity Taxes in Check
Service Society. “The numbers are going down, and I suspect going down at a rate of 10,000 a year or so, although you can’t prove that with any of the lines of evidence that are available to us.” Of course, landlords and tenant groups both have an incentive to portray the figures in a way that bolsters their cause. Landlords say the system, which limits how much they can increase rents each year, is counterproductive because the state’s “price controls” reduce the economic incentive to build more housing and thus limit supply. “Instead of raising the deregulation thresholds we ought to be lowering those thresholds because at those rent levels, there’s certainly no housing emergency,” said Jack Freund, vice president of the Rent Stabilization Association, a landlord group. Tenant advocates insist the regulations are necessary to protect all residents from exorbitant rents, which is critical given New York City’s high demand for housing and low vacancy rates. “Anybody who spends more than a week here and takes a peek at what the rental market is like readily recognizes that owners have a vast amount of bargaining leverage over tenants, certainly in the unregulated stock,” said Tim Collins, a tenant lawyer and former executive director of the Rent Guidelines Board. “Even in the regulated stock the rents have been going up quite up a bit.”
By Arthur “Jerry” Kremer
This summer the heat is on New York’s consumers and small businesses, who face staggering air conditioning bills thanks to some of the highest electricity costs in the country. And it could get worse: on top of existing electricity taxes, a major new state program could further increase costs. The average electricity bill here is 60% above the national average, due in large part to state electricity taxes that account for 25% of a typical bill. In March, the New York Affordable Reliable Electricity Alliance documented that New Yorkers pay at least $1.6 billion annually in electricity taxes. Many of these are flat rate taxes thrust on consumers regardless of their economic means. Some of these taxes are used to fund laudable energy and environmental programs, such as supporting renewable energy through the System Benefits Charge. Other charges are hidden and used to pay for a variety of items. The taxes also pay for several offbudget programs, including the Energy Portfolio Standard and the Regional Greenhouse Gas Initiative. At the same time, we need to make competitive, marketbased investments to expand and improve the transmission grid, to further develop renewable energy sources such as rooftop solar, and to enhance energy efficiency and battery storage. This is the goal of the “Reforming the Energy Vision” (REV) program, a transformative plan to modernize New York’s electricity production and distribution in the coming years. Given our limited public resources and numerous competing endeavors, policymakers must provide a clear and transparent analysis of the costs for REV.
John DeFrancisco, chairman of the state Senate Finance Committee, has sponsored legislation that “... would require a fiscal analysis and provide more transparency for what has the potential to be a multibillion-dollar initiative.” It passed the Senate on a bipartisan 34-24 vote, underscoring the broad support for this common-sense, fair, and simple proposal. It should be among the first measures the Legislature addresses when it reconvenes. New Yorkers should never be asked for billions of additional dollars in electricity payments without knowing what they’re paying for and without accountability. It’s wise for the State Senate Finance Committee and others to seek ways to reduce electricity costs and shine a light on REV. We deserve a modern electric system and transparency in how we pay for it.
Arthur “Jerry” Kremer is the former chairman of the Assembly Ways and Means Committee and a principal author of the state’s power plant siting law. He now is the chairman of the New York Affordable Reliable Electricity Alliance.
-4,000 -5,000 -6,000
SPECIAL SPONSORED SECTION
-9,000 -10,000 2003
Source: New York City Rent Guidelines Board cit yandstateny.com
The New York Affordable Reliable Electricity Alliance (New York AREA) is a diverse group of business, labor, environmental, and community leaders working together for clean, low-cost and reliable electricity solutions that foster prosperity and jobs for the Empire State.
WWW . A R E A - A L L I A N C E . O R G
city & state — July 17, 2015
DREAMS OF FIELD
CASH-STRAPPED HOUSING AUTHORITY MAY HAVE TO SCRAP PLANS TO SELL LAND TO SCHOOL By JUSTIN SONDEL
city & state — July 17, 2015
unicipal housing authorities across the state continue to struggle to provide adequate housing for their tenants, manage assets and keep their finances in line, and the Buffalo Municipal Housing Authority is no exception. The authority is currently under the watchful eye of the U.S. Department of Housing and Urban Development, which has hinted it may take control of the authority if occupancy rates— which are hovering around 84 percent—don’t improve and financial security isn’t established. All of this may cause problems for the authority’s plan to sell a prime piece of real estate to the city Board of Education with the intention of restoring a sports field once used by City Honors High School, Buffalo’s crown jewel of public schools. The authority has been in talks with the school board in an effort to return the four-acre plot—previously the site of Woodson Gardens, a housing authority complex built in the late 1970s and demolished in 2013—to the Board of Education, with the support of a long list of foundations and community and advocacy groups. However, the housing authority may be limited in its ability to work with the school on the land purchase, given the pressure on the authority to secure a big payday from the sale. Joe Mascia is one of two elected commissioners on the authority’s seven-member board, with the remaining five appointed by Mayor Byron Brown. “It’s not a done deal with the Board of Education because what HUD is looking for is as much money as fast as the housing authority can put it together,” Mascia said. While the housing authority has
The Buffalo housing authority wants to sell a field back to City Honors High School, above. maintained that it intends to work with the Board of Education and other partners to ensure that the property can be used for athletic fields, which would also serve the surrounding community, they have listed the property for sale, asking $2.1 million. Many of the city’s developers have purchasing power that dwarfs the school board’s, and with Buffalo Niagara Medical Campus (the everexpanding amalgam of university buildings, research companies and health care institutes that has been a main focus of the state’s economic development efforts in the city) just a stone’s throw away there is no doubt that some of them are eyeing the plot. With the housing authority in the process of replacing more than $290,000 in fees paid to outside legal counsel that HUD deemed inappropriate—and with its fund balance alarmingly low—it needs all the money it can get from the deal. This may restrict the flexibility the housing authority has in negotiating
with the Board of Education to make the Fosdick Field project, as the planned athletic field would be named, into a reality. If the Board of Education is slow in securing the funds for the purchase or a developer is willing to pay far above the asking price, the housing authority’s hand may be forced into selling to another entity. And while HUD is not directly involved in the marketing or sales negotiations for the land, it will need to sign off on whatever deal the authority brings forward. “HUD did not recommend or require the recent listing of the vacant Buffalo Municipal Housing Authority (BMHA) property at Woodson Gardens, and takes no position on the merits of potential buyers,” HUD spokesman Charles McNally said in an email. “The Department’s role in any proposed sale of federal land is to ensure that the BMHA receives fair market value. Regulations governing sale at a lower price require BMHA to demonstrate a commensurate public
benefit and that the sale will be in the best interest of the housing authority and its residents.” Mascia, who supports the idea of turning the land back into athletic fields, said he believes the federal department would not sign off on a deal that was not the most financially advantageous route for the housing authority. “The housing authority now is forced to replace the reserves they’ve used up, so that’s what this is about,” Mascia said. “This is about the HUD recommendation that they sell off any asset they can sell off to replenish the reserve that they have depleted.” Even with the many financial challenges facing the housing authority, its leaders remain stalwart in their commitment to the Fosdick Field plans. Board Chairman Michael Seaman told City & State the authority will move forward with the plans and is currently working with City Honors to see them through. “We’re committed to do a transaction with City Honors that accommodates City Honors and accommodates our needs at the housing authority,” Seaman said. “That has been going on for over three years. The only difference that has happened is that we need to expedite the process. All parties are aware of it and we will continue to work with the school to make that happen.” Seaman said the authority has not brought the specifics of the negotiations with the Board of Education to HUD, as those negotiations are ongoing. “I’m waiting for a transaction from the school that accomplishes the dollar amount that we need and then we will have those direct conversations with HUD,” Seaman said. “I think that’s where we are right now.” cit yandstateny.com
By Deborah Milone
ast week, the workers at Gotham’s Citi Bike bike-share program got their first union contract—a huge victory for the employees. But the agreement between the Transport Workers Union Local 100 and Motivate, the private company that owns Citi Bike, was nowhere near what the workers would have gotten if they worked for the TWU’s usual public-sector negotiating partner, the state-run Metropolitan Transportation Authority. The agreement highlights the problem that the average private-sector worker faces. If you’ve got skills and you’re willing to organize your co-workers, you can negotiate for pretty good working conditions and even some great working-life benefits. But you won’t get any private employer to guarantee a dime for you in retirement, whether for a pension or for health care. Nor will you win any featherbedding that drives up wages by making workers less productive. On Thursday, TWU local chief John Samuelson called the bike agreement “historic.” And it is. New York is the first city to organize its bike-share workers. The TWU is working on similar agreements for Boston, Chicago and Washington. The agreement is good for the workers, too. Workers will get an immediate 10 percent wage hike, and 20 percent over five years. A year and a half from now, dispatchers, mechanics and call-center workers will make $19 an hour, or nearly $40,000 annually for the company’s 150 full-time workers. Nobody will make less than $15.50. Workers will get fully paid health benefits, as well as predictable work schedules (a big problem right now in retail and other low-pay industries). Newer full-time workers get two weeks’ paid vacation (longer after two years), and full-timers get seven paid holidays (part-timers’ benefits are reduced to reflect their hours). And Citi Bike has promised not to cut jobs below the number it has today. Perhaps most valuable for a young workforce, fulltime workers get eight weeks’ paid leave when they have a baby. That’s four times more than what the TWU’s workers at the MTA get. “These are family jobs,” says Ed Aviles, 42, a bike rebalancer (who moves bikes from full stations to empty ones). Avila, who lives in public housing on the Lower East Side, was on unemployment benefits before taking this job. What’s missing, though, is an MTA-style retirement plan. If you work on the subways or buses, you can retire as young as age 55 (as long as you’ve done 25 years of work), with half your salary guaranteed for life. And you get guaranteed health care in retirement, too, even if you’re too young for Medicare. Citi Bike workers, by contrast, get what the rest of cit yandstateny.com
us get if we have reasonably OK jobs—an employer matching our 401(k) contributions. Another thing that’s missing from the Citi Bike deal: protection from work rules. For decades, the most powerful public-sector unions have kept their employers from making them more productive—and thus cutting overtime. (The Long Island Rail Road, in particular, is famous for this.) The Citi Bike agreement, though, says that managers “have the absolute right to create and implement reasonable rules and regulations.” And if the workers don’t like something at some point, they can’t threaten to strike. “The union agrees that it will not call, engage in, participate in, or sanction any strike, sympathy strike, stoppage of work, picketing … or similar economic action,” the agreement says. Though the TWU can’t legally strike against the MTA, it did in 2005. And the LIRR’s unions (not the TWU) used the threat of a strike to wring an unaffordable labor agreement out of the MTA last year. The TWU agreement with Citi Bike, then, is even more “historic” than Samuelson said. As other private-sector workforces, including Gawker workers, organize, they’ll probably get similar improvements in working conditions and benefits, as long as their employers can afford them. What they won’t get is anyone to guarantee their retirements—nor can they really threaten a massscale industrial action to try to win anything that employers won’t give semi-freely. Private-sector employers don’t offer guaranteed retirement benefits anymore because they can’t afford to. Not even the MTA can afford to do so—it just hasn’t yet admitted it. What does this mean for truly progressive policy? What we need isn’t great retirement benefits for public-sector folk and nothing for everybody else. We need to separate retirement from employment— whether public or private—and instead have a mass-scale program to help everyone out more in retirement. This could mean a bigger Social Security program for people who contribute more into their own accounts managed to reduce investment risk, with huge tax credits for lower-paid and middle-class workers. Or it could mean something else. But progressive pols should start talking about it—and stop pretending that the outdated public-sector retirement system is still working. Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal. Twitter: @nicolegelinas
Nuclear Plants Bolster New York’s Economy Carol Browner, former EPA Administrator under President Obama, wrote recently in the New York Post that “existing nuclear power…is a key source for New York—and it must continue to play a large role in the state’s carbon-free energy production.” Her statement is well-founded: according to a new study by the Brattle Institute, nuclear plants reduce our wholesale electricity prices by 15%; contribute more than $7 Billion annually to our economic output; and create nearly 27,000 New York jobs. A separate independent study documented the many significant economic benefits that come from the continued operation of Indian Point Energy Center (IPEC). Start with 5,400 jobs, not only at the plant but in all the businesses and services supporting it. These are good paying jobs that help hard working people to pay the mortgage, send the kids to college, and build communities. Without Indian Point, $2.3 billion would disappear from our local economy. It’s not just the private sector that benefits from Indian Point: it’s the public sector as well. IPEC pays $340 million in annual tax revenues, consistent revenues that pay for good schools, paved roads, community services, and strong infrastructure. Cities and towns need money to run, and, simply put, homeowner taxes would rise or services would be cut without Indian Point. Our environment is healthier, too, because of Indian Point. IPEC’s carbon-free power keeps 8.5 million metric tons of carbon dioxide from entering the air every year—the equivalent of taking 1.6 million cars off the road.
