Badlands Journal

Below are a few recent news articles that show some of the diversity of interests and concerns that center in Stockton,  a city whose importance is routinely forgotten in the state.

Badlands Journal editorial board

7-29-09

Stockton Record

Stockton to pay $4M in sewer spill settlement...Alex Breitler

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_NEWS/907290313

STOCKTON - The City Council on Tuesday approved a $4 million settlement with environmentalists who claimed that a slew of sewer line spills placed the city in violation of the federal Clean Water Act.

The Stockton-based California Sportfishing Protection Alliance sued the city in September, claiming 1,530 sewer overflows during the previous five years endangered human health and the environment.

Tuesday's settlement requires a gradual decline in the number of spills over the next five years through more vigilant inspections and maintenance, and requires the city to consider new rules requiring private sewer line connections to be inspected prior to the sale of a home.

"These are all things that we are essentially doing now," said Jeff Willett, assistant director of the city's Municipal Utilities Department. "The real struggle and cost issues are the time frame in which they need to be completed."

Bill Jennings, head of the fishing alliance, has claimed the city failed to maintain the sewer system and postponed repairs for lack of funding. The number of spills in Stockton per mile of pipe exceeds the state average, he said.

"The primary goal (of the lawsuit) was to bring the city into compliance," he said Tuesday. "We think we've got sufficient yardsticks, performance measures and goals to secure that."

"We're patching one of the thousand cuts" that are killing the Delta, Jennings said.

Sewer spills are a threat to the estuary because waste-water from a leaking or burst pipe may find its way into storm drains, which empty directly into rivers and streams.

Residents can help by not pouring grease down their drains, Willett said. Grease congeals inside the pipes, forming blockages that can lead to spills.

Under the settlement, the city must hire an additional employee to inspect grease traps at restaurants. It also must conduct closed-circuit television inspections of 1,000 miles of sewer line over the next five years.

The cost also includes $300,000 for environmental mitigation projects elsewhere and $250,000 in fees for the alliance's attorneys and consultants. The alliance itself, Jennings said, does not make money off the numerous lawsuits it has filed but rather is funded through contributions.

Willett said the cost of the settlement will be carried by the Municipal Utilities Department's roughly $70 million budget, which is separate from the city's general fund, the focus of the city's recent budget struggles.

He said should the city adopt rules requiring the inspection of pipes connecting private homes to the public sewer system, homeowners trying to sell those properties would have to pay that expense.

Spanos rides green wave with Preserve proposal...Michael Fitzgerald

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_NEWS0803/907290323/-1/A_NEWS

I think one can say without argument that the AG Spanos Co., though ultra-successful, have not been on the forefront of the green housing revolution.No. This is the developer who ripped out a line of ancient Valley oaks by mistake - oops - which builds big boxes, which pours oceans of asphalt around big boxes, which builds into the Delta, and which, around here, specializes in sprawl so bad it summoned the wrath of the state attorney general.

Yet this week, Spanos Co. announced a bold and admirably progressive $2 billion housing plan with elements greener than Kermit the Frog.

The Preserve immediately had two things going for it.

1). Its high-density design better balances jobs and housing (it calls for construction of a community hospital), preserves farmland and features other "smart" components long overdue for Stockton.

2). It's not the bourgeoisie "Lifestyle Center" Spanos originally proposed for the same - albeit smaller - site at Interstate 5 and Eight Mile Road. That misconceived second downtown would have sabotaged downtown redevelopment.

That said, The Preserve is still new northside growth. It's sprawl, but it's green. It's green sprawl.

That's not ideal. But neither is it the so-10-years-ago sort of housing policy the Valley specializes in. It's an immense leap forward. It's leadership. It's cool.

Of course, developers have a way of winning approval based on good plans then, when the public turns away, requesting waivers to the plan and building the same old sprawl.

Spanos Park West originally won approval as a tech park. The most high-tech thing about Spanos Park West today is the Star Wars Legos in the Target.

"All I can tell you is that (a "smart" Preserve) is my intention," pledged David Nelson, senior vice present of land development for Spanos Co.

"I think really what it is reflective of is the company listening to the community," Nelson said. "Certainly in the wake of the settlement agreement it caused us to take a step back and think about the way we were approaching projects."

So the "settlement agreement" - the lawsuit settlement with Attorney General Jerry Brown and The Sierra Club, who challenged Stockton's sprawly General Plan 2035 - made Spanos adjust. As did the election of a smart-growth council majority.

Just as good, "Encourage an open public process" is one of The Preserve's four basic tenets. If obeyed, this amounts to a opening up of Spanos corporate culture.

Back in the day, company founder Alex Spanos worked behind the scenes. People were involved on a need-to-know basis. You didn't need to know.

