December 6, 2009

Answering and raising questions about American Tire and Recycling; Proposed Racine business to use tires to generate power

Our last story on American Tire and Recycling, a company planning to open in Racine next month, drew two interesting comments from people in the know:
I have had dealings with the CEO of American Tire & Recycling,Kerry Ecklund. He is also the owner of Keweenaw Scrap Tire & Metal. He means well, however, is looking for hand-outs. He knows how to dodge bullets, and manipulate the public relations machine. The cities of Racine and Niagara need to consult with the Michigan D.E.Q., Calumet (MI)Township, Houghton (MI) County. Ask about revolving loans, development block grants and loans. How many were paid back? Why did Kerry pack-up his shredder operation in MI and move to WI?
and
American Tire & Recycling doesn't seem to be an efficient operation,refering to the plan to ship tire parts to/from Niagara/Racine.Anyone in the recycling industry can tell yopu that the more you move products/by-products around,the more costs accrue.If all they plan to do is make T.D.F. (tire derived fuel), they'll not last very long.T.D.F. is a low-grade product that sells for $20 to $50 per ton. Real tire recyclers furthur refine tire shred to such products that command a premium on the recycled rubber market (crumb rubber,playground surfacing). As one who is heavily involved in the tire recycling industry, I think American Tire Recycling is a company looking to operate with other peoples money to benefit company shareholders. This has happened before.
We've done some background research on American Tire, and there's a shred of truth to the comments. Keary Ecklund, head of American Tire, is tied to a large scrap metal company in northern Michigan. (We actually reached Ecklund at Keweenaw Scrap Metal in Hancock, Mich.) His family also owns Ecklund Carriers, a national trucking company.

The interview with Ecklund went well. He talked openly about his company's plans for Racine and how it will tie into their operations in Niagara, which is about three hours north on the Wisconsin-Michigan border.

Ecklund said the plan is to setup a simple tire collection point on Memorial Drive in Racine. Truck drivers will collect used tired from a radius of 100 miles and bring them to Racine, where workers will cut the treads from the sidewalls and then put them on another truck, which will drive the cut tires to Niagara for recycling.

Ecklund said he's planning to hire about 90 employees to work two shifts. The employees will work four 10-hour days in a row and then get four days off. The jobs will be low-skill jobs at the site and truck drivers to collect materials. There will be no scrap material on site.

We discovered a few new specifics about the company, including how it makes business sense to collect tires in Racine and ship them all the way to Niagara for recycling. The reason: biomass fuel.

Ecklund said his company is recycling tires to sell to paper plants, which use the material to burn with biomass, mostly wood, to run their plants. The rubber helps the biomass burn more efficiently. Recycled tires burn consistently at 16,000 BTUs, while biomass burns at between 6,000 and 9,000 BTUs. Combining the two ingredients helps raise the temperature of the biomass and even out the temperature.

It's a good market for American Tire because several major paper plants are switching to biomass as a more reliable fuel than coal, which has fluctuated in price in recent years, Ecklund said. Biomass is also a renewable resource. Paper company harvest forests every 20 years, which is a lot quicker than coal is produced.

He added We Energies and other companies are also planning to build biomass plants in the coming years, which gives American Tire additional customers for its materials. (Read a 2008 story about his plans, which says he can get $50 a ton for tire-derived fuels.)

Ecklund said American Tire originally setup its recycling operation in northern Michigan, but had to shut down because it was drawing too much power from the region. "We were making lights flicker in people's homes," Ecklund said.

His company is planning to move into a former power plant in Niagara, which offers plenty of energy infrastructure to run the recycling business.

Ecklund said he learned about the terminal on Memorial Drive in Racine because his family has run a trucking company for many years. He said he knew every "nook and cranny" for trucking companies in the state.

"We're excited to get in there," Ecklund said.

What was interesting about the interview with Ecklund was the number of minor differences he shared with the information provided to city officials at last week's RDA meeting. RCEDC and city officials suggested the business was up and running, but it's not. Ecklund only received approval to move into its Niagara site last week.

Officials also suggested a similar operation to the one in Racine was running in the La Crosse area, but Ecklund said they had no other sites running in the state. If the Racine operation goes well, he said, they're looking at two other tire collection sites in Wisconsin.

