Tuesday, May 25, 2010

Restructuring Experts predict more municipality bankruptcy

Getty Images
Vallejo, Calif., is one of the few U.S. cities to have filed for Chapter 9 bankruptcy protection.

Indicating how serious a cash crunch many cities and counties are facing, more restructuring professionals expect a major U.S. municipality to default on its debt than predict that a foreign country will be unable to keep its loan commitments, a new survey has found.

In a poll released Monday by consulting firm AlixPartners LLP, 90% of respondents predicted a significant American municipality will default on its debt before 2012. Only 63% of those professionals, however, believe that a foreign country will default in that same period, despite the debt crisis unfolding in Europe.

The survey results likely reflect that there is a willingness among countries in Europe and the Middle East to work together to avoid a debt default, while most believe it’s unlikely that Washington would come to the aid of municipalities, said Peter Fitzsimmons, AlixPartners’ North American president.

“There is very little appetite at the federal level to bail out local governments, and the problems in some cities are severe enough that there will probably be a default,” he said.

A number of municipalities, including Harrisburg, Pa., Detroit and San Diego, have openly discussed their deep financial problems and have even contemplated filing for Chapter 9, the section of the U.S. Bankruptcy Code that governs municipal filings.

Municipalities are struggling in part because widespread foreclosures and commercial property vacancies have caused property values to fall, which in turn limits how much property tax local government can be collected, said Juliet Moringiello, resident scholar at the American Bankruptcy Institute.

“The impact of the financial crisis has trickled up to municipalities,” she said.

AlixPartners, a Southfield, Mich., turnaround firm, polled 91 bankruptcy lawyers, bankers and fund managers earlier this month as part of its annual survey of restructuring professionals.

On Roosevelt Island, A Tribute to Trash Tubes

Kate Milford
Billy Dash changes the oil in one of the Roosevelt Island trash system’s six turbines.

Hidden below ground and running between the 16 apartment buildings on Roosevelt Island is a system of pneumatic tubes that propels household waste at speeds of up to 60 miles per hour. It’s a futuristic solution to the urban problem of trash collection, a grandiose and somewhat elegant advance over the fleet of unsightly sanitation trucks trolling city streets today.

“Everyone kind of grabs on to the quirky Jetsons side of it,” says Juliette Spertus, an architect who has spent two years researching the system. “People assume it’s a relic and not an answer for the future.” Her research is on display at the “Fast Trash!” exhibit at a gallery on Roosevelt Island.

The system was built 35 years ago during a period that saw city and state governments involved in Utopian projects to remake what was then called Welfare Island. According to Spertus, the system was designed with a 40-year lifespan.

Most island resident are scarcely aware that the system exists, according to Judith Berdy, president of the Roosevelt Island Historical Society.

Here’s how it works:

One of Roosevelt Island’s residents tosses a bag of trash down a chute inside an apartment building. The trash, rather than landing in a bin, piles atop a vacuum tube. Five times a day, engineers at a control center open the valves in each building and suck the collected garbage through 20-inch pipes that lead to a collection point at the southern end of the island.

At the collection point, the garbage spins once more -– this time around a cyclone separator that pulls heavy objects apart from the lighter debris -– and then everything is packaged in containers for pick up.

Thanks to the tube system, Department of Sanitation trucks make no house calls on Roosevelt Island.

And here’s a short film about all the objects that get stuck inside the system. (The entire 10-minute documentary by Greg Whitmore can be seen here):

Nature Abhors a Vacuum :: EXCERPT - “JAMS” from greg whitmore on Vimeo.

Roosevelt Island’s tubes were the first municipal-scale implementation of the technology in the U.S. -– the only other one was in Disney World. “It’s like a time capsule, like if someone rolled out a working Model-T,” Spertus says. “It was designed as a model, only no one paid attention to it.”

ENVAC, the Swedish company that built the Roosevelt Island trash system, is still around and vaguely embarrassed by the absence of recycling and other modern touches. But despite the quirk factor — trash hurtling through tubes! — Spertus wants people to see the serious side of the island’s fast-moving waste.