As one public figure once told me, by the time the opposition realized the game was in progress, they had already been checkmated. Now, Spanos people are in talks with Campaign for Common Ground and others.

"It was a different way of doing business back then," Spanos Cos. spokeswoman Natalia Orfanos said.

The change is not occurring because the aging founder, unable to run the company, has been replaced by a son, Michael, with a different philosophy, Orfanos said.

"I think if Mr. Spanos were in place right now, ... he would be making the same decisions his sons are making," Orfanos said. "Michael is very much like his dad."

Is some of this greenwashing? Oh yeah. Greenwashing is part of modern business.

But Spanos Co. vows to build The Preserve not only in consultation with the Stockton polity but with Gensler, a global leader in sustainable design, and other green gurus.

If Spanos delivers - and if the market supports The Preserve - the result could re-brand and transform Stockton, claimed Michel St. Pierre, Gensler's San Francisco-based director of planning and urban design.

"Stockton, because of its current black eye, is a perfect candidate, really, to transform itself," St. Pierre said.

Experts predict California's next boom will be in green industry. The Preserve, on top of Stockton's "amazing assets" such as its downtown, waterfront and port could attract green sector jobs.

"My guess is it will not take very much to make this happen," St. Pierre said.

Look 20 years ahead. Downtown and the waterfront are revitalized; high-speed rail streaks through town; The Preserve offers "a model for environmentally and economically sustainable development."

Added St. Pierre, "The Spanos family investment - to have a major developer who has a major interest, a very significant role - is itself a major asset."

Guaranty Bank collapsing...Staff and wire reports

Institution bought Stockton Savings Bank in 1997

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_BIZ/907290305

Guaranty Financial Group Inc. probably can't continue as a going concern, the company said.

Its subsidiary, Guaranty Bank, which has 10 branches in San Joaquin County, is "critically undercapitalized" after recent write-downs related to its mortgage-backed securities portfolio. Guaranty's primary shareholders are unwilling to inject additional capital, the company said.

"In light of these developments, the company believes that it is probable that it will not be able to continue as a going concern," Austin, Texas-based Guaranty said in a filing with the U.S. Securities and Exchange Commission.

Guaranty Bank has agreed to be taken over by federal banking regulators, but a takeover has not yet occurred. Guaranty could end up as the largest U.S. bank failure of the year so far.

Guaranty Bank's board continues to operate, but the federal Office of Thrift Supervision "is exercising a significant degree of control over what had heretofore been the functions of the board," Guaranty Financial said in the filing.

Guaranty Bank's customer deposits remain fully insured up to Federal Deposit Insurance Corp. limits, the bank and regulators said. The FDIC's standard insurance amount is $250,000 per depositor.

"We continue to work with our regulators," Guaranty said in a statement. "We are focused on providing the best customer service possible and believe we can avoid any disruptions to our customers. As a member of the FDIC, Guaranty depositors enjoy the same coverage as customers of other FDIC member banks."

Guaranty Bank has five branches in Stockton, two in Lodi and one each in Manteca, Escalon and Tracy.

Texas-based Guaranty acquired most of those branches through its 1997 merger with Stockton Savings Bank.

Outside bankers interpreted Guaranty's filing as an acknowledgement that the bank has lost its struggle to stay in business. They added that regulators may be negotiating with buyers interested in Guaranty's business, although the company said any transaction would not be expected to result in proceeds for shareholders.

"The game is over as an independent company," said Jim Gardner, a longtime banker who is now chairman of Commerce Street Capital LLC, a Dallas-based investment banking firm. "The shareholders are wiped out and the government is calling the shots."

Guaranty Financial Group's stock closed Tuesday at just under 13 cents a share. Its 52-week high was $6.75.

While Guaranty is technically based in Austin, its top executives work in Dallas. The bank has about 160 branches in Texas and California.

The bank's assets include a weakened loan portfolio and a large chunk of mortgage-backed securities, many based on risky California mortgages.

In its filing Thursday, Guaranty Financial said it wrote down the value of its mortgage-backed securities and took accounting charges of about $1.5 billion.

The write-downs left it with a core capital ratio of negative 5.78 percent as of March 31 and a total risk-based capital ratio of 5.52 percent.

Guaranty was spun off from Temple-Inland Co. of Austin in late 2007, a move sought by Temple-Inland shareholder and New York billionaire Carl Icahn.

A year ago, Guaranty picked up a $600 million additional investment from Icahn and Dallas billionaire Robert Rowling.

In April, Guaranty said banking regulators ordered it to raise its capital levels.

In June, it said it might seek an unusual "open bank assistance" plan, in which its shareholders would inject additional capital and regulators would absorb some of its losses.

Earlier this month, Guaranty said it had assets of about $14.4 billion as of March 31.

The largest bank failure so far this year was Florida-based BankUnited FSB, which had assets of $12.8 billion when it went down in May. An investor group acquired nearly all its assets.

