Category: Breaking News

Pacifica’s Plot Against New York’s WBAI Fully Exposed

Dateline Berkeley October 13, 2019

THE TURN OF THE SCREW: WBAI’S ELECTED DIRECTORS PREVENTED FROM VOTING ON WBAI SHUTDOWN

(Courtesy of PacificaInExile.org)

Berkeley-Faced with an imminent loss on an after-the fact and in-secret Pacifica National Board vote to approve the shutdown of WBAI-FM, the perpetrators are changing the voters. During a closed session meeting on Saturday night, a letter was presented proposing to invoke conflict of interest charges against 75% of WBAI’s elected directors,who are charged with being the voice of WBAI’s 8,000 members on the Pacifica Foundation board. The charges of conflict of interest invoked Section 5233 of the CA Corporations Code which is about financial conflicts of interest. The 5233 accusation seeks to prevent three of WBAI”s elected directors from being allowed to vote on all matters affecting WBAI members indefinitely. The three votes being eliminated are unable to vote on whether or not they are eliminated, allowing a minority of the board of directors to “vote” to disenfranchise the majority and therefore win a series of votes they would otherwise have lost.

The vote on the Pacifica National Board is vital because the actions to terminate all of WBAI’s staff and turn the NY community radio station into a repeater can only be legally supported as an action of the licensee, which are the 22 members seated on the national Pacifica board. If the majority of the directors seated on the Pacifica National Board do not support the shutdown of WBAI, the action is not an action of the licensee.

The removal of voting rights is being applied to WBAI staff representative Shawn Rhodes because is WBAI staff, and WBAI directors Alex Steinberg and James Sagurton because they are plaintiffs in WBAI vs Pacifica, the request to the Supreme Court of New York to issue a temporary restraining order to halt the shutdown of community radio operations in the New York metropolitan area.

The voter suppression being applied to WBAI’s elected representatives for the second time in the last four years, removes the representative voting rights promised to WBAI members in Pacifica’s bylaws.

Article Three, Members of the Foundation, Section 5: Rights

All Members shall have all rights granted to them by law or by these Bylaws, including without limit the right to vote, on the terms and in the manner set forth in these Bylaws

Article Five, Board of Directors of the Foundation, Section 1: Board of Directors –
Eligibility, Number, Powers and Duties

The Board shall have equal representation from each of the Foundation’s five radio stations. The Delegates from the five Foundation radio stations shall each elect four (4) Directors : three (3) of whom shall be Listener-Sponsor Delegates and one (1) of whom shall be a Staff Delegate — for a total of twenty (20) “Station Representative” Directors, as set forth in Section 3 of this Article of the Bylaws.

The activities and affairs of the Foundation shall be conducted and all corporate powers shall be exercised by or under the direction of the Board.

When last we wrote, Judge Frank Nervo of the Supreme Court of New York had halted the shutdown of WBAI with a temporary restraining order in effect until October 18th, which the perpetrators were choosing to ignore. On Thursday, Judge Debra James upheld the portion of the TRO that prevented the termination of WBAI’s staff thus removing the putative reason for the takeover, but allowed Pacifica to continue to pipe in reruns and keep WBAI’s local content off the air, including local news and information and PSA’s and public affairs programs generated by New York community-based groups. The judge’s decision which is in place until a hearing on October 18th, was based on the rights of the licensee which is why the license owner has to put the matter to a board discussion and vote. The perpetrators have since moved to shift the case to the federal courts, invoking the Trump administration FCC under Ajit Pai as a potentially interested party.

The decision by the perpetrators is contrary to Pacifica’s mission which is to provide an outlet to the members of the served community – “In radio broadcasting operations to encourage and provide outlets for the creative skills and energies of the community” and removes all content by and about New Yorkers and New York and $1.378 million dollars donated by New Yorkers in the last year to support that local content and to maintain their voting rights in the affairs of the Pacifica Foundation.

So why is this happening? We know that at least here in the Bay Area, you have been inundated by e-mails claiming imminent financial collapse due to WBAI and elaborate claims that WBAI will destroy all the rest of the Pacifica stations if not stopped in their tracks right now. Is there any basis in reality for these claims? Not really.

The Pacifica Foundation organizes itself into the 5 station areas, an archives division and a small national office that mostly deals with accounting and regulatory compliance (and none too well). The only income the national office generates is from selling sidebands and collecting affiliate dues, an amount that totaled about $575,000 last year. In order to support additional operations and an executive director, the Pacifica national office collects “dues” from the fund drives of the five Pacifica stations, an amount that equals about $1.4 million dollars a year when the stations can afford it. They call this central services.

The Pacifica National Office, whose power stems from holding the station’s licenses by grants from the FCC, a structure set up by Lew Hill in 1946 before KPFA went on the air three years later, has over the years shut down stations including KPFA in the summer of 199. After that, its structure was overhauled to allow donors to the foundation to exercise control and theoretically prevent future shutdowns by being granted membership rights. Over the years, this tiny office has authorized expansive contracts indebting the five stations, including the two Democracy Now contracts which transferred over $7 million dollars of member donations to an outside nonprofit organization, and the Empire State building tower contract which indebted the five stations to paying another $8 million dollars to Wall Street. Not surprisingly, the five stations which all had decreases in their membership rolls from 2018 to 2019 except WBAI which went up by 3%, have defaulted on these obligations, with Democracy Now forgiving the last $1.8 million of contract dues in 2018 and the last $3 million of the Empire contract rolled over into a low-interest loan from a NYC-area foundation.