Officials also made no mention of the use of recycled tires for power plants - they only said uses would include shredding tires for playground surfaces - and didn't tell the RDA about Ecklund's significant ties to scrap and recycling companies. While not critical information, it was very difficult to track down information about a company named "American Tire and Recycling" in Wisconsin. It was significantly easier to find information about Ecklund's scrap business.

While we seem to have an answer to the first commenter's question - Why did Kerry leave Michigan? - we haven't researched Ecklund's track record in other communities. It probably makes sense to look further into his companies before the city approves just under $40,000 in free rent for the operation.

That said, jobs are jobs. If American Tire is going to put 80-90 people to work in Racine, it's hard to blame officials for taking a leap-before-you-look approach to welcoming the business to the city.

48 comments:

  1. 80-90 where? I don't think so. He is telling them what they want to hear and they are daft enough to believe him. A local company looked at the same site and city would not return their calls. Besides it will just be another scrap yard to sell your gutters when you can't afford your property taxes. Good job Mr. Dickert, another wonderful job from city hall.

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  2. You should look at how many judgements are against this guy in the court system. I know because he screwed me and still owes me the money the court said he would have to pay me. He even owes a Harlem Globetrotter money.

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  3. Keary likes to party like a rock star. He likes to squander money hanging out with hollywood stars and rocking and rolling. Watch out Racine and enjoy your dance with Keary.

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  4. I am not sorry about reposting this because I am fairly certain that this is their business plan (I am SURE that these people did not turn over a business plan to the City, and even if they did, O'Connell and corridor expert do not have the experience and knowledge base to review it):

    "We need money to come here, we're going to hire some people, we need more money to hire more people, we need more money to keep the people we hired and to hire more people, if you don't give us more money we'll close and this will hurt your economic development plans, see ya. . ."

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  5. Dustin/Pete - here's a thought: ask to see their business plan but, if they require it, sign a NDA and agree not to provide any details. Then you can report on whether a business plan exists or not!

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  6. Hey Guys your not done with your research, how many paper mills use Biomass? What are they using now for filler?
    With Doyle's "Green Jobs" bill projected to lose 38,000 jobs and close most of the paper mills what happens in 5 years is that another mess for us to clean up?
    What are the wages going to be? for the "80" jobs.

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  7. Dickert has proven to jump head over heels into deals that backfire and prove his inept business sense, this is another such example. This has not been thought out or researched enough for us to roll the red carpet out. These jobs will be 8 dollar an hour jobs, believe that.

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  8. I think that Dickert's foolish ideas be more fodder for The Post to look into.
    The Mayor first said we have 9 of 14 TIFS failing but yet he still wants to play real estate games, well what are you The Mayor or a Developer?
    Tax base is the cry used to destroy Farmers Markets and community garden spaces at the same time the city just hands out money. I will be hiring lots of help this winter remove snow and will pay more then $8.00 can I get my mortgage paid for by the City?

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  9. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=wi&vol=wisctapp2\2002\01-1151&invol=1

    Ask about this

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  10. concrete katie12/07/2009 8:31 AM

    So why is this guy getting a deal here? Why does SC Johnson get deals? Why does the gas station guy in West Racine get a deal? I never got any deal. I was actually told a couple of months ago that there are no exceptions, that every taxpayer is treated the same via a incomprehensible letter from the assessment guy at City Hall which was then copied and sent to everyone at City Hall so that they could laugh at their own taxpapers and hide behind their ridiculous and completely dishonest response to taxpayers who must pay for all these breaks to SC Johnson and others who are being courted at the expense of us.

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  11. Pete and Dustin - if you are going to promote comments - the two paragraphs above, the least you could do is give us their names and positions.

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  12. Is there anywhere else in Racine where you can just click on a story and find out as much as you do at the Racine Post? I have decidedly mixed feelings about this website, but thank you for taking the time to look behinds the scenes on stories of local import. Can you imagine the impact if an organization the size and scope of Lee Enterprises were to do some investigative reporting on Racine's government? We might actually clean out the crooks and have a chance at rebuilding our city.

    Party on!

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  13. Top five under reported stories

    DRC and Bid #1 and the following of the law

    How much of the RCEDC does the City pay and what positions there are City workers?

    The conflict of interest on many City Committees

    What City funded programs are being pressured to do off the book work for what city staff pet projects

    Who owns many of the buildings along State St? When did they buy them?