Contra Costa Times

Smaller Delta canal could work nearly as well as massive one in the works...Mike Taugher

http://www..contracostatimes.com/localnews/ci_12932308

Studies of an aqueduct as wide as a 100-lane freeway to carry water around the Delta are showing it might not get as much bang for the buck as some advocates might think.

State water officials recently put the rough price tag at $7 billion to $15 billion, which may be tough to swallow in a cash-strapped state. More importantly, studies are showing a 50-mile-long canal through a right-of-way as wide as three football fields — a size critics compare to the Panama Canal — would be dry much more often than full. Although the Schwarzenegger administration is pushing to have key permits and plans done by the end of 2010, it is likely to be at least 15 years before it could be completed.

These details about size, cost and time — which were included in a presentation last week by the Contra Costa Water District — play to critics of the canal plan, but water officials caution that criticism of the plan's cost-effectiveness is premature and no decisions have been made.

Still, studies show a peripheral canal would provide only slightly more water than agencies have pumped out of the Delta in recent years, and then only if the canal is operated in conjunction with existing south Delta pumps. Even that amount of water assumes regulatory approval that is not assured.

Surprisingly, the difference in average water supply from the massive, 15,000 cubic-foot per second canal favored by water agencies and a less controversial version one-third the size is marginal — less than 300,000 acre-feet on average, enough water for roughly 600,000 households or enough to irrigate 100,000 acres of crops.

"A small one does just as good as a big giant one," said Greg Gartrell, Contra Costa Water District assistant general manager.

"A small one you get done a lot faster without the threat" to water quality and the environment.

In addition to arguing for more consideration of a smaller canal, the water district is arguing for immediate action on a set of more modest — but largely ignored — measures that could improve water supplies and fisheries quickly.

Studies by the Bay Delta Conservation Plan, a committee of water agencies, regulators and environmental groups, shows the large canal would be full 4 percent of the time and would hold a trickle of 2,000 cubic feet per second or less 30 percent of the time, according the Contra Costa Water District's presentation to a group of Contra Costa business representatives.

By comparison, the smaller aqueduct could carry 5,000 cubic feet per second through a 25- to 30-foot tunnel.

Major water agencies say it is too early to make judgments about the appropriate size of a canal but added that if the Delta's vulnerable levees collapse after flooding or an earthquake, parts of the state will become entirely dependent on a canal.

"In the long-term, given the changes we will likely be seeing in the Delta, we will need to look at something in the (larger) 15,000 cfs size range," said Laura King Moon, assistant general manager of the State Water Contractors, an organization that includes Zone 7 Water Agency, Santa Clara Valley Water District and the Metropolitan Water District of Southern California.

Other advocates point out that a larger canal would be prudent for the future if environmental conditions improve and restrictions on water deliveries are eased.

King Moon did not rule out a smaller canal but was critical of the Concord-based water district's conclusions.

"They presume to know the right answer. It's not possible to know the right answer right now," King Moon said.

The conservation plan was launched in 2006 to resolve two problems for water agencies from the Bay Area to San Diego: the potential unreliability of water deliveries from south Delta pumps due to fragile levees and the increasingly tough restrictions on water deliveries to protect endangered species.

The plan seeks to build a canal, restore wetlands and enact other measures that committee members hope will be approved by regulators. King Moon said water agencies hope the canal can at least get water agencies back to the supply levels they were receiving before restrictions triggered by the collapse of endangered fish species.

Meanwhile, with the state's budget crisis addressed for now, state lawmakers are expected to turn their attention to California's water crisis so the entire slate of options is likely to be fiercely debated in coming months, particularly if public money is needed for wetlands restoration and pollution cleanup.

The chair of the state senate's Delta stewardship and sustainability committee, Sen. Lois Wolk, D-Davis, said the Contra Costa Water District's numbers should carry a lot of weight.

"It's always good when a water district does this kind of analysis, especially using the BDCP's own numbers," said Wolk, who has been critical of the proposed canal and the governor's water plans. "A conveyance of a kind that is being proposed by the administration will not be cost effective and may not solve the crisis in the Delta," she added.

"The worst thing you could do would be to build a Panama Canal that you couldn't use or might make things even worse."

