Category Archives: Finance

Alpha Natural Resources: Running Wrong

Alpha miners in Southwest Virginia (Photo by Scott Elmquist)

Alpha miners in Southwest Virginia
(Photo by Scott Elmquist)

 By Peter Galuszka

Four years ago, coal titan Alpha Natural Resources, one of Virginia’s biggest political donors, was riding high.

It was spending $7.1 billion to buy Massey Energy, a renegade coal firm based in Richmond that had compiled an extraordinary record for safety and environmental violations and fines. Its management practices culminated in a huge mine blast on April 5, 2010 that killed 29 miners in West Virginia, according to three investigations.

Bristol-based Alpha, founded in 2002, had coveted Massey’s rich troves of metallurgical and steam coal as the industry was undergoing a boom phase. It would get about 1,400 Massey workers to add to its workforce of 6,600 but would have to retrain them in safety procedures through Alpha’s “Running Right” program.

Now, four years later, Alpha is in a fight for its life. Its stock – trading at a paltry 55 cents per share — has been delisted by the New York Stock Exchange. After months of layoffs, the firm is preparing for a bankruptcy filing. It is negotiating with its loan holders and senior bondholders to help restructure its debt.

Alpha is the victim of a severe downturn in the coal industry as cheap natural gas from hydraulic fracturing drilling has flooded the market and become a favorite of electric utilities. Alpha had banked on Masset’s huge reserves of met coal to sustain it, but global economic strife, especially in China, has dramatically cut demand for steel. Some claim there is a “War on Coal” in the form of tough new regulations, although others claim the real reason is that coal can’t face competition from other fuel sources.

Alpha’s big fall has big implications for Virginia in several arenas:

(1) Alpha is one of the largest political donors in the state, favoring Republicans. In recent years, it has spent $2,256,617 on GOP politicians and PACS, notably on such influential politicians and Jerry Kilgore and Tommy Norment, according to the Virginia Public Access Project. It also has spent $626,558 on Democrats.

In 2014-2015, it was the ninth largest donor in the state. Dominion was ahead among corporations, but Alpha beat out such top drawer bankrollers as Altria, Comcast and Verizon. The question now is whether a bankruptcy trustee will allow Alpha to continue its funding efforts.

(2) How will Alpha handle its pension and other benefits for its workers? If it goes bankrupt, it will be in the same company as Patriot Coal which is in bankruptcy for the second time in the past several years. Patriot was spun off by Peabody, the nation’s largest coal producer, which wanted to get out of the troubled Central Appalachian market to concentrate on more profitable coalfields in Wyoming’s Powder River Basin and the Midwest.

Critics say that Patriot was a shell firm set up by Peabody so it could skip out of paying health, pension and other benefits to the retired workers it used to employ. The United Mine Workers of America has criticized a Patriot plan to pay its top five executives $6.4 million as it reorganizes its finances.

(3) Coal firms that have large surface mines, as Alpha does, may not be able to meet the financial requirements to clean up the pits as required by law. Alpha has used mountaintop removal practices in the Appalachians in which hundreds of feet of mountains are ripped apart by explosives and huge drag lines to get at coal. They also have mines in Wyoming that also involve removing millions of tons of overburden.

Like many coal firms, Alpha has used “self-bonding” practices to guarantee mine reclamation. In this, the companies use their finances as insurance that they will clean up. If not, they must post cash. Wyoming has given Alpha until Aug. 24 to prove it has $411 million for reclamation.

(4) The health problems of coalfield residents continue unabated. According to a Newsweek report, Kentucky has more cancer rates than any other state. Tobacco smoking as a lot to do with it, but so does exposure to carcinogenic compounds that are released into the environment by mountaintop removal. This also affects people living in Virginia and West Virginia. In 2014, Alpha was fined $27.5 million by federal regulators for illegal discharges of toxic materials into hundreds of streams. It also must pay $200 million to clean up the streams.

The trials of coal companies mean bad news for Virginia and its sister states whose residents living near shut-down mines will still be at risk from them. As more go bust or bankrupt, the bill for their destructive practices will have to borne by someone else.

After digging out the Appalachians for about 150 years, the coal firms have never left coalfield residents well off. Despite its coal riches, Kentucky ranks 45th in the country for wealth. King Coal could have helped alleviate that earlier, but is in a much more difficult position to do much now. Everyday folks with be the ones paying for their legacy.

Renewable Energy: A Tale of Two Virginias

Apologies to Mr. Dickens

Apologies to Mr. Dickens

By Peter Galuszka

Call it a tale of two Virginias – at least when it comes to renewable energy.

One is the state’s traditional political and business elite, including Dominion Resources and large manufacturers, the State Corporation Commission and others.

They insist that the state must stick with big, base-loaded electricity generating plants like nuclear and natural gas – not so much solar and wind –to ensure that prices for business are kept low. Without this, recruiting firms may be difficult.