You guessed it. It’s another Pacifica contract. In 2019, Pacifica contracted with NETA to do accounting. NETA (National Educational Telecommunications Association) is a South-Carolina-based corporation that signs contracts to perform administrative services for public media companies. Pacifica’s national office signed a contract to pay NETA $35,000 a month or $420,000 a year. How was this new expense to be paid for? Pacifica said they would reduce their administrative payroll by $400,000 a year by jettisoning their in-house accounting staff.

Oops. Pacifica did not reduce it’s administrative payroll by $400,000. It did not reduce its administrative payroll by $1. In fact it increased its administrative payroll in 2019 by $162,000. Without a CFO or any in-house accounting staff, Pacifica kept an administrative payroll of $650,011 in 2019, exactly the same the $655,000 average over the years 2011-2017 when it kept a full-time CFO, controller and staff accountant on the payroll. Then Pacifica added this new $420,000 contract, bringing its 2019 national office payroll to over a million dollars, which is unprecedented over the past decade. That is why the national office has a cash flow crisis. Unsupervised overspending at the national level.

In order to conceal this from you, the perpetrators have been throwing around a bunch of false numbers about WBAI, claiming WBAI owes them $7 or $8 million dollars. Not in recent history. Without boring you all to death, the $7 million dollars represents the following: $2.5 million is the unpaid portion of the Empire contract that Pacifica signed, not WBAI, and is now in the form of a loan from a NYC-based foundation. $500,000 is the unpaid vacation, sick time and pension payments owed to WBAI’s employees under their SAG-AFTRA contract, which Pacifica signed. Of the remaining liability of “central services”, $3,582,000 million (of a $4,182,000 total) dates from 2014 or earlier or more than five years ago. WBAI’s unpaid central services from 2015 onward have been entirely paid by a generous bequest from a NY donor who gave a $900,000 estate gift, of which $583,500 was directly given to the Pacifica national office.

1977 – Working on WBAI phone lines

The national office’s cash flow problem is that they have run through the money WBAI gave them (which if they were smart they would have socked away to help pay back the foundation loan instead of spending it all), and now they cannot pay the contracts they signed.

In fact, the largest central services shortfall from the 2018-2019 period is from WPFW in Washington DC and before that in 2015-2016, the largest shortfall was from Los Angeles station KPFK, which also incurred a $295,000 labor settlement in those years for anti-union activities.

This is all easily discernible from basic forensic accounting, but the perpetrators are relying on shouting “squirrel” in order to justify their actions. Let’s look at the short-term costs of the WBAI shutdown:

Loss of $350,000 to $400,000 in fall fund drive revenue in WBAI, immediate payout of accrued vacation, sick and pension accruals to WBAI employees of approximately $400-$500,000, refunds of the first four days of BAI’s fund drive of $40,000, loss of monthly “BAI buddy” recurring donations of $20,000 a month, upcoming arbitration with the SAG-AFTRA union for lack of notice to the union of impending layoffs which costs a minimum of $50,000 for anti-union activities, legal costs for 3 hearings, with many more to go, of at least $40,000. Ongoing costs of $30,000 a month to operate WBAI as a repeater station without any donations from the now-fired 8,000 WBAI members.

Who spends $900,000 to get out of a cash flow hole?

Nobody, that’s who. So operating WBAI as a repeater station is not the long-term plan. The vicious joke is that “WBAI is worth more dead than alive”. Very true. WBAI is a commercially convertible license so its value as a commodity is huge and dwarfs the value of the rest of Pacifica’s assets combined. The problem for Pacifica is those darned bylaws and that darned mission statement.

There’s a reason why you got an email recently from the “Pacifica Restructuring Project” to change the bylaws to a handpicked board and give those handpicked board members wide latitude to change the bylaws as they wish with nothing more than 30 days notice. The elected majority of the Pacifica board of directors stopped that bylaws amendment last month. But now the elected majority of the Pacifica board of directors can no longer vote and the gold rush is at hand.

If you value being kept up to speed on Pacifica Radio news via this newsletter, you can make a little contribution to keep Pacifica in Exile publishing . Donations are secure, but not tax-deductible. (Scroll down to the donation icon).

To subscribe to this newsletter, please visit our website at www.pacificainexile.org

Pacifica Faction Expels WBAI Board Reps

Power Play at Pacifica Board – Latest News

Reggie Johnson, WBAI Programer for “From The Soundboard” posted some breaking news on his Facebook page of the events going on in New York.  It is becoming clear that the Pacifica Board did not vote to shut down WBAI, that it was done by a faction led by the present Interim Executive Director.  This faction is now trying to have the Board approve their activities retroactively.  The Board, locked 11-11, is being changed by expelling the WBAI Directors, giving the faction a majority to complete the take-over.  Rumors are rife that they plan to sell the WBAI Broadcast License, which would bring in millions of dollars.  This is just a rumor, but something that has been bandied about for some time as the network has faced severe economic stress.  See previous posts that discuss the financial problems with WBAI and it’s Empire State contract for the broadcasting tower.  Thanks to Reggie Johnson for his continuous updates.  Previous videos he posted showed the damage and ransacking of the WBAI facilities, allegedly by the IED and a faction of the Pacifica Board.  New York has lost its Progressive Community Voice.

Below: Reggie’s video inside of WBAI showing the equipment that was allegedly damaged or seized in the Pacifica faction raid.