And all that clean electricity comes from Indian Point, despite extremes of temperature or weather, at an average of 93% capacity for the past decade. In contrast, fossil fuel plants are only able to produce power 50 percent of the time, and wind and solar even less than that. Reliable, clean, safe, and affordable electricity from New York’s nuclear plants, including Indian Point, is a crucial part of the foundation of our state’s economy—of jobs, communities, and families whose lives are better and safer because IPEC and her sister nuclear plants work for them every day, year in and year out. In New York, Indian Point has proven its value over and over again, and it should continue to operate for years to come. Deborah Milone is the Executive Director of the Hudson Valley Gateway of Commerce, representing much of Northern Westchester. She is a member of the New York Affordable Reliable Electricity Alliance.
SPECIAL SPONSORED SECTION
New York AREA’s membership includes some of the state’s most vital business, labor and community organizations including the New York State AFL-CIO, Business Council of New York State, Partnership for New York City, New York Building Congress, National Federation of Independent Business and many more.
WWW . A R E A - A L L I A N C E . O R G
city & state — July 17, 2015
BIKES AND BENEFITS
ROUND AND ROUND THE REVOLVING DOOR
REGINA CALCATERRA’S DUBIOUS PAST IN POLITICS MADE HER A QUESTIONABLE CHOICE TO LEAD CUOMO’S DOOMED ETHICS COMMISSION
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key figure involved in the disbanded Albany ethics commission was sued by the state Board of Elections 17 times, and had once been found ineligible to run for an office she had campaigned for. She had learned the art of politics and governance from a state official convicted of fraud, and had used connections made while under his employ to earn money as a lobbyist and attorney, gaining the prestige to do so as an employee of the state—a perfect illustration of the revolving door in New York politics. She even admitted in writing that she cheated on a test to get her first job. But Gov. Andrew Cuomo did not choose to make this woman an example of the kind of person his Moreland Commission to Investigate Public Corruption should examine. Instead, Cuomo appointed Regina Calcaterra his ethics commission’s executive director. Indeed, Calcaterra’s main qualification for leading an ethics investigation—installed by Cuomo but nevertheless meant to act entirely independent of him—was that she had proved to be Cuomo’s loyal subject while leading a previous investigation, taking orders from the governor’s office and providing information to it. The year 2014 should have been a great one for Calcaterra: She published a New York Times bestselling memoir and was serving in
the second prominent role Cuomo had chosen for her. But after Cuomo shut down the Moreland Commission amid reports the investigation had gotten too close to the governor’s office and his allies, Calcaterra found herself in a state of uncertainty. The U.S. Attorney’s Office has taken up many of the commission’s defunct cases, and is investigating whether the Cuomo administration interfered in the commission’s work, why the commission was disbanded, and whether the administration pressured commissioners to issue statements disputing the interference allegations, according to an August 2014 article in The Wall Street Journal.
alcaterra cut her teeth in politics and government under Alan Hevesi, who would later become city and state comptroller and was barred permanently from public office in 2007 after pleading guilty to defrauding the government and served 20 months in prison after admitting in 2010 that he’d abused his stewardship of the $125 billion New York state pension fund (having approved a $250 million pension fund investment in exchange for $1 million in gifts to himself and his family). When Calcaterra first joined Hevesi’s team in 1989, working cit yandstateny.com
ILLUSTRATIONS BY LARRY NADOLSKY
By CATRINEL BARTOLOMEU from THE ACCOUNTABILITY PROJECT
UP FROM POVERTY
alcaterra learned to lie out of necessity. The middle child out of five born to a drugaddled, abusive woman her children called “Cookie,” (having decided their mother didn’t deserve the title “Mom”) Calcaterra and her siblings had to tell falsehoods to social services agencies to keep themselves from being separated in the foster-care system. Cookie was wily and resourceful, playing the part of a down-and-out— but occasionally capable—woman to get close to men for money and shelter cit yandstateny.com
and repeatedly regaining custody of her children to extract a larger welfare check. Meanwhile the children had to fend for themselves, stealing food and clothing and befriending the right people, doing whatever was necessary to survive on the fringes of society over the sometimes monthslong periods during which they were deserted by their mother. The young Calcaterra got smart on the ins and outs of the social services system, at first to keep her siblings together and later to escape from their mother permanently. When Cookie
“being the body that decides who receives which resources, and how much of them,” and feeling inspired that her work could help others. But it wasn’t long before she began to understand that public service also has a much shrewder, more self-serving side, observing during an internship in Albany that public policy was like a “chess game … sheer strategy and full emotional investment are needed for the most convincing players to win.” Calcaterra puts her own drive to win on display in “Etched in Sand,” recounting the difficulty she had
“Handing out literature during rush hour.” was absent, the children fabricated stories to tell inquiring authorities, claiming she worked long hours, misrepresenting the latest bruise or burn and bracing themselves for her return, along with the life-threatening beatings. Although loyalty to her siblings nearly kept Calcaterra silent, she divulged everything one day when a social worker confronted her and said, “Regina, she’ll kill you if you stay here.” At age 14, Calcaterra declared emancipation; she became a ward of the state and her mother no longer had control over her. Although still a child, she finally had a chance to give her life some direction, moving in with a Long Island foster family, graduating high school and finding the wherewithal to get accepted into SUNY New Paltz. In college, she found her calling to public service, realizing that the government’s power results from
getting a job immediately out of college in 1988, when a good job required a typing test, which Calcaterra repeatedly failed, having never learned how. She figured out a way to pass, though: “I’m allowed to practice on the same script and the same typewriter I’ll be using for the test,” she writes. “I take my time to type the script with no mistakes … then I place it under my typewriter. ... It’s perfect.”
LOBBYING FROM JUST OUTSIDE
hereas before she met Hevesi, Calcaterra was just a minor lobbyist working for the Queens-based Eastern Paralyzed Veterans Association, her work in the 1990s launched her into the world of big-time lobbying.
Instead of working for someone else, Calcaterra could now put her name on the door, and partner with Carl Figliola, a Hevesi supporter and golfing buddy to then-Mayor Rudy Giuliani. Figliola and Calcaterra worked together in several incarnations of their firm in the early 2000s, including Figliola and Calcaterra, CLF Consulting and Carl Figliola & Associates, where they were joined by major players from both the Hevesi and Giuliani camps. Their cohort included Hevesi’s lieutenant Jack Chartier, former Hevesi employee Jennifer Duncklee and future director of corporate governance for the state Comptroller’s Office under Hevesi, Julie Gresham. To top it off, Giuliani’s own cousin, Catherine, joined the firm. Despite the public rancor between Giuliani and Hevesi in those years, Figliola and Calcaterra were able to leverage their access on both sides to build up a lucrative portfolio of clients, including 27 with city agency business. But even then, Calcaterra attempted to downplay the value of the government relationships her firm had, telling Newsday in 2001 that Figliola’s relationship with the mayor “isn’t business-related. It’s personal and strictly personal.” Calcaterra wrote that she lived the life of a “young hotshot” in “Etched in Sand,” but didn’t give much detail beyond that; she was in fact living it up and building a public persona solidifying her high-powered network through her personal relationships. A source close to Calcaterra at the time described how she cultivated a proximity to power that gave her the limelight she had always sought by going out regularly for drinks with Chartier, Figliola and his “strictly personal” friend Giuliani. The mayor convoyed the clique to his favorite spot, Club Macanudo, a cigar bar on East 63rd Street, to upscale restaurants, and even to Yankees games, where Calcaterra once threw the first pitch. One of the boldest examples of Calcaterra pushing her Hevesi relationship with clients came when Figliola-Calcaterra took on the Fisher Brothers real estate development company as lobbying clients. Fisher Brothers, which had been active in New York real estate for over a century and had built over 10 million square feet of office space in the city, was also one of Hevesi’s biggest campaign contributors—providing $92,000 to the then-city comptroller’s coffers in 1999 alone. Hevesi’s first deal with Fisher
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on his failed first campaign for city comptroller, she did anything that was asked of her, including menial work like “stick(ing) stamps on envelopes and hand(ing) out literature at subway stations during rush hour.” It was the first example of Calcaterra taking advantage of New York politics’ revolving door: She was a lobbyist for a veterans organization when she met Hevesi, and would eventually be hired as the comptroller’s legislative director in 1994, even though she had yet to finish law school. In 2000, Calcaterra formed a lobbying firm, then went back into government just two years later at the largest pension fund controlled by the city Comptroller’s Office, the New York City Employee Retirement System. She jumped from there to a $175,000-a-year gig at Barrack, Rodos & Bacine, a law firm that donated over $90,000 to Hevesi’s campaign for state comptroller in 2002, was hired that year by the state Comptroller’s Office to lead litigation on a $6 billion lawsuit, and was retained by Hevesi after he took office in 2003. By 2010, Calcaterra took the revolving door for one more spin as she ran for office in the state Senate, piling up large donations from her previous state-contractor employers, before eventually being removed from the ballot when she was found in violation of the state’s residency requirement. As with so much in her memoir, “Etched in Sand,” Calcaterra’s portrayal of her time with Hevesi is at least selective and perhaps misleading. While some of her work for Hevesi is chronicled in the memoir, she omits his ethical problems and never mentions his convictions, even though they left her without the political lodestar she’d had for nearly two decades. As it turns out, Hevesi wasn’t the only older figure who would let her down with unethical activity, nor was he the first.
CALCATERRA’S C R E W
LARRY SCHWARTZ REGINA CALCATERRA
22 ARNOLD FISHER
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ALAN HEVESI: Calcaterra’s mentor, former city and state comptroller, served 20 months in prison for misusing state pension fund CARL FIGLIOLA: Calcaterra’s former lobbying partner, Hevesi supporter, buddy of Rudy Giuliani
RUDY GIULIANI: Former New York City mayor, Calcaterra drinking buddy FISHER BROTHERS: Real-estate giants, Calcaterra clients, huge Hevesi donors
STEVE BELLONE: Suffolk county executive, Calcaterra’s boss during her time in Long Island
LARRY SCHWARTZ: Cuomo aide, presumably Calcaterra’s second-floor contact during Moreland Commission
GOV. ANDREW CUOMO: Established Calcaterra as head of Moreland Commission
Brothers in 1998 invested $105 million from the New York City Employees Retirement System in FdG Capital Partners, a fund run by the Fisher family. An unusual investment for the retirement funds managed by the Comptroller’s Office, FdG didn’t have much of a track record, having been launched only a year earlier with partners who had not worked together managing private equity, according to a New York Times report from 2001. Two years later, Hevesi endorsed an investment of $1 billion into another Fisher Brothers venture. This time, the city’s investment adviser did not have a chance to review the plan before Hevesi approved the investment, igniting a major controversy over Hevesi’s relationship with his key campaign funders—with FigliolaCalcaterra caught in the middle. Amid heavy opposition from Giuliani—“It seems to me that the circumstances suggest inappropriate use of influence, and it’s not the first time that’s happened with Comptroller Hevesi,” Giuliani later told reporters—Fisher Brothers withdrew the proposal in 2000. Figliola and Calcaterra dissolved their relationship in late 2001, and Calcaterra involved herself in a series of ventures: She made her own lobbying firm, launched a “Women PAC” in 2001 and worked on personal issues.
But the revolving door turned again for her in 2002, when she was hired by NYCERS, the same retirement fund that had gotten Hevesi in trouble with the Fisher Brothers. She was named deputy general counsel to the $38 billion pension fund, where according to a copy of her 2006 resume obtained by The Accountability Project, she “provided counsel to the fund’s Board of Trustees,” which included Hevesi. Through her Women PAC, Calcaterra managed to regularly run afoul of campaign finance regulations. She was sued 17 times by the city’s Board of Elections for failing to file required financial disclosures. Calcaterra offered an excuse for her conduct in 2013, telling the Daily News she thought the PAC was closed in 2003, despite her having contacted the Board of Elections about it in 2004, 2006 and 2009. The matter was resolved in 2009, a year before her run for Senate, when she agreed to make up the filings and pay a fine.
INSIDE & OUTSIDE
alcaterra’s gig at NYCERS was short-lived, and she was soon back in the private sector, this time working for a big payday from a government contract. Back when terrestrial phone lines were still the biggest phone business
ON HER OWN
ut Calcaterra would only be able to use her relationship with Hevesi as long as he was in power. When he was barred from elected office in 2007 and imprisoned in 2011, Calcaterra had to find a new power structure to be a part of. Initially, she tried to make it by herself, running for a state Senate seat in 2010. “I know it’s a long shot,” she writes in “Etched in Sand,” “but everything I’ve done up to now has been a long shot too.” It turned out the odds were even more stacked against her than she’d thought: She wasn’t eligible to run for the office, as she hadn’t been a New York state resident for the prior five years. Nevertheless, Calcaterra pressed forward, raising more than $290,000 for her campaign, including more than $80,000 from her old BR&B contacts—the contacts she built while working hand-in-hand with the now-convicted Hevesi. Calcaterra insisted she was eligible to run, despite a lawsuit objecting to
her candidacy. Calcaterra had lived in Pennsylvania for several years while working for BR&B. She’d gotten a Pennsylvania driver’s license, had a bank account there, voted four times there, filed taxes as a Pennsylvania resident, participated in the local Democratic club and worked as a ballot official. She even filed for divorce in Pennsylvania in 2006 (an episode and a marriage that both go completely unmentioned in her memoir). Despite all that, she claimed in court she’d really been a New York resident for much of that time. The court eventually found that Calcaterra “ha(d) not met the constitutional requirements of a five year continuous residency,” and removed her from the ballot.
