After All, It Is a Park

City Moves on Zuccotti Occupiers

After Two Months' Acquiescence,

Next Round Will Be in Court

Last night, the city administration used its power to close down, at least temporarily, a street demonstration that had occupied Zuccotti Park, a previously uncelebrated 33,000-square-feet plot of choice Lower Manhattan real estate with trees and benches softening the skyscrapers surrounding it on three sides.

The Park is located on the west side of Broadway, between Cedar Street and Liberty Place, roughly two blocks north of Trinity Church, which is at the head of Wall Street. It is public open space, owned and maintained by Brookfield Properties and intended for passive recreation. It was created through a transaction in which Brookfield was permitted to build a substantially larger office building on the site. Mr. Zuccotti, a former first deputy mayor of New York City during the Beame administration, serves as the co-chairman of Brookfield, a Canadian company.

Zuccotti is a highly regarded public servant and a successful and innovative real estate executive. When the city was on the brink of bankruptcy in 1975, a principal demand of the business and civic communities was for his appointment as first deputy mayor, in effect the city's chief operating officer. His leadership helped to restore the reputation of city government, whose credibility had been seriously impaired as a result of misleading financial statements over the years, which concealed the city's failure to cope with deficits.

It is interesting that Zuccotti's name is more likely to be widely known for the two-month forcible occupation of the park designated to honor him than for the good works he accomplished for the city at a critical time in its history.

We must point out that today, in 2011, thirty-six years after that narrow escape from financial ruin, the city's position, although not so dire as it was in April 1975, when bankruptcy papers had been prepared by the law firm of Weil, Gotshal and Manges to be filed in Federal Court, nonetheless conceals structural weaknesses. At this time, due to thirty years of relative fiscal restraint, the city is not as badly off as either the national government, with its $15 trillion public debt, the New York State government, which faces a $3.5 billion deficit in the upcoming fiscal year, or the euro zone, whose stability is widely regarded as precarious.

Unfortunately, there is no John Zuccotti on stage or in the wings today to deal with these fiscal problems. We must face these issues in the closing stage of a twelve-year mayoralty which largely avoided disaster and disrepute, and which initiated many worthwhile programs, particularly in health and housing, while being unable to eliminate the structural imbalance which has plagued city finances for over a generation.

While reserving for another time a discussion of the current mayoral candidates, we believe it is safe to say that none has demonstrated the stature or skills of a Zuccotti or a Felix Rohatyn, to cite two leaders of the past generation. As people criticize Mayor Bloomberg for various aspects of his persona, they should not forget the substantive achievements of his tenure or the relatively high quality of his appointments.

We will be fortunate if the next administration at City Hall is comparable in achievement to the current one. Political leaders are often more highly regarded after they have left office. Harry Truman epitomizes that history. The inevitable reassessment of the current administration is likely to start sooner than the Truman redemption. Our problem, however, is not with what will be Mayor Bloomberg's place in history, a position which will be measured in part in consideration of his enormous personal wealth, employed in the public's interest as well as his own.

The issue which will dominate the next two years in our municipal history is who the successor will be, and whether he or she will have the ability to deal with the daunting issues that still face the city. We have sounded the call that danger lies ahead, and it will take enormous effort and sacrifice to deal with the problems that have gravely impaired so many other places, both in this region and around the world. Time always gets shorter, and we should devote our abilities to a wide search for equitable solutions, because inaction leads to the aggravation of existing problems as the time to resolve them inevitably diminishes.



StarQuest #785 11.15.2011 714 words

One Small Step

Pension Reform Agreed Upon,

But Will the Promises Be Kept?

By Henry J. Stern
October 28, 2011

The city's antiquated pension system has long been in need of streamlining and updating. The agreement reached yesterday by Mayor Bloomberg, Comptroller Liu and leading labor unions provides hope that 2012 will be a year of pension reform, but such hopes have previously arisen and been dashed on the rocks of political reality.

New York City employees have different pension plans, all under the management of the City Comptroller: the Employees' Retirement System (NYCERS), the Teachers' Retirement System (TRS), the Police Pension Fund Subchapter 2, the Fire Department Pension Fund Subchapter Two, and the Board of Education Retirement System (BERS). Each pension fund is financially independent of the others and has its own board of trustees, which include city officials and relevant union leaders. In general, the city and the unions have roughly equal authority over the funds.

Sometimes the city and union leaders work jointly on pension matters, while at others they are in disagreement, a difference largely based on the relationship between the mayor and the comptroller at the time.

Historically, the city's mayors and comptrollers have been at odds more often than they have been united. The comptrollership has been used as a stepping-stone for mayoral candidates and under those circumstances it is not uncommon for the mayor and the comptroller to disagree on issues.

The last comptroller, Bill Thompson, left office in 2009 after a close but unsuccessful effort to defeat Mayor Bloomberg's bid for a third term. The subsequently disgraced and convicted Alan Hevesi sought the mayoralty in 2001, but ran a poor fourth in the Democratic primary, losing to Mark Green, Freddy Ferrer and Peter Vallone, who all lost to Bloomberg.