The other is a collection of huge, Web-based firms that state recruiters would give an eyetooth to snag. They include Amazon, Google, Facebook and others that tend to have roots on the West Coast where thinking about energy is a bit different.

Besides the Internet, what they have in common is that they all vow to use 100 per cent of their electricity from renewable sources. What’s more, to achieve this goal, all are investing millions in their own renewable power plants. They are bypassing traditional utilities like Dominion which have been sluggish in moving to wind and solar.

So, you have a strange dichotomy. Older business groups are saying that the proposed federal Clean Power Plan should be throttled because it would rely on expensive renewables that would drive away new business. Meanwhile, the most successful and younger Web-based firms obviously aren’t buying that argument.

I have a story about this in this week’s Style Weekly.

In Virginia, the trend is evidenced by Amazon Web Services, which sells time on its cloud-computing network to other firms. It is joining a Spanish company, Iberdola Renewables LLC, in building a 208-megawatt wind farm on 22,000 acres in northeastern North Carolina, just as few miles from the Virginia border. Three weeks earlier, on June 18, Amazon announced it plans a 170-megawatt solar farm in Accomack County on the Eastern Shore.

Dominion, which has renewable projects in California, Utah and Indiana and the beginnings of some small ones in Virginia, says it is not part of the projects. It could possibly get electricity indirectly from them. Amazon’s power will be sold on regional power grids to business and utilities.

When they complete such sales, the Net-focused firms will get renewable energy certificates that can be used to show that they have put as much renewable energy into the electricity grid as they have used, says Glen Besa, director of the Virginia chapter of the Sierra Club.

This will be especially important in Northern Virginia where there are masses of computer server farms used by Amazon and others. These centers used 500 megawatts of power in 2012 and demand is expected to double by 2017. Also, for years, the region has hosted such a large Internet infrastructure that at least half, perhaps 70 percent, of the Net’s traffic goes through there.

Part of the back story of this remarkable and utility-free push for renewables is that environmental groups are shaming modern, forward-looking firms like Amazon to do it.

Amazon Web Services was the target of criticism last year when Greenpeace surveyed how firms were embracing renewable energy. The report stated that the firm “provides the infrastructure for much of the Internet” but “remains among the dirtiest and least transparent companies” that is “far behind its major competitors.”

Dominion also got bashed in the report. Greenpeace says, “Unfortunately, Dominion’s generation mix is composed of almost entirely dirty energy sources.” Coal, nuclear and natural gas make up the vast majority of its power sources.

Its efforts to move to renewable sources have been modest at best. In regulatory filings, Dominion officials have complained that renewable energy, especially wind, is costly and unreliable although they include it in their long-term planning.

Dominion has plans for 20-megawatt solar farm near Remington in Fauquier County and is working on a wind farm on 2,600 acres the utility owns in southwestern Virginia. It has renewable projects out-of-state in California, Utah and Indiana. The output is a fraction of what Amazon plans in the region.

In a pilot offshore wind project, Dominion had planned on building two wind turbines capable of producing 12 megawatts of power in the waters of Virginia Beach. It later shut down the project, saying new studies revealed it would cost too much. It says it might continue with a scaled down project if it got extra funding, such as federal subsidies.

The utility says it must build more natural gas plants and perhaps build a third nuclear unit at its North Anna power plant to make sure that affordable electricity is always available for its customers.

As Amazon announced its new renewal projects, Greenpeace has changed its attitude about the company. Now it praises Amazon for its initiatives in Virginia and North Carolina. “I would like to think we have pushed Amazon in the right direction,” says David Pomerantz, a Greenpeace spokesman and analyst. He adds that Amazon has some work to do in making its energy policies “more transparent.”

One unresolved issue is that two neighboring states, North Carolina and Maryland, have “renewable portfolio standards” that require that set percentages of power produced there come from renewables. West Virginia had such a standard but has dropped it. In Virginia, the standard is voluntary, meaning that Dominion is under no legal obligation to move to solar or wind. It also gives the SCC, the power rate regulator, authority to nix new power proposals because they might cost consumers too much, providing Dominion with a handy excuse to move slowly on renewables.

Another matter, says Pomerantz, is whether Virginia’s legislators will enact “renewable energy friendly policies” or watch hundreds of millions of dollars in renewable project investments go to other states, such as North Carolina.

So, you have a separate reality. Traditionalists are saying that expensive renewables are driving away new business, while the most attractive new businesses are so unimpressed with traditionalist thinking that they are making big investments to promote renewable energy independently.

It isn’t the first like this has happened.

The Ironies of Virginia’s Growing Diversity

Midlothian’s New Grand Mart taps state’s growing diversity

 By Peter Galuszka

Suddenly immigration is popping up as a major issue in Virginia and the nation.