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  14. Dear 8:31 AM, Amen!

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  15. "Ecklund said American Tire originally setup its recycling operation in northern Michigan, but had to shut down because it was drawing too much power from the region. "We were making lights flicker in people's homes," Ecklund said."

    More power means more coal burned a great green company! Thank God Racine is a green City!
    Racine smashes Farmers Markets
    Goes out of its way to end plans for Urban Gardens.
    Refuses to write a simple law for homeowners wanting to compost but wants UNIT to make the call.
    Yes Racine an American Green City.

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  16. I think this is a reflection on the mayor's poor planning skills, and I'm not trying to be funny.

    The more I see of this guy, the more it looks like he runs things on the fly. High risk/high reward philosophy that is only good when it works.

    This deal might still be a good one when it is all said and done, but I don't get the sense that anyone is doing their homework. The mayor wants to say he brought the business into the city, and rightfully so with the unemployment rate as high as it is here.

    The real question is if the $40k is worth it, and will it pay off in the long run.

    I don't have an issue with the city using funds to bring in companies that would not otherwise be here, but it has to make sense and fall into the overall strategy and plan that the city has. Problem is that we don't know what the overall strategy and plan is because the mayor never delivered.

    So what we're left with is the potential for very inconsistent decision making. Is the $40k incentive expected for every deal from now on, or just this one? What are the acceptable tactics to bring business into the city? How much money is too much? Where will the money come from?

    If all of these things were known up front, then it is a little easier to deal with. As it is right now, it just seems like a knee-jerk decision for a much needed win around here.

    The larger point though is that there is business and then there is smart business. The main difference is planning, and the mayor should deliver the 10 year plan. It would answer a lot of questions and make any future deals easier to understand.

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  17. Yes, Racine is a city run by and for the rich green trash, the money-mutts who ride roughshod over the rest of the residents.

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  18. concrete katie12/07/2009 11:33 AM

    "Where is the money coming from?"

    It comes from taxpayers....at least some of us. Other taxpayers get passes and breaks and passes and breaks. Favoritism? What is the deal? This is open government? This is transparency? This is government by the people?

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  19. "The real question is if the $40k is worth it, and will it pay off in the long run."

    If its only 40K as a one time deal could not RAMAC write a check or RCEDC would not that be something we could expect them to do?
    Why is it the tax payers, is does it seam that there is always something the public is not told?

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  20. http://www.maforests.org/Facts.pdf

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  21. 11:19 - well make some money and quit whining!

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  22. 11:35

    That's really part of the key question. Should tax payers fork out the money?

    That's why we need a strategy.

    The reality is that if you are going to compete for outside business, it will require incentives. That can take many different types of forms, but all are basically cost to the taxpayer.

    In some cases, the money might be worth it. For instance, let's say the business in question was to employ 50 people and pay $50K/year for most employees, and more for management. If a $40k tax incentive package is enough to convince that company to setup shop here instead of somewhere else, then I think you could argue the net benefit to the city is very much on the plus side.

    But that situation doesn't always apply. A consideration has to be the quality of company and jobs it brings. Should taxpayers dish out the $40k for $8/hour jobs? Well, the answer might be yes, or it might be no. It depends on what the goals of the city are.

    If the goal is to reduce unemployment at any cost, then yes spend the $40k. There is a strong case for this with unemployment so high. These are at least jobs that bring spending money into the city in the form of wages. There is also the point of momentum. Getting things going in a positive direction in terms of jobs is valuable. Companies are not flocking here, so any wins help the mayor attract more, even if the cost is a little high on this deal.

    On the other hand, if the goal is only to use money to attract a certain level of company...wages, size, etc - then maybe you don't spend the $40k on this deal. The wages could be pretty small and city resources (money)are tight right now. Paying this money sets a precedent and it is one that is not unlimited. Money is tight and must be spent wisely. There is some question as to if this company is even viable. That's a great reason to do your homework and make sure those precious dollars are spent well.

    Tough call...depends on what your goals and plans are. But we don't have a plan or vision from the mayor from which to judge this decision. That's why the 10 year plan is important. This shouldn't be a political football...it should be common sense. Every successful enterprise has a plan.

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  23. Why bother importing this joker from Michigan? Sounds like trouble.

    There are plenty of out of work people from Racine. Why not set them up with this business?