Liz Holtzman was defeated for reelection as comptroller in the 1993 Democratic primary by Hevesi, who raised integrity issues against her. She never ran for mayor, but was defeated as the Democratic nominee for U.S. Senate in 1980 by Al D'Amato and in the 1992 Democratic Primary for Senate by Robert Abrams. Her predecessor as comptroller, Harrison J. Goldin, made a bid for the office in 1989, finishing fourth in the Democratic primary behind Richard Ravitch (3rd), incumbent mayor Ed Koch (2nd) and David Dinkins, the eventual mayoral winner. Goldin had succeeded Abe Beame, the only comptroller in City history to ascend to the mayoralty since Consolidation in 1898.

It is one thing for public officials to disagree on a policy issue, a frequent occurrence, but another to be in chronic dispute on questions of investment and expenditure of public funds, in situations in which the outcomes can result in financial gaps of millions of dollars in return on investments. The hydra-headed current system leads to such results.

The relationship between third-term mayor Mike Bloomberg and first-term comptroller John Liu has been particularly chilly. Although they cannot run against each other in 2013 they clearly have different visions as to what the city should do in the interim.

Liu has been in full-fledged campaign mode for the 2013 Democratic nomination for Mayor from the day he took office 22 months ago. His initial act was to publicly decline a mayoral invitation to lunch on his first day in office, which, though not substantial, set a tone of antagonism over a non-issue. There are other issues, great and small, where the two men have differed. One chronic bone of contention deals with the comptroller's issuing reports faulting the conduct of a mayoral agency. The press asks the mayor to respond, and he generally does.

Whatever justification for a particular dispute it seems clear that the mayor and the comptroller are often on opposite tracks in their judgment of the city's financial crisis and the way for it to dig itself out of the mess. The mayor sees the solution as based on reducing expenses and increasing renevue with an economy that gets better, while the comptroller believes the city can survive the recession by continuing to spend as it has done in the past.

Of course, all this may change in the next few months, since new economic data is constantly arising and influencing the stock market, corporate earnings, and tax receipts. The financial situation may improve, or deteriorate.

The tentative agreement reached yesterday between the mayor and the comptroller will require considerable fine-tuning in addition to approval by the State Legislature in Albany. It is by no means complete and dispositive of the main issues that have arisen. It does indicate a desire to reach common ground and the recognition that the city's urgent and continuing fiscal troubles require more savings to be made without endangering the pension system.

Some watchers believe that the decisions announced yesterday are not real, but a paper gloss over a more severe situation designed to buy a few months breathing room in which city and state officials will work out a more comprehensive reform. Of course, if the financial situation improves over the next several months to the extent that these measures will not be fully required, so much the better.

The working agreement announced yesterday will require the relinquishment of some authority by the comptroller, who now possesses almost plenary authority in making investment decisions for the $120 billion that remains in the city's pension accounts. It is a rare for public officials to spontaneously limit their authority in any way, unless they are required to do by law enforcement or other external authorities.

Liu has been under fire in the press in recent weeks for alleged fundraising irregularities, including taking campaign contributions from certain donors under the name of others in order to increase the amount of matching funds he would receive from the city's Campaign Finance Board. If he made concessions as the result of current political weakness, it remains to be seen whether he will adhere to them when his own situation improves.

It should always be remembered that every high political office is but a few steps from the grand juries' chambers in the county court houses. The higher one rises in the system, the more vulnerable one is to accusations of various types of misconduct.

The trouble is, as we say in Rule 32, that some of the charges are likely to be true.

A Good Governor

Carey Was Indispensable

In City's '70s Fiscal Crisis

The obituaries for Governor Hugh L. Carey stress a major achievement, bringing fiscal responsibility to New York City government after the financial crisis of 1974 and 1975. Here are some facts about the situation at that time and Governor Carey's critical role.

Mayor Koch, who knew Governor Carey since they served in Congress thirty years ago, has written about Carey's achievements. Click here to read his commentary.

This article is a worm's eye view of the fiscal crisis and political events that surrounded and followed it. Back then, I was a City Councilmember at large, elected from the Borough of Manhattan. The City Council, at the time less powerful than it is today, had little to do with creating or resolving the city's near-bankruptcy. We offer some background and political history of the 1970's. Thirty-five years later, it is remarkable how many of these events have been forgotten, while the new generation of New Yorkers never knew them.

In Governor Carey's inaugural on January 1, 1975, he said that "the days of wine and roses were over." This was a sage prediction of the fiscal storms ahead. In response to the city's inability to borrow money to meet its obligations, Carey secured state legislation creating the Municipal Assistance Corporation (also known as Big Mac) and the Financial Control Board for New York City. MAC had the authority to borrow money on behalf of the city, and city tax revenue streams were required to give priority to MAC bonds over any other municipal obligations. The interest rate on some MAC bonds was set as high as 11 per cent, and that income was tax-free. The FCB had authority over the city budget, its approval was required before a budget could be adopted.