Virginia Beach has been dubbed a “sanctuary city” for undocumented aliens by Fox News and conservative Websites. GOP presidential hopeful Donald Trump is scarfing up poll number hikes by calling Mexicans trying to enter the U.S. illegally “rapists” and proposing an expensive new wall project to block off the southern border. Pro-Confederate flag advocates are pushing back against anti-flag moves, but they can’t escape the reality they are conjuring up  old visions of white supremacy, not their version of respectable Southern “heritage.”

So, if you’d like to look at it, here’s a piece I wrote for The Washington Post in today’s newspaper. When I visited a new, international food store called New Grand Mart in Midlothian near Richmond, I was impressed by how large it was and how many people from diverse backgrounds were there.

Looking further, I found one study noting that Virginia is drawing new groups of higher-income residents of Asian and Hispanic descent. In the suburbs, African-Americans are doing well, too.

The Center for Opportunity Urbanism ranked 52 cities as offering the best opportunities for diverse groups. One might assume D.C. and Northern Virginia would rank well, and they do. More surprising was that Richmond and Virginia Beach rank in the top 10 in such areas as income and home ownership. True, mostly black inner city Richmond has a 26 percent poverty rate but it seems to be a different story elsewhere.

Stephen Farnsworth of the University of Mary Washington says that economic prosperity and jobs that had been concentrated in the D.C. area, much of it federal, has been spread elsewhere throughout the state. It may not be a coincidence that New Grand Mart was started in Northern Virginia by Korean-Americans who undertook research. It revealed that the Richmond area was a rich diversity market waiting to be tapped. They were impressed and expanded there.

Other areas that do well in the study are Atlanta, Raleigh, N.C. and ones in Texas, which show a trend of job creation in the South and Southwest outpacing economic centers in the Northeast, Midwest and in parts of the West. Another story in today’s Post shows that there are more mostly-black classrooms in Northern cities than in the South. The piece balances out the intense reevaluation of Southern history now underway. A lot of the bad stuff seems to have ended long ago, but somehow similar attitudes remain in cities like Detroit and New York.

This progress is indeed interesting since old-fashioned American xenophobia is rearing itself again.

In Virginia, the long-term political impact will be profound as newer groups prosper. They may not be as inclined as whites to embrace Virginia’s peculiar brand of exceptionalism, such as their emotional mythology of Robert E. Lee and Thomas Jefferson. Their interest in them might be more dispassionately historical.

And, as the numbers of wealthier people from diverse backgrounds grow, they may be less willing to keep their heads down when faced with immigrant bashing. That’s what people of Hispanic descent did in 2007 and 2008 when Prince Williams County went through an ugly phase of crackdowns on supposed illegals. They could strike back with their own political campaigns.

Whether they will be blue or red remains to be seen. It’s not a given that they’d be Democratic-leaning. Farnsworth notes, however, that as more diverse people move to metropolitan suburbs, whites in more rural, lower-income places may become more reactionary out of fear. Hard-working and better-educated newcomers might be out-classing them in job hunts, so they might vote for politicians warning of a yellow or brown peril.

In any case, New Grand Mart presages a very crucial and positive trend in Virginia. It shows the irony of the hard right echo chamber peddling stories designed to inflame hatred and racism, such as the one about Virginia Beach being a “sanctuary” for illegals. In fact, the city is attracting exactly the  well-educated and hard-working newcomers of diverse backgrounds upon whom it can rest its future.

But we’re in an age of bloated billionaires with helmet hairdos and no military experience claiming that former Republican presidential candidate John McCain, a shot-down Navy pilot who spent five years in a brutal North Vietnamese prison, is not a hero. If Virginia can ignore such time-wasters and embrace diversity, it will be a better place.

Higher Ed as Engine of Social Injustice

tuition_hikesby James A. Bacon

College tuitions have soared over the past several decades, and so have federal grants and subsidized student loans. Many observers of the higher ed scene believe that easy credit has been a driving force behind the tuition hikes: The more Uncle Sam subsidizes student participation in higher education, the greater the pricing power exerted by colleges and universities. But correlation does not necessarily equal causality. Proof that escalating college loans enables tuition hikes has been hard to come by.

Three economists working for the Federal Reserve Bank of New York think they have found the proof. In a new paper, “Credit Supply and the Rise in College Tuition,” the authors note that federal loan programs have accounted for 90% of all student loan originations since the 2009-2010 school year, and 75% to 80% in the preceding years. Drawing from three separate Department of Education data sets, they show how closely tuition increases track changes in federal lending policy.

When we control for all forms of aid, we find that each additional Pell Grant dollar to an institution leads to a roughly 55 cent increase in sticker price tuition. For subsidized loans, we find a somewhat larger passthrough effect of about 70%. We also find a loading of tuition on unsubsidized loans of 30 percent. All of these effects are highly significant.