Pacifica’s Raid on WBAI Stopped in Court

FOR IMMEDIATE RELEASE: From Pacifica in Exile Tuesday October 8, 2019

Supreme Court of New York Stops Pacifica’s Attack on WBAI

Berkeley-In the morning, a crew of Pacifica Foundation board members led by brand new IED John Vernile, locked out the staff at WBAI-FM in New York and then fired them all, told the landlord to rent the space to someone else, and started piping in content from the West Coast over mid-Manhattan. In the night, the Supreme Court of New York told them to stop it and restored WBAI’s facilities, equipment, studio space, employees and control over the airwaves.

If this feels to you like a flashback, well there’s a reason for that. Two decades ago, the Pacifica Foundation locked out employees at Berkeley’s KPFA and started piping in content from Texas. At that time, the nonprofit’s board was united in their desire to teach KPFA a lesson and extract the millions in license value. Not this time. At least half of Pacifica’s elected board wasn’t informed, had no idea. and never consented. That’s probably why Supreme Court judge Frank Nervo (at home and in his pajamas) called a halt to things. This is what he said.

The Supreme Court of the State of New York has issued a stay and temporary restraining order enjoining the Pacifica Foundation from 1. Seizing any property files or equipment from WBAI 2. Terminating any employees of WBAI 3. Preventing WBAI from broadcasting it’s regularly scheduled programming. 4. Interfering in the business or orderly administration of WBAI pursuant to Section 1315 of the NYC Not for Profit Code and the Pacifica Foundation bylaws until a hearing to be held on October 18th.
The WBAI takeover followed immediately upon the collapse of a proposed set of new bylaws presented by the same folks who attempted to lock out WBAI, namely the KPFA board faction formerly known as Concerned Listeners, before they were formerly known as Save KPFA and currently known as United for Independent Radio. For the bylaws amendment petition, the name used was “The Pacifica Restructuring Project”. They were joined by a few board members from Texas and Los Angeles. The petition to the members sought to install six hand-picked people as a new self-selecting board majority that would perpetuate itself indefinitely with broad powers to further change the bylaws. The petition, which aimed to install the six by January of 2020, relied on the existing national board to open a bylaws amendment period and call another election. The board deadlocked at 11-11, blocking the petition until next year, and the proponents resorted to trying to kick one of their opponents off the board, KPFA’s Tom Voorhees (an action which is still scheduled for October 26th at KPFA).

Denied their hand-picked six to rubber stamp their actions, the group simply decided to go ahead in secret with the attack on WBAI with no board sanction. This secrecy meant that a number of things that needed to happen, didn’t: no meet and confer with the union prior to laying off union staff, no advance notice to employees and programmers, no notice to the landlord, and no consultation with the lender who holds as collateral studio buildings in LA, Houston and Berkeley.

Whether it could possibly be considered a sober plan no matter how carefully carried out is another matter. The lockout interrupted a fund drive in process that would normally book around $300,000. Laid off employees get severance pay and failing to meet and confer prior to layoffs results in a trip to arbitration. It probably wasn’t cheap to find a lawyer and dispatch them to Judge Nervo’s house in the middle of the night to argue unsuccessfully against the TRO. A repeater station still needs to transmit and WBAI’s 4 Times Square transmitter costs $12K a month. With no fund drive apparatus or staff and a program schedule of re-runs, where does that money come from? It’s unlikely to be the NYC audience whose programs were all cancelled. An organization so desperately broke that it has to cannibalize its own radio station can’t fly the IED and at least three board members to NYC and put them up in hotels to do the dirty work. It doesn’t really add up. Most WBAI’ers concluded the end game is a sale of the station license for the tens of millions of dollars it will get on the open market as a commercially convertible license.

Besides its role as a cash cow to provide a windfall to other 4 stations, are the finances at WBAI really that bad or that much worse than the other stations? Once the predatory Empire State Building tower lease Pacifica stuck WBAI with was ended, the answer is not really that much worse. You don’t have to take my word for it. Here is a profit and loss statement for 2018-2019.

It shows an operating deficit of -$227,000 including the internal transfers that Pacifica calls “central services” which are not direct costs, but payments to the Pacifica Foundation itself to support the national office. We want to be clear that in the end, all of the Pacifica stations are going to have to find a way to break even or the long-term prognosis is bleak. However, if every Pacifica unit that ran an operating deficit of -$227,000 or more was shut down, all the employees fired and the station turned into a repeater with every single local program cancelled, then the treatment would have happened to:

KPFK in 2007, 2013, 2014 and 2015

WPFW in 2012, 2013, 2014 and 2016

KPFA in 2009, 2010, 2011, 2013 and 2016

Only KPFT in Houston would be left standing.

In another ironic twist, the WBAI signal area in 2019 provided a generous bequest from the estate of a former WBAI fan of $583,500. A nice chunk of change that was left to the national foundation which promptly ratcheted up their annual spending from $1.82 million in 2018 to $2.49 million in 2019, an increase of $670,000 powered by that estate gift. Once it was all spent by national, they moved to shut WBAI down.

So what now? The Pacifica Foundation has been silent since the TRO was issued WBAI staff and programmers are meeting tomorrow to get themselves back up and running. WBAI members should support the station right now and show it with your words, emails and dollars. (Mail them checks. The Pacifica Foundation disabled the online donations system).  In other signal areas, please speak up. Your delegates are elected and you put them there to represent you so can tell them what to do and what not to do in your name. Each station has instructions for contacting the local station board on the website and they meet in public once a month. Democratic Socialists of America, who have a program on WBAI, are mobilizing to support the station in New York. In Berkeley, which is the most responsible for the attack on WBAI, there should be accountability with the listeners who elected these delegates.