In a way, Roosevelt Island’s garbage system offers a glimpse of an alternative New York, one that sought technology-driven solutions to urban problems. “Basically, trucks were cheaper,” Spertus says. It wasn’t the city’s only foray into tubes. From 1897 to 1953, a pneumatic mail system served parts of Manhattan.

Spertus’s exhibit asks us to contemplate going back to this future. “There’s not a lot of thought about how to incorporate our maintenance systems into the design of our urban spaces,” she says. Roosevelt Island’s trash system might look like a dead-end technology, but parts of Barcelona, Seoul, Stockholm and Hong Kong all use the modern descendants of the same system today. In that sense, Roosevelt Island’s tube-based trash is “as cutting-edge today as it was in the 70s,” Spertus says. Modernizing the island’s system would cost $6 million, according to Spertus.

It’s hard to imagine a city that’s closing libraries and senior centers investing in a pneumatic garbage infrastructure. But it’s also hard to imagine New York City’s garbage being hauled around in the same way forever.

Tuesday, May 18, 2010

The Revenue Limits of Tax and Spend

The Greeks have always been trendsetters for the West. Washington has repudiated two centuries of U.S. fiscal prudence as prescribed by the Founding Fathers in favor of the modern Greek model of debt, dependency, devaluation and default. Prospects for restraining runaway U.S. debt are even poorer than they appear.

U.S. fiscal policy has been going in the wrong direction for a very long time. But this year the U.S. government declined to lay out any plan to balance its budget ever again. Based on President Obama's fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008. The current Greek deficit is now thought to be 13.6% of a far smaller GDP. Unlike ours, the Greek insolvency is not too large for an international rescue.

As sobering as the U.S. debt estimates are, they are incomplete and optimistic. They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs, even though these benefits are officially recognized as "mandatory spending" when the time comes to pay them out.

The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.


The nearby chart shows how tax revenue has grown over the past eight decades along with the size of the economy. It illustrates the empirical relationship first introduced on this page 20 years ago by the Hoover Institution's W. Kurt Hauser—a close proportionality between revenue and GDP since World War II, despite big changes in marginal tax rates in both directions. "Hauser's Law," as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.

What's the origin of this limit beyond which it is impossible to extract any more revenue from tax payers? The tax base is not something that the government can kick around at will. It represents a living economic system that makes its own collective choices. In a tax code of 70,000 pages there are innumerable ways for high-income earners to seek out and use ambiguities and loopholes. The more they are incentivized to make an effort to game the system, the less the federal government will get to collect. That would explain why, as Mr. Hauser has shown, conventional methods of forecasting tax receipts from increases in future tax rates are prone to over-predict revenue.

For budget planning it's wiser and safer to assume that tax receipts will remain at a historically realistic ratio to GDP no matter how tax rates are manipulated. That leads me to conclude that current projections of federal revenue are, once again, unrealistically high.

Associated Press

Like other empirical "laws," Hauser's Law predicts within a range of approximation. Changes in marginal tax rates do not make a perceptible difference to the ratio of revenue to GDP, but recessions do. When GDP falls relative to its potential, tax revenue falls even more. History shows that, in an economy with no "output gap" between GDP and potential GDP, a ratio of federal revenue to GDP of no more than 18.3% would be realistic.

In this form, Hauser's Law provides a simple basis for testing the validity of any government's revenue projections. Today, since the economy already suffers from a large output gap that is expected to take many years to close, 18.3% must be a realistic upper limit on the ratio of budget revenues to GDP for years to come. Any major tax increase will reduce GDP and therefore revenues too.

But CBO projections based on the current budget show this ratio reaching 18.3% as early as 2013 and rising to 19.6% in 2020. Such numbers implicitly assume that the U.S. labor market will get back to sustainable "full employment" by 2013 and that GDP will exceed its potential thereafter. Not likely. When the projections are tempered by the constraints of Hauser's Law, it's clear that deficit spending will grow faster than the official estimates show.

Mr. Ranson is the head of research at H. C. Wainwright & Co. Economics.

