Bon Voyage

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City Council President Lois Giess peered down from the third floor at City Hall as Mayor Bob Duffy put an end to the city’s support of a Fast Ferry service.

As Duffy wrapped up, I asked Giess how long the subsequent meeting of the City Council would be. The council planned to meet to remake the Rochester Ferry Company board.

"Short," she said. "We have board members to appoint… to sell a boat."

She and other City Council members had a stoic look as Duffy addressed the press in the City Hall atrium. He told the assembled that making his decision called for answering four questions:

1) Could the city afford this venture?

2) Did the ferry have a sound business and marketing plan?

3) Was there a likelihoodof success?

4) Was this the best way for the city to spend $51.5 million?

He said the answer on all counts was – no.

Here are some other questions to ask as we see the ferry as a city venture drift on:

What would have been wrong in selling the ferry as a city-subsidized service? The paradigm had always been the ferry would sustain itself. That’s how it was sold in the first year – when the private group Canadian American Transportation Systems lost millions. And that’s how then- Mayor Bill Johnson sold it when the city borrowed money to buy the vessel and run it. In 2004, Johnson said he didn’t think it necessary to sell the public that way because the earnings would cover the costs.

Later in the year, he that maybe it wasn’t wise to say that the ferry wouldn’t need city support.

But then in December, when he and Councilman Ben Douglas announced a plan to borrow more money to keep the ferry running, the self-sustaining mentality seemed back in play.

Would people in the city been more resistant to a ferry venture that, up front, called for city bucks? Maybe. But wouldn’t the community have been more accepting of losses if the city could have convinced the public to go along with it?

Under Duffy’s not-so-great "best case scenario," he had the ferry losing roughly $2.7 million. Could people in Rochester have accepted that amount? We’ll never know now.

Are we willing to pay it out now or borrow on a gamble? City Councilman Adam McFadden was one of a number of council members who were not thrilled with the sudden pull out from the project. McFadden said the boat should have been allowed to run another year by borrowing the $11.5 million requested. And then he pointed to Duffy’s call for $.9.5 million from the city’s reserve fund to pay off debts associated with the ferry and for costs in peddling the boat

To him these options were equivalent. "All this city’s got going is its reserve fund and its (good) credit rating," he said.

But in reality these options give very different vibes. Pulling from the reserve to close down shop means grabbing money in the bank. It also means being ultra-conservative, believing that there is no way the investment will take off. Borrowing that money says that the ferry could pick up steam. But it prolongs the financial agony if it continues to flounder.

And ultimately this gets to whether government really belongs in the game of risking the public coffers on ventures like this. Go ahead and apply this argument to the High Falls district… a Performing Arts Center in a Renaissance Square… even running a government bus service.

Was no one going to share the burden? Monroe County has tip-toed around that ferry project for years. Toronto clearly has no interest in it (and Duffy even said that there were agreements in place to pay the Toronto Port Authority money to take passengers).

During the Douglas-Johnson news conference last month, the plan called for tapping other governments on the shoulder for financial help with the ferry. Duffy seemed willing to try it as well. Or at least until this announcement. Clearly his administration believed they’d get nowhere with other governmental agencies.

What could we use $51.5 million for? Duffy posed that question and gave answers like — more than 500 police officers outfitted with cruisers and more the 700 houses made lead safe. But this is one question not worth posing. The city will never see $51.5 million now that it’s getting out. They will sell that boat to pay back part of the initial $40 million in borrowing. They’ll yank money out of reserves (if the City Council approves).

And finally remember awhile back when this space asked what is the Rochester Ferry Company? We said then that it’s the city.

Now we know that it’s a collection of pallbearers.

Don’t Count on DeLay

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You can see it in their eyes… in their tone of voice. Democrats see an opening to win back the House just as the door is closing on Tom DeLay.

Upstate Democrats who want to defeat local incumbent Republicans – especially in the Rochester region – are buoyed by the GOP’s ethical missteps (here’s a link from the Democratic-leaning Daily Kos)

"This is a whole new year… a whole new time," said Rep. Louise Slaughter, a Democrat in Congress from Fairport – one of the few from upstate. "None of the conventional wisdom applies."

Slaughter made the GOP’s DeLay-Duke-Abramoff problems the centerpiece of her national radio response to President George Bush’s radio address last weekend.