Since this all just happened on 10-7-2019, plans are still being developed, but we are told there may be a press conference on October 8 at 9am at KPFA and speakouts are expected at the planned local station board meetings on October 19th and October 26th here in Berkeley. Other signal areas will likely also arrange some events. To be clear, about the last thing in the world our listener dollars should be spent on is Pacifica fighting WBAI in court. None of that makes the stations stronger, better, more engaging, more technically sophisticated, more politically pointed or more culturally rich. It’s our responsibility to back this misguided board up and make them support our stations, not destroy them.

If you value being kept up to speed on Pacifica Radio news via this newsletter, you can make a little contribution to keep Pacifica in Exile publishing . Donations are secure, but not tax-deductible. (Scroll down to the donation icon).

To subscribe to this newsletter, please visit our website at www.pacificainexile.org

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Started in 1946 by conscientious objector Lew Hill, Pacifica’s storied history includes impounded program tapes for a 1954 on-air discussion of marijuana, broadcasting the Seymour Hersh revelations of the My Lai massacre, bombings by the Ku Klux Klan, going to jail rather than turning over the Patty Hearst tapes to the FBI, and Supreme Court cases including the 1984 decision that noncommercial broadcasters have the constitutional right to editorialize, and the Seven Dirty Words ruling following George Carlin’s incendiary performances on WBAI. Pacifica Foundation Radio operates noncommercial radio stations in New York, Washington, Houston, Los Angeles, and the San Francisco Bay Area, and syndicates content to over 180 affiliates. It invented listener-sponsored radio.

Container Group Blasts State of California – Consumers Cheated Out of $308 Million 2017-18

Non-Profit Container Recycling Institute Confronts Closures of Recycling Centers

CRI Response to Closure of Nearly 300 Bottle Redemption Centers in CA

State’s Recycling System Needs Significant Overhaul for Consumers and the Environment 

CULVER CITY, CA, AUGUST 7, 2019 – This week’s closure of 284 recycling redemption centers (RCs) by rePlanet, the largest operator of such centers in California, marks the latest and most significant setback to the state’s container deposit system (referred to as a bottle bill). Now is the time for Gov. Gavin Newsom to work with the state legislature and the California Department of Resources Recycling and Recovery (CalRecycle) to overhaul the bottle bill, which historically has resulted in the recycling of more than 50 million beverage containers daily – 20% of the nationwide total – in the process saving enough energy each year to power the equivalent of 300,000 households.

It is particularly troubling that this situation was entirely preventable. For the past three years, the Container Recycling Institute, a Southern California-based nonprofit recycling authority, has repeatedly drawn attention to the dire consequences caused by inadequate RC processing payments from CalRecycle, the state agency that administers and provides oversight for recycling programs.

Because of these underpayments that have prevented a significant number of RCs from remaining solvent, along with historically low scrap prices and minimum wage increases for RC employees, more than half of the state’s nearly 2,600 RCs in operation in 2013 have since closed, and California’s recycling rate has dropped 10 percentage points (from 85% to 75% for all beverage containers combined). In addition, the loss of RCs has meant fewer jobs – the termination of 750 in the case of the rePlanet RC closures alone.

While California strives to be “best-in-class” on environmental issues – from addressing our climate crisis to keeping plastic out of our oceans – the state’s bottle bill actually remains one of the most inconvenient in the world. There are more than 50 container deposit programs across the globe, but only California employs a payment system that imparts such high levels of financial risk and uncertain and inadequate payments to RCs. Because other systems don’t have these flaws, none of them would allow – as California’s law has – one-fifth of their redemption locations to close in one week (part of over one-half during the last five years), with no realistic backup plan in place.

The consequences for consumers and the environment are dire. Deposit systems typically result in beverage container recycling rates two to three times higher than the rates of other recycling programs – making structurally sound deposit systems crucial to reducing energy use and carbon emissions because fewer containers need to be made from virgin materials. Besides seriously impacting the environment, the availability of fewer RCs also means fewer opportunities for consumers to get back their bottle deposits. According to CalRecycle, in fiscal year 2017-18, Californians lost out on $308 million in unredeemed deposits – an all-time high for the state.

The solution to California’s bottle recycling crisis requires two approaches: 1) a significant overhaul of the current system, and 2) specific immediate actions by CalRecycle.

At a minimum, structural changes to the container deposit system should include:

  • An expansion of the system to also accept wine and spirit containers;
  • An increase in the container deposit from 5 cents to 10 cents to incentivize more bottle returns; and
  • Predictable and sufficient funding for RCs.

California’s leaders can look to Oregon for an example on how to maintain, expand and continuously improve a container deposit system. In the past several years, Oregon has authorized the development of more RCs (with 20 new sites opened), increased the deposit from a nickel to a dime, and simplified the bottle drop-off process with a consumer-friendly program called “BottleDrop.” As a result, the state’s container deposit redemption rate increased from 64% in 2016 to 81% in 2018.

Regarding CalRecycle, CRI applauds the agency for taking swift action this week to update information on its website. The newly closed RCs have been removed from the website and a list of retailers that redeem in-store has been added. CalRecycle should also immediately:

  • Prioritize enforcement of the “return-to-retail” commitment of the 1,000-plus beverage retailers (including supermarkets) that have pledged to accept back empty containers and provide refunds to consumers.
  • Instruct beverage retailers that are not currently return-to-retail sites to place signage directing consumers to the nearest location for redeeming containers.

If the current downward commodity pricing trend continues without structural adjustments to California’s processing payment formula, RCs’ cumulative net losses will inevitably force even more of them out of business. Further closures will mean additional reductions in recycling opportunities, less recovered income for consumers, fewer jobs, and significant harm to the sustainable economy and the environment.