Monday, May 17, 2010

With Metropolitan Etiquet

AnimalNY via Jason Shelowitz

Last week, Jason Shelowitz, 30, a Chelsea-based painter and freelance graphic designer, started hanging very realistic facsimiles of MTA service advisories in subway cars and train stations around the city. The goal: to call New Yorkers out for their inappropriate or disgusting behavior, and to make them laugh i the process. “Keep your hands to yourself, perv,” one sign says. Another: “Keep your finger out of your nose. Please.” The posters bear the stamp of the MEA: Metropolitan Etiquette Authority.

Shelowitz created more than 300 posters, which he will finish hanging up over the next few days (though he plans to keep a few to sell or give away to friends). We caught up Shelowitz and asked him a few questions about his campaign for civility.

How did this project come about?

It came about just experiencing different things on the subway and kind of always sharing stories with friends and co-workers. I’m sure you’ve come into work before and said something to the guy sitting next to you, like “You wouldn’t believe it but this morning, someone was eating a big thing of chicken wings and making a mess and throwing bones on the floor and stinking up the whole train.”

Is this a joke?

It’s not really a joke, it is serious. I love New York and I love the idiosyncratic behaviors of people, but when it starts to invade people’s space…on the subway where you have no escape, it’s messed up. If someone is sitting on the train during rush hour eating a meatball sub, dripping sauce on people’s shoes and they look up and happen to see my poster, they might think, ‘This is incredibly disruptive to other people. Maybe I shouldn’t be eating this on the train. Maybe I should just wait to get off at my stop.’ So I was hoping I get through to a couple of people, but really I just wanted to make people smile and relate to it.

How did you decide which behaviors to target?

I sent out a mass email and asked people to send me some their subway gripes. I decided I was only going to do ten posters so I narrowed them down to the ten most occurring. Nail-clipping was a little more obscure, but I threw it in there because I just thought it was funny. Once I had them, I re-wrote them and formulated them into some clever copy so people would at least smile when they saw them.

Where did you put them?

Mostly on the trains themselves. I’ve done the F, V, A, C, E and L trains. I tried and put them next to the service-change posters. Brooklyn and Manhattan are the only boroughs that have them in the stations…I shuffled them so that they would be in random order. The only site specific ones are the staircase pieces, which I try and put near stairs.

Are you going to make more?

No. I decided I wanted to do a small amount because I believed it wasn’t going to take much to get the message out. I’m doing such a small run, I’m not really causing a pollution problem or a mess problem in the stations.

Have the police contacted you? Any fines?

There are probably only ten you can see up anywhere because people are taking them really quickly. I think that’s why the MTA hasn’t contacted me yet. They haven’t really seen them. I witnessed two workers in Union Square checking some out after I put them up. And they loved them. They were laughing and kept walking.

Do you think the MTA should be doing something like this?

I don’t know if it would be as effective. They tell you not to hold the doors open. There are little notes on buses and there are signs on the subway that say give up your seats to people who need them. And to not throw trash around. But they are so ubiquitous that people don’t pay attention.

What’s the most annoying thing that is ever happened to you personally on the train?

I saw a woman eating — she had a plastic bag full of crabs. And she was straight up sucking the meat out of crab parts and then throwing them on the floor. That was probably the most disturbing, just purely disgusting, thing. I had a little turd next to me on the seat once. I was trying to figure out where the smell was coming from. I thought I stepped in something. I don’t know if it was from a baby or a chihuahua or what. That was gross. The turd was on the 1 train. The crab was I think on the F train.

Washington's New Gun Rules

Brooks Kraft for the Wall Street Journal

Biathlete Mark Snyder, shown above at a shooting range in Poolesville, Md.

WASHINGTON—Mark Snyder, an amateur biathlete, wanted to buy a .22-caliber bolt-action rifle for target shooting and figured the process would take about a week. After nearly six weeks, six visits to police departments and $300 in fees, he secured his rifle.

"I was not expecting a free ride," said Mr. Snyder, 45, "but this is an obstacle course they put in place."

The U.S. Supreme Court overturned the District of Columbia's 32-year ban on handguns in 2008, a victory for the gun-rights lobby that seemed to promise a more permissive era in America's long tussle over gun ownership. Since then, the city has crafted rules that are proving a new, powerful deterrent to residents who want to buy firearms.