Los Angeles Times

Home prices may be stabilizing, market tracker shows

The S & P/Case-Shiller index of prices in 20 major cities rose in May over its April level for the first time since 2006. Analysts say it's too early to declare that the free fall in prices is over...Peter Y. Hong
http://www.latimes.com/business/la-fi-home-prices29-2009jul29,0,5601852,print.story
Another sign emerged that the nation's struggling housing market may be nearing its bottom as a widely followed national home-price index posted its first gain in nearly three years.
The S&P/Case-Shiller index of home prices in 20 metropolitan areas was up slightly in May over its April level for the first time since 2006.
Cleveland, Dallas and San Francisco showed the largest gains in May figures released Tuesday, but Los Angeles prices continued to fall. The index was the latest surprise following reports showing monthly gains in new-home sales and housing starts nationwide, and higher median home sales prices in California.
"The data do show for the first time in quite a few years some potential signs of turnaround," said Maureen Maitland, vice president of index services at Standard & Poor's.
But "in terms of a sustained recovery, we're not out of the woods yet," Maitland cautioned. "What we need is for this to continue for quite a few months."
The nationwide index of house prices was still down 17% in May from the same month last year. But the rapid deterioration in prices has slowed since January.
Many housing market analysts agree that cheers over a few bright spots in the data must be weighed against a more complex range of indicators. Home prices are still falling in many areas, with high unemployment and looming foreclosures likely to weigh down real estate for the foreseeable future.
Even the May index rise over April -- by a half-percentage point -- turns out to be a decline when adjusted for seasonality.
May is a busy month for home sales, which usually bumps prices up. Seasonally adjusted, the index for May was down by nine-tenths of a percentage point from April.
The slowing decline in home prices means "the free fall housing has been in is clearly over," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "But I'm not confident at all we're seeing the end of the period of price declines."
Mortgage interest rates and unemployment are rising, and "we continue to have a massive oversupply of houses by every measure," he said.
Such mixed signals are prompting confusion for homeowners and potential home buyers, and it brought warnings from veteran housing market observers.
"We are extremely concerned that policymakers, banking and real estate industry executives, investors and others will use misleading home price data to conclude that home prices have stabilized. They have not," John Burns, a widely followed Irvine consultant to home builders, wrote in a recent note to clients.

The glut of unsold homes was the mostly overlooked part of a report Monday that new-home sales jumped 11% in June over May. New-home sales were so low in May, however, that even with the double-digit percentage increase, June's new-home sales total was still the lowest for the month since 1982.
The median home sales price is another point of confusion. It has been rising in California and Southern California recently. The California median was up 7% in June from May, to $246,000, according to San Diego-based MDA DataQuick.
But the rise in median price actually reflected falling prices of homes in more expensive neighborhoods, not an end to the downturn. That prompted more sales of relatively pricey properties, changing the mix of all homes sold to a higher-value grouping.
Because the median is the middle of all values, it rises when the group is made up of higher-valued members. So the median can rise even as prices fall -- as long as the prices are falling at the higher end of the market.
Until January, the Case-Shiller index had been declining at a record pace for 16 straight months. Since then, the slide has slowly become less severe.
The index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time. From those data, an index score is used to show price changes. An index score of 100 reflects January 2000 prices.
The Los Angeles index, which includes Orange County, was down 19.8% in May from the year-ago month. In April, the Los Angeles area decline had been 21% from the same month in 2008.
Los Angeles prices are now 42% below their 2006 peak.
The largest year-over-year declines were in Phoenix (34.2%) and Las Vegas (32%).
Other cities showing sharp declines were San Francisco (26.1%); Miami (25.2%); Detroit (24.5%); Minneapolis (21.7%); Tampa, Fla., (20.8%); and Chicago (17.5%).
Despite the likelihood of further price declines, many home buyers are deciding prices have fallen enough. Baker of the Center for Economic and Policy Research is among them; he just purchased a house in Washington, D.C., after renting for five years.
"I didn't think I was hitting the bottom, but I figured I wouldn't get killed," he said. "If prices fall another 5% or 10% I'll be OK. If they fall 20% I'll be upset," he said.

Lenders lack incentive to halt some foreclosures

Banks can profit more by allowing certain types of borrowers to lose their homes, hampering government efforts to rein in foreclosures...Renae Merle. Merle writes for the Washington Post.
http://www.latimes.com/business/la-fi-mortgage29-2009jul29,0,6439981,print.story
Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded.
Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.