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  24. FYI, it is $40k a year.

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  25. I thought the $40k was for an 18 month lease.

    On the plus side, the did negotiate for the requirment that they hire from the city.

    That has to be considered in the pro/con analysis of the deal.

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  26. 40K a year?! Hit the road Jack

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  27. Something else to consider is that the credit market is pretty tough right now for small business. Part of the reason the $40k may be spent like this is due to difficulties in getting loans in general. Typically, those loans could be used for the startup or expansion costs, but perhaps not in this case.

    A good question to ask the mayor would be why the $40k as a lease payment and not some other form of investment.

    The fact that they need this money upfront could indicate a poor cash reserves on hand.

    Another possibility is that they know the city is in trouble and they're using that to bargain. Smart move on their part, but we pay.

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  28. BTW

    I think the Racine Post deserves some thanks and credit here for their work on this story.

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  29. Maybe maybe not, I still think they are drinking Dickert's Kool Aid

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  30. If they were drinkig the kool aid then I'm not sure this story would have come up.

    Sometimes maybe we take for granted that the Racine Post exists at all. I think we're lucky to have an alternative news source. I don't think Dustin and Pete are getting rich off of all this work and it must take a lot of effort and time to put all of this together.

    In the end, we benefit.

    This story in particular raises some important questions about strategies that the mayor is undertaking to draw business into Racine (a worthy goal).

    If we spend money now, then maybe we don't have it later for a more attractive business down the road. Things are tight so we have to spend wisely....but make no mistake either....we will have to spend some money to help move things forward. Recovery won't be free.

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  31. concrete katie12/07/2009 3:24 PM

    No. This city is selecting who should get favors and who should be shut out. The city does so behind closed doors by people who are appointed to their posts or are well paid employees of taxpayers.

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  32. concrete katie - prove it. Site some specific examples.

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  33. concrete katie

    That's why some transparancy would be nice. I think something like the 10 year plan could provide that because it would detail out the strategy for the city. Then, it wouldn't be a surprise when things like this come up, and it wouldn't be a surprise when other things are approved or denied (left behind as you say).

    This is just one good example. It feels random to me, and not part of an overall strategy. The mayor has a lot of energy and passion, but I don't think he could write up a plan to save his life. He would be a great asset at helping to execute a plan. He's got drive and passion, but as mayor that is not enough.

    If I were a prospective business considering coming here, I just got two messages:

    1. Racine is willing to negotiate
    2. I can squeeze them for $'s

    This isn't entirely negative though. Sending a message that Racine is willing to deal will undoubtably help attract other businesses. The question is at what cost and are we attracting the right type of business.

    It also brings up another issue: organic economic growth or imported economic growth. We have seen what can be done to attract new, outside business - but what is the strategy for existing business that might not be seeing these same types of deals?

    You can think of it like sports. Sometimes you build through the draft, but then you also bring in a couple of free agents from the outside to round out your team.

    To win, you generally have to do both.

    But what is the mayor's vision on this? I have no idea. Another reason the 10 year plan should not just be a stupid campaign slogan, but instead a tangible and well thought out valuable resource.

    Put it out there and let the public weigh in on the strategy and if there is sufficient opportunity for organic growth.

    Then good thing about having the plan is that when these scenarios come up, then everyone knows where he stands....and when other situations come up, they know why he said no or went in another direction.

    Right now, he changes his position (or comes up with it) based on the issue coming up. There are all kinds of consistancy gaps.

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  34. Ok Everyone, It's time to just accept the fact that we were lied to and mislead in regards to the mayors "10 year plan" Hell, there is no 2 year plan.... The back door, shady deals continue to go down. We must question with vigor and demand answers. There are many more shady boderline illegal dealings to be brought to light very soon. Thanks Racine Post for exsisting!

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  35. What message are we sending to prospective mayoral candidates if we just let Dickert take a pass on the 10 year plan promise? I think the public needs to continue to press on this issue until it comes to resolution. If not, then nothing anyone says during a campaign will ever matter because they know they will not have to follow through on their promises.

    Some people just accept that statement as given with politicians, but citizens of Racine have the power to hold people accountable. He got elected to do something that he has completely brushed aside. There is no other way to say it. He banked on nobody caring about this and that is a very sad reflection on his character I have to say.