Legal gun owners must be registered by the city, a red flag for many in the gun-rights community concerned that registration lists could be used to confiscate firearms. The District limits the number of bullets a gun can hold and the type of firearm residents can buy. It requires that by next year manufacturers sell guns equipped with a special identification technology—one that hasn't yet been adopted by the industry.

Up in Arms

See a breakdown of gun-related legislation state-by-state.

The Supreme Court is now deliberating a case challenging handgun bans in Chicago and Oak Park, Ill., which are similar to the former ban in Washington, D.C., and is widely expected to side with gun-rights groups. The experience of Washington, D.C., however, suggests a pro-gun ruling by the Supreme Court doesn't mean an end to the matter. Here, the battle over whether residents can own guns has been replaced by a fresh debate over whether lawmakers can restrict legal gun ownership.

Eleanor Holmes Norton, the District of Columbia's non-voting representative in Congress, is blunt about the point of the city's laws: discouraging gun ownership.

"To get them you have to go through a bureaucracy that makes it difficult," she said in an interview. Her constituents tend to oppose firearms because of gun violence, she said. "Nobody thinks we would have fewer shootings and fewer homicides if we had more relaxed gun laws."

Kenneth Barnes, 65, became a D.C. gun-law activist after his son was shot to death in his clothing store in 2001. He supports the city's current gun law. "I have no issue with the right to bear arms," but the Supreme Court's decision gave the city the right to set gun laws for its citizens, he said. "What we're talking about is self determination."

In 2009, the first full year the law was in effect, homicides in the city dropped to 143 from 186 in 2008. The 2009 total was the lowest since 1966.

In its 5-4 decision in 2008, known as District of Columbia v. Heller, the court ruled that the Second Amendment includes an individual right to self-defense. In doing so, it struck down the city's 1976 ordinance that effectively banned possession of handguns. The ruling offered little advice on what level of regulation might be permissible, giving the city room to maneuver within the ruling's broad outlines.

Brooks Kraft for the Wall Street Journal

Mark Synder unlocks his rifle's trigger

One question now is what impact Supreme Court nominee Elena Kagan might have on future gun cases. Her public record on gun rights is limited primarily to positions she held as a Clinton White House lawyer and as a clerk for the late Justice Thurgood Marshall. The National Rifle Association has said it has some concerns and will work with the Senate to formulate some "tough questions" for the nominee on gun rights. With the five-judge majority that ruled on Heller intact, Ms. Kagan's impact on gun rights cases could be limited in the near future.

Gun-control supporters say the District is acting within the Constitution, in that Heller didn't outlaw all gun control. "From our perspective, there's a broad range of gun-control steps that can be taken that would be constitutional post-Heller," said Chad Ramsey of the Brady Campaign to Prevent Gun Violence.

Wayne LaPierre, executive vice president of the National Rifle Association, said the city's new rules strike against the spirit of the Supreme Court's decision. "Can you go out and buy guns in D.C. and defend yourself as the Supreme Court said you should be able to? No. The citizens can't experience the freedom from a practical level. What good is winning it philosophically?"

In the months since the Heller decision through April, the city has registered 1,071 guns, including 756 handguns and 315 "long" guns, such as rifles. That's a rate of about 181 guns per 100,000 residents. Before the Supreme Court decision, the rate of registered guns in Washington was close to zero.

Across the U.S., federal law-enforcement agencies estimate the total number of guns is between 200 million and 350 million, which results in a rate between 65,000 to 114,000 guns per 100,000 people nationally. A 2006 survey by the University of Chicago's National Opinion Research Center found gun ownership in 34% of all homes.

Right now, the legal advantage lies with the District. In a federal District Court ruling in March, Judge Ricardo Urbina upheld the city's gun law, writing that the Supreme Court didn't rule gun registration "unconstitutional as a general matter." The judge concluded the city had the power to limit the kinds of firearms permissible and the size of ammunition magazines.

Gun-rights groups and several plaintiffs, including Mr. Snyder the biathlete, are appealing the ruling. Mr. Synder joined the lawsuit after calling the NRA to complain about the registration process. Stephen Halbrook, an attorney representing the plaintiffs, predicts the case will come back to the Supreme Court for a second review of District gun laws.