It is incumbent upon all of us to communicate with elected officials on the need to restore adequate processing payments to RCs to not only keep California’s vital recycling system alive, but to make it truly “best-in-class.”

The nonprofit Container Recycling Institute is a leading authority on the economic and environmental impacts of used beverage containers and other consumer product packaging. Its mission is to make North America a global model for the collection and quality recycling of packaging materials.

# # #

California’s Beverage Container Redemption Center Crisis: Facts and Figures

  • In 2013, at the deposit program’s peak, 2,578 RCs operated in the state.
  • According to CalRecycle, before this week, 1,506 of those RCs remained open.
  • With the loss of the 284 rePlanet sites, the number now stands at 1,222, meaning 53% of the state’s RCs have closed since 2013.
  • Before the rePlanet RC closures, California had only one RC for every 26,000 people, with several “recycling deserts” providing virtually no access. Oregon, despite having a population only one-ninth that of California’s, has at least 40% more redemption locations.
  • On average, factoring in the loss of the rePlanet RCs, each remaining center in California now must accommodate 122% more people than they did in 2013.

The “Secret” List of CRV Deposit Refund Locations. Get Your Money Back

Nowhere To Take Bottles and Cans?  CalRecycle Has A Little List.

Here It Is, The Entire List, As a Public Service.

Explanation:  Option A means the store has agreed to refund deposits.  Option B means they are paying the State $100 per day NOT to refund deposits.  Option C means they have some kind of exemption.

List of redemption locations

 

The Recycling Armageddon Hits California

rePlanet Is Closing Down

The Large Chain of Bottle and Can CRV Redemption Centers Is Gone. About 800 Employees Lose Jobs.

Consumers Losing Millions in CRV System and Now Cannot Find Deposit Refund Locations.

by Paul Hunt

“Canageddon”, the Recycling Armageddon has hit California. The huge project to Recycle bottles and cans is spinning out of control amidst a seemingly never ending assault of criminals, fraudsters and mis-management.  The two big factors of the week is the decline in redemption centers like rePlanet, where consumers can turn in their bottles and cans and get their cash deposit back, and a double whammy as China has just announced an astounding 25 percent tariff tax on recycled products shipped to China.

As consumers face mounting problems finding a place to redeem their bottles and cans, the State has failed to provide convenient locations to do so.  Facing insolvency, private companies are closing down, and some partner Cities like Santa Monica, are shutting down their recycling yards.  The State, however, continues to rake in millions of dollars per year.  Simply put, everyone pays the deposit fee of 5 cents or 10 cents per beverage container (depending on size).  This money is supposed to be held in trust for the consumer until the bottles and cans are returned.  The big factor here is that the State takes in hundreds of millions, and by letting redemption centers and recycling yards close down, they pay out less and less every year back to the consumer, thus making more money every year.

A Merry-Go-Round of corruption. 

The State’s program is rife with fraud and corruption.  Here’s a few bullet points:

–Independent Recycling yards have been caught “laundering” bottles and cans from out of state.  Since the price, say for a pound of aluminum cans is less than the CRV deposit of 5 cents each can, crooks are bringing in tons of the cheap cans from Arizona and Nevada and selling them to California for CRV.  These cans are not marked on the bottom with California’s unique recycle logo, but is anyone checking?

–The distributors and large outfits are responsible for paying the CRV to the State.  Here’s a good one:  Walmart, one of the biggest players “forgot” to pay the State for 5 years.  When they were caught by a routine audit, it was found that they owed $14.5 million dollars.  Out of about 3,000 distributors only about 50 are audited every year.

–Since inflation eats into the profit and operating costs of companies, many outlets and redemption centers are closing down.  In the last few years over 1,300 redemption centers have closed.  As the expenses rise, like wages, many companies start losing money, because they are stuck with a set CRV.  In times past, when the world economy was growing, China paid more for the aluminum than the CRV, so the centers could pay the consumers their deposit back and still make money selling to China.

–China just announced that they are going to slap on a whopping 25 percent tariff on recycled materials coming into their country.  This is in retaliation for the U.S. putting tariffs on Chinese goods.  The price of recyled materials is dropping way below the CRV, another loss for the redemption yards.

–The Cities are also shutting down their yards that pay CRV deposits to consumers.  They found a better way to scam money out of this.  The yards were also losing money in higher labor costs and lower pricing on the  recycled bottles and cans.  By shutting down the yard, there is no more pay-out to the consumer, no more wages to employees, no more employees at all.  A big savings.  Meanwhile they tell the consumers to please put their bottles and cans into the blue recycling bins at their house or apartment.  This gives a huge flow of material to the City that they can sell back to the State.  It is estimated that this “curbside” collection scheme costs cities about 20 million to run but throw off an astounding $140 million in profit!

–And then there is the lazy consumer.   The CRV deposit is  only a nickle or a dime, chump change, so why bother with it?  That’s exactly what the State wants the consumer to do:  be lazy and forget about getting your deposit back.  The State then reaps in something like $200,000,000 every year in the difference, unclaimed deposit money.

–Homeless folks and low income folks often have turned to recyling to augment or make a meagre  living with CRV.  Lots of folks collect cans and bottles.  These folks are now being shut out by the closing down of payment centers.