The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders deal with three types. Modification makes economic sense for a bank or other lender only if the borrower can't sustain payments without it, yet will be able to keep up with new, more modest terms.
A second set are those who are likely to fall behind on their payments again even after receiving a modified loan and will probably lose their homes one way or another. Lenders don't want to help these borrowers because waiting to foreclose can be costly.
Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification. Lenders have little financial incentive to help them.
These financial calculations on the part of lenders pose a challenge for President Obama's ambitious efforts to address the mortgage crisis, which remains at the heart of the country's economic troubles and continues to upend millions of lives. Senior officials at the Treasury Department and the Department of Housing and Urban Development on Tuesday extracted a pledge from 25 mortgage company executives to do more to help borrowers in danger of foreclosure.
The administration is seeking to influence lenders' calculus in part by offering them billions of dollars in incentives to modify home loans. Still, foreclosed homes continue to flood the market, forcing down home prices. That contributed to the unexpectedly large jump in new-home sales in June, reported Monday by the Commerce Department.
"There has been this policy push to use modifications as the tool of choice," said Michael Fratantoni, vice president of single-family-home research at the Mortgage Bankers Assn. But "there is going to be this narrow slice of borrowers for which modifications is the right answer." The size of that slice is tough to discern, he said. "The industry and policymakers have been grappling with that."
The effort to understand the dynamics of the mortgage business comes as the administration is prodding lenders to do more to help borrowers under its Making Home Affordable plan, which gives lenders subsidies to lower the payments for distressed borrowers. About 200,000 homeowners have received modified loans since the program began in March, while more than 1.5 million borrowers were subject during the first half of the year to some form of foreclosure filings, from default notices to completed foreclosure sales, according to RealtyTrac.
No doubt part of the explanation is that lenders are overwhelmed by the volume of borrowers seeking to modify their mortgages. Rising unemployment and falling home prices have added to the problem.
But a study released last month by the Federal Reserve Bank of Boston was downbeat on the prospects for widespread modifications. The analysis, which looked at the performance of loans in 2007 and 2008, found that lenders lowered the monthly payments of only 3% of delinquent borrowers, those who had missed at least two payments. Lenders tried to avoid modifying the loans of borrowers who could "self-cure," or catch up on their payments without help, and those who would fall behind again even after receiving help, the study found.
Nearly a third of the borrowers who miss two payments are able to self-cure without help from their lender, according to the Boston Fed study. Separately, Moody's Economy.com, a research firm, estimated that about a fifth of those who miss three payments will self-cure.
The borrowers who are most determined to meet their obligations are often unlikely candidates for loan modifications.
"These are the people who will get a second job, borrow from their family to keep up," said Paul S. Willen, a senior economist at the Federal Reserve Bank of Boston and an author of its report. "From a coldblooded profit-maximizing standpoint, these are the people the banks will help the least."

CNN Money

Profiting from bank failures

Big banks are scooping up troubled, smaller institutions at a time when growth is hard to come by -- and thanks to favorable FDIC rules, more deals are likely...Colin Barr

http://money.cnn.com/2009/07/29/news/economy/failed.banks.fortune/index.htm?postversion=2009072911

Since the banking crisis started last year, six regional banks have bought at least two failed banks from the FDIC. The leader has been Zions Bancorp (ZION), a Salt Lake City-based institution that has acquired four banks from the FDIC.

Other buyers of multiple troubled banks include U.S. Bancorp (USB, Fortune 500), the Minneapolis-based bank that last year bought the remains of troubled thrifts Downey Savings and PFF, which failed on the same day. The joint purchase of Downey and PFF wound up being the third largest deal by assets for failed banks last year, after the WaMu and IndyMac sales.

FDIC rules require the agency to resolve bank failures in the manner that's least costly to the deposit insurance fund. The deposit fund is backed by fees paid by banks, but the FDIC has a credit line with the Treasury Department that it could tap in an emergency.

The rash of failures over the past year and a half has come at heavy cost to the fund, which is now 75% below its statutory minimum balance.

The cost to the FDIC fund in the U.S. Bancorp and Zions deals alone was $3.6 billion. The agency also agreed to so-called loss-sharing agreements on some of the transactions, which means the fund could end up shouldering additional costs on troubled assets taken on by the acquirers.

It's this provision -- capping the acquirer's losses at the expense of the fund -- that is most alluring to regional banks and their investors.

Strong regional banks "should benefit from picking up relatively attractive deposit franchises with low or no credit risk given the FDIC loan guarantees that have so far accompanied these deals," Morgan Keegan analyst Robert Patten wrote in a note to clients this month.

Patten pointed to Cincinnati's Fifth Third (FITB, Fortune 500) and Atlanta's SunTrust (STI, Fortune 500) as two of the banks that might be chosen to participate in future deals, while Keefe analysts said U.S. Bancorp and BB&T (BBT, Fortune 500) could be singled out as buyers of more failed banks.

Some bankers have downplayed questions about buying failed institutions. Such deals "really are off our radar," Fifth Third chief executive officer Kevin Kabat told investors last week, noting that there have been relatively few bank failures in the Midwest.

But given the advantageous terms, no one is ruling FDIC-assisted deals out, either.

U.S. Bancorp chief executive officer Richard Davis said in a conference call with analysts and investors last week that the bank "will always be available" for any "opportunities that come along" on the FDIC failed bank list, though it is keeping an eye out for bigger ones.