Note: To the best of my knowledge, the Federal Reserve Board of New York is not funded by the Koch Brothers or affiliated with the Tea Party.

Bacon’s bottom line: While increased federal support has made it somewhat easier for students to finance their college educations through borrowing, the higher ed establishment captures the majority of the funds. Little of the money has gone to hire more professors, increase faculty pay or otherwise improve the quality of education. Most of it has paid for bloated administrations. Meanwhile, outstanding student-loan debt has skyrocketed to more than a trillion dollars, creating a new class of indentured servants.

This is the hardest evidence yet that one of America’s most ideologically liberal institutional complexes, higher education, is also one of the most exploitative. Colleges and universities talk a good game about social justice, but in the end, they put their institutional prerogatives first.  In the end, higher education has become a powerful engine of social injustice.

(Hat tip: Tim Wise)

Capitalism Triumphs Again!

RAM clinic, Pikesville Ky., June 2011. Photo by Scott Elmquist

RAM clinic, Pikesville Ky., June 2011.
Photo by Scott Elmquist

By Peter Galuszka

If there were any questions about just how capitalism has failed, one need look no farther than Wise County, where, this week, hundreds, if not thousands, of people will line up for free medical care.

The event is ably noted in The Washington Post this Sunday by a young opinion writer named Matt Skeens who lives in Coeburn in the coalfields of southwestern Virginia.

This week, the Remote Area Medical clinic will come to the Wise County fairgrounds to offer free medical and dental care to anyone who needs it.

You might ask yourself a question: why do so many people in one of the parts of the United States that is fantastically wealthy with natural resources need free medical care? Where is the magic of capitalism so often lauded on this blog?

A few insights from Mr. Skeens:

“Local representatives of Southwest Virginia will travel to the fairgrounds to stand on a coal bucket and assure us they’re fighting against President Obama and the ‘war on coal.’ These politicians won’t mention that with their votes to block Medicaid expansion, they ensured that the lines at RAM won’t be getting any shorter. But hating Obama in these parts is good politickin.”

Skeens runs through a list of mountain folk who can’t afford health care. One is a breast cancer survivor who hasn’t had a screenings in years. His grandfather, a retired electrician and coal miner, had also camped out at RAM clinics to get help.

Odd that this is the way I found neighboring West Virginia when I moved there with my family from suburban Washington, D.C. in 1962. Just as it was then, the riches that should have helped pay for local medical care went out of state. Much of the coal left by railcar or barge. Now, natural gas released by hydraulic fracking will find its way to fast-growing Southeastern cities or perhaps overseas thanks to new proposed pipelines such as a $5 billion project pitched in part by Dominion Resources.

While I have never been to the Wise County RAM clinic, I did happen to drop by one in Pikesville, Ky., a coalfield area that is one is Kentucky’s poorest county. It is not far from Wise. I was busy researching a book on Richmond-based Massey Energy, a renegade coal firm, in June 2011.

Photographer Scott Elmquist and I were on our way from Kentucky to an anti-strip mining rally in West Virginia when we noticed the RAM signs. More than 1,000 people had started lining up at the doors around 1:30 a.m. at the local high school.

It was packed inside. A Louisville dental school had sent more than 50 dental chairs that lined the basketball court. Some of the patients said they were caught in a bind: they had jobs but didn’t have enough health coverage and couldn’t pay for what they needed.

Since then, there’s been some good news. Unlike Virginia, whose legislature has stubbornly refused to expand Medicaid to 400,000 residents who need it (supposedly in a move to tighten federal spending), Kentucky expanded Medicaid last year. Now, 375,000 more people have health insurance.

Not so in Virginia. People continue to suffer while those with comfortable lives laud the miraculous benefits of capitalism.

Another Idol Has Fallen: Virginia’s Fiscal Condition Not So Great

Virginia state finances -- not the gold standard we thought.

Virginia state finances — not the gold standard we thought.

by James A. Bacon

Once upon a time, Virginia was widely regarded as the Best State to Do Business. No longer. That reality is slowly making an impression in government and economic development circles, and I sense a growing awareness that Virginia can’t continue doing things the same way it always has.

Virginia also has long enjoyed a reputation for fiscal rectitude, due mainly to its AAA bond rating, the maintenance of which is a bipartisan priority. However, Virginia’s fiscal solvency is slipping, too — and the problem runs deeper than temporary problems caused by cutbacks in federal spending. I don’t get the sense that this reality is yet sinking in.

In research for George Mason University’s Mercatus Institute, “Ranking the States by Fiscal Condition,” Eileen Norcross rates the financial health of U.S. states in FY 2013 based on short-and long-term criteria. Virginia ranks only 21st on the list, lagging Alabama and South Carolina, among other states. (For those on Boomergeddon watch, the states with the most precarious finances are New York, Connecticut, Massachusetts, New Jersey and, of course, the U.S. poster boy for fiscal irresponsibility, Illinois.)