    The ability to deliver on this task was within his power to do. There's really no excuse.

    Not having the plan gets us into situations like this with American Tire and Recycling and the Corinne/State Street development, West Racine Tousis, Land Speculation, Korean owned-store, etc, etc, etc

    Nobody understands where we're going with all of this. If we did, then it would be easier to make decisions and rationalize decisions. You wouldn't have as many misunderstandings and outrage on an issue by issue basis.

    This scenario with American Tire will keep playing itself out time and time again and we'll keep having the same arguments and people will wonder why some are treated differently than others.

    So, I disagree about letting Dickert off the hook on the 10 year plan. If you campaigned on it, then deliver it or step down because you lied. You lied.

    The people have to have higher expectations and not get trampled on by well intentioned people that promise things they know they can't deliver or it will happen again and again.

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  36. I have been against this project from the beginning, stating time and time again that the taxpayers of Racine SHOULD NOT be paying this company's operating expenses. I am happy to see the 90%+ negative posts concerning this project. Pete, Dustin and the inept city government should take a lesson from this. But they probably won't.

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  37. Dustin,

    You have a power here that we don't. On a couple of occassions, and even recently, you asked the mayor about the 10 year plan. You didn't ask that question in contempt or to make him look bad. You asked on behalf of Racine because it was legit and the right thing to do.

    My question to you now is; how does it feel as a citizen, a man, a journalist, that Dickert lied right to your face without shame?

    I feel bad for all of his campaign supporters that gave their valuable time to this man while deceived them all and campaigned on a lie.

    I'm sure the city council has no respect for him, and why should they? He likes to talk tough but can't back it up. Everywhere he speaks, people in the backs of their heads are going to think he is full of it. How effectively can you govern when nobody believes you will follow through? How fair is that to the city and people that elected him?

    Do the right thing Dustin and ask Dickert again. It is time to make a stand.

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  38. Guys, It doesn't matter any longer. He never had a one year plan let alone a 10 year plan. We got suckered and I got suckered with the rest of you that voted for him, we've all been had! This guy was a mistake and we all know it! He's got another year and then we find someone true with their head screwed on straight. AND NO FORMER LOBBIYIST"S as Dickert is.....

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  39. Graham,

    What happened to all the Liberals that have been beating you up on this issue? Seems they can't handle facts! As I stated on a different blog the truth would come out and the liberals and their mighty Dickerthead would be silent. Lets see the "Mayoral Dweeb" work his way out of this one. First he gives land to a Nazi and now this great vetting job boys?

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  40. Graham,

    What happened to all the Liberals that have been beating you up on this issue? Seems they can't handle facts! As I stated on a different blog the truth would come out and the liberals and their mighty Dickerthead would be silent. Lets see the "Mayoral Dweeb" work his way out of this one. First he gives land to a Nazi and now this great vetting job boys?

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  41. well, there was actually a business plan presented which was drawn up by an outside party. A very good, accurate one at that.

    You can look stuff up online - but could never know the background to each situation...like the fact that it is NOT a Harlem Globetrotter, it is a son of a Harlem Globetrotter that also imbezzled $200,000 from Mr Ecklund, but, due to the court system as it is...those types of facts just dont surface.

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  42. 1. Why would an outside party draw up a business plan? Isn't that the job for the company we are throwing money at?

    2. The only "business plan" presented to the city was a letter written by Brian O'Connell. If American Tire wants our money shouldn't they give us the courtesy of actually showing up for the meetings where the city is throwing money at them? Has anyone from the company even been to Racine?

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  43. Anon 11:57 I am sure that all the lawsuits brought against Mr. Ecklund have been ridiculous claims and that the courts are always wrong. If this man stole $200,000 from Mr. Ecklund, why didn't he take him to court first, in order to get his money back. If you expect the citizens of Racine to send a check, maybe he should send and explanation.

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  44. If 40K is available to bring jobs to Racine along with a free building then we should have a request for proposals. Maybe a local has a great idea for a better business. Why should this only be given to this guy exclusively?

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  45. This comment has been removed by a blog administrator.

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  46. Graham, and others: Enough with the childish variations on Mayor John Dickert's name. Show some respect, stick to the issue at hand, or put your comments elsewhere.

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  47. Dear 11:56 AM, The only people who make money in Racine are corporate crooks, dope dealers and counterfeiters.

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