7-28-09

Indybay.org

Legislature to Consider Big Water Package After August Recess...Dan Bacher
http://www.indybay.org/newsitems/2009/07/28/18612770.php

A peripheral canal may or may not be included in the water bond package that emerges after the State Legislature convenes on August 17 after its summer recess, according to this article by Steve Evans featured in the recent Friends of the River e-newsletter. It has also been reprinted on the California Progress Report website, http://www.californiaprogressreport.org.
The problem is that the Legislative process regarding the creation water package has completely lacked any transparency, so it has been difficult to get any handle on the exact bill or bills that will emerge.
One particularly troubling proposal being advanced argues for bypassing the Delta by taking water out of the Sacramento River just south of Sacramento. "The peripheral canal would then deliver the water 50 miles downstream to the existing California Aqueduct, where it would be pumped south to the Westland's Irrigation District in the Central Valley and to the municipal water districts in the Los Angeles basin," said David Greenwald, editor of the California Progress Report. "One source places the price tag for this at around $20 billion, not to mention the potential environmental and economic impacts." Read more on http://www.californiaprogressreport.com/2009/07/peripheral_cana_2.html.
I encourage everybody interested in saving the Delta to participate in the Million Boat Float on August 16 and 17. For more information, go to: http://www.indybay.org/newsitems/2009/07/22/18612057.php
Legislature To Consider Big Water Package After August Recess...Steve Evans, Conservation Director, Friends of the River.
A Peripheral Canal may or may not be included in a package of water bills that the Legislature expects to take up after their August recess. The water package will likely address Delta governance and ecosystem restoration, as well as water conservation.
Capitol insiders are not saying whether the bill package will expressly authorize a giant Peripheral Canal to divert massive quantities of fresh Sacramento River water around the beleaguered estuary for export to the southern Central Valley and southern California.
The water package will also likely include some kind of appointed water council or water master to manage water operations in the Delta. In addition, the package will attempt to implement the Governor’s call for a 20% reduction in water use in the state. Whether this will include conservation mandates for agriculture, which uses 80% of California’s developed water, remains to be seen.
It is also unknown whether this initial water package will include funding mechanisms, either in the form of a proposed general obligation bond (essentially borrowing money in the name of the taxpayers) and/or water fees. The cost of a Peripheral Canal could be at least $10 billion and new or enlarged dams needed to supply water to the canal would be billions more. Billions are also needed for ecosystem restoration in the Delta and upstream watersheds.
Whatever the Legislature’s Democratic majority intends to do about water, you can be sure that the Republican caucus will withhold any support unless the package includes authorization and funding for new or enlarged dams. Dams on the Republican’s “must do” list include the enlargement of that Shasta Dam (which would drown the last remaining homeland of the Winnemem Wintu Tribe on the McCloud River), the Sites Reservoir (which would divert water from the Sacramento River), and the Temperance Flat Dam (which would drown the scenic San Joaquin River Gorge).
Even if the water package doesn’t explicitly authorize construction of the controversial Peripheral Canal, it is certainly intended to enable its construction. The canal was rejected by voters in a statewide referendum in 1982. Since then, many native fish species in the Delta have declined towards extinction and water quality in the estuary has suffered from the lack of fresh water flows. Water exports through the Delta have more than tripled over the last 50 years.
Southern California developers and southern Central Valley agribusiness are pushing for a canal as wide and as long as the Panama Canal, that can divert more water than the average flow of the Sacramento River. Some Legislators and even some misguided conservation organizations believe that a canal or some other form of “conveyance” could actually benefit the Delta ecosystem and its endangered fish species. But the government’s track record in operating water projects in compliance with state and federal environmental laws is less than stellar and there is no reason to assume that the canal will be operated differently.
There are serious questions about the assumption that a Peripheral Canal, or some other kind of new conveyance system, will benefit the Delta’s ecosystem, fisheries, water quality, and agriculture. The Public Policy Institute of California determined that there is only a 50% likelihood that the Sacramento River salmon population, which is the mainstay of the commercial salmon fishing industry in California and southern Oregon, will remain viable with a Peripheral Canal. The same report found only a 40% likelihood that the Delta smelt would remain viable with a canal.
A recent science evaluation of the draft Bay-Delta Conservation Plan, which is closely tied to the canal proposal, found that the benefits of Delta habitat restoration may be off-set by the negative impacts of the Peripheral Canal diversion on Sacramento River salmon. The same report indicated that the canal would do little to improve south Delta water quality or the survival of San Joaquin River salmon population.
Friends of the River, and its commercial and sport fishing allies, are working with Delta communities and farmers to ensure protections for the Delta in whatever water package that may emerge from the Legislature. Recently, we helped mobilize Delta farmers and Legislators, anglers, and the concerned public at a rally for the Delta held on the Capitol steps in early July.
Friends of the River is also pushing hard for a top to bottom revamp of water rights in California. One of the underlying problems with the seemingly intractable water issue is the fact that California has granted rights to considerably more water than is normally available in any one year. That sets up a permanent but artificial state of demand outstripping supply.
Redetermining the highest beneficial use for all existing water supplies, coupled with significant efforts to encourage regional self-sufficiency through water conservation, recycling/reclamation, and improved groundwater management, will go a long way towards solving the problem. The fact is that California has a water management problem, not necessarily a water supply problem. Look for alerts concerning this important issue when the Legislature reconvenes or visit http://www.friendsoftheriver.org for the latest information.