ON A NEW TRACK WITH CUOMO
nd then the ever-evolving Calcaterra found a way to get involved in Long Island politics, even though she wasn’t eligible to be an elected official there. Her failed run for the state Senate was followed by a brief stint in Suffolk County, where she was the chief deputy executive to Steve Bellone. When Superstorm Sandy hit in 2012, Calcaterra writes, she was driven to further service. She describes an overwhelming and personal sense of loss looking at the devastated island from above: “My mother left behind scorched earth with the same totality that Mother Nature had swept my island,” she writes. Moved by her own nostalgia, Calcaterra iterates her memoir’s mission: “This is the story of how it took a community to raise a child … and how that child used her future to give hope back.” But as personally moving as her return home might have been, Calcaterra’s reign on Long Island revealed a less-than-wholesome approach to governance. She played a key role in the $23 million sale of the Foley Nursing Home, in which the Bellone administration failed to follow competitive bidding procedures. Bellone’s team rushed transactions and bypassed safeguards, favoring private buyers who were given financial advantages, according to a 2013 Newsday investigation. When Calcaterra drafted a caustic memo suggesting that Bellone’s predecessor Steve Levy could be the subject of a federal fraud investigation because of his inaccurate fiscal projections, the document was leaked
city & state — July 17, 2015
Giuliani took them to Yankees games, where Calcaterra once threw the first pitch.
around, WorldCom, the nation’s second-largest long-distance company, was committing securities fraud. In June 2002, the firm announced it had overstated its previous year’s earnings by more than $3.8 billion. As it happened, the New York state pension fund was then the largest shareholder in WorldCom, so the fund launched a lawsuit against the phone service. The Comptroller’s Office hired an out-of-state law firm, Barrack, Rodos & Bacine, to make their case in July 2002, while Carl McCall was still the state’s comptroller and Hevesi was running for the job. BR&B and its partners and PACs donated more than $90,000 to Hevesi’s 2002 campaign, and maintained their position as lead counsel once Hevesi took office. There was one major change at BR&B around the time Hevesi was elected in 2002, though: They hired Calcaterra, even though she had never worked as a litigator. She became the point person for handling BR&B’s relationship with the state Comptroller’s Office and would speak with Hevesi and those in his office “several times a day,” she testified in an unrelated lawsuit. In years to come, the relationship between Hevesi, BR&B and Calcaterra remained a close one. Calcaterra stayed with the firm until December 2011, having opened the firm’s New York branch and become a partner.
In Bellone’s office, she “went in cursing ... she threw a water bottle at someone and missed.”
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from her office, forcing Bellone to apologize and disown it as a “rookie mistake.” Suffolk County Legislator Kate Browning, who first met Calcaterra in a discussion about the Foley nursing home, explained in an interview that while Calcaterra gave her two weeks to come up with a plan for the nursing home, Calcaterra refused a plan that called for a request for proposals, the standard Suffolk County contracting process. Browning described Calcaterra as intimidating and abusive, cursing on multiple occasions at county government officials. “I would tell her we had a process that had to be followed, for RFPs for example, but she didn’t want to follow it, she wanted it done her way and right away,” Browning said. Indeed, the Newsday investigation showed that because county officials were unhappy with existing RFPs, they chose to pursue a negotiated deal, and Calcaterra spent only a week meeting with potential buyers and got offers from three of them, while others declined to make an offer because they felt rushed. After the winning bidders, the Shermans, made their offer, other potential buyers were not given a chance to raise theirs, and the deal was sealed within a few hours. “It was her way or the highway, she was extremely rude,” Browning said of Calcaterra’s reign in Bellone’s office. Browning described an incident that
allegedly occurred after Superstorm Sandy, when some of the county’s probation officers had to be moved to a different building to make space for FEMA officials. While the probation officers had no problem with it, Browning said, Calcaterra “went in cursing and swearing at the probation officers and county employees. I was told that she threw a water bottle at someone and missed them.” Luckily, Calcaterra had a way out. Soon after Superstorm Sandy, Cuomo formed his first Moreland Commission on Utility Storm Preparation and Response, and Calcaterra was appointed to the commission and moved out of Suffolk County. Bellone denied widespread speculation that, as former Suffolk Chief Deputy County Executive Paul Sabatino put it, “they moved her up as a favor to Bellone, because she had become an embarrassment.”
A GOOD SOLDIER
alcaterra might have made an impression on Cuomo and his staff when he was serving as the state’s attorney general and prosecuting Hevesi. But in her role serving on that first Moreland Commission, Calcaterra showed that she could do what it would take to ensure a good outcome for the governor’s office. The first Moreland Commission
was formed to scrutinize the Long Island Power Authority’s response to Superstorm Sandy, in which repair crews were never dispatched and phones remained unanswered while more than 90 percent of its 1.1 million customers were left without power, according to a New York Times investigation. While proceedings went smoothly overall, the commission’s final recommendation—to privatize the utility—seemed calculated to many onlookers. The conclusion appeared “dictated, and predetermined because it didn’t match the findings in the report,” according to Matthew Cordero, a member of the LIPA board of trustees who also claimed that the executive branch, through Calcaterra, manipulated the public hearings to their benefit, always choosing four or five witnesses who supported the second floor’s perspective to speak first, and then severely limiting time for public statements. Mark Green, the former city public advocate who served on the commission with Calcaterra, explained in an interview that he had no problem with Calcaterra’s role in that first commission because “we weren’t a law enforcement commission, we were a policy commission and it was just assumed that Regina was going straight to the second floor and reporting all that the commission was doing.” So, despite Calcaterra having been successfully removed from a ballot for office in New York state, having been sued 17 times for campaign finance violations, having served under the man convicted of perhaps the most prominent corruption scheme in Albany in recent decades, and then having used his connections to go round and round the revolving door between the private sector and government work, Cuomo installed her as head of his ethics commission in July 2013. Of course, the same conduct was not expected from the second Moreland Commission. Keeping the governor’s office in the loop would have undermined the basic goals of the commission: to investigate corruption in Albany, wherever it might be found. Nevertheless, Calcaterra was not just accused by her colleagues in The New York Times of reporting back to the governor and his aide, Larry Schwartz, but also of rooting through garbage cans, hacking emails and thwarting independent investigations in an attempt to put the kibosh on subpoenas that may have besmirched Cuomo and his allies.
Sources within the Moreland Commission told The Accountability Project that Calcaterra was “shockingly underqualified” and that she “botched” her operational responsibilities like public hearings, contracts and document management. Instead, they said her primary motivation was to protect the governor and to display her loyalty to the executive branch. These commissioners spoke on condition of anonymity because of Bharara’s ongoing investigation. Executive Order 106 issued by Cuomo to create the commission stated that “The Commission shall conduct public hearings around the State to provide opportunities for members of the public and interested parties to comment on the issues within the scope of its work,” and according to a former commission staffer, “Calcaterra was personally responsible for managing the public hearings, of which there were supposed to be several, at least, but there ended up being two or two and a half. And there was only one public hearing where the public could actually speak.” There were originally four public hearings planned. The first was held in a venue so small that members of the public could not get in, even to listen, unless they were on a list of speakers. Over 100 people lined up outside Pace University on Sept. 17, 2013, and the handful who did get in only got three minutes to speak. Like the hearings that followed, this first hearing was “announced with very little notice, such that unless you were particularly looking out for them, there was no way you’d know about it,” according to a source who was on the commission. “There was no effort to get the word out.” The second hearing was held for the Capital Region on Sept. 24, 2013, and while some members of the public spoke, the majority of the proceedings focused on vetted testimony from public policy experts and advocacy organizations. According to the commission’s own press release for the third hearing at the Javits Center in Manhattan on Oct. 28, 2013, members of the public were “invited to attend only. Those invited to provide testimony to the commission will be the only speakers for the hearing.” And a fourth hearing, initially scheduled for Sept. 18, 2013, in Buffalo and announced on the commission’s website in July, was canceled and never rescheduled. Some of Calcaterra’s critics on the commission believed she was cit yandstateny.com
keep at it.” If Cuomo had wanted the corruption investigation to yield better results, there was one example he could have turned to: the Moreland Commission his father, Mario, appointed in 1987. As Richard Emery, a lawyer who served on that commission, said in an interview, “I knew of no contact between the governor’s office and our commission, other than on the issues of budget,” adding “the thought of anyone communicating to us would have been like someone trying to influence the conclave that elected the pope.” Andrew Cuomo’s Moreland Commission was certainly no conclave. But the person he chose to lead it was about as suitable as a Borgia pope.
CALCATERRA WAS NOT JUST ACCUSED BY HER COLLEAGUES OF REPORTING BACK TO THE GOVERNOR AND HIS AIDE, LARRY SCHWARTZ, BUT ALSO OF ROOTING THROUGH GARBAGE CANS, HACKING EMAILS AND THWARTING INDEPENDENT INVESTIGATIONS
With research by Azure Gilman. The Accountability Project is a nonpartisan investigative journalism organization focused on political corruption in New York.
city & state — July 17, 2015
intentionally preventing the public from speaking in an effort to protect the governor, and that her vehement loyalty cultivated an atmosphere of fear and secrecy among commission staffers—one of whom described Calcaterra as wavering between “uninterested in what we were doing, to hot-tempered and aggressive about what we were doing.” Cursing and screaming often accented her disproportionate responses, according to another former commission member. As previously described in City & State, Calcaterra nixed the commissioner’s original independent report writers, insisting instead on a writer—Alex Crohn—whom Cuomo preferred and who had worked for the governor’s counsel, Mylan Denerstein. Once the report was written and a last-minute dissent was included to indicate that some of the commission members (7 out of 25) were not in favor of public financing, the two factions argued extensively about the use of the word “majority” in the report, which some thought made it sound like the commission was not overwhelmingly in favor of public financing of electoral campaigns. They finally agreed all instances of that word would be removed from the final report. Calcaterra, however, released the report to the press while the co-chairs and writer were still working on removing all instances of the word and finalizing the report. For a commission investigating public integrity that was charged with making recommendations to strengthen laws and procedures and making criminal referrals, the Moreland Commission failed to identify any specific examples of public corruption. The indictment of former Assembly Speaker Sheldon Silver highlighted what the Moreland Commission wasn’t able to complete during its truncated tenure. The commission’s data about the legislator’s outside income was merged with the U.S. attorney’s own investigation in order to file the 35-page criminal complaint against Silver, Bharara revealed at a news conference after Silver’s arrest. Having spoken out harshly against the shuttering of the commission several times, Bharara spooked lawmakers again when he said the charges against Silver “in our view go to the very core of what ails Albany: lack of transparency, lack of accountability and lack of principle— joined with overabundance of greed, cronyism and self-dealing. But we will
Empire State Compassionate Care is the best-choice provider for New York’s medical marijuana program. The ESCC team—which produces nearly 70% of New Jersey’s pharmaceutical-grade medical marijuana—went from seed to sale 3.5 months after being licensed.
The ESCC team has already provided relief and exceptional service to more than 25,000 patients suffering debilitating illnesses. = 100 People
“I hope that people who are suffering the same way I am get the opportunity to be comforted and assisted by the Empire State Compassionate Care team like I was.” Felice Tunison, suffering from multiple sclerosis (MS)
“If it wasn’t for the help I received, I would not be in the position where I am today. I stand here today as a 26-year-old man who suddenly has the motivation and vision to do something with his life.” Dashaunt McLean, diagnosed at 19 with epilepsy
“I tried other medical marijuana facilities that unfortunately did not have the counseling or staff skilled enough to treat my variety of ailments. That search ended with the Empire State Compassionate Care team.” Marta Portaguez, suffering from severe fibromyalgia/CHS and gastroparesis
SPOTLIGHT: MEDICAL MARIJUANA
SPOTLIGHT MEDICAL MARIJUANA
advocates to push through the Compassionate Care Act in New York. Following its passage in March there has been a rush of activity
Most of it has surrounded the 43 businesses seeking to cultivate and distribute the new drug. In coming weeks, the state Health Department will
marijuana awarded, is
severe illnesses are allowed access to the drug. This also will have a
In this special section we examine these issues and hear from some of
Lawmakers, advocates fight to get PTSD covered under the law By Ashley Hupfl
Companies are spending millions competing for an uncertain market By Justin Sondel
37 Lawmakers seek to change federal law to end legal gray area for states By Wilder Fleming
city & state â€” July May17, 18,2015 2015
Our Dream Team
Science Based. Patient focused.