The key insight here is that balancing the budget is only one measure of fiscal health. “State spending may be large relative to the economy and thus be a drain on resources,” writes Norcross. Also, she adds, “The state may define budgetary balance to exclude certain funds or to mask debts, thus obscuring the true cost of spending or the resources required to finance long-term obligations.”

The report compiles five measures of financial strength:

Cash solvency. Can the government pay bills that are due over a 30- to 60-day horizon? On average, the states have a ratio of cash to short-term liabilities of 2.3 to one. Virginia ranks 30th most solvent by this measure.

Budget solvency. Can the state government meet its fiscal year obligations? In other words, are revenues running ahead of spending? Virginia’s capacity by this measure ranked 29th nationally.

Long-Run solvency. This ratio represents the proportion of long-term liabilities — bonds, outstanding loans, claims and judgments, compensated employee absences — relative to total assets. Virginia ranks 27th by this measure.

Service-level solvency. This measure captures how much “fiscal slack” states have by measuring the size of taxes, expenses and revenues relative to state personal income. It is a general measure of whether a government  has room to raise taxes or increase spending. Virginia ranks 5th — the only measure it which it stands out as being in solid shape.

Trust fund solvency. The final measure factors in long-term obligations such as long-term debt, pension obligations and other post-employment obligations (such as health insurance for retirees). Virginia ranks 15th by this measure.

(Hat tip: Tim Wise)

Memories of a Klan Rally

KlanersBy Peter Galuszka

I was looking through a some old clips today and spotted this Golden Oldie that ran in the Jan. 30, 2000 edition of BusinessWeek magazine where I worked for about 15 years. Bloomberg now owns rights to it and I hope they don’t mind me re-running it.

Mindful of the lofty rhetoric one reads on this blog about being Southern and symbols, I thought this might be an interesting read about how nothing is sacred. Not the Confederate Flag. Not even Stonewall Jackson.

It also shows how little things change. The flag and statues of Confederate generals are still flashpoint issues and people like GOP presidential candidate hopeful Donald Trump are running around making offensive statements about Mexican immigrants. (For the record, the late U.S. Sen. Robert Byrd of West Virginia had been a Klan member early in his life and he later renounced his membership).

The Ku Klux Klan rally I covered was on Nov. 6, 1999.

Here goes:

Letter From West Virginia

The High Price of a Klan Rally

Studying me solemnly from across his desk, Thomas A. Keeley sighs and says in his West Virginia twang: “I have to take care of my people.” I kid Tom that he sounds like the sheriff who was battling coal-company thugs in the 1988 movie Matewan. Tom grins. He puts up with me, since we go back 35 years–to grade school here in Clarksburg, a town of 18,000 nestled in the hills of central West Virginia. Today, Tom, as president of the Harrison County Commission, is the county’s top elected official, and I’ve come to find out how he intends to take care of “his people” in what could be one of the biggest crises Clarksburg has ever faced.

In two days, the Knights of the White Kamellia, one of 55 units of the Ku Klux Klan, will hold a rally on the front steps of the Harrison County Courthouse in downtown Clarksburg. The Klan picked the spot because of its dramatic statue of Confederate General Thomas J. “Stonewall” Jackson, born in Clarksburg in 1824. The Klan figures that Stonewall, riding north against the Yankees, will make a dandy prop for its November rally. So will the 70 state troopers, city police, and county deputies who will be providing the security. The Klan believes that the police presence not only will make it appear to be an oppressed group but will also increase the media coverage.

The city-county expense for the Clarksburg rally will be about $50,000–pin money compared with what 40 cities spent in 1999 hosting the Klan. Security at Cleveland’s August rally ran $600,000, although only 21 Klansmen showed up. But Harrison County is in the heart of the Appalachian poverty belt, and it desperately needs the money for other things. The hamlet of Marshville, for example, badly needs help, since its groundwater has been polluted by coal mines. “It’s costing us a lot of money to accommodate a bunch of white-trash bigots, and you can quote me on that,” says Tom, leaning back in his rumpled suit.

But he doesn’t have much choice. Not only is the Klan making noise, but a far more dangerous ultra-right-wing group is also active locally: the Mountaineer Militia, a cabal of heavily armed survivalists ready to fight what they consider excessive federal power. Militia members from the Clarksburg area hatched an Oklahoma City-style plot in 1996 to bomb the new $200 million FBI fingerprinting center in Clarksburg. The installation employs 3,000. After the FBI infiltrated the group, five men were convicted or pleaded guilty to explosives charges; one was convicted of selling blueprints of the center.