Two Gates Project: the Gateway to Extinction?...Dan Bacher

As if plans for the peripheral canal and more dams weren't bad enough, the Metropolitan Water District and and the state and federal governments are aggressively working to complete another environmentally destructive government boondoggle, the "Two Gates Fish Protection Demonstration Project."
http://www.indybay.org/newsitems/2009/07/27/18612658.php

The Metropolitan Water District (MWD) of southern California and other water agencies have concocted a new scheme supposedly designed to “protect” the endangered Delta smelt – the "Two Gates Fish Protection Demonstration Project."
However, critics of the project consider the project to be a thinly disguised plan to export more water from the California Delta that will result in the extinction of imperiled Central Valley Chinook salmon, Delta smelt, longfin smelt, green sturgeon and other fish populations. The project is being fast-tracked at the same time that the Schwarzenegger administration, Senator Dianne Feinstein, corporate agribusiness and their allies in the State Legislature are pushing to construct a giant peripheral canal approximately the same size and length as the Panama Canal.
MWD, in a June 9 board meeting, described the Two-Gates Fish Protection Project as a “key near-term project that, according to modeling analysis, should assist in reducing entrainment of Delta smelt and other sensitive aquatic species at the state and federal Delta pumping facilities without adversely affecting Chinook salmon, steelhead, sturgeon or Longfin smelt.”
The project would be implemented by the U.S. Bureau of Reclamation’s installation of an operable gate structure on Old River and Connection Slough in the central Delta between the cities of Stockton and Antioch. “Hydrodynamic modeling analyses have also indicated that gate operations could improve water quality in the central and south Delta,” MWD contended.
Governor Arnold Schwarzenegger recently said he was committed to fast-tracking the project to provide “relief” to San Joaquin Valley agribusiness while affirming commitment to a “water deal” that includes a peripheral canal and more dams.
“With mandatory water restrictions and crops lying fallow, it is clear that every Californian is suffering from our water shortage - and this project will provide much-needed relief,” claimed Schwarzenegger, during a break between his staged "green energy" photo opportunities and holding press conferences regarding slashing the state budget. “While I remain committed to getting a comprehensive water deal done this year, I will aggressively work with local, state and federal officials toward the speedy approval and completion of the Two Gates project so that California’s bread basket can continue to feed the world.”
In contrast, Bill Jennings, chairman of the California Sportfishing Protection Alliance, after carefully reviewing the draft Biological Assessment and draft Mitigated Negative Declaration for the Two Gates project, is alarmed that this scheme is “another bullet speeding towards the Delta’s heart.”
“The stated purpose is to circumvent the export restrictions in the recent Biological Opinions (BiOp) issued by the U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service (NMFS) by preventing Delta smelt from entering the south Delta where they are susceptible to entrainment in the massive export pumps of the state and federal projects,” said Jennings. “The project was hatched in secrecy, but has now been handed to the U.S. Bureau of Reclamation where it is on a breathtaking fast track to construction this fall.”
Jennings said Two Gates is being "merchandised as a scientific experiment" and admittedly seeks answers to a series of hypotheses that need to be verified. These include: do Delta smelt “surf” the tide, can intermittent operation of the gates affect turbidity, will subtle changes in turbidity cause smelt to avoid certain areas?
“Unfortunately, the reality is that the project is an increased water export scheme masquerading as science," stated Jennings. "Suggestions that conveyance be decoupled from the actual scientific experiment and that any positive effects serve to restore smelt abundance have been rejected. The clear intent of the project is to increase water exports over limits imposed by Judge Wanger's Delta smelt decision and the recent BiOp.”
The Recreational Boaters Association of California is also taking aim at the project over concerns that it will impede navigation on the Delta.
“At issue regarding this project is the long standing policy principle of RBOC to keep the navigable waters of California open and accessible to recreational boating,” stated Dave Breninger, 
RBOC President. “In this instance, this appears to have not been taken fully into consideration by Cal-Fed in designing the 2-Gates Project.”
He emphasized that the group is also very concerned about the speed with which the agencies are implementing the project without concern for proper public input.
“There is a very short time-line on the 2-Gates Project. It is on an extremely fast-track for installation targeted for the gates by this November!,” stated Breninger.
Roger Mammon, board member of Restore the Delta, echoed Breninger's concerns about the Two Gates Project blocking navigable waterways, as well as being part of a plan by agribusiness and southern California to increase water exports out of the Delta.
"This is just the start of Southern California and corporate agriculture telling us we cannot play in our own backyard," said Mammon. "And if we want to, we have to play by their rules. Before you know it, there won't be water for Delta residents, aquatic life in our waters, Delta businesses or Delta farms. As soon as they build their Panama Canal of the Delta, they will just wait for us to dry up and blow away."
CalFed, the joint state/federal organization that has presided over the collapse of Central Valley salmon and Delta fish populations while wasting billions of dollars on unsuccessful “restoration” projects, has scheduled a science panel review for 6 August 2009. Information can be found at: http://www.science.calwater.ca.gov/pdf/reviews/Final_2_Gates_meeting_notice.pdf 