Erik Holling President Former Associate Professor at Harvard Medical School, a National Mortimer Sackler Awardee and a successful global businessman Alfonso Romero-Sandoval M.D., PhD Chief Medical Officer Has conducted extensive research on cannabinoids and their effects on acute and chronic pain at Dartmouth Medical School and Wake Forest University Eileen Konieczny R.N. Lead Strategist and Director of Patient Services President-elect of the American Cannabis Nurses Association John Cutter Chief Security Officer Former Deputy Chief for Counter-Intelligence of the New York City Police Department in the aftermath of 9/11
Valley Agriceuticals is dedicated to setting the industry standard for medical cannabis production, delivery and patient care in New York State. Our Science
Our team is composed of leaders in science, education and medicine who are passionate about applying internationally recognized pharmaceutical and biotechnology standards to medical cannabis production and delivery.
Our Health Centers
Our patient experience will be provided in the warm and welcoming environment of our Origin Health Centers™ located in Rochester, Manhattan, Albany and Westchester. Our health centers will be staffed by pharmacists and nurses educated on the endocannabinoid system and have state-of-the art security with a 24 hour patient care hotline.
Our Production Facilities
Valley Agriceuticals has broken ground on a 100,000 square foot cultivation and production facility in Wallkill, NY that will create approximately 65 construction jobs and more than 100 operational full-time jobs at full build-out. Within this highly secured facility, Valley Agriceuticals will process and package our ‘certified naturally grown (CNG)’ plants into consistently dosed medicines, and will also maintain a lab for quality assurance, controls and research to further advance the science behind the medicine.
Dan Hartman Director of Compliance Has more than 23 years of government regulatory experience, selected to lead the Colorado Medical Marijuana Enforcement Division Shay Avraham Sarid Master Cultivator One of the leading producers of medical cannabis in Israel Alan Shackelford, M.D. Clinical Research Director A member of the Medical Marijuana Scientific Advisory Counsel of the Colorado Department of Health, Former research fellow at Harvard Medical School, and global leader in medical cannabis care Joe Bova Dispensary Operations A member and past Chair of the New York State Board of Pharmacy
LAWMAKERS, ADVOCATES FIGHT TO GET PTSD COVERED UNDER THE LAW By ASHLEY HUPFL
hen Gov. Andrew
Cuomo and the state Legislature agreed to a medical marijuana program in New York at the end of the 2014 legislative session, advocates hailed the decision, but were quickly disappointed by the small number of medical conditions eligible to be treated under the program. A year later, the state Department of Health is set to announce the winners of the five licenses to distribute medical marijuana by the end of the month and elected officials and advocates are already eyeing the next big hurdle for the program: adding post-traumatic stress disorder, Alzheimer’s disease and muscular dystrophy to the list of qualifying conditions. “That’s a decision that doctors should make, not legislators or government officials, but Governor Cuomo was very insistent that we had to have a list of specific conditions and that would be that,” Assembly Health Committee Chairman Richard Gottfried told City & State in a video interview. State Department of Health Commissioner Howard Zucker has until January to consider whether the three conditions should be added to the state’s medical marijuana program. “We need to resolve this. Veterans, in particular, could really benefit from this,” state Sen. Diane Savino told City & State. “It’s a very important issue for veterans, the (U.S. Department of Veterans Affairs) is struggling with this. They know veterans are selfmedicating with marijuana, they’re choosing to have their own version of ‘don’t ask don’t tell.’” PTSD is a psychiatric disorder that can occur after experiencing or witnessing a terrifying event. After the event, individuals can suffer from flashbacks, bad dreams and many other emotional and psychological symptoms.
Some say marijuana could help veterans cope with post-traumatic stress.
The U.S. Department of Veterans Affairs’ website says the belief that marijuana can be used to treat PTSD is “anecdotal” and “there is no evidence at this time that marijuana is an effective treatment for PTSD.” On Thursday, the state of Colorado, which allows marijuana for recreational use, rejected it as a treatment for PTSD. Michael Krawitz, executive director of Veterans for Medical Marijuana Access, argued that medical marijuana is an effective anti-anxiety drug, along with being a drug that combats neuropathic and chronic pain. He says he has been told by many veterans he works with who suffer from PTSD that marijuana allows them to have a good night’s sleep. Krawitz also noted that only two anti-anxiety medications, Zoloft and Paxil, are approved by the FDA for treating PTSD, and they can come with some severe negative side effects— including suicidal thoughts. “They’re not particularly effective,” Krawitz said. “They’re not a magic bullet for post-traumatic stress. What you wind up with is a large population of patients that have either used these medications and they really haven’t
helped them much or they’re having difficulty using them because of the negative side effects.” Using medical marijuana to help veterans combat PTSD—although they are not the only group to suffer from the disorder—is a particularly complicated issue, since the VA is a federal agency and marijuana is still a Schedule I drug under federal law. Therefore, many VA hospitals decline to weigh in on the issue. The Albany Stratton VA Medical Center does not have a position on the issue, a spokesperson said, but will address medical marijuana in their 2015 policy agenda scheduled to be released in a few weeks. “Certainly I think that it’s something the veterans community picked up on a long time ago and the science has been catching up,” Krawitz said. “The VA has actually been very receptive to the knowledge, to the evidence and the science. What they haven’t wanted to do is get involved in the controversy.” Because marijuana use—both medicinal and recreational—is still so controversial, the issue unavoidably becomes both a political and ethical
discussion, not just a medicinal one. “I think rationally it should not be up to the law to say PTSD is in (the state’s medical marijuana program) but this (other condition) is not,” Gottfried said. “We don’t do that for almost any other medication including some very dangerous and highly addictive controlled substances.” Like state lawmakers who argue they should not make decisions best left to doctors, Krawitz said doctors should not be expected to act like police officers and should only act in the best interest of the patient. “Unfortunately, veterans or non-veterans have run into trouble with their doctors, where their doctors feel like they’re supposed to act like the policemen in this particular instance,” he said. “The ethics are very clear here, the doctor is not supposed to be a cop.”
WHAT’S COVERED CONDITIONS ELIGIBLE FOR THE STATE’S MEDICAL MARIJUANA PROGRAM: -cancer -HIV/AIDS -Lou Gehrig’s disease -Parkinson’s disease -multiple sclerosis -spinal cord damage -epilepsy -inflammatory bowel disorder -neuropathies -Huntington’s disease ADDITIONAL CONDITIONS BEING CONSIDERED FOR THE PROGRAM: -post-traumatic stress disorder -Alzheimer’s disease -muscular dystrophy
SPOTLIGHT: MEDICAL MARIJUANA city & state — July 17, 2015
THE NEXT BATTLE
By JUSTIN SONDEL
BUSINESSES BIDDING FOR A MEDICAL MARIJUANA LICENSE
ometime soon the five lucky winners of New York’s medical marijuana sweepstakes will be growing, processing and selling cannabinoids to a select group of ailing New Yorkers. The state is expected to wrap up its selection process sometime this month, and 38 other companies will walk away empty-handed after investing millions of dollars just for a chance at securing the precious licenses. Applicants had to submit a $10,000 application fee, $200,000 in collateral and proof that they had access to property suitable for growing and producing the treatment. Even after obtaining the rights to the production and sale of medical marijuana, the five companies will have to invest millions more to get their facilities up and running and establish dispensaries. They will face an uncertain market that is expected to experience slow growth at the outset due in part to the restrictive nature of the Compassionate Care Act, the law signed last year that governs the medical marijuana industry in New York. cit yandstateny.com
So why even get into this game? What makes it worth the initial investment, knowing how slim the chances are you will ever get the opportunity to carry out your carefully laid plans? Michael Mayes is the CEO of Quantum 9, a Chicago-based marijuana industry consulting firm with clients in weed-friendly states across the country, including New York. He says the appeal is in the longterm potential for growth. Though New York and his home state of Illinois have laws that create significant barriers to entering the market, the states are home to two of the largest metro areas in the country, offering an immense opportunity to any companies with the capital to withstand a few slow years in the beginning as patient trust in the system grows. Illinois’ program’s numbers are slim so far. Set to launch this fall, it has just over 2,500 patients registered. Some of the low participation, however, has been blamed on provisions specific to that state’s law, such as fingerprinting and background check requirements.
In other words, it’s a long-term investment, as opposed to states with more open medical marijuana laws like California and Oregon or legalized recreational marijuana use like Washington and Colorado. “New York and Illinois are longterm plays, as where Colorado or Washington would be short-term plays,” Mayes said. One of the main obstacles for New York’s medical marijuana growers could be the limited list of diseases for which physicians are allowed to prescribe the drug. The Compassionate Care Act currently allows for 10 diseases. Mayes said that as the program is rolled out and politicians hear from constituents who have benefitted from the use of medical marijuana, they are likely to push for an expanded list of diseases. In Illinois the list of diseases has expanded by 25 percent since their law was signed in 2013. “I believe New York will probably do something similar, where if they’re starting to see dismal patient populations the advisory board will have to add more ailments and
ADVANCED GROW LABS NEW YORK, LLC ALTERNATIVE MEDICINE ASSOCIATES, LLC BLOOMFIELD INDUSTRIES INC. BRIGHTWATERS FARMS LLC BUTLER EVERGREEN, LLC CANNICARE LLC CANNABIS OF AMERICA LLC (EMPIRE GREEN LABS) CITIVA MEDICAL LLC COLUMBIA CARE NY LLC CCCONY, INC. (COMPASSIONATE CARE CENTERS OF NY, INC.) COMPASSIONATE CARE WNY, LLC COMPASSIONATE SUNSET LLC (COMPASSIONATE RELIEF CENTERS OF NY) EMPIRE STATE COMPASSIONATE CARE, INC. EMPIRE STATE HEALTH SOLUTIONS LLC ETAIN, LLC FAR(M)ED NEW YORK, LLC FIORELLO PHARMACEUTICALS, INC. GOOD GREEN GROUP LLC GREAT LAKES MEDICINALS LLC HERBAL AGRICULTURE LLC HUDSON HEALTH EXTRACTS, LLC INTEGRATED SCIENTIFIC HERBAL ADVANCES, LLC KANNALIFE SCIENCES, INC. (KANNAGRO, LLC) KINEX SUPPORTIVE PHARMACEUTICALS, LLC LABCARE, INC MEDIGRO ORGANICS LLC MED MAR, LTD. MINDFUL MEDICAL NEW YORK, LLC NEPENTHEA LLC NEW YORK MEDICAL GROWERS, LLC NORTH COUNTRY ROOTS, INC. NEW YORK CANNA, INC. NY COMPASSION, LLC NY GROWING PARTNERS, LLC PALLIATECH NY, LLC PHARMACANN LLC ROSS JOHN ENTERPR ISES (GOOD LEAF) SALUS SCIENTIFIC, LLC SHEVA HEALTH & WELLNESS LLC SILVER PEAK NY LLC THC HEALTH INC. TILRAY NEW YORK, LLC VALLEY AGRICEUTICALS, LLC
Michael Mayes is CEO of Quantum 9, a marijuana industry consulting firm.
SPOTLIGHT: MEDICAL MARIJUANA
COMPANIES SPEND BIG COMPETING FOR AN UNCERTAIN MARKET
city & state — July 17, 2015
WHY GET INTO THE GAME?
SPOTLIGHT: MEDICAL MARIJUANA
streamline the adoption registry process,” Mayes said. In addition, the New York law does not allow any smoking of marijuana and will require companies to stick to strict quality measurements, making production more difficult. Still, there could be another longterm goal for some of the companies that have applied. In states with recreational marijuana laws like Colorado, medical marijuana was legalized first. Mayes said some of the companies seeking licenses could see recreational marijuana for New York on the horizon, even if it is still many years off. “There’s definitely a first-mover opportunity for individuals in the medical market when it becomes recreational,” Mayes said. Assemblyman Richard Gottfried, a long-time champion
“If you don’t have a lot of money, you’re not going to be a player.”
city & state — July 17, 2015
- Assemblyman Richard Gottfried
of medical marijuana, sponsored the Compassionate Care Act in his chamber, as well as the bill passed this year that will expedite the implementation process to make the drug available to a select group of patients in desperate need at the beginning of 2016. He has a nuanced view of the barriers for potential licensees created by the state’s rigorous and highly competitive application process. “The way the regulations are written and some of the requirements, if you don’t have a lot of money, you’re not going to be a player, and I think that’s unfortunate,” Gottfried said. “On the other hand, we do want the applicants to be people who are serious and not just a couple of guys who want to brew up product in the bathtub or the garage. We want people who are not a fly-by-night operation.” Still, some of the requirements outlined in the law are onerous, he said, and could stop people with the necessary skills but less means from competing for a license. “I think a lot of these requirements
really make no sense,” Gottfried said. “If we imposed those requirements on people who were going to sell morphine, every neighborhood pharmacy would be up in arms, quite justifiably.” Butler Evergreen LLC is one of the many companies that have invested hundreds of thousands of dollars in their bid for one of the five licenses. Mark Doherty, the company’s chief operating officer, said that should they be selected, the company will have to make large upfront investments with a long waiting period before they begin to recoup any money. “The nature of the business, as it’s designed, is expensive,” Doherty said. “If you want to call that a barrier to entry, I guess you can make an argument there, but the way I look at it is that you’ve got to be really committed because you’re going to spend a couple million dollars just to get your application put together.” But Doherty said the competitive application process and strict requirements of the law will work to create an environment that will encourage innovation and result in a superior product in the end, something that could make the New York companies industry leaders across the nation. “With the way it’s set up in New York, it’s really allowing companies to come in and be the best, if you will” Doherty said. “The company that the law has sort of forced us to create in New York state is absolutely cutting edge and state of the art.” And as far as concerns about initially low patient rates, Doherty said that is to be expected and is likely built into most applicants’ plans. “The reality is that every program in every state so far has taken time to get up and running,” Doherty said. “There is a slow adoption rate.” In addition, Doherty said, the medical marijuana business is not all about money. Many people at Butler Evergreen have been affected by a disease that could have been aided by medical marijuana. In fact, Doherty’s wife was diagnosed with melanoma while she was pregnant with their first child. Shortly after giving birth, doctors discovered that the cancer had spread to her lymph nodes. She is still battling the disease. “I was already well aware of the marijuana industry,” Doherty said. “I was already well aware of patients and how they are served and things like that. It’s been a real interesting process going through this while my wife has this illness and certainly could benefit from medical marijuana. Unfortunately, it’s not available at this time.”