Back to rePlanet, one of the few redemption outfits.  Their locations are being closed.  Calls to their corporate office go to a recording that they are closed.  Calls to David Lawrence, the CEO and also the head of media relations, don’t get a response.  Neighbors at some of  the redemption huts say that Friday August 2nd was their last day.  Employees were told a couple hours before closing that they were being laid off.  rePlanet had 800 or so employees at one time.  Now they are out of a job, like the employees of the Santa Monica recycling center and over a thousand other centers.  The State agency, CalRecycle, put out a one line statement “CalRecycle is working to gather more information about rePlanet’s announced closures and the resulting impact on California consumers.”  (rePlanet has nothing about closing on it’s webpage.).  Buckle up folks, it’s CANAGEDDON.

Many thanks to Susan Collins of Container Recycling Institute for an astounding amount of research on their web site. www.container-recycling.org.

 

The KPFK and Pacifica Foundation Financial Labyrinth

Update on Management and Financial Issues

by Kim Kaufman

KPFK Building Coming Up For Sale?

Pacifica is the last network of independent non-commercial radio stations operating in five of the largest media markets in the country. They are KPFK, Los Angeles, KPFA, Berkeley, WBAI, New York City, WPFW, Washington D.C. and KPFT, Houston, Texas. Many observers — and listeners — have written Pacifica off as a pathetic in-fighting mess as it has long been irrelevant in the larger media world. But the fact that this organization still owns and operates five very valuable radio licenses in major U.S. markets is worth taking a look at, especially from the financial aspect which is rarely exposed.

Since KPFK (and the other stations) are having another election for their Local Station Boards (LSB), what follows is information for anyone considering running, or voting, from a former KPFK LSB member. I will highlight some of the critical issues facing KPFK and Pacifica to consider.

This is also an update to KPFK and Pacific: A Quiet Coup from October, 2015 which detailed problems with the finances then — the lack of several years of filing annual audits to the CA Attorney General, the lack of adequate bookkeeping, etc. I advocated voting for one faction of new and returning former LSB members (which I had then been aligned with) to replace the other faction. They were elected and have had a majority on the local and national boards for the last three+ years. During this time, however, the financial picture has only gotten worse. Pacifica’s factional infighting is somewhat notorious but is the problem only the factions or is it something else?

As to my qualifications for addressing these issues, I was on KPFK’s LSB from 2009 to 2015 when I was termed out. I was, at different times, Treasurer of KPFK, on the National Finance Committee, Director on the Pacifica National Board (PNB), on the Audit Committee, on a Financial Recovery Audit Task Force, and other committees. I have been involved in and focused on the finances of KPFK and Pacifica for many years and in many capacities. I have written many analyses of budgets and actual income/expenses, been a whistleblower and advocated for transparency and honesty.

The main job of KPFK’s LSB is to approve yearly budgets from management and make quarterly reports on the station’s finances and to make sure the station is on solid financial footing. Good budgets are based on historical data and formulas that are specific to non-commercial radio whose revenue comes largely from on air fund drives. Management has not availed itself of those tools for the last two budgets and produced overly optimistic budgets. Nevertheless, KPFK’s Finance Committee brought the budgets to the LSB, which were approved with little to no discussion. The estimated $500,000 end of year surplus for FY2018 wound up being a ($67,000) deficit. This is a notable “mistake” but to date has never been analyzed by the Finance Committee.

Thus, the FY2019 budget repeated the same errors as were in the FY2018 budget. There have been verbal reports from the Treasurer, such as revenue was “better than the budget and better than the previous year.” But they have never been supported by documentation or actual data and were, in fact, false conclusions. This sort of statement is typical and shows a lack of attention and/or expertise that is needed for the required oversight duties of the board.

Because of decreasing revenue from KPFK’s on air fund drives, there are now various forms of desperate acts to raise money, most of which are forms of underwriting that violate FCC and CPB (Corporation for Public Broadcasting) rules. Underwriting is allowed and the FCC has specific rules that need to be followed but management is not complying with them. The Finance Committee has been made aware of these violations but have thus far not taken any action. Further, KPFK is misleading the public with programmers saying that KPFK takes no underwriting, it’s all “powered by the people,” etc. This is not true and has not been for about two years.

If there are discussions about the finances at KPFK going on, they are being made behind closed doors and not at either the Finance Committee or the LSB meetings.

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This lawsuit of Empire State Realty Trust against Pacifica happened because of lack of oversight by the PNB.

In October 2017, a judge ruled against Pacifica and awarded ESRT [Empire State Realty Trust] a summary judgement of $1.8 million plus attorney’s fees. ESRT sued Pacifica in February 2016 to recover back rent and tower fees, interest and attorney costs. In the years-long dispute, Pacifica accused ESRT of price gouging and “holding the network hostage” with a contract that required WBAI to pay tower rent that increased about 9% per year. . — Inside Radio

Members and programmers from WBAI called ESRT “greedy capitalists” but Empire would not back down. In fairness to all of the involved parties, Pacifica voluntarily entered into the tower rental agreement with ESRT in 2005 with full awareness of all of its provisions for potential future rental increases.

On the PNB, there was dithering and inaction. Many secret and some public meetings were held, arguing between filing for voluntary bankruptcy or taking out a loan to pay off the judgment and the rest of the contract with Empire. The decision was to take out a loan. The argument against bankruptcy was that legal fees would be high — but the loan’s fees, legal fees and interest wound up being, by my calculations, about $900,000 or more, the same or arguably much more than bankruptcy would have been. Time will tell as to the real cost of taking out a loan.

Most elements of the reported 150 page loan agreement are still secret, with claims from the PNB there is a provision in the document that requires it being secret. Requests to provide that particular provision to the public have not been answered. While a press release about the loan is still on KPFK’s website, and easily found elsewhere on the internet, it is now forbidden to name the lender publicly.