IDENTITY CRISIS. Taking a cue from New York Mayor Rudolph Giuliani, who has also had to deal with a Klan demonstration, Tom is forbidding the wearing of masks at the rally, figuring that fewer Klansmen will show up if they are not able to keep their identity secret. At this point, nobody is sure who they are. The only known Klansman is Cletus Norris, who wrote Tom the letter announcing the rally, using a post office box in Grafton, 20 miles to the east. Norris is a former road worker, once employed by the city. The next day, as I drive to Grafton in search of Norris, I try to recall if the Klan had been active when I lived here back in the 1960s.

In the Deep South at that time, the Klan was bombing black churches and killing civil-rights workers. But from what I remember, not much happened here. Besides, Klansmen in these parts traditionally weren’t so much antiblack (there were few blacks here) as anti-Catholic. That was in reaction to the Italian immigrants who streamed into the area in the 1800s to build the Baltimore & Ohio’s main line to St. Louis, taking jobs away from Protestant backwoods types. The animosity was resolved naturally over the years as boy met girl and both defied ethnic hostility. Today, largely due to intermarriage, 40% of local folk are of Italian descent.

As luck would have it, driving down a Grafton street, I spot a parked gray Dodge pickup with bumper stickers bearing Confederate flags and the slogan, “Racial Purity Equals American Security.” Bingo! I walk up the crumbling concrete stairs to a yellow clapboard house and knock on the door. A slim man with a reddish-blond beard answers. “I am the Grand Dragon,” confirms Cletus Norris. He invites me to sit in the warm autumn sun on the front porch of his parents’ house. The experience is unnerving because for an hour, this 33-year-old is talking softly, pleasantly, almost seductively, but is expounding truly hateful ideas. At one point, Norris asks gently, “You aren’t Jewish, are you?” I reply: “No, but I am Catholic.” Norris says: “That’s O.K.”

A Klansman for five years, Norris claims his group is peaceful and interested only in protecting white rights. “Our rally,” Norris reassures me, “will set a lot of minds at ease. They’ll listen to us and see that we’re just normal Christian men.” Their agenda? “By the year 2040, we will be outnumbered by the combined nonwhite races of this country, and whites won’t get a fair shake.” The message is spreading through cyberspace. “We have some people in Europe and Australia, thanks to the Internet,” he says, as he hushes a dog barking inside the house. Norris insists he doesn’t hate blacks, only “race-mixing.” As for Mexicans, the border to the south should be closed. And Jews? “Christ didn’t have one good thing to say about the Jews.”

Later, I contact Mark Potok, editor of The Intelligence Report of the Southern Poverty Law Center, a Montgomery (Ala.) nonprofit that tracks hate groups. He says Klan membership is static at about 5,000, but that 200,000 belong to other hate groups: Membership in those groups is increasing 25% a year.

PEPPER GAS. The following day–rally day–the police are nervous. Clarksburg looks as if it’s occupied by an invading army. Police vehicles include a bomb disposal truck. There are SWAT teams wearing black Wehrmacht-style helmets and face masks. “If things really get out of hand,” says policeman J.P. Walker says at a press briefing, “you’ll hear a siren, and then you’ve got 10 seconds until the pepper gas goes off.” The rally site has three fenced-in pens–one for Klan supporters, one for the press, and one for protesters. Participants must go through detectors, and attendees can’t bring in anything more than a car key.

Right on time, Norris, head up and confident-looking, dressed in white robe, leads the Klan parade out of the courthouse onto the front plaza, right past Stonewall. He is followed by eight Klansmen and two Klanswomen in brightly colored robes and hoods–no masks. About 150 protesters and 20 supporters shout insults at each other. “This country will go down the tubes,” shouts Norris, but he is barely heard above the noise because Tom won’t allow loudspeakers. When a rumor sweeps the crowd that one Klanswoman is a local English teacher (which turns out to be false), she yells good-naturedly: “There’ll be a test Monday morning.”

After two hours without incident and only one arrest–for disorderly conduct–the Klanspeople are escorted to a city parking lot, where they get into three cars, with Missouri, Ohio, and Virginia plates. Norris announces that a rally the next day in Fairmont, 20 miles north, has been canceled. Is that because the mayor refuses to provide security, I ask? “No, we just don’t want to make a nuisance of ourselves,” Norris says. The irony of that is not lost on one police officer. As he waves to the departing caravan, he mutters: “Goodbye, you sons of bitches–and to think I had seats on the 50-yard line at the West Virginia-Virginia Tech game today.”

By Peter Galuszka; Edited by Sandra Dallas

Disgraceful

Richmond City Hall

Richmond City Hall

by James A. Bacon

Fiscal Year 2015 in Virginia came to a close yesterday but the City of Richmond still had not filed its Comprehensive Annual Financial Report (CAFR) for FY 2014, reports the Richmond Times-Dispatch. The report provides an audited overview of revenues, spending, assets and debts critical to appraising a locality’s financial condition.