JOSEPH GRIFFO State Senator
City & State: This year you worked in your chamber to draft a version of the medical marijuana bill that would expedite access to the drug for a particular set of patients with progressive and degenerative diseases. It passed the Senate by a wide margin. It also passed in the Assembly and is waiting for Gov. Andrew Cuomo’s signature. And yet in 2014, you voted against the Compassionate Care Act. Were you against the idea of medical marijuana or were there specifics in the bill that passed that concerned you? Sen. Joseph Griffo: I just thought there were too many pieces that were moving quickly and needed to be addressed. That’s what my resistance was and my concern and that’s what caused me to vote the way I did. Then the bill passed and was signed into law, so then I began to work with the communities to take advantage economically from facilities that are going to be located. If the community was so inclined and willing then I would support their efforts for either a growing facility or a dispensary. The second part, which was more compelling and more important, was that some of these individuals, particularly children, who needed expedited access to the medicinal marijuana, we needed to find a way to do that. C&S: Part of the hesitation to using marijuana as medicine is the long history of its use as a recreational drug. Does that make it any less valuable as a medicine in your eyes?
JG: I believe that if there’s an opportunity for individuals to find relief we have to have empathy. If there’s a means and a method to provide people with relief who are suffering from a debilitating illness then, obviously, I don’t think we should avoid trying to find some product, some means, to provide them the health and the comfort that they need, the relief that they need. Conceptually, everything is on the table in that regard. The difference is, how do you evaluate what really works and doesn’t work? What’s the best method and manner. I think, so far, the clinical studies, clinical trials are probably the best way to do that. C&S: There are a limited number of ailments that medical marijuana will be used for under the law, though more are being considered. Do you feel the state should continue expanding that list? JG: That was one of my concerns and why I was not initially supportive of the bill. How do you pick and choose? Nobody’s clinically studying this yet. I think they really picked some illnesses that require and deserve this type of attention. For instance, people are talking about (post-traumatic stress disorder) now. That’s something that could be included. The point is I’m not a clinical expert nor are any of my colleagues, even though some may have more expertise in health. If this is a medicinal product, we need to rely on medical and research professionals to make the determination in terms of how to use, when to use, that kind of thing.
TECHNOLOGY, TELECOMMUNICATIONS & NEW MEDIA JULY 29 2015
On July 29th, City & State Reports will honor outstanding professionals from: Technology, Telecommunications & New Media. These individuals have successfully promoted the principals of Corporate Social Responsibility which encompass everything from philanthropy to environmentalism to the treatment of workers in the developing world. Keynote Speaker: Minerva Tantaco, Chief Technology Officer of NYC Featured Speaker: Jay Hershenson, Senior Vice Chancellor, City University of New York Emcee: Andrew Rasiej, Founder, Personal Democracy Forum
8 a.m. Breakfast at Hunter College Lexington Ave. & 68th St. - Southwest Corner 3rd-Floor Dining Hall For more information on purchasing tickets, tables and congratulatory ads, please contact Lissa Blake at firstname.lastname@example.org or call 646-517-2741.
AND THE WINNERS ARE… TIMOTHY ARMSTRONG Chairman and CEO STANLEY LITOW Vice President of Corporate Citizenship & Corporate Affairs DAVID HANTMAN Global Head of Public Policy JOHN SABEY President MAX HAOT President & CEO
Lifetime Achievement Award
Chairman’s Award Outstanding Disaster Relief Support in New York & Worldwide Outstanding Achievement in Promoting Energy Sustainability for the Internet Economy & Collaborative Genomic Research. Broadcaster Award for Innovation in Technology and New Media
NEIL CAPEL Founder & Chairman
Vanguard Award for Innovating a 21stCentury Workplace at Sailthru.
JESSICA KLEIN Open Web Designer
Excellence in Promoting Community Engagement, Education & Transparency through Technology
LOU KERNER Manager JOHN KATZMAN Chief Executive Officer DARRYL RAMSEY Business Development Manager & Technical Strategist for State & Local Governments THOMAS DEVITO Vice President & General Manager of NY & NJ
Outstanding Innovations in Community Engagement through Social Media Outstanding Achievement in Promoting Education & Student Safety through Innovation & Technology Outstanding Achievement in Community Engagement, Education & the Promotion of Supply-Chain Ethics Excellence in Volunteerism, Education & Community Engagement
SPOTLIGHT: MEDICAL MARIJUANA
DIANE SAVINO State Senator
City & State: There have been 43 applicants in New York for the medical marijuana program, which will launch in January if all goes according to plan. Do you feel like that is a good response? Diane Savino: Well when we first passed the legislation, there was some concern that we were constructing a program that was so narrow that it would actually act as a deterrent to qualified bidders. So there was a little bit of a fear that we weren’t going to get any people, and in fact I think 43 is a pretty good number. I don’t have an opinion on any of the individual applicants, that’s up to the Department of Health, but from what I’ve heard from both the department and from people in the industry, these are some of the best and most
respected people in the industry. C&S: There have been a lot of stories out lately about the various bidders. One bidder has been endorsed by labor; another bidder is working with Stony Brook. There have been some more negative stories as well; there’s a bidder from the “Wolf of Wall Street” firm. What makes a good bidder? DS: This is just my opinion, because I do not have a vote on this, but from what I understand from having extensive discussions with the Department of Health, particularly during the development of the regulations, they have concerns about a few things. One, they want to make sure if they grant a license, because there are only going to be five licenses with 20 dispensaries, that if they grant a license to one of the applicants that they are able to be up and running immediately and that there is not going to be a significant lag time because if that occurs then patients will suffer. So they’re looking for people who one, have capital, who have property, in leases or ownership of property, that are able to implement them as quickly as possible. They’re also looking at a business model that is sustainable, because all of the risk is on the applicant for the first couple of years. Remember the state is not growing medical marijuana, we’re not dispensing it, we’re regulating it, similar to the way we regulate liquor licenses and casinos. But there’s a big caveat. With liquor licenses and casinos we issue the regulations, you apply for a license, you are granted a license, and you conform to the license, but then you are able to
The push to make medical marijuana legal in New York state was more than a decade in the making, with several variations of bills introduced through the years and a handful of near-agreements that fell apart in the last minute.
GROWING POT LEGISLATION
city & state — July 17, 2015
1997 Assemblyman Richard Gottfried introduced a bill to allow for medical marijuana possession for patients suffering from a variety of illnesses. The bill did not address production or distribution of marijuana.
sell the product to anybody who is legally able to purchase that product, and all that usually is by age, so it’s open to anyone over the age of 21. In this instance, we are regulating it and we are also determining who the customers are after the fact, so it’s a very risky endeavor for some of the applicants, so what they are looking for are people who can absorb that type of risk in the short term before they make any money. The other thing they are looking at in the business model is what they call geographic diversity, because they are sensitive to the limitations of the size of the program, so what they want to see is how would an applicant not only grow the product, but process the product, because that’s key—you can’t sell the flower product. So that’s going to be what separates people in this process. C&S: You mentioned the timeline, and not wanting to have patients wait too long, but obviously in the Legislature there was a bill passed by both houses to expedite the process for children with epilepsy. You were concerned about that legislation, specifically for legal issues, so could you walk us through what the risks specifically might be, if the governor decides to sign it? DS: What I’m most concerned about is that anything that deviates from the Department of Health’s timeline of implementation in 18 months could potentially derail the program for a couple of reasons. First of all, if we could wave a magic wand and get access to patients we would have done that. The governor did request from the federal government a waiver from
2000 Gottfried introduced a broader bill that would have added marijuana to the existing list of drugs regulated by Public Health law. The bill varied through the years but at times including a provision to allow patients to grow small amounts of marijuana in their homes.
them to allow for the importation of medical marijuana from other states and the federal government resoundingly said no, which is what they said to every state, because the federal government’s position on marijuana is that it is a Schedule 1 substance, and for those of you watching at home, what that means is that there is no legitimate purpose for the use for marijuana. They classify it the way they classify heroin and LSD. So you have to grow your own product in your own state, you have to process it in your own state and you have to make sure you don’t do anything to attract the attention of the federal government, who could come swoop in and shut down the entire program. I also am somewhat concerned about us cherry-picking the sympathetic patient because in the efforts to do that we leave out all the thousands of other people who are equally affected and waiting for treatment. C&S: Do you feel like there has been enough research done on medical marijuana at this point? DS: Yes there is plenty of research, it’s just not done here in the United States. We’re an amazing country, but we’re not the only one. We have a great health care system, but we don’t have the best and we don’t have the only health care system. There’s landmark legislation in places like Israel, and the Netherlands, and Ireland and Canada, so we rely on that as we develop policy here, but you’re right. This willful ignorance with respect to the value of medical marijuana is standing in the way of research that could be done right here at home.
The Assembly and the Republicancontrolled state Senate were in advanced talks about passage of a medical marijuana bill, but a U.S. Supreme Court ruling threw the legality of state medical marijuana bills into question, derailing the bill. cit yandstateny.com
Chairman, Assembly Health Committee
City & State: You championed the medical marijuana law last year, and now we’re getting close to the point that they will be picking the winning bids. I understand there were 43 applicants. How do you tell a good bidder from a less good bidder? Richard Gottfried: Well, I’ve been watching the process, although once bids were submitted in a way there was really nothing to watch, because quite appropriately under state law, once bids come in the people in the executive branch who judge those bids are pretty much forbidden to talk to anybody. What the criteria are, we really don’t know. The statute and the regulations have a zillion things, almost an outrageous amount of details that you have
C&S: New York is not the first state to go through this process. When you were writing this legislation and researching it, were there any states that did a really good job or states that didn’t do so well, and what lessons did you learn from how it worked elsewhere? RG: I think we focused a lot on Colorado partly because it was a very detailed regulatory setup and people talked about it a lot. On the negative side, we went out of our way to be able to tell people that this was nothing like California, because lots of people thought that California was a bad model. But actually probably about 90, 95 percent of the words in the bill were written well before anybody actually looked at Colorado. I think what we set up, sets up a very tightly regulated process that is actually a whole lot more regulated than the process governing extremely dangerous drugs like morphine and hydrocodone. Nobody needs a photo ID card to fill a prescription for morphine, and some of the state regulations governing the handling of medical marijuana are bizarre compared to anything else.
2008 With both the Assembly and GOP-controlled state Senate supporting a medical marijuana bill, talks with Gov. Eliot Spitzer began to hammer out concerns the administration had with implementation of the law, but his resignation amid a prostitution scandal derailed the passage of the bill.
C&S: In this session there was legislation passed in both houses, it’s before the governor now, to expedite access on a limited basis for these younger children with epilepsy, at least that’s one example. RG: Well certainly the young children with uncontrollable epilepsy need it, many of whom have been able to get really amazing relief from their seizures from using a version of medical marijuana that has almost zero THC in it, which is the part of marijuana that gets you high. There
are a fairly small number of those children in New York who have been able to have access to that product for over a year now through a limited clinical trial at NYU. There is really no reason why the state has not moved forward to make programs like that available to a whole lot more of those children. The bill that we passed this year would allow expedited, narrower implementation of the law specifically for patients who have a serious degenerative condition or one where a delay would be life-threatening. I hope the governor will sign that bill. It builds on the structure of the law we passed last year. I think it’s a sensible approach. C&S: This medical marijuana program was supported by Democrats and Republicans, but if the state were to push forward and try to do recreational marijuana, there might be some criticism that this program was just a stepping stone toward fully legalizing marijuana, and I think that’s something Republicans might be concerned about. How would you respond to that line of reasoning? RG: Well the fact that a doctor can write a prescription for morphine, nobody thinks that means it’s OK to use morphine for recreational purposes. The fact that we might argue that marijuana is no more dangerous than alcohol and that if we let people regulate it and buy alcohol why not allow the same for marijuana, that’s a completely separate issue from the medical question. I think both probably make sense, but one doesn’t lead to the other.