“Given that Delta smelt are clinging to existence by a thread, is it reasonable to embark upon a rush project to alter the hydrology of their designated critical habitat simply to get around water export restrictions imposed by the BiOp?” Jennings asked.
Delta smelt, a 2 to 3 inch long fish only found in the Sacramento-San Joaquin River Delta, is an indicator species that demonstrates the health of the ecosystem. The San Francisco Bay-Delta Estuary is the largest and most significant estuary on the West Coast of the Americas and supports an array of species found up and down the coast, including Chinook salmon, steelhead, green sturgeon, starry flounder, striped bass, American shad, herring, anchovies, California halibut and Dungeness crab.
During the presidential campaign and since taking office, President Barack Obama has repeatedly said that he is committed to “integrity” and “transparency” in the scientific process under his administration.
“The public must be able to trust the science and scientific process informing public policy decisions," said Obama in a memorandum to the heads of executive departments and agencies on March 9, 2009. “Political officials should not suppress or alter scientific or technological findings and conclusions. To the extent permitted by law, there should be transparency in the preparation, identification and use of scientific and technological information in policy making.”
Those are welcome words that many would agree with, especially after 8 years of the persistent manipulation of science to the detriment of fish and the environment under the Bush administration. However, if the Obama administration is truly committed to “integrity” and “transparency” in the scientific process, why is the Bureau of Reclamation working with the California Department of Water Resources and MWD to fast-track the construction of the Two Gates Project without regard to proper public input and the impact of the project on collapsing fish species?
CSPA’s Concerns with the Two Gates Project
Here are some of the concerns of Bill Jennings, executive director of the California Sportfishing Protection Alliance, with the Two Gates Project (http://www.calsport.org/7-27-09.htm):
• Environmental review has been short-circuited. A Finding of No Significant Impact (FONSI) and Mitigated Negative Declaration is proposed instead of a full Environmental Impact Statement/Report - this for a project whose purpose is to keep an endangered species out of a part of its critical habitat.

• Required authorizations (i.e., 404 & 401 permits, streambed authorization agreement, consistency determinations with federal BiOps, etc.) are proceeding with reckless and unprecedented haste.


• The models justifying the project have never been peer-reviewed, are based upon questionable assumptions and exclude significant relevant information.
• There has been no effort to determine whether the hypotheses the experiment seeks to verify could be answered in other ways that don't require major structural components and altered hydrology.


• Evaluations of potential impacts to other species (salmon, steelhead, sturgeon, longfin, splittail, threadfin shad, striped bass, etc.) are cursory, if nonexistent.


• There is no evaluation of potential water quality impacts to non-conservative constituents (i.e., the suite of pesticides, industrial and household chemicals, oxygen demand, selenium, mercury, toxicity and other dissolved constituents) that are identified as plaguing Delta waterways. Indeed, the MWD modeling indicates that residence time and water quality problems in Old River at Tracy could increase. Data collection of constituents will be limited to salt, turbidity and chlorophyll.


• Potential problems that arise, like increased predation, will be addressed on the fly by the seat-of-the-pants.


• Should Delta smelt show a slight increase in abundance (for whatever reason); there will be enormous pressure to quickly ramp up exports without waiting for the scientific experiment to run its course. There can be no confidence that the Water Operations Management Team or the fishery agencies will be able to withstand that pressure.


• The recent NMFS BiOp bluntly prohibited installation of the South Delta Improvement Project (SDIP) operable barriers because of numerous fishery impacts. That project was developed over the span of a decade and subject to an EIR/EIS. If the SDIP operable barriers in Grantline Canal and Old and Middle Rivers were environmentally unacceptable, what can justify the haste to install the Two Gates operable barriers?

In sum: what can be the necessity of short circuiting the normal rigorous environmental review and permitting processes to hastily embark upon yet another hydraulic modification of the estuary when every previous effort has led to disastrous consequences? 


CSPA believes that a full EIR/EIS should be conducted and that any increased conveyance should be uncoupled from the scientific experiment. Of course, history suggests that is not likely to happen short of litigation.