The battle in the District stands in contrast with other areas of the country where gun-rights advocates have been enjoying success. Last month, Arizona Gov. Jan Brewer signed a law permitting residents 21 years and older to carry concealed weapons without permits. On April 19, armed protesters assembled in federal parks in Virginia, including Gravelly Point Park directly across the Potomac River from Washington, taking advantage of a law signed in 2009 by President Barack Obama that allows visitors to carry loaded firearms into national parks as long as the state allows it.


After the Heller decision, the District's city council passed the Firearms Registration Amendment Act of 2008.

Under the law, would-be gun owners must go through a process requiring fingerprints, photographs and the detailing of some job history.

Applicants have to take a 20-question test on the District's gun laws and regulations. There is a five-hour class, including at least one hour at a gun range, although the city doesn't have a public one. Buyers are required to find trainers from a list approved by police. There is a vision exam, and once the process is complete, the gun must be taken back to the police to be fired for a ballistic identification.

The registration expires after three years and must be renewed. If it lapses, the police can seize the gun, and for a first offense, the owner could be jailed for up to one year and fined $1,000.

The law designates certain guns as assault weapons that can't be bought in the city. It limits the size of the ammunition-feeding devices to no more than 10 bullets. Many common semi-automatic pistols can hold more than that.

In 2011, the city will require semi-automatic pistols owned in the city to be produced with devices that imprint shell casings with a code or serial number as part of the firing process. That would make it easier to link shell casings to guns. The technology, known as micro-stamping or micro-engraving, is in its infancy, and most manufacturers haven't yet adopted it.

Peter Nickles, the District's Attorney General, acknowledged the law requires technology that "may not exist right now. But if you build it they will come. While we are not there yet, there is a lot of science out there and a lot of development."

Many jurisdictions around the U.S. have elements of the District of Columbia's law, but few have all of them. Only Hawaii has a gun registration process, in place since 1988, as strict as the District's and only California has a micro-stamping law, though it hasn't been implemented yet. Gun-rights and gun-control groups agree the city's law is among the most restrictive in the country.

Attorney General Nickles contends the District is on sound legal footing. "The effort that was made by the city council was to come up with a law that balanced the Supreme Court's requirement that we authorize firearms for use in self-defense in the home with public safety," he said. "I think we struck the right balance."

The city is surrounded by jurisdictions that don't have the same laws as the District, Mr. Nickles said. The result is there is a proliferation of illegal guns in the city. "There's no denying the fact that we have a helluva lot of illegal guns on the streets," he said, but the solution isn't to "arm everyone."

Even without the new law, Washington, D.C., presents obstacles to the would-be gun buyer. There are no gun stores in the city. It has few federally licensed firearms dealers—businesses that can transfer a handgun into the city that was bought elsewhere.

The city changed its zoning laws in 2009 to permit gun stores, but no business has tried to open one, according to the Attorney General's office. Only one federally licensed firearms dealer, C.S. Exchange, is performing transfers to the public. Under the law, handguns bought outside the city must be transferred through a licensed gun dealer in the city.

Charles Sykes, owner of C.S. Exchange, conducts business by appointment only. He estimates fees for registration, testing, fingerprinting and transfers can double the cost of a gun. He doesn't think demand would support a fully operational gun store. These days, he can go weeks without making a transfer. "At first you had a rush of people going down to police headquarters to pick up information" on buying guns after the 2008 court decision, he said. "But they didn't rush to get firearms."

Lenwood Johnson sits on a District advisory commission, a body elected to represent neighborhoods with various city authorities. In January, he talked about owning an unregistered gun in a short article in the Washington City Paper, an alternative weekly.

Two days later, he said, the D.C. Metropolitan Police appeared at his apartment on a Saturday and asked to search it. They left after finding nothing.

The following Tuesday, Mr. Johnson, 50, went to the police's gun-registration section and picked up an information packet.

Three days later, police came to his apartment again, with a warrant, after he'd left for work. "They searched every inch, every box, every drawer, the dirty clothes hamper, the cookie jar, and didn't find anything," Mr. Johnson said.