SPOTLIGHT: MEDICAL MARIJUANA
C&S: There’s a limited list of diseases that you can use this treatment for. Which diseases should be covered or should it even be limited to specific individual diseases? RG: You know, state law does not set any criteria for what you can prescribe almost any drug for and yet there is this very restrictive provision for medical marijuana. I don’t think that makes a whole lot of sense. Back when we were negotiating language in this bill with the Spitzer administration, the Health Department didn’t want to have anything in the bill about the Health Department approving or not approving any condition because the health commissioner at the time said, “It’s not my job, I don’t want to have anything to do with that, I don’t want to have people lobbying me to add this disease or not add this disease,” and he was right. The bill does allow the Health Department to add more conditions and it requires them to study and report back on a handful of conditions and I certainly hope they approve them.
2014 Gov. Andrew Cuomo signs the Compassionate Care Act, a bill championed by state Sen. Diane Savino, which paves the way for medical marijuana in New York. The bill is widely considered to be one of the most restrictive versions of medical marijuana legislation in the country.
city & state — July 17, 2015
to comply with, but if 20 of the 43 applicants all comply with the requirements there is nothing in the statute or the regulations that tells the Health Department which of those 20 qualified bidders should get a contract, which to me is a pretty problematic situation. If the state is going to be handing out what may be a very valuable license, and there’s no regulatory basis or criteria for picking applicant No. 6 as opposed to applicant No. 12, to me that’s an invitation to trouble.
SPOTLIGHT: MEDICAL MARIJUANA
C A NN A B I S CHRONICLE
15 YEARS OF MEDICAL MARIJUANA LAWS
hough marijuana is still technically illegal on the federal level, most states now have some form of a medical marijuana law on the books. Many have comprehensive programs that allow treatment for a wide variety of diseases and conditions. Others allow treatment using “low THC, high cannabidiol” (CBD) products, which offer many of the medicinal benefits of marijuana—without the high. New York is one of five states now in the process of implementing a medical marijuana program, though it’s relatively late to the game. Here’s a look at how the nation’s medical marijuana laws have evolved over the last 15 years.
city & state — July 17, 20,2015 2015
Medical marijuana is legal Medical marijuana laws are set to be implemented * SOURCE: THE NATIONAL CONFERENCE OF STATE LEGISLATURES
Treatment using CBD products is legal cit yandstateny.com
By WILDER FLEMING
medical marijuana program slated to go live in January, it’s worth catching up on where the federal government stands on the issue. While legalization of any kind was once staunchly opposed at the national level, Washington has recently been receptive to allowing states to administer their own programs. But there are still some hurdles to overcome. While 23 states and Washington, D.C., have legalized marijuana for medical use in some fashion, the plant remains a Schedule I controlled substance at the federal level, meaning it is considered to have “no currently accepted medical use.” Yet the most recent voice of support has come from President Barack Obama himself, who came out in favor of relaxing the federal position in April. In June the administration announced an end to a rule that all prospective marijuana studies undergo a Public Health Service review before being federally sanctioned— eliminating an additional hurdle in the highly cumbersome application process for researchers. And there is substantial, bipartisan support in Congress as well, which this spring passed an amendment to an annual spending bill forbidding the U.S. Justice Department and the Drug Enforcement Agency from using funds to interfere with state laws permitting medical marijuana. “Last year the amendment got 219 votes in the House, and this time it got 242, and then we also passed it in the Senate this year, which we didn’t do last year—so it’s fair to say support is growing pretty rapidly in Congress,” said Dan Riffle, federal policy director at the Marijuana Policy Project in Washington. “It’s pretty clear at this point that the Obama administration and a majority in Congress don’t want DOJ spending its resources on interfering with state medical marijuana efforts or cit yandstateny.com
circumventing state law on the issue.” Yet such a measure has to be passed every year to remain effective. And while the amendment is intended to be clear according to two of its authors, U.S. Reps. Dana Rohrabacher and Sam Farr, the Justice Department has claimed the amendment fails to block prosecution of organizations and individuals in contempt of the law—an interpretation that aligns with DOJ’s continued pursuit of several cases against marijuana dispensaries in California’s Bay Area, for example. A historic bill introduced in the U.S. Senate this spring, however, aims to end the tension between federal and state laws permanently by knocking the drug down to Schedule II, end federal interference in state medical marijuana programs and make it easier to research the plant. The Compassionate Access, Research Expansion and Respect States Act, introduced in March by Sens. Kirsten Gillibrand of New York, Cory Booker of New Jersey, and Rand Paul of Kentucky, seeks to “extend the principle of federalism to State drug policy,” whereby the states are considered “laboratories of Democracy.” If passed, the CARERS Act would have a sweeping effect on federal pot policy: The Controlled Substances Act would be amended, allowing states to set their own rules without fear of federal interference. Marijuana would also be reclassified as a less dangerous substance under the new law: Currently classified as Schedule I along with heroin, pot would be classified Schedule II, along with drugs like cocaine, methamphetamine and oxycodone, all of which have an accepted medical use. The legislation would also go a step further and completely deschedule some strains of marijuana low in THC—the plant’s main psychoactive chemical— but high in levels of cannabidiol or CBD, a chemical that has been shown to have a
useful medical purpose, but which does not produce a “high” the way THC does. State Sen. Diane Savino supports Gillibrand’s efforts. “I think what Senator Gillibrand is doing is absolutely amazing,” she said. “There’s a whole bunch of different populations across this country that have become accustomed to medical marijuana, who expect it and want it, and we have state governments that depend upon the revenue. So it is time for the Congress, and members of Congress from those states to step up and say it’s enough already and we need to change it.” In June, Gillibrand testified before the Senate Caucus on International Narcotics Control that she was introduced to the issues surrounding medical marijuana when parents of children suffering from seizures approached her about the positive effects CBD-rich cannabis had on their children. “CBD can reduce the number of seizures patients experience,” Gillibrand said. “The benefits are dramatic. Children’s brains and bodies can develop, they can learn, they can play. They can be kids.” Furthermore, the CARERS Act would encourage banks to begin handling money for marijuana dispensaries. Currently, lending institutions are wary of being branded money launderers by the federal government, meaning that most dispensaries have to deal entirely in cash. Finally, the bill would end the federal monopoly on growing and harvesting marijuana for research. Currently there is only one federally sanctioned pot farm in the U.S., and that’s at the University of Mississippi. This is part of the reason marijuana research has been so slow to develop in the U.S. But even though both the president and Congress seem to be coming around on the issue—CARERS in the Senate enjoys 12 bipartisan co-sponsors and its
equivalent in the House has 16, including Reps. Richard Hanna and Jerrold Nadler of New York—the bill will likely not be going anywhere this year. “Sen. Chuck Grassley (of Iowa) chairs the Senate Judiciary Committee and he’s militantly pro-drug war and anti-marijuana, so he’s not gonna call the bill any time soon,” said the Marijuana Policy Project’s Riffle, who also noted that Rep. Bob Goodlatte of Virginia, who chairs the Judiciary Committee in the House, is also staunchly against the drug. But Riffle sees the long-standing federal crackdowns on state-sanctioned medical marijuana operations petering out nonetheless. “DOJ prosecutions of individuals and asset forfeiture actions against businesses that are in compliance with state laws will happen with less and less frequency until they stop, which they largely have already,” Riffle said. “That is, unless and until a future administration reverses course, which is extremely unlikely given how popular marijuana reform is and how strongly Americans oppose federal enforcement of marijuana laws in states where it’s legal.”
U.S. Sen. Kirsten Gillibrand is leading the charge to reclassify marijuana as a Schedule II drug.
SPOTLIGHT: MEDICAL MARIJUANA
LAWMAKERS SEEK TO END LEGAL GRAY AREA FOR STATES
city & state — July 17, 2015
AGENCY FOCUS: MTA
AN INSIDER’S GUIDE TO NEW YORK STATE’S AGENCIES AND AUTHORITIES
AGENCY FOCUS SPOTLIGHT ON:
THE METROPOLITAN TRANSPORTATION AUTHORITY
city & state — July 17, 2015
he Metropolitan Transportation Authority has reached a pivotal point in its 50-year history: Ridership is at an all-time high and is only projected to increase over time as New York City’s population swells and younger generations eschew automobiles for public transit. Encompassing the city’s subway and bus services, the MetroNorth and Long Island Rail Road commuter lines, the Staten Island Railway, seven bridges and two tunnels, the MTA transports over 11 million daily passengers. Subway ridership alone can exceed 6 million on some days. For straphangers, the increase in delays due to overcrowding is evident. It’s no secret that the MTA not only needs to modernize much of its infrastructure, but to flesh out the system as well—along places like Manhattan’s East Side, for example, where the Lexington Avenue subway line carries as many riders as the Chicago and Boston systems combined. Yet the authority’s capital plan, the mechanism by which the system is upgraded and expanded, is facing a $14 billion funding gap. As MTA Chairman and CEO Thomas Prendergast has noted, “the public transit system simply makes New York possible.” Where the money needed to fill the hole in the capital plan comes from remains an open question, but there is no doubt that as the city grows and shifts, the public transit system must keep pace. In City & State’s MTA user guide, we give our readers a snapshot of the authority’s most pressing capital projects, along with a rundown of its key leaders and more insight from Prendergast.
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THOMAS PRENDERGAST Chairman and CEO, Metropolitan Transportation Authority City & State: Authority CFO Bob Foran recently warned that the MTA could have to raise fares by 15 percent if the state Legislature doesn’t come up with a way to fill the $14 billion funding gap in the agency’s $32 billion capital plan. You have said there are no plans for a fare hike of this magnitude, but what are the alternatives? Tom Prendergast: Well it was a hypothetical question raised and it was
a hypothetical answer. And what I said a couple of days later is that we’re not going to solve the problems with the gap in capital plan funding on the backs of the fare-payers. That historically has never been the case here. We’ve been able to find a way to get the money that we need going back to 1982, and I am confident that we’re going to be able to do the same here. C&S: Can you outline any possible
alternatives? TP: No, not now. Whenever we get into these types of discussions, it’s all the key stakeholders. So in this particular case there are four different parties that we see as playing a role in terms of filling that gap: the federal government—and that dialogue will probably be two years from now when Congress has to deal with infrastructure across the country. Then the state, and they’ve anteed
up $1 billion. The city, and we went out May 4 with a formal request for them to increase the amount that they give to us annually. And finally other players that benefit directly and indirectly: developers, business, etc. It is important to the city of New York and it’s important to the region that we get a funded capital plan. C&S: The Citizens Budget Commission has calculated that
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C&S: Can you remind us what time span that $14 billion gap covers? TP: This capital program is from 2015 through 2019. So when you take a look at the program, different funding sources come in at different times. You get your annual contributions from the city and the state. You get the annual contributions that we expect to get from the federal government.
contemplated building that line. So it is not new, per se. If you take a look at lines on a map and you think about evenness of spacing, that is an area where if you put a line in, you cut down some distance between the other two lines that would run parallel to it. But in terms of need right now, the No. 1 most heavily traveled line in the country is Lexington Avenue (the 4, 5, 6 line on Manhattan’s East Side) and the work we’re doing on opening the Second Avenue Subway for Dec. 31 of 2016, from 96th Street south to 63rd Street. And then if we do a next phase, that would be 96th Street to 125th Street—that will take off a lot of the overcrowding on the Lexington Avenue Line. So that is the biggest priority, along with extending the 7 line west and East Side Access.
C&S: Mayor Bill de Blasio recently suggested running a subway line south along Utica Avenue in Brooklyn, but he has suggested no funding plans. What do you think of the mayor’s suggestion? TP: Well in terms of Utica Avenue, that is something that has literally been on the books as an identified transit corridor quarter going back to the late 1920s. The Independent Subway System anticipated or
C&S: A lot of elected officials have begun to show support for the Move NY plan, which would place tolls on East River bridges while lowering the cost of driving across bridges elsewhere around the city. How might the plan affect MTA operations? TP: There are a number of issues that need to be vetted with it, in terms of does it really generate the revenue that people say it will? Will the behavior
patterns of drivers follow what they say the model predicts in terms of people going to other bridges? And what is the net impact in terms of lost revenue and positive revenue? How much money is it going to take to not only inspect and maintain those bridges, but what are the long-term capital improvement needs for those bridges? Because if you have to do maintenance work on a bridge every 20 years, you’ve got to be putting away money on an annual basis to be able to accommodate for those needs. And those are all critical questions that are being reviewed right now. C&S: What ever happened with the governor’s transportation reinvention commission? There were some big names and some hype around it last year. TP: Well the primary purpose of the reinvention commission that the governor charged us with was the ability to make sure that as we look forward into the future, we deal with two things, one of which was—you know, people can argue about whether or not global warming is occurring— but what you can’t argue about is the increased frequency and intensity of weather events affecting the system. So as we’re making expenditures
on the capital program side, are we increasing the resiliency, the hardness of the system, to those storm events? That was one. The second issue is, are we aiming for what the demographics of our service area and its users will be 20 years from now? Because if we’re aiming for something the way service is being provided now and the way behaviors are now, we may miss the mark. And we’re starting to see that. Right now millennials graduating from school are waiting longer before they buy a car and so they are more public transit-dependent. They are living in and around more public transportation. They’re waiting longer before they get married. We’re already starting to see differences in a growing portion of our ridership. So it’s a combination of resiliency and demographic change, and that has influenced in some ways the prioritization and identification of projects in the capital plan.
