Pacifica Interim Executive Director on the Empire State Building Crisis

Subject: Preparing for financial crisis of ESRT lawsuit
Date: Tue, 26 Sep 2017 13:52:39 -0500
From: Pacifica Executive Director
To: Pacifica National Board, Bob Young, Carole Travis, Jaime Gomez, Rob Simms, Ted Weisgal

(Please forward this to all LSB members at your stations.)

We've talked for months about the lawsuit filed by the Empire State Realty Trust (ESRT) against Pacifica. The judge will hear the case on Oct. 4 and there are some very important things you need to know. I wish I had good news but I don't, and I want to remind all of you how serious this is. If you think that this does not matter to you because you are involved with other stations than WBAI in NYC, you are wrong. This will dramatically affect EVERY station in Pacifica.

If you've forgotten about the details of this case, it's about unpaid tower rent and fees at the Empire State Building, where WBAI has its transmitter and antenna. The lease was renewed in 2005 with terms that make it unsustainable - including fees that have increased at more than four times the rate of inflation since then. WBAI managed to catch up on those fees in 2014, but has been unable to keep up with the ever-increasing fees since then. So ESRT, the current owner of the Empire State Bldg, filed a lawsuit against Pacifica last fall. More details are at wbai.org if you want more background.

But I want to stress that this is going to affect you, and your station, regardless of where you are in Pacifica. As I've been saying for some time, whether we reach a settlement agreement with ESRT for something less than the full amount for which they are suing us, or whether the court decides to award the full amount of the lawsuit to ESRT, Pacifica is going to have to come up with a lot of money in the very near future.

Depending on whether we can get a settlement agreement with ESRT or the judge issues a summary judgement, we'll probably have to come up with between $1.5 and 2.5 million very soon. All Pacifica stations can be dramatically and adversely affected by this, and we we all need to stick together to make sure we can get through it. I'm asking all of our LSBs and the PNB to please focus on this instead of fighting with each other, so that all of our stations and Pacifica can survive. Yes, it's that serious. Pacifica's debt is crushing us -- all of Pacifica -- and we have to deal with the ESRT lawsuit now, as it's the most immediate part of the financial crisis caused by our debt. But as I've been saying for months, unfortunately there's more.

The amount for which ESRT is suing us goes up each month as the unpaid fees accumulate. It's currently approximately $2.4 million. In addition, the lease goes until 2020, and there's an additional $2 million of lease obligations between now and then. We hope to get out of that future obligation, but the ESRT has been unwilling to negotiate (so far) and there's no assurance we can get out of that.

We don't know what the judge will decide on Oct. 4, but regardless of the specifics, we're still going to have to come up with a lot of money soon - we just don't know yet how much it will be or exactly when. But I think it's safe to assume that it will be at least $1.5 million.

What makes this even harder to deal with is that the $2.4 million that ESRT says we owe them now is part of a total of $7 to 8 million in debt that Pacifica has accumulated over the years. Frankly, I think this is due to financial neglect, but we need to focus on solutions, not blame. It's now coming down to the wire and we can't keep delaying getting that under control. Some stations have made changes this year in programming and personnel and have had some significant improvements in finances, but some others are still struggling, and we don't have the cash even with all of our bank accounts in all of Pacifica to pay what will be needed for the ESRT lawsuit.

We will probably have to borrow money for this, in order to get enough money fast enough to fund a settlement or summary judgement. But because of our terrible credit, we'll have to pay sub-prime interest rates. What we do not yet have is a plan to pay off those loans - only some suggestions. Failure to pay the loans would be just as bad as not paying a summary judgement in the lawsuit. This is something else the PNB will have to decide. Whatever it is, there will be some pain for all stations. The debt is a legal obligation of all of Pacifica, regardless of who signed the lease and which facility it's for. We all have to do our part to get past this, even if it hurts.

To make matters worse, we have unfunded employee pension payments that have also accumulated over recent years that also need to be addressed soon, and that I've told the GMs to plan for. We've found that the amount is larger than expected. See the FY2015 audit (pages 20-21) that was completed last month for the amounts due for FY2014 and FY2015. Additional amounts we owe for FY2016 and FY2017 are still being determined. This needs to be done in addition to paying whatever very large amount will be needed for the ESRT lawsuit. The total amount for pensions is probably between 3/4 and 1 million dollars, plus there may be additional penalties for late payments for past years.

I've asked for an executive session in Thursday's PNB meeting so that we can talk about strategies to deal with the ESRT lawsuit. It needs to be in closed session because we can't say things publicly that might interfere with getting a settlement in the lawsuit. I'm hoping that the members of the PNB who have insisted on making so many repeated objections that it takes 60 to 90 minutes in each meeting, just to get through agenda approval and minutes from the last meeting, to please not do that, and let us get on with the extremely important discussions and decisions that need to be made regarding this lawsuit.

I hope all of the fund drives now and in Oct. can surpass their goals, as we're going to need every bit of extra cash that we can get. I also hope all of you will make additional donations to your station (or directly to Pacifica) in the next few weeks, and ask your friends as well. I know that many KPFT members are dealing with flooded homes and cars because of Hurricane Harvey and won't be able to donate at all now, but I'm hoping that others can make up for that.

I've been telling all the GMs and the National Finance Comm. for many weeks that it's very important to produce surpluses (by reducing expenses and/or increasing revenues), as every station has debt (including to their own employees with the pension plan) that we have to get under control. One or two of the stations are saving money to pay those pensions, but others have not been able to get their finances under control enough to do that yet. This has to change, and the FY2018 budgets need to plan for the cash flow to fund pensions as well as to pay off loans for the ESRT lawsuit.

Let's please put aside our internal fighting, at least until we get this very real financial crisis under control, and remember that we are here for a very important reason - to ensure that we have Pacifica stations that can inform people that there are other ways than violence to resolve conflicts, stand up to the powerful political and economic interests, speak up for people who are oppressed because they have little political power, and more. We need to be there for future generations, as well as now, to provide independent news, music, and public affairs that other stations won't let you hear. Our country, and the world, need our stations to speak truth to power and stand up for peace and for rights guaranteed by the Constitution. But we won't have those stations to do that critically important work if we spend so much of our energies fighting with each other instead of facing the very real threat that the ESRT lawsuit is to all of us. Let's stand together for peace, for equal rights for all, for civil rights and the Constitution, for the environment, and for real news rather than fake news. Let's stand up for our stations and for Pacifica.

But to do all that, we have to do what's needed for our financial survival, and to make sure that all of our stations can continue providing the invaluable service that our country so badly needs.

Peace,

Bill
William G. (Bill) Crosier
Interim Executive Director
Pacifica Foundation
1925 Martin Luther King Jr Way
Berkeley CA 94704-1037
510-316-9783