And she represents a shining example within the Democratic Party of someone who can take on and defeat an incumbent. She’s done it three times through her long political career – from county legislature to Congress – taking down Fred Eckert in 1986 to win her House seat.

So Louise ought to know about whether the climate is right for incumbents to be knocked off. What advice does she give to people like Dan Maffei (who wants to take down Republican Rep.Jim Walsh); Jack Davis (who wants to defeat GOP Rep.Tom Reynolds) and Eric Massa (a challenger to Republican Rep. Randy Kuhl)?

"These people aren’t going to need any advice," she said.

Really? Well, Slaughter believes that individual candidates have their own strengths (for example, Davis has his own financial resources and Maffei has Washington contacts by virtue of being a staffer on the Hill). She also believes the Democratic Congressional Campaign Committee will have ample cash on hand to help challengers. And, in New York, Eliot Spitzer may be a strong head of the Democratic ticket in 2006.

But here is the thing that’s hard to shake. Democrats can’t bank on the ethical charges alone. This isn’t the age of Watergate, when a scandal took us by surprise. Sadly, we are far more cynical about politicians. The names of those who have been in ethical trouble over the years – Jim Wright, Dan Rostenkowski, Newt Gingrich – are many. And those problems didn’t really spurred on change in voting patterns.

The 1994 Republican revolution may have been built partly on claiming that Democrats long in power have become corrupt. But the real reason for the conservative gain was that the electorate embraced the conservative ideals spoken then.

Have the Democrats staked out an ideological position that will grab voters, that will pull them in? That’s the chore left not only to the DCCC, but to the challengers like Maffei, Massa, Davis or Ken Howard and Paloma Capanna.

The Republican ethical problem opens a door. But the salesmen better have a good pitch or the door will quickly shut again.

Pataki’s Poppies

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Before you read on – click here to take a listen to an interview with Erika Rosenberg. She covered Albany government for Gannett News Service for years before returning to Rochester to keep an eye on the State Capitol as part of the Center for Governmental Research. This interview was done for WXXI’s Need to Know (Jan. 6).

George Pataki gives us another of his State of the State speeches – and once again the actress Margaret Hamilton jumps to mind.

You remember Hamilton – the 1939 artist behind one of the great celluloid villains… the Wicked Witch of the West. More specifically, I hear Pataki and I think of the witch peering through her crystal ball as the heroes of the Wizard of Oz come to the edge of the forest and see Oz itself. They must run through a field of flowers. Poppies.

"Poppies … poppies … " the witch hisses as she casts a spell. "Poppies will put them to sleep … sleep … now they’ll sleep."

Now Pataki’s speech doesn’t necessarily put you in need of a pillow. Instead the message is like all those pretty flowers in the field. And like Dorothy – we barely realize how we’re being lulled into this false sense of comfort. As if there are no problems in New York. Everything is just fine in upstate. Right? Sure.

So to look at this speech we’ll need a little help from Albany-watcher, Erika Rosenberg of the Center for Governmental Research… just so we don’t fall asleep in the field. Rosenberg calls his speeches "feel good, upbeat assessments of the state" and suggests that you take it with a grain of salt.

Good advice to follow for Pataki’s latest and last version. The 2006 model is clearly being showcased not just to a New York audience but to a national one. And yet there are small kernels of a message inside the grand fluff. Here’s but a few:

George’s Appeals to Conservative Nation, Part I – A nod to the death tax – Pataki brought out the laundry list of tax cuts in this latest version. But his repeal of the Estate Tax sounds so much like Inside-the-Beltway Republican rhetoric that it’s hard not to notice.

To be fair, Pataki has moved on the state’s Estate Tax before. He and the state legislature rolled back the so-called extra estate tax imposed on New York residents. But New York remains one of about 20 states that imposes some kind of state estate tax . (this link on Connecticut’s tax highlights those states who still have it in place)

Rosenberg said that in the five years she covered Albany she never remembered Pataki taking the time to mention a cut in the Estate Tax in his opening speech.

And she points out that Pataki’s litany of tax cuts in general is the "first salvo" in the battle to decide what to do with the first surplus the state has seen in awhile – roughly $2 billion. Use it to cut the state’s massive debt? Spend it on social programs? No. Pataki is clearly aiming the money for reducing the tax rates. That’ll play good in the nation’s heartland, no doubt (as long as they forget that New York remains one of the highest taxed states in the nation).