AGENCY FOCUS: MTA
the gap in the MTA’s capital plan is actually closer to $19 billion. TP: There are a number of things the Citizens Budget Commission came out with, some of which we agree with and some of which we don’t agree with. But we’re still standing by the number we have, which is now $14 billion in terms of unfunded need.
For the full interview with Thomas Prendergast, including his thoughts on when the capital plan’s funding issues will be resolved, and the challenge of balancing the MTA’s long-term goals with increased ridership, visit cityandstateny.com.
WE MOVE NEW YORK •••••••••••••••••••••••••••••••••••••
Millions of people. And we move them in and around the Big Apple every day. If you ride the rails in New York, chances are you’re doing it on a Bombardier product.
city & state — July 17, 2015
Built in New York, by New Yorkers.
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AGENCY FOCUS: MTA city & state — July 17, 2015
Carmen Bianco is the outgoing president of New York City Transit at the Metropolitan Transportation Authority. New York City Transit is responsible for buses, subways, paratransit and the Staten Island Railway. Prior to assuming his current position in April 2013, Bianco served as senior vice president of the Department of Subways, where he oversaw the entire subway system starting in 2010. He led the subway system through the MTA’s response to Superstorm Sandy, oversaw the restructuring of the Department of Subways, and led the development of the authority’s FASTRACK construction program. A 30-year veteran of the transportation industry, Bianco has previously held senior safety positions at Amtrak and NJ Transit. He plans to retire next month.
Joseph Giulietti is president of the Metropolitan Transportation Authority’s Metro-North Railroad. He began his railroad career in 1971. He joined the newly formed Metro-North commuter railroad in 1983 as superintendent of transportation, and went on to hold a number of other positions. In 1998, he left for the South Florida Regional Transportation Authority, where he eventually served as executive director. Giulietti returned to the busiest commuter railroad in the United States in January 2014, where he now oversees 6,000 employees and over 700 miles of track stretching between New York and Connecticut.
James Ferrara, who has served as president of the Metropolitan Transportation Authority’s Bridges and Tunnels since 2010, started at the agency in 1977. He was in charge as operations superintendent at the Brooklyn-Battery Tunnel on Sept. 11, 2001, and he was widely praised for his response in the chaotic hours following the attack on the World Trade Center, assisting stranded motorists and pedestrians, expediting emergency vehicles and directing employees. Bridges and Tunnels is responsible for the Robert F. Kennedy, Throgs Neck, Bronx-Whitestone, Henry Hudson, Verrazano-Narrows, Cross Bay Veterans Memorial and Marine Parkway-Gil Hodges bridges, and the Queens-Midtown and Brooklyn-Battery tunnels, which approximately 800,000 vehicles use to traverse the five boroughs each day.
Michael Horodniceanu is president of the Metropolitan Transportation Authority’s Capital Construction agency. He worked as CEO of a New York City-based engineering firm The Urbitran Group from 1980 to 1986, went on to do a four-year stint as New York City’s traffic commissioner, then returned to Urbitran in 1990, where he remained until his appointment at Capital Construction in 2008. Horodniceanu, who was born in Romania and emigrated to the United States after spending his final high school years in Israel, oversees all of the MTA’s major construction projects, from East Side Access, which will connect the Long Island Rail Road with Grand Central Terminal, to the Second Avenue Subway, slated to open on Manhattan’s East Side in December of next year.
Robert Foran is chief financial officer at the Metropolitan Transportation Authority, where he is responsible for the Business Service Center, which oversees the procurement and management of raw materials for the MTA’s everyday functioning, maintenance and capital projects. A public finance banker for over 30 years before assuming his current position in 2010, Foran did a 19-year stint at Bear Stearns, where he served as senior managing director, and has worked with major infrastructure agencies nationwide, including the MTA, since the 1980s. Foran played a major role in the $15 billion restructuring of the authority that began in 2002. He holds an MBA from Harvard Business School.
Darryl Irick has been president of the Metropolitan Transportation Authority Bus Company since late 2010. Irick began his transit career in 1986 as a bus operator at the Kingsbridge Bus Depot in the Inwood section of Manhattan. He assumed his current position at a time when the Great Recession had precipitated severe budget constraints, but during his tenure he has overseen upgrades such as Select Bus Service, camera-enforced bus lanes and the rollout of MTA Bus Time— which provides real-time bus location information—while consolidating dispatch centers and streamlining services. Irick oversees some 18,500 employees and nearly 6,000 buses, which transport more than 2.8 million customers daily throughout a 900-square-mile operating area.
Patrick Nowakowski is president of the Metropolitan Transportation Authority’s Long Island Rail Road, the busiest commuter railroad in the United States. Before assuming his current position in May 2014, Nowakowski spent 27 years with the Southeastern Pennsylvania Transportation Authority and then five years as executive director of the Dulles Corridor Metrorail Project, a 23-mile extension of Washington, D.C.’s existing rapid transit system. The LIRR extends some 120 miles from Penn Station to Montauk on Long Island, and carries over 334,000 passengers per day.
Donna Evans has been chief of staff at the Metropolitan Transportation Authority since January. Prior to that, she served as chief of staff at Metro-North Railroad for over seven years. Evans began her career as a public relations representative for Conrail’s Metropolitan Region—the predecessor of the Metro-North Railroad. In 1983, she joined New York City Transit’s public affairs department, where she held several media relations positions. She returned to Metro-North in 1989 as its press secretary and was promoted to director of corporate media and relations in 1997, a position she held until becoming Metro-North’s chief of staff in 2007. She graduated summa cum laude from Long Island University’s Brooklyn Center Campus.
Jerome Page has been general counsel at the Metropolitan Transportation Authority since February 2014. In 1998, he joined the MTA as deputy counsel for real estate and finance, after having served as an associate at a private law firm. He joined the MTA in 1998 as deputy general counsel for real estate and finance. Prior to that, he was an associate at a private law firm. Page received a bachelor’s degree from Williams College and J.D. and Master of Regional Planning degrees from the University of North Carolina, Chapel Hill.
AGENCY FOCUS: MTA
POWERING NEW YORK
city & state — July 17, 2015
Providing New York with high quality and reliable transportation. A New York company employing New York resources.
A CITIZENS BUDGET COMMISSION ANALYSIS By CHARLES BRECHER and JAMISON DAGUE
city & state — July 17, 2015
he Metropolitan Transportation Authority is vital to the region’s economic well-being. Its mass transit services— New York City subways and buses, the Long Island Rail Road and the Metro-North Railroad—and its seven bridges and two tunnels constitute a $1 trillion asset. On an average weekday, the system’s trains and buses move people on more than 8.5 million trips, and nearly three out of every four people entering Manhattan’s central business district do so via an MTA facility. The authority is the circulator for the largest and most economically dynamic metropolitan area in the United States. HOW MUCH DOES THE SYSTEM COST? Operating this system requires more than $14 billion per year. Roughly half, or $7.4 billion, pays for the New York City subway and bus system. Another $2.7 billion covers the commuter railroads—$1.5 billion or 10 percent for the LIRR, and $1.2 billion or 8 percent for the MNR. The MTA Bus Company, which operates interborough express bus service on a budget of $632 million, and Bridges and Tunnels, with a budget of $495 million, each account for around 4 percent of the total cost. The MTA devotes $2.5 billion per year, or 17 percent, to servicing debt on bonds sold in previous years. The remaining $836 million, or 6 percent, includes authoritywide expenditures and general reserves. The majority of these costs, nearly $8.6 billion, are related to labor. In 2014 the MTA paid $5.4 billion in wages, including overtime, and an additional $3.2 billion covered fringe benefits, including health insurance for current workers ($991 million) and for retirees ($474 million), pension fund contributions ($1.3 billion) and other benefits ($640 million). The MTA is constrained in reducing labor
million) and mortgage recording tax ($349 million). Motor vehicle user fees collected from drivers, taxicab trips and automobile rentals in the MTA region provide $311 million for the MTA. Local and state governments appropriate $1.1 billion from general funds.
Operating the New York City subway and bus system costs $7.4 billion per year. costs because they are determined by collective bargaining, with current agreements spanning from 2012 to 2017. Non-labor expenses (not counting the $2.5 billion for debt service) account for about one-quarter of all agency costs, or $3.1 billion. HOW DO WE PAY FOR IT? The funds to pay for this system come from three basic sources. The first is mass transit fares. The second is motor vehicle user fees generated from tolls, motor fuel taxes, license and registration fees, and taxes on motor vehicle rentals. This source fully funds Bridges and Tunnels and provides revenue for mass transit services. The third is subsidies allocated from state and local governments’ general tax funds specifically for funding mass transit services. The fare box generates more than $5.7 billion annually for the MTA. This amount has increased in recent years, driven by growing ridership and biennial fare increases that began in 2009. The latest fare increase of 4 percent occurred in March 2015 and is expected to generate an additional $250 million a year; another 4 percent increase is scheduled for March 2017.
Tolls on MTA bridges and tunnels generate $1.7 billion annually. Like fare revenue, toll revenue has increased in recent years, though this is primarily owing to rate increases, and not an increase in volume. Toll revenue that exceeds Bridges and Tunnels’ operating expenses and debt service ($587 million in 2014) goes to support mass transit services. A complex array of state, regional and local taxes, subsidies and fees constitute the rest of the MTA’s revenues. The two largest sources are the payroll mobility tax and the Metropolitan Mass Transportation Operating Assistance program, which each generate nearly $1.6 billion. The payroll mobility tax is levied on wages paid by most employers in the MTA region, while the MMTOA includes sales taxes raised in the MTA service region, regional and state corporate taxes, and a portion of the petroleum business tax levied on businesses importing petroleum into the state. Petroleum business tax collected separately from the MMTOA raises an additional $622 million annually for the MTA. The agency also receives revenue generated from real estate transactions via the urban tax ($757
A BETTER WAY TO PAY Who should pay for the MTA? The answer is: everybody. The Citizens Budget Commission has recommended guidelines dividing the costs among the three categories of revenue and the sectors of the public from which they each derive. These guidelines are designed to lead to an equitable, efficient and easily understood basis for funding the MTA. First, mass transit users should pay fares sufficient to cover 45 to 50 percent of the operating costs of those services. Second, the cost of road infrastructure—bridges and tunnels in the MTA’s case—ought to be borne entirely by motorists. Motor vehicle user fees should generate a surplus large enough to cover 20 to 25 percent of the cost of mass transit services to help compensate for the negative externalities of vehicle use—namely traffic congestion and air pollution. Third, tax subsidies to mass transit should constitute 25 to 30 percent of the operating costs and should also fund “catch-up” capital investments needed to bring the system to a state of good repair, reflecting the broad economic benefits of mass transit and the costs associated with restoring the system. The MTA should move toward following these guidelines more closely in the future. In 2018, mass transit services, excluding Bridges and Tunnels, will require an estimated $16.6 billion. Under current policies, fares will cover 41 percent of this need, general tax subsidies 35 percent, and motor vehicle cross-subsidies 11 percent. A deficit of about $2.1 billion will remain unfunded. cit yandstateny.com
NATALIA BRATSLAVSKY / SHUTTERSTOCK
AGENCY FOCUS: MTA
A WAY TO PAY FOR THE MTA
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PLANS AND PROJECTS
METRO-NORTH EXTENSION (PENN STATION ACCESS)
city & state — July 17, 2015
7 TRAIN SUBWAY EXTENSION Although the $2.4 billion extension of the 7 train to Hudson Yards on Manhattan’s West Side has been essentially complete since December 2013, when outgoing Mayor Michael Bloomberg took a ceremonial spin on the line as part of his farewell pageantry, the opening has been repeatedly delayed since. Complications have arisen from issues with the escalators, faulty alarm systems, problems with a custom-built elevator, and mysteriously vibrating ventilation fans—all of which have pushed back the opening of the new station at 34 Street and 11th Avenue until this summer.