The city's fiscal crisis was different and more immediate than the one the Federal government is now enduring. For years, starting at the end of the mayoral term of Robert F. Wagner in 1965, and increasingly during the eight years of the Lindsay administration and the first year under Mayor Abe Beame, the city had consistently spent more than it received in revenues. The gap was filled by borrowing, and city officials devised a number of instrumentalities for short-term borrowing, which was in addition to regular long-term borrowing through the issuance of bonds. In addition, current expenses, which should have been paid for by current revenues, were allocated to the capital budget, which made them eligible for bonding.

To meet its cash needs, the city began to issue new instruments, called RANs, TANs and BANs. These were respectively Revenue Anticipation Notes, Tax Anticipation Notes, and Bond Anticipation Notes. When they came due, the city rolled them over, renewing them for a short period of time. The sum of money borrowed in this way steadily rose, and there came a time in 1975 when the banks, fearful of default as the city's debt increased, stopped buying the freshly issued notes. This caused an immediate cash crisis, as the city did not have the money to pay its employees, having become dependent on the proceeds of the short-term notes which had been rolled over.

The Emergency Financial Control Board (as it was called at the time) had effective control of the city government, since it controlled the cash flow. Its seven-man board consisted of the governor, the mayor, the state and city comptrollers, and three private citizens chosen by the governor and confirmed by the state senate. Other elected officials were allowed to appoint non-voting representatives to the Board.

Governor Carey, who had become proconsul for the city, first secured the retirement of Deputy Mayor James Cavanagh, a longtime civil servant and the appointee of Mayor Beame. Cavanagh, an honorable man who came to symbolize the old way, was replaced by John E. Zuccotti, a 38-year-old who had been chairman of the City Planning Commission. The city reduced its expenditures sharply, mainly by laying off 50,000 employees on June 30, 1975, the end of the fiscal year.

Politically, Carey concluded that Beame was indecisive and not competent to manage the city. He and former Mayor Wagner set about finding a challenger for the 1977 Democratic primary. The usual partner of Wagner and Carey was Alex Rose, the Liberal Party leader who had brought about Mayor Lindsay's re-election in 1969 after Lindsay, at the time a Republican, lost the primary in his own party. Lindsay was re-elected on the Liberal Party line.

Sadly, Alex Rose had passed away on December 28, 1976 and Wagner and Carey were left on their own. They settled on Mario Cuomo, at the time New York's secretary of state under Governor Carey. Cuomo came in second in the seven-person primary race (Bella Abzug, who had just left Congress after narrowly losing a Senate primary to Daniel Patrick Moynihan, came in fourth). The top two, Congressman Ed Koch and Cuomo, made the runoff. Beame had been eliminated because he came in third, Manhattan Borough President Percy Sutton ran fifth and Bronx Congressman Herman Badillo was sixth. Joel Harnett, a civic reformer, was a distant seventh. The results were so close that the top six candidates each received more than 10 per cent of the vote, but none of them won 20 per cent. Koch was barely one per cent above Cuomo in the initial voting.

The law provided for a runoff between the top two candidates if no one received 40 per cent of the ballots. Koch defeated Cuomo in the primary runoff by ten points, and in the general election when Cuomo ran a strong race on the Liberal line. On winning, Koch declared peace with Carey, and the two men became political allies and friends. In 1982, when Mayor Koch ran against Carey's Lieutenant Governor, Mario Cuomo, for the Democratic gubernatorial nomination, Carey endorsed Koch, who ended up losing to Cuomo.

The breakthrough in Hugh Carey's political career came in 1974, when he defeated the better-known Howard J. Samuels by a 3-2 margin to become the Democratic and Liberal Party candidate for governor. Carey had been a Congressman from Brooklyn for seven terms. Samuels, known affectionately as "Howie the Horse", had been the first chairman of the Off-Track Betting Corporation. He had the support of Democratic Party leaders and was personally wealthy due to the success of Kordite, a plastic product used in baggies, wax paper, plastic wrap, disposable kitchenware, and sturdy trash bags, which he invented and developed. Samuels came from upstate Canandaigua, and was widely referred to as "the upstate industrialist". Carey was the downstate politician.

As governor, Carey made first-rate appointments to his staff, including David Burke and Robert Morgado as successive Secretaries to the Governor, Judah Gribetz as counsel and Michael Del Giudice as policy director. After he left office, Carey led a relatively private life with his family.

In addition to the extensive obituary by Richard Perez-Pena which began on A1 of the Times, the Carey family placed a lengthy and detailed notice on pA17, the obituary page of the newspaper. Mayor Koch wrote a tribute to the former governor, titled HUGH CAREY: NEW YORK'S GREATEST GOVERNOR OF THE MODERN ERA. Click here to find the column, republished on New York Civic's website. It is well worth reading.

BTW, many years ago, Governor Carey received the park name "Leonine". It was a reference to his middle name, Leo, and his stately appearance. In New York State, he was, at an important time in history, the king of beasts.



StarQuest #773 8.8.2011 1247 words