The City of Richmond is one of only three localities still to have failed to issue the report, the filing deadline for which was seven months ago. With a population of 218,000, Richmond is by far the most populous of the three, which includes poverty-stricken Wise County (pop. 40,000) and the town of Dumfries (pop. 5,100).

“A ten-month delay for something that should be a basic function of government is unconscionable,” said City Councilman Jonathan T. Baliles. “This is what happens when you ignore the fundamentals of government.”

City officials, reports the TD, have cited employee turnover, a lack of training and challenges in implementing a new financial system as reasons for this year’s delay. In other words, city officials blame dysfunctional management.

The problems did not materialize overnight, however. The city issued emergency procurement documents for outside help from an independent consultant to ensure timely completion of the 2013 CAFR. Payments to that consultant have risen from an anticipated $95,000 to $295,000 under  March contract extension.

Shortly thereafter, the city’s auditing firm, Cherry Bekaert, fired the city as a client. According to the TD, partner Eddie Burke cited “a high-risk, dysfunctional working environment that ‘has continually gotten worse every year.'” Ask yourself: How bad did the situation have to be for a midsize CPA firm to turn down a $320,000 annual contract?

Bacon’s bottom line: As Baliles says, balancing the books is fundamental. Add this failure to a string of other spending and administrative scandals over the past few years, and it seems pretty clear that government in Virginia’s capital city is a mess. It wasn’t always this way. Long-time residents remember when Robert C. Bobb ran the city in the 1980s as one of the most effective city managers in the country.

Ultimately, it is the responsibility of one person — the mayor — to ensure that the city functions properly. While Mayor Dwight C. Jones is good at striking the right rhetorical chords on a variety of issues, he has proven ineffectual as an executive.

I admire Jones’ response to the controversy over the Confederate flag and other symbols of the Confederacy, including the statues along Monument Avenue. “Rather than tearing down,” he said recently, “we should be building up in ways that establish a proper sense of balance and fairness by recognizing heroes from all eras to tell a richer and more accurate story of Virginia’s history.” Those are the words of a uniter and a healer, not a divider.

But I’m concerned that Jones doesn’t have much interest in the nuts and bolts of government. Perhaps that is understandable considering that he has divided his time between his responsibilities as mayor, Senior Pastor of First Baptist Church and for a year, chairman of the Democratic Party of Virginia. But when he does focus on his mayoral duties, instead of making sure the trains run on time, Jones has promoted high-profile projects like the Shockoe Bottom baseball stadium, the Washington Redskins training park and the World Road Cycling Championship.

Private investors are pouring money into the city. What most of them want to see, however, isn’t wheeling and dealing that rewards a privileged few. They want to see a city that does the things that cities are supposed to do. Like close out the books on time.

What’s the Deal with Dominion and Coal Ash?

The coal ash ponds at Possum Point

The coal ash ponds at Possum Point

By Peter Galuszka

So what’s the deal with dumping coal ash and Dominion Virginia Power?

A story in the Associated Press that is getting wide attention suggests that the utility may be consolidating five coal ash dumping ponds at its Possum Point generating plant into one that may or may not be properly lined.

If the lining is inadequate, then the coal ash which contains such dangerous chemicals as arsenic and selenium could leach into Quantico Creek and the Potomac River, according to the Southern Environmental Law Center.

Dominion claims it is in compliance with all current state and federal rules although stricter ones are due soon. So why not wait for final rules and bury the coal ash in a proper way? Dominion thinks that would be too expensive, critics say, and it is making its move now.

Dominion announced recently that it was closing nine coal ash ponds at Bremo Bluffs, Chesapeake, Chesterfield and Possum Point. Some of the ponds were opened in the 1940s. Bremo has converted from coal to gas, as has Possum Point. Chesapeake is closing completely.

Just to quash the potential argument, these closings were announced long before the fossil fuel industry started their “War on Coal” propaganda campaign and is doing so for cost reasons. Possum Point switched from coal in 2003.

Coal ash is messy and can be deadly. Its problems were underscored when 50,000 tons of coal ash stored by Duke in North Carolina broke free and splashed into the Dan River. That polluted rivershore into Virginia. Duke ended up with $102 million or so in fines. Virginia fined Duke a puny $2.5 million.

Richmond’s Pathetic Leadership

At the Diamond

At the Diamond

By Peter Galuszka

Richmond is going through an existential crisis. Its “leadership” can’t get anything done after wasting the public’s time and attention on the supposed possibilities of this so-called “Capital of Creativity.”

Two examples come to mind. One is the city’s and region’s utter failure to do anything about its crumbling ballpark. The other is wasting everyone’s time on pushing an independent children’s hospital and then having VCU Health and Bon Secours pull the rug out from everyone.