The Bronx could finally enjoy access to the Metro-North commuter network sometime in the next decade: The MTA’s so-called Penn Station Access plan would link points in Connecticut, Westchester County and the eastern Bronx directly with Manhattan’s West Side, something Bronx politicians have pushed hard for because of the economic benefits a new commuter line could bring to New York City’s poorest borough. The plan will rely heavily on existing infrastructure, and rough cost estimates have hovered around $1 billion. (The project received $250 million in Gov. Andrew Cuomo’s 2015-16 executive budget.) The plan is contingent upon the East Side Access project bringing LIRR trains into Grand Central, since only then can enough trains be diverted from Penn Station to open up slots for Metro-North trains there—meaning the plan won’t become a reality until at least 2023. MTA officials say extending Metro-North service into Penn Station is critical— given that Grand Central is the railroad’s lone terminus in New York City. By running a second Metro-North line into Midtown, a single point of failure along the current line during a natural disaster would no longer cut the second-largest commuter network in the nation off from the city. cit yandstateny.com
METROPOLITAN TRANSPORTATION AUTHORITY / PATRICK CASHIN
The megaproject to bring the Long Island Rail Road into Grand Central Terminal by 2023, which by federal estimates will require $10.7 billion, is well over a decade behind schedule and will cost at least $6.4 billion more than the original $4.3 billion price tag. Although construction on East Side Access began in 1969, with completion slated for the early ’90s, the plan was tabled in the ’70s on account of New York City’s fiscal collapse. A feasibility study completed in 2001 allowed for the project to move forward. When complete, the MTA estimates that the LIRR will carry some 162,000 daily customers into Grand Central via a lower passage of the already-active 63rd Street subway tunnel running under the East River from Sunnyside Yards in Queens. Workers are essentially doubling the complexity of Harold Interlocking— already one of the busiest railroad junctions in the nation—to accommodate the project.
MEUNIERD / SHUTTERSTOCK
EAST SIDE ACCESS
The idea of building a subway line under Second Avenue on Manhattan’s East Side has been kicking around since 1929, but only now is it close to becoming reality, with the $4.45 billion first phase of the project slated to open in December 2016 (federal projections now say early 2017). Begun in 2007, the new line, which will see Q trains servicing three new stations at 72nd, 86th and 96th streets, will connect with the F line at the existing Lexington Avenue/63rd Street station. Upper East Side customers up to 96th Street will now have an alternative to schlepping over to the 4/5/6 trains along Lexington Avenue—where overcrowding has become increasingly problematic. A follow-up phase would connect the 96th Street Q train with the 4/5/6 lines at 125th Street in Harlem via two new stations at 106th and 116th streets. A third phase, which has not yet been funded and has no timeline on implementation, would extend the new line from 63rd Street south to Houston Street—to be traversed by an entirely new T train. A fourth phase would see the T train run from Houston Street down to Hanover Square in lower Manhattan. But MTA Chairman Tom Prendergast has warned that even the second phase of the new line will be shelved should the authority’s current funding crisis go unsolved.
MTA CAPITAL CONSTRUCTION / REHEMA TRIMIEW
SECOND AVENUE SUBWAY
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Bronx Borough President Ruben Diaz, Jr.
Alphonso David, Chief Counsel to Governor Cuomo
New York City Public Advocate Letitia James
State Senate Democratic Conference Leader Andrea Stewart-Cousins
State Comptroller Thomas DiNapoli
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ANDREW HEVESI AND JOSEPH LENTOL
lthough the session has ended without a change to the age of criminal responsibility, we have an opportunity to reconsider how the state can address this issue. The governor has committed to address by executive order the most troubling result of treating 16- and 17-year-olds as adults in the criminal justice system: housing them in adult jails and prisons. Now we should turn our attention to an issue that is very much a part of this discussion: finding alternatives to incarceration for adolescents who may otherwise be at risk of homelessness. One way to address this very common problem would be to fund adolescent respite centers. Adolescent respite centers would be small, community-based centers where parents or police could drop off youth, or where young people could check themselves in, to provide families in crisis with a cooling-off period. Another use for these centers might be as an alternative to pretrial detention in lieu of bail when a youth is not able to return home. During their time at the respite center, youth and families would be connected with services while they determine the best options for longterm placement. Adolescent respite centers would play a vital role in supporting families and reducing criminal justice involvement for adolescents across the state. There is a severe need for shelter options for adolescents. For example, Covenant House is the only youth crisis shelter in New York City. This places an enormous burden on agencies such as the city Administration for Children’s Services and the state Office of Children and Family Services. ACS currently sends Brooklyn youth to a shelter on Long Island because of the shortage of beds in New York City. cit yandstateny.com
At-risk groups include: • Youth who are kicked out of the home after an intra-family dispute, often involving violence. According to Covenant House, 50 percent of shelter youth reported intense conflict or physical harm by a family member as a major contributing factor to their homelessness. • Youth who return home after time in foster care or a criminal justice facility. Fifty percent of adolescents aging out of foster care and juvenile justice systems will be homeless within six months because they are unprepared to live independently and have limited education and no social support. • LGBTQ youth. Forty percent of the homeless youth served by agencies identify as LGBT, according to a 2012 report by the Williams Institute. LGBTQ youth face social stigma, discrimination and often rejection by their families, which adds to the physical and mental strains and challenges that all homeless people struggle with. • American-raised children of immigrant parents. Culture differences can lead to conflicts that result in parents kicking their children out of the house, leaving the youth homeless. Immigrant LGBT youth are especially vulnerable in this regard because, while homelessness is a pervasive issue for all LGBT people, LGBT individuals from immigrant communities often lack support systems such as other family members or friends that are in a position to give them shelter and help. • Pregnant and parenting teens of all genders. Pregnancy, parenting and sexual activity create tensions at home for young fathers as well as young mothers. Families sometimes kick their teenagers out of the house to express their dissatisfaction with the youth’s sexual activity. Statistics show
Fordham University found that 1 in 4 of surveyed homeless youth became a victim of sex trafficking or was forced to provide sex for survival needs. Of these victims, about half reported that the No. 1 reason they had been drawn into commercial sexual activity was because they did not have a safe place to sleep. All of these groups of adolescents and their families could be served invaluably if youth had a safe place to stay while both sides had time to cool off. Many of these youth need never become homeless if they and their families have a neutral, safe place to go where they can mediate their differences, designate a family member the youth can stay with, or collaborate with a case manager about long-term placement options. Another important hope for these respite centers is that they can effectively access resources that homeless youth are entitled to through ACS or Family Court. Due to their incomplete development, adolescents are often unable to navigate bureaucracies on their own behalf and find simple and seemingly apparent solutions. The respite centers could offer a wide variety of services, including attorneys to represent the child in pursuing benefits, services and educational needs in light of his or her predicament. Adolescent respite centers would go a long way to helping youth avoid arrest and to provide options to judges in order to reduce the impact of the criminal justice system on adolescents.
that pregnancy rates among youth are higher for those experiencing homelessness than their housed peers. One study reports that 50 percent of all unaccompanied female youth have been pregnant, a number which is significantly disproportional to that of the general (non-homeless) youth population. Most unaccompanied youth are sexually active, and many practice “survival sex,” the exchange of sex for food, clothing and shelter, according to the National Network for Youth. Safe shelters could help many young people avoid falling into this pattern and save many from a life of prostitution or worse. While New York is able to provide some shelter beds specifically for LGBTQ youth, victims of sex trafficking, and pregnant and parenting young mothers, they are not currently equipped to provide housing to the other categories of homeless adolescents across our state, many of whom are adolescent boys of color— the same group most likely to become involved in the criminal justice system. Right now, many of these young people live in the streets or “couch surf”—sleep on the floors or couches of friends, neighbors or even strangers and move to another couch when they are no longer welcome. A significant number of these children of color have been evicted from NYCHA housing due to involvement in the criminal justice system, after which the family must choose between promising not to allow their child home or facing homelessness themselves. Once this happens, the youth is more likely to be arrested, engage in criminal activity to meet their survival needs, connect with a gang or engage in unsafe sexual relationships or the commercial sex trade. A 2013 study by Covenant House New York and
Andrew Hevesi is chairman of the Assembly Committee on Social Services and Joseph Lentol is chairman of the Assembly Committee on Codes.
Adolescent respite centers could help homeless teens connect with state and city resources.
city & state — July 17, 2015
KEEPING TEENS OFF THE STREET
MEDIA MATTERS A
uthor and columnist
C&S: You mentioned print media. How does that fit into the equation? MW: It’s a stark contrast between television and print media. Television stayed to its fundamental business strategy, that if you want television you have to pay for it. And television never panicked and has always been used to fighting a turf battle and knew to dig in for the long haul, whereas print began to panic almost in the first days of the growth of digital media and gave itself away and I think fundamentally ruined its own business. The interesting existential question is, could print have saved itself? I think there’s a reasonable argument that yes, it probably could have.
Michael Wolff is out with a new book, “Television Is the New Television: The Unexpected Triumph of Old Media in the Digital Age,” which undercuts the popular narrative that online media is making its older competitors obsolete. Wolff, who contributes to USA Today, Vanity Fair and other publications, spoke with City & State’s Senior Correspondent Jon Lentz about his new book, the state of the newspaper business in New York City and Michael Bloomberg’s chances as a potential presidential candidate. The following is an edited transcript.
City & State: In late May, you floated former Mayor Michael Bloomberg as a potential Democratic presidential candidate. Would he actually have a realistic shot if he got into the race? Michael Wolff: My argument was that he would be the only person with a realistic shot if Hillary’s campaign cratered at some point well into the campaign cycle, because nobody else could raise the money. He’s the only candidate who has $2 billion, the $2 billion it takes to run for president, in his pocket.
city & state — July 17, 2015
C&S: Do you have any sense of whether he would actually be interested in running? MW: Michael Bloomberg? Yes. There is no question in my mind and there is no circumstance under the sun in which Michael Bloomberg would not be interested in being the president of the United States, if he could be. C&S: Any observations on how the Republican presidential field is shaping up? MW: Well, I think it’s shaping up to include every Republican in the country. Beyond that, there’s certainly a top tier to a relatively absurd field, and in that top tier they all seem like people who could run a competitive race. C&S: You have a new book out, “Television Is the New Television,” in which you argue that there really
A Q&A WITH
MICHAEL WOLFF hasn’t been the digital revolution that everyone is talking about and betting on, at least from an economic perspective. MW: That’s quite a fair summary. The argument in the book is that digital media, certainly from a business and revenue standpoint, has remained quite a disappointment and I don’t see a model emerging that would ever make it competitive, certainly with television. Meanwhile, television in the 15-year course of the creation of digital media has become an ever stronger business—stronger on an advertising basis and stronger too because it has built itself a very powerful subscription business. C&S: In The New York Times, you mention the example of James Murdoch, the son of Rupert Murdoch, and how you were initially skeptical of his belief in the future of television, but over time you came to the conclusion
that the medium is thriving. Was that a key turning point that led you to this conclusion? MW: When I had that conversation with James in 2008, that was a moment in which everybody believed that we were all profoundly toast in the conventional media business. That certainly is true if you’re in the print business or the music business. It was one of those interesting things in which you could believe that television was just a thing of the past until you suddenly realized that the only thing that most of us do is watch television. Partly this has to do with the incredible propaganda talents and velocity of digital media, that digital media uses digital media to promote digital media, and to do it so effectively that you could literally not see what’s in front of your face. And what’s in front of your face is television, but it takes a reminder to realize that it isn’t digital media that is preoccupying your thoughts but in fact television.
C&S: You know quite a bit about The Wall Street Journal and the New York Post, having written “The Man Who Owns the News,” a biography of Rupert Murdoch, and you know Daily News owner Mort Zuckerman well. What’s your take on the newspaper business in New York City? MW: One of the interesting things about the New York City newspaper market is it’s really no different from any other newspaper market. It used to be different. It is not now. The New York Times is under the same pressures as every other newspaper. The tabloid newspapers, the Post and the Daily News, are not only up against the same pressures, but also up against the pressures of there being two tabloid newspapers in a town that probably cannot even afford one. So it’s a fairly grim picture. Obviously the Times has responded to this by becoming a national paper and looking toward making its business a digital one. To me that seems like some serious pie in the sky. The digital New York Times does $15 million a month in advertising revenue. It can’t run its business on that. Obviously the Daily News is up for sale. It’s a very, very, very precarious moment, if not a last-stand moment for newspapers everywhere—and newspapers in New York, heretofore one of the world’s great newspaper cities. cit yandstateny.com
Gov. Andrew Cuomo and New York City Mayor Bill de Blasio help celebrate the U.S. women’s national soccer team’s World Cup victory with a ticker tape parade in Manhattan.
KEVIN P. COUGHLIN / OFFICE OF THE GOVERNOR
ROB BENNETT / ED REED / MAYORAL PHOTOGRAPHY OFFICE
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This edition features timely issue spotlight on NY's medical marijuana games, an MTA agency focus, and more!
Published on Jul 17, 2015
This edition features timely issue spotlight on NY's medical marijuana games, an MTA agency focus, and more!