Mr. Johnson said he keeps the gun with relatives in Maryland and decided not to bring the gun into the city and register it. "After what I went through with the District, it's just not worth it." A long-time NRA member, he said he is not an activist and doesn't want to draw attention by raising a ruckus. "I just want to legally own a gun," he said.

Lt. Jon Shelton, who commands the firearms-registration section and gun-control unit, said police went to Mr. Johnson after his public statements that he owned an unregistered gun. "We would be neglecting our duty if we did not."

After the Supreme Court's Heller decision, Lt. Shelton, who has been an officer 22 years, said he expected a "much larger response," than there has been in terms of residents buying firearms. "I had geared up. I anticipated it."

Mr. Snyder, the biathlete, said he contacted the registration division Jan. 20, 2009, about registering a rifle if he bought one. "I wanted to do everything by the book," he said.

He says he was told by police he wouldn't be required to submit to the new training requirements, which didn't go into effect until April 2009. "The steps they gave me were to get the paperwork, buy the gun, have the dealer fill out the paperwork, return the paperwork to the police with a photo, take a test with 20 questions and go through fingerprinting."

He learned later about a safety course he needed. He also had a 10-day waiting period. It took days before an approved trainer called back to set up an appointment. By the time he finished the process, he said, it was Feb. 26, and the $300 in fees he paid had doubled the cost of the rifle.

Gramercy Park

[GRAMERCY]David Turnley for The Wall Street Journal

Gramercy Park requires a key and is only open to nearby residents.

Gramercy Park is lovely in the full bloom of spring, but what goes on around the park isn't always so pretty.

For those with keys to its iron gates, Manhattan's only private park is very much a small town, complete with bitter squabbles and decades-long grudges. The neighbors have gathered into two main camps of combatants.

In the official corner are the park's five trustees. Elected to lifetime terms by the owners of lots along the park, they interpret and enforce the 1831 deed created by developer Samuel B. Ruggles. Although James M. Clark Jr. is the trust's chairman, its most visible member is Arlene Harrison, who in 1994 founded the Gramercy Park Block Association, a nonprofit community group.

Getty Images

O. Aldon James

Leading the opposition is O. Aldon James, president of the National Arts Club, at 15 Gramercy Park. Mr. James, who lives in one of the club's 48 residential units, has objected—sometimes with legal action—to many of the trustees' moves over the years. His most recent frustrations: The park was double-locked for five days in April, preventing even key holders from entering; and on May 5, Mr. Clark reprimanded him for bringing 20 architecture and art history graduate students from Columbia University into the park.

Park rules stipulate that the maximum number of guests is six (for events not organized by the trust), of which Mr. James was reminded in a letter signed by Mr. Clark—accompanied by a photograph of the tour group in the park.

"It's Big Brother stuff," Mr. James exclaimed.

"I just reminded him that he was breaking the rules," Mr. Clark said.

Mr. James acknowledges that the rules exist, but he wants them loosened to encourage greater use and enjoyment of the shared space. (He does not, however, argue that the park should be made public.)

[Gramercy1]Sam Bolton/PatrickMcMullan

Arlene Harrison

One former resident, who lived on the park for five years, describes the scene inside the gates: "Unfortunately, the park itself is not that functional for younger residents. I spent little time there, which is a shame considering it is a beautiful place with lots of history, as well as interesting art. You are not able to walk or relax on the grass, and the benches are definitely not intended for socializing."

Mr. James's ire is directed squarely at Ms. Harrison, though she considers this a one-sided fight. "This is a peaceful community," she said. "It's not the least bit of a war."

In addition to her official capacities, Ms. Harrison is a self-appointed warden. She walks the park every morning at 6:30 a.m., making notes on the conditions inside. She circles around to the doormen of park buildings—then circles back in case there is any news that needs to be shared. She returns to the park interior again later. "I come in from 3 to 5:30 to be with the children and the nannies. I talk to them," she said. "I work seven days a week."

She regularly e-mails news and photographs—of anything from gardeners at work to children at Easter—to about 700 residents on the park. She is also now leading the charge against a proposed bar at 38 Gramercy Park. "I am devoted to this neighborhood. Every inch of it," she said.