Pataki wanted us to hear about his about his "family friendly" tax policies. But that tax talk appears to get nearer to the national Republican family.

George Gets Medieval on Big Oil – Or so it would sound. Really, he called for New York to take the lead in breaking the dependence on foreign fuel – to free us from international regimes with oil reserves who might also sympathize with terrorists. This also sounds very national in scope.

He’ll do this in New York by making alternative fuels tax free. Hey, isn’t ethanol an alternative fuel? I’ll bet Iowa – the corn growing state that it is – would love a guy who talks about making grain-related products like ethanol tax free. Probably would be great for a presidential candidate to talk about in a state that acts as THE early bell-weather for the 2008 presidential race

Pataki also wants to put alternative fuel pumps at stations along the Thruway. To Rosenberg, it appears difficult for Pataki to achieve these grand plans. We’ll see if the follow-through follows the words.

Reform? What Reform – A year ago there were seven proposals to revamp the operation of state government contained in Pataki’s State of the State message. There was lobbying reform and clamping down on state authorities (Trust me, it’s there.. you have to go to the bottom of the text).

This year? Nothing.

In fact, what’s interesting is that he raised expanding a program that has come under scrutiny for needing reform – Empire Zones. He wants an Empire Zone in every county. This would allow for a more level playing field for counties in New York, supporters of such a move believe.

But just a few months earlier, Monroe County was complaining because of new rules that would tighten up the Empire Zones. This reform came after downstate Assemblyman Richard Brodsky (now an attorney general candidate) focused on Monroe County’s Empire Zone effort and complained that it was being misused.

So is the reform effort – born out of the Brennen Center for Justice report that called New York’s Legislature dysfunctional – dead? Sounds like it if you listen to Pataki.

But hey… as Rosenberg put it, the State of the State is really just like the first day of school. All the kids returning to class, showing off the new clothes mom and dad bought them. Then it’s business as usual.

Now we need the budget message – a more realistic speech. Think of it like Glenda the Good Witch’s snow falling – that should shake all that poppy dust from our nostrils.

Inauguration Bits and Pieces

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We have ourselves a new mayor of Rochester.

But before we look down the road at what Bob Duffy can expect – let’s tie up some loose ends after his inauguration day.

First, it appears that Bob Duffy has made a tradition out of something that appeared to be an off-hand gesture. Two years ago, when Maggie Brooks was sworn in as county executive – she decided to extend an olive branch to Mayor Bill Johnson. This was after a campaign against Johnson for the job (a race she won easily). Brooks bounded off the stage and hugged the big lug. Detente by embrace.

Well wouldn’t you know that Bob Duffy had to replicate the bear hug, jogging away from his podium to find Brooks. If only this new tradition for new county executives and Rochester mayors had been in place earlier. Imagine how different it would be had Jack Doyle embraced Johnson. How about if Bob King and Tom Ryan had just such a moment. Could you see it?

Now let’s get at the speech itself. Duffy reached out to city employees, praising them and telling them he wanted to work in partnership to better the city. He also made note of union leadership. The former chief of police mentioned the head of the teachers union (Adam Urbanski), and the leader of the non-teaching school workers (Dan DiClemente). The former top cop also mentioned by name the top municipal employees’ leader (Tony Gingello) and the head of the firefighters union (Joe Montesano).

But the ex-police chief someone left out the name of Ron Evangelista – the head of the Locust Club, the city union for police officers.

Gee, do you think it was because the Locust Club endorsed his primary opponent, Wade Norwood? Or because the union ran anti-Duffy radio spots (scroll down for audio clips)? Or because of Evangelista’s letter in response to Duffy declining the Locust Club endorsement?

Nah… I’m sure that’s water under the bridge.

Also of note in Duffy’s speech was his return to the three main priorities of his administration – public safety, education and economic development (as if those priorities would be any different for anyone else who would take over as mayor of the city). That last priority – economic development – gets a big mention even though he has yet to fill the job of economic development commissioner (one of the few appointments Duffy has yet to make).