Mind you, you hear ramblings out the wazoo about how Richmond is all about “regionalism” and how the “River City” is just a dandy place to live. One of the worst offenders is Bacon’s Rebellion, which shamelessly crams Richmond boosterism down readers’ throats.

But what really sets me off is a full page and unabashedly revisionist editorial in this morning’s Richmond Times-Dispatch titled “Ballpark in the Bottom? Definitely not.” The writers claim they “having listened carefully, and at great length, to all sides, we have become convinced a proposal that seemed promising at first is fatally flawed.”

Yipes! This comes after a couple years of the newspaper’s flacking Mayor Dwight C. Jones’ dubious plan to put a new $67 million stadium in historic Shockoe Bottom for the city’s Minor League AA team, the Flying Squirrels, rather than refurbishing or replacing the crumbling Diamond on the Boulevard near the strategic intersections of Interstates 64 and 95.

TD Publisher Thomas A. (TAS) Silvestri, the one-time and obviously conflicted chair of the local chamber of commerce, pushed the Shockoe idea because that was the flavor of the month with parts of the Richmond elite, including some developers, the Timmons engineering group, the Jones regime and others.

It was a bad idea from the start and had been shot down before. The Bottom has no parking and is too cramped. Even worse, it would disturb graves of slaves and other reminders of the city’s darker past such as being the nation’s No. 2 slave trading capital (this is before the “creativity” part).

The AAA Richmond Braves hated the Diamond so much that they bolted to a new stadium in Gwinnett County outside of Atlanta in 2009. A new team associated with the San Francisco Giants decided to move in. The Flying Squirrels have been an outstanding success and in the five years they have been here, their team has drawn more fans than any other in the Eastern League. In fact, their stats place them among the best draws in all of minor league baseball.

But the Squirrels had been led to believe they would get new or greatly improved digs. Instead of focusing on the Diamond (which has ONE elevator for the sick and elderly and it often doesn’t work). A couple of weeks ago, Lou DiBella wrote an open letter to the community noting that nothing has happened. Their deal with the city end next year, raising the issue of whether they will bolt as the Braves did.

Squirrels owner DiBella

Squirrels owner DiBella

I did a Q&A with DiBella for Style. Here’s how he put it:

“We have been a great asset for the whole Richmond region. Where am I looking? I’m not trying to look. You want me to look, tell me. I want to create a dialogue. I want people to be honest and open and candid right now. If you’re going to screw around with us the same way you did with the Braves, the way Richmond did under false pretenses, and there’s no chance of any regional participation or the city being creative in building a stadium — let me know now because I do have to start thinking about the future.”

He has a point. Richmond did screw around with him. Chesterfield and Henrico Counties did, too. The Squirrels get most of their spectators from the suburbs but their political leaders don’t want to spend anything to help. They neatly got off the hook when they conveyed the Diamond from the Richmond Metropolitan Authority, of which they are members, to the city exclusively.

The Jones administration, meanwhile, wasted everyone’s time (except that of the Richmond Times-Dispatch) by pushing the Bottom idea. The business elite sponsored trips for so-called local leaders to fly around the country and look at other stadiums.

Then, nothing. A development firm called the Rebkee Co. came up with a plan to build a new stadium near the Diamond with private funds. But the city refused to even review the plan. They did not accept formal written copies of the idea.

The Jones team did manage to come up with a summer practice area for the Washington Redskins that is used about two or three weeks a year. It hardly draws anything close to what the Squirrels do, but they had little problem pushing with their idea.

Bill Goodwin

Bill Goodwin

Next up is a stand-alone children’s hospital, an idea backed by a group of pediatricians and Bill Goodwin, a wealthy philanthropist and one of the most powerful men in Richmond. He and his wife pledged $150 million for the project and many, including the RTD, talked about it to death. Goodwin’s idea would be to create a world class hospital on the level of the famous Childrens Hospital of Philadelphia.

Then, without warning, non-profits VCU and Bon Secours health system pulled the rug out from under Goodwin and everyone else. They said an independent children’s hospital wasn’t needed, there was no market for it and pediatric care is moving more towards out-patient service, anyway.

The real reason, says Goodwin, is that a stand-alone children’s hospital would mean that other local hospitals would have to scale back their money-making pediatric units.

Also for Style, I asked Goodwin for his thoughts. He was flabbergasted at shutting down the idea without warning. He said:

“We were planning for an independent children’s hospital that was regional and would provide more comprehensive coverage than what VCU and Bon Secours are currently providing. This effort would have been a heck of an economic driver for our community and would provide significantly better medical care for children. Better medical education and research were also planned. We would be creating something that was creating good jobs, and it would be something that the community would be proud of, which we haven’t had recently.”

So there you have it, sports fans – a moment of truth. With its current leadership, Richmond couldn’t strike water if it fell out of a boat. You know it when the editorial writers on Franklin Street start revising history.