But in Mr. James's view, Ms. Harrison's devotion doesn't necessarily confers legitimacy: "She does not speak for the trust. James Clark is the chairman."

According to Mr. Clark, the tensions are, at least partially, left over from another era of leadership. In 2001, Mr. James sued the trust and its chairwoman at the time, Sharen Benenson, claiming she prevented him from escorting a group of minority schoolchildren into the park. "The current trustees were not the trustees when the National Arts Club president brought the lawsuit," Mr. Clark said. "But because of the lawsuit and what it has cost to settle that, there is some animosity."

The suit was settled out of court in September 2003 and the terms were sealed.

It was not the first such tussle. In 1994, Mr. James and others objected to the removal of 10 trees (he still refers to it as "arboricide"), and accusations of pigeon poisoning followed, in 1998.

During the recent lockouts, Mr. James chose physical, rather than legal, action. On April 29, he scaled the tall, iron fence with two ladders—just as he did on April 13, when he was confronted with signs reading: "For your safety, the park is closed today."

Ms. Harrison confirms that the park was closed five times—for a routine spring cleanup and for tree management. "We had 12 crab apple trees that were in various stages of decay and dying. It was in danger of spreading to other trees," she said, adding that the tree experts tried "various techniques" that necessitated closing the park, lest children should be put in danger.

Mr. James said he wasn't informed that the park would be closed. Ms. Harrison says that's because he has not asked to be on the e-mail list. Mr. James confirms he is not on the list—as a matter of representation.

"To get her e-mails, you have to belong to the Gramercy Park Block Association," he said. "We are members of the Gramercy Neighborhood Associates."

The GNA, which Ms. Harrison was a part of before splitting off to start her own group, includes residents on the park and in the surrounding neighborhood. GNA's president, Alan Krevis, declined to comment on the differences between his group and Ms. Harrison's. He did, however, praise one of his constituents: "Aldon James has been very generous to our organization."

Ms. Harrison says she started her group—it has 1,600 members on the park and beyond, she says—to reach out to new residents and young families. The difference between the two groups, she says, is based on the breadth of activities: "They are into historic preservation. We work on safety, security and quality-of-life issues."

Thomas F. Pike, a trustee for three years and a resident of the area for 40, defends Ms. Harrison's work for the neighborhood, which he says has the tensions of any family—one with "discretionary money and discretionary time."

"Arlene can walk into the park and name every child in there. She's like a grandmother to everyone," said Mr. Pike. "She's vigilant in protecting the park. She's also a civic activist—and because she's an activist, she can be gristly."

Elected in 2003, Ms. Harrison says the trustees emphasize communication because previous leaders did not. "There was never communication. Nothing that I can remember," she said.

When elected, she and Mr. Clark started sending annual reports to all residents. After the 2001 lawsuit was settled, the trustees drafted formal rules for the park and had them approved by lot owners. The rules—which are posted—are also sent annually. They include: No standing or sitting on the grass. No alcohol. No pets. No Frisbees, soccer balls, footballs or baseballs. No musical, theatrical or other entertainment unless organized by the trust. Wedding parties (no guests) may take photos—while standing only on the graveled areas.

Keys to the park cost $350 per year, and there is only one per residential unit. Buildings may buy two keys per year at $1,000 apiece. In addition, lot owners pay $3,000 a year for normal operating expenses and $2,500 for capital assessment.

Mr. Clark says the rules are an interpretation of the original deed. Written in 1831, it does not ban Frisbees. It does, however, offer specifics on what types of business are not permitted: no tanneries, no brass foundries, no museums, no circus.

Clubs, however, pass muster. And new residents quickly discover that the trust is more closely allied to The Players—the club founded by Edwin Booth in 1888 that is located at 16 Gramercy Park—than the National Arts Club. "It's very low-profile," Ms. Harrison said of The Players. "The community has a caring relationship toward it. We don't want it to disappear."

Although the National Arts Club itself may receive the same consideration, its president does not. "I don't think I spend 10 minutes a year thinking about Aldon James, except when he pulls these stunts," said Mr. Clark. "There's not much you can do about it."

Write to Pia Catton at Pia.Catton@wsj.com