Does it signal a false interest in economic development. No. Instead it may tell us that Duffy is interested in radically altering the economic development function in the city. During the campaign we heard him say that he would like to merge the economic development department with the city’s community development agency. There have been bigger discussions around combining the city and county economic development efforts. Bet on this change coming soon.

And finally, a place in the speech that may give hope to the lovers of metro-government. Those advocates have to be feeling pretty low with the departure of Mayor Johnson – who talked about smart growth and metro government and consolidation at turns. During the campaign to replace Johnson – the issue was barely raised.

Well there was one passage late in the 30-minute speech that might give a glimmer of hope to those hoping government merging isn’t dead. Duffy talked to those who lived outside the city – about how the fortunes of Rochester mean everything to them as well. He said: "You can’t be a suburb of nowhere." A strong, vibrant, attractive city must be the core of our community. We have the ability not only to reinvent our government but also to reinvent our community."

It’s no clarion call for consolidation. It’s barely a nod. But maybe for those mourning the death-knell of the concept – it might be something to hold onto.

Okay, now that that is out of the way – on to the Duffy era. Fasten the safety belts.

The Rochester Ferry Co. Chronicles: Part III – What’s Next?

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So what’s next for the Rochester Ferry Company?

Does it remain a sort of front organization for the city – working only as a way to keep the ferry debt invisible to a "constitutional" limit?

Or is there something more for it to do?

Perhaps it hinges on what the newly-minted Mayor Bob Duffy and the long-time City Council President Lois Giess decide about the board make-up. Should the two loosen up restrictions on board membership – and get the rest of the City Council to agree – maybe real advisors from the business world can populate it.

A group of people schooled in business practices would make sense. But then maybe we could call it what it really ought to be called – an advisory board.

But there is another potential use for this organization. And it stems from the idea of finding other sources of financial support. Everyone from Duffy to outgoing Mayor Bill Johnson to Current City Councilman (and Ferry Company President) Ben Douglas talk about involving other governments in supporting this service.

And why not. Duffy talks about how it can get Canadians to the Finger Lakes wine country and the outlet malls in the region. There is plenty of talk about how the ferry can carry people to Monroe County’s premier golf courses. And, frankly, there is more of an idea that it will take Americans to Toronto then the other way around.

So if outlying counties, outlying towns and the largest metropolis of Ontario are seeing the benefits – why can’t they pony up a little cash. Maybe Duffy sees it this way.

And maybe Duffy could use the Rochester Ferry Company as a first enticement to outside governments. He could invite in officials from potential "governmental partners" and give them a seat at the table… allow them to make some decisions.

But, of course, reality could also rear its ugly head here too. After two awful financial years behind this ferry venture… and with the city on the hook for potentially $51.5 million (and only a boat worth maybe $25 million as the sole asset) potential "partner governments" could politely say no and then run as fast as they could from the offer.

In other words it would take a large sales job.

And so we’re left with a few things: As things currently stand – the Ferry Company IS the city. And there is still a whopping debt left out there on a boat that has so far done nothing but drain away money. And it won’t be the Rochester Ferry Company that pays it off. It will be city taxpayers.

Odd Jobs

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Since Bob Duffy stepped down as police chief to run for mayor, we’ve had one man named to replace him who held the "interim" tag. Now we have another.

The first one – Cedric Alexander – never spoke about whether he wanted the job full time (although Republican mayoral candidate John Parrinello said over and over again that he wanted Alexander – and pushed Duffy to say likewise, something he never did). Alexander took himself out of the running almost immediately – taking a state level position.

Now comes the second short-term chief. Duffy said that Tim Hickey is only interested in helping him along with a transition to a full-time chief. It appears to be a shame, considering Hickey’s long track record.

And to think that outgoing Mayor Bill Johnson said that his appointment to replace Duffy came down to a tight choice between Duffy’s two former deputy chiefs – Alexander and Hickey.

This must mean Duffy wants to go beyond the city borders.

Then came the announcement that Molly Clifford has been named administrator for the Neighborhood Empowerment Team offices or NET.

Clifford will inherit an office that took an awful beating over 2005… from charges during the campaign that it was a waste of money… to protests that said NET is unfairly enforcing laws that were meant to stifle nuisance businesses.

Clifford has a history of inheriting organizations in a tailspin. When she became head of the Monroe County Democratic Committee, in late 2002, there were feuds a plenty in the party. And when she left in early 2005, those fissures still remained.