This “Summary of the $3.7m Loan” was released to the public by the PNB. The figures offered in the Summary, however, are incorrect. It appears to be an early draft as the actual amountof the three year interest-only loan is $3.265 million and the adjustable interest for the first 18 months is $379,556. Pacifica could not get KPFK’s tower included as collateral because the US Forest Service, on whose land it sits, would not allow it. The tower was supposed to be used as collateral to borrow, and pay interest on, the first 18 months of interest payments.

Thus, two buildings adjacent to Berkeley sister station KPFA were sold to pay part of the ESRT settlement and the rest used for the first 18 months’ interest. One building housed the Pacifica National Office, with offices for the Executive Director, CFO and accounting staff. The other building had been vacant for a decade or so.

The CFO at the time resigned when the loan was signed, claiming the loan was in default because Pacifica could not provide any of the lender’s required financial documents, such as a current audit, profit and loss, etc. In a leaked document, Pacifica’s general counsel also weighed in on problems with the loan.

Pacifica must start paying the interest for the second 18 months starting October, 2019. It’s hard to see how Pacifica can come up with monthly payments of $21,000+, especially since KPFK is unlikely to be able to cover its own basic operating expenses going forward and will need help from the rest of the network, which has no help to give. There’s even less hope for paying off the $3.265 million balloon payment due March, 2021.

Those supporting the loan have made repeated claims that Pacifica can easily refinance for a better loan, that “a loan is not in default until a judge says it is,” and that the loan is secured by real estate only. This paragraph #4 from the Summary, however, shows this is false:

“[i]n addition [to the real property: buildings & land, three buildings housing radio stations KPFK, KPFA (Berkeley) and KPFT (Texas)], the Collateral includes accounts receivable, tangible goods, equipment, rental income, sales proceeds, contracts, intellectual property, furniture, cash and proceeds of insurance or sales — in short, virtually every real, tangible and intellectual property right in which Pacifica has an interest.”

This provision also includes the Pacifica Radio Archives. It’s much more than just real estate. Whatever the outcome of a potential default on the loan, lawyers will be involved — and Pacifica is required to pay legal fees for both sides.

It’s hard seeing a way to a refinance since Pacifica has not complied with requirements for the loan and has no way of paying the balloon payment in March, 2021 — unless they sell or swap one of the five licenses (which are under the jurisdiction of the FCC andcannot be used as collateral). The lender did not do its due diligence according to its own website. The mystery is: why did they lend to the obviously deadbeat Pacifica? The loan broker, Marc Hand, made at least $50,000 on the deal. Some speculate the loan has already been sold to a third party, see comment 3 of 3.

The idea of refinancing this loan they cannot pay back or pay the interest on, while adding more fees, interest, legal and brokers’ fees, seems like little more than a distraction to divert and delay the board from dealing with the realities of its insolvency and failing operations.

Some on the PNB imagined they could save money by outsourcing Pacifica’s accounting and not replacing the CFO. The new outsourced accountants have, as of this writing, produced nothing since their hire almost a year ago. Supposedly, an interim CFO was hired for three months in January but he produced nothing. The PNB just hired a new part-time interim CFO, an employee of the outsourced accountant firm. KPFK’s Finance Committee was told she was being paid “a small amount.” She was supposed to produce financial reports for the last two years by June but now it might be July.

Pacifica is also under investigation by the Department of Labor for violating ERISA laws, which has to do with pensions promised to employees of the five stations. This has been a problem for over two years and, as far as anyone in the public knows, is still unresolved and unpaid. Including penalties, this could amount to a large sum to be paid out.

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Pacifica has been trying to catch up on its late audits since 2014 for which Pacifica has been under investigation by the CA Attorney General. The current auditor has been working to complete the FY2017 audit since last fall (originally estimated to take three weeks). It was due to the CA Registry of Charitable Trusts June, 2018. The auditor finally told the audit committee he’s only been able to get about 50% of the documentation he requested and suggested they stop searching for more. He will finish what he has but it will be “qualified” which is auditor-speak for: there are serious problems. In this case, he can only audit what he has and the rest is undocumented and unknown. The FY2018 audit, due June 2019, will miss this deadline and will also be “qualified” for the same reason. Two qualified audits that say your organization is too messed up to audit is not likely to persuade donors, foundation grantors or the Corporation for Public Broadcasting to give funds to Pacifica. It’s unknown whether the CA Attorney General or the lender will accept them.

There was some anticipation that Pacifica would get current on its audits by this June and would again be eligible for CPB grants. That is not to be as CPB’s deadline for qualification is June. When Pacifica last received those grants, in 2012, it received about $1 million a year. Pacifica needs to get current on its financial reporting and compliant with other CPB requirements in order to be eligible for the 2020 cycle in order to receive funds in 2021.

Why the secrecy and obfuscation? Why the complete lack of financial oversight and fiduciary responsibility? Is it only incompetence?

In my earlier article, I wrote about the KPFA Foundation, a shadow corporation formed for the purpose of taking over the assets of Pacifica. Before that, in 2009, there was another secret 501(c)(3) formed for the Pacifica Radio Archives, supposedly to raise money (which never happened) but rumored that “in case” something happened to Pacifica, i.e., bankruptcy, the Archives could be moved into this non-profit. It was created by former PNB Chair/Interim Executive Director Sherry Gendelman with Matthew Lasar as Secretary. Lasar, a Pacifica historian of sorts, has advocated for breaking up the Pacifica network in alliance with the KPFA Foundation people.