But Duffy said that his former campaign manager has "incredible skills in bringing people together and leading a team." She’ll get a second chance at flexing those muscles with NET.

The Rochester Ferry Co. Chronicles: Part II – Why is it there?

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Why does the city even have a Rochester Ferry Company? The answer most often voiced is that it keeps the ferry debt off the city’s debt ledger.

Why’s that important? Is that enough to have this agency in place?

Well, first understand that the Rochester Ferry Company acts as a middleman  for ferry funding.

The company took on a $40 million loan from the Australian Export Finance and Insurance Corporation, bought the boat at auction for $32 million, and stashed away the rest in a reserve.

But while the company took on the loan, the city guaranteed the payback. And why not. Remember who the Rochester Ferry Company really is.

Now comes the latest call by the city leaders to borrow another $11.5 million for the service.

The Rochester Ferry Company plays its middleman role here as well. The city uses the Ferry Company in a roundabout way to get at the money. It’s called a leaseback agreement. The city will "lease" the ferry from the Rochester Ferry Company.  Then the city will "lease back" the boat to the ferry company.

The lease agreement makes the city liable for the paying back the $11.5 million loan that the ferry company takes out. Sound familiar?

Sure it does. The company is the city. So, why bother with having this company at all? Why doesn’t the city just borrow the money itself?

The reason, says outgoing Mayor Johnson is it keeps the borrowing off the city’s constitutional debt limit. In a presentation he gave on the ferry project in Boston last summer, Johnson was rather candid on what he viewed as the perils of putting the debt on the city’s ledger. "We would have to spend less on housing and economic development projects, as well as maintenance of streets, parks, and other public infrastructure, in order to raise enough money to buy the boat," he said at this Boston gathering.

Seems reasonable on the surface. That’s $51.5 million in debt on a single project – a risky project. According to the city’s budget book, Rochester has $305 million in bonds and notes that can be counted on its debt limit. Take away the borrowing for schools and you have $136.5 million for city-only debt.

That makes the ferry number look rather… substantial. Remember Ben Douglas, the president of the Rochester Ferry Company’s board, said that selling the boat would give them some money back, but only around $25 million.

So maybe keeping that ferry borrowing off the debt limit gives the city flexibility to borrow for other things.  But you might also say that this arrangement is like taking out a second credit card and claiming it gives you more flexibility to ring up more debt on your family. In other words, put the debt anywhere you like – it’s still debt the city must shoulder.

And here is a question worth pondering. Would any credit rating agency – like a Moody’s or a Fitch’s – ignore the $51.5 million in debt on the ferry even though it’s not part of the city’s constitutional debt limit? Or would they consider it when determining the overall health of the city?

So the Rochester Ferry Company’s role seems limited, doesn’t it?

Or could it be useful in other ways? Let’s tackle that in the last installment of this little series.

The Rochester Ferry Co. Chronicles: Part I – What is it?

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So much written, so much said about the effort to bail out the Rochester-to-Toronto ferry service.

And yet it’s not the City of Rochester that must approve $11.5 million in borrowing for the beleaguered boat. It’s up to an organization called the Rochester Ferry Company. Sounds like a separate entity from city government, right? Well dear reader let’s get at that notion right away.

It’s well worth asking – just who is the Rochester Ferry Company. It was conceived nearly a year ago. This was after the original private owners of the ferry – Canadian American Transportation Systems – showed a big loss for the big boat and closed shop early. The city created the organization to borrow $32 million to buy the ferry.

The oddity of the Rochester Ferry Company showed itself early on. Originally Mayor Bill Johnson wanted to create a not-for-profit corporation. IRS guidelines required that a not-for-profit have a large majority of the board of directors coming from the sponsoring organization. That meant the city. So that meant nine of the eleven people would be city elected or appointed officials.

But a funny thing happened on the way to the corporation. Upon further review, the city thought better of it. The city leaders decided, instead, to create a limited liability company. They changed the name from "corporation" to "company" and called the "board of directors" the "board of managers."

The Rochester Ferry Company was born.