After that came another secret effort from Berkeley by then-KPFA LSB chair Carole Travis who had been soliciting celebrities to join the board of “Big Tent Radio,” a nonprofit she claimed to be starting to acquire Pacifica’s assets after it “collapsed.” Attempts were made to get her to resign as she was clearly working against the best interests of Pacifica but no bad deed goes unrewarded at Pacifica and she remained on the local board, soon to be on the PNB.

There is presently another plan to break up the network from Berkeley, reports of a similar plan from Los Angeles, plus a long-time plan from one faction in New York. None of the breakup and takeover plans seem particularly viable but the absence of any other plan or even a discussion on how to pay back the loan, or interest payments, seems puzzling considering Pacifica’s precarious financial situation. Are they waiting for a sudden “shocked” awareness of financial problems and an orchestrated rush to “reorganize,” creating the opportunity for the licenses going to current favored board members with waiting 501(c)(3)s?

You can hear PNB Director Donald Goldmacher in this clip at a recent Strategic Planning Committee meeting suggesting selling off Pacifica’s assets (possibly to him and his allies around the network). He was recently re-elected to the KPFA LSB and is a long-time member of the Berkeley faction which created the KPFA Foundation, above.

Thus the sale of the Berkeley buildings and elimination of the Pacifica National Office and its accounting staff, which become unnecessary if the organization is going to dissolve, or privatize, itself into board members’ hands, and makes complete sense in this context. There’s no need for a permanent in-house CFO if there’s no intention of Pacifica continuing as a network. Further evidence of short-term planning: the outsourced accountants have a two-year contract.

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Pacifica just had another election for the LSB which ended in March. Those running for re-election were micro-managing their own election. It was delayed, disorganized, over-budget, and the public and members were not properly informed. A 10% quorum of membership is required and KPFK had an 11% quorum — but 9% of the ballots were blank ballots. There was a quiet campaign advising voters that if they didn’t want to vote or if they didn’t know who to vote for, to send in a blank ballot to help reach a pseudo quorum. Those who were asking the membership for election or reelection received so few votes that they amounted to a vote of no confidence. They did not earn even the 10% required votes from the membership.

But like Trump losing the popular vote or George Bush, arguably never legitimately elected either time, that will not stop these illegitimately seated LSB members from acting as if they have a mandate. They are planning a big rewrite of the bylaws. The Pacifica bylaws are terrible, complicated and, in places, contradictory. They were written by a “listeners” after the lawsuits of 1999–2002 were settled. A rewrite by another group of “listeners” will not be better. The problem is not the bylaws, or Robert’s Rules of Order, the problem is electing “listeners” without skills or knowledge of broadcasting, basic finance, management or anything related, and no record of success in anything except getting elected and becoming board members of a multi-million dollar media organization which has only shown consistent decline for the last 20 years under their stewardship. Some of these people have been in and out of Pacifica’s governance for two decades or more. Due to Pacifica’s current structure, it’s impossible to replace them in favor of competent people. Bylaws rewritten by them will only entrench them further.

The first line of The Pacifica Foundation Mission Statement is:

To establish a Foundation organized and operated exclusively for educational purposes no part of the net earnings of which inures to the benefit of any member of the Foundation.

Insiders love to toss the Mission Statement around but never remember that first sentence. The reason the federal government mandates that non-profits have outside, independent boards, and also why they’re under the jurisdiction of Attorneys General is that they are funded by public money. Boards are supposed to make sure the public’s money goes where donorsthink it goes. The main job of a board is to report to the public about its financial operations. Pacifica’s board cannot or simply will not do that. The idea of public service appears long forgotten within Pacifica. One might assume this is just run of the mill incompetence, but it seems way past the time we can blame the chaos only on that.

It’s no wonder the members of KPFK’s Finance Committee refuse to answer awkward questions dealing with the financial realities of the operations. The board members paint rosy pictures of how well they’re doing to “save Pacifica” but, in reality, KPFK is in extremely bad shape and declining. You can hear it in the increasing fund drive days which are not bringing in enough to cover their expenses. Nor is Pacifica, as a whole, faring any better under the present PNB than it was under the previous PNB.

Instead of focusing on finances and complying with federal and state regulatory agencies the favored subject of discussion by board members has always been programming. The ultimate prize for aggressive board members is to be able to control programming to suit their tastes and ideologies — from expected old guard Trotskyism/Marxism/Revolutionary Communist Party/anarchism (etc.) to Scientology with a few progressive Democrats and black or Latino nationalists in the mix. The boards hire weak managers who they can then micromanage and work to create their own patronage system by giving program slots or jobs to their friends and allies. The resulting mediocrity and lack of cohesion of the program grid is the result. It obviously drives away listeners and extends fund drive which only turn off more listeners. Now those PNB members making decisions are actually proposingprograms for the sole purpose of enticing funders. This shows a lack of imagination and any pretense of journalistic integrity. This is only the latest of ideas thought up by amateurs who have done little more than master the byzantine governance system of Pacifica to get themselves into these undeserved positions of authority. Look for sketchy health programs, celebrities and other unimaginative pandering unlikely to excite funders or listeners.

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For anyone still considering running for KPFK’s board, or any of the other stations, these are some of the bigger problems KPFK and Pacifica are facing. You will need to be a fighter with an independent mind because the entrenched board members of both factions are not really open to questions or open discussions, especially about financial matters.

The election information is here and the nominating deadline is June 30. If

you have skills, Pacifica needs you. But Pacifica doesn’t have a history of treating talented people well.

The sad irony is that just at the time this country needs a vibrant non-corporate media, Pacifica continues to make itself even more insolvent, unlistenable and irrelevant.

Kim Kaufman can be reached at kim.kaufman@att.net