And yet – even though the IRS regulation on board makeup no longer applied – the legislation creating the company still called for nine of the 11 members being city elected or appointed officials. Why? Inertia? Because it was easier to keep going without making changes? Or did the city want that many of its own on the board to keep the tightest possible control on the ferry operation? Johnson had plenty to say about it at the time.

Mayor Johnson and City Council President Lois Giess automatically had seats on the board. Johnson named five others. They were administration officials Ed Doherty, Loretta Scott, Bill Ansbrow and Jeff Carlson (Carlson was eventually replaced by another Johnson administration official, Linda Stango). Giess named four people to the board. And, as you might have figured, they largely came from the city council – Ben Douglas, Wade Norwood and Gladys Santiago.

The legislation also called for the mayor and council president to name one outsider… so Karen Noble Hanson and Charles Barrentine were appointed.

But make no mistake. The Rochester Ferry Company WAS and IS the city.

So when you read news accounts of how the ferry company board was loathe to provide information about the service (see Tim Mains quote)… when you heard that the ferry burned through an $8 million reserve… and when you realized it continued to operate when the bank account was empty — there was only one place to look.

The company is the city.

With the new year… and a new mayor taking office… there will be changes on this company’s board. Incoming mayor Bob Duffy gets Johnson’s seat. And Duffy has ousted Stango, Doherty and Scott. So he gets to appoint replacements. Giess must replace Norwood (who leaves the City Council after his failed run for mayor).

Interestingly enough, there is a movement afoot to loosen up restrictions on the board make-up, to allow fewer city officials. Duffy has said that Giess would like to appoint someone with business experience – an outsider – to replace Norwood. Duffy loves the idea and gives the impression that he would like to do the same. That would take a change of the legislation.

Don’t be surprised if you see that happening on January 5 when the City Council must approve Bob Duffy’s three appointments.

But until then – the Rochester Ferry Company is the city government.

So is the company needed? We get at that in part two of this trilogy.

Duffy and the Non-Partisan Potholes

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Hey, Bob Duffy.

Was that a Republican we saw you appoint to your administration on Thursday? I think the last time there was a Republican in City Hall was, what, Lonesome Charlie (scroll down for this entry). Or maybe Steve May?

Anyway, I’m referring to this new appointee, Paul Holahan. He’s your new commissioner of environmental services. He replaces a guy who has been in city government since the 1970s – the venerable Ed Doherty.

Oh, there were some hurt feelings among some in City Hall when you swept out the old. But frankly, anyone who was paying attention during the campaign should have realized that you were going to overhaul the city staff.

Anyway… I’m looking at this resume for Paul Holahan. He worked for Greece town government for years – that bastion of Republican politics. He worked for the Rochester Genesee Regional Transportation Authority, a place run by Don Riley, a former Republican town supervisor from Greece.

His last job was in Irondequoit. In the fall of 2004, Republican Supervisor David Schantz called his new public works commissioner an experienced and well seasoned management professional (check out page 2).

And now, here he is… in the Democratic bastion of Rochester.

How could it be Mr. Duffy? Bob Warshaw, your transition coordinator, said that Holahan’s party affiliation is "an irrelevent fact."

"There is no such thing as a Republican or a Democrat pothole," Warshaw said. I guess that if I had been paying attention during the campaign I would have realized that you would be reaching across boundaries and lines – even those political.

But here’s the real interesting thing… Irondequoit is going through its own transition. A Democrat, Mary Ellen Heyman, has led a Democratic takeover of town government, ousting Schantz in the  process. (We’ll have more on that transition soon).

Heyman said that she gave Holahan the chance to remain on in Irondequoit. He clearly turned that down.

"I’m disappointed," Heyman said. "But I’m not surprised he chose a different opportunity."

So who knows – maybe Paul Holahan simply sees this as a chance for a fresh start. Maybe he finds you, Mr. Duffy, a more acceptable Democrat. Maybe, as your staff has said, he could care less about all that party stuff.

It is interesting, however.

Oh, you want to know something else that’s interesting? You know who is advising Irondequoit’s incoming supervisor – Mary Ellen Heyman – on the transition? Ed Doherty… the venerable guy that Paul Holahan is replacing.

It’s enough to make your head spin.

And let’s not even get into the fact that you named a former aide to Rudy Giuliani as your deputy chief of staff. But, hey, there are no Republican lunch meetings or Democrat lunch meetings, right?