Changes of fortune

Viewing Main St. from a coffee shop, say the one next to Bob Hart Square c. 2006, the special characters that stood out on the sidewalk were chunky fellows in designer California casual attire and cellphones glued to their ears as their mouths made real estate deals. Today, looking out the window of a new coffee shop near the Art Kananger Center the special characters on the sidewalk are the homeless pushing babycarts bearing all the person's worldly goods and someone barrelling down the street on a mountain bike spouting off because she's off her medication for Tourette's Syndrome.
Yet so many of the people who made the decisions that turned Merced into the least affordable real estate market in the nation and then into one of the consistently highest per capita foreclosure-rate metro regions in the nation are still doing business at their old stands. They aren't sleek as they were once. In fact, some have aged so badly they can't be easily recognized beyond the confines of their offices and labeled public seats.
But, the chatting classes are expanded because of the arrival of UC Merced, which produces larger numbers of vacuously confident, subsidized students, youth in numbers still insufficient to become a municipal profit center. Alas, the students of UC Merced may never live up to the myth of their eternal prosperity-producing powers during the heyday of the Boom.
Badlands Journal editorial board
1-28-12
Merced Sun-Star
Merced City Council gets bad news about revenues
Mayor 'determined' not to cut personnel from firefighter or police ranks…JOSHUA EMERSON SMITH
http://www.mercedsunstar.com/2012/01/28/v-print/2208738/merced-city-council-gets-bad-news.html
Merced city administrators recently braced the City Council for challenging budget decisions in the near future.
"Revenue, we might see something, but not like in the old days when we used to be able to bank on 5 percent growth," Bradley
Grant, Merced finance director, told the council at a budget meeting Friday.
Mayor Stan Thurston said the city must come up with creative ways to save roughly $1.5 million to $2 million in the coming
2012-13 budget. "We're going to have to look at very different ways of doing business in some areas," he said. "Can't tell you exactly what they might be, but I'm determined personally that there'll be no further reduction in personnel in fire and police."
When pressed to explain his plans further, he said, "I better not because it's a council decision. I'll throw it out on the table at the appropriate time."
Thurston didn't say he'd take retirement funds or heath care costs for public employees off the chopping block.
The City Council will have to make some hard choices concerning services paid for from "the general fund and discretionary funding," Grant said. "Which primarily are police and fire."
Tough questions about how to pay for services and infrastructure maintenance are nothing new. It's no secret the economic downturn has been taking its toll on Merced for several years.
Five years ago, the city had $17 million in the general fund reserves. By this summer, reserves are projected to be at roughly $7 million. If spending continues at its present rate, by the summer of 2013 the general fund reserves could be downto as little as $3.3 million, according to city officials.
The Government Finance Officers Association recommends that a city the size of Merced keep about $5.5 million in its general fund reserves.
Allowing the general fund reserves to dip lower than the recommended $5.5 million would be "irresponsible," Thurston said.
For the city to maintain that level of reserves, budget expenditures will have to be trimmed by about $2 million.
The city manager will provide the council with a proposed budget in May. The budget is typically adopted by the last meetingin June.
Economic slump forces closure of Merced County Economic Development Corp…Mike Tharp
http://www.mercedsunstar.com/2012/01/27/v-print/2207957/economic-slump-forces-closure.html
The Merced County Economic Development Corp. will cease operations by Sept. 30.
MCEDCO's executive committee recommended the decision and the board of directors approved the action during its Thursday meeting.
The decision to close the organization was the result of dwindling public and private financial support in the current economic downturn, according to a news release from the Merced County Association of Governments.
The organization has been unable to generate sufficient funds to sustain its operations, according to the news release. David Spaur, president and chief executive officer, said he'll stay on through February to help coordinate an economic summit Feb. 23 funded and sponsored by Pacific Gas & Electric Co. "We couldn't go forward and we can't reorganize," he said of MCEDCO, "so it was best to dissolve."
Both the county and city of Merced cut off funding to the agency last year, halving its operating revenue. Since then, MCEDCO has been reliant on private sector contributions to survive, and apparently not enough of them came through.
MCEDCO shuttering its operations because of insufficient funding didn't come as a surprise to Supervisor Deidre Kelsey. "The original intent of MCEDCO was to operate as a tool for the private sector business community and interface with state and local government to expand existing businesses and recruit new industry to Merced County," she wrote in an email.
"While the concept was a good one, finding sufficient funding partners has been difficult from the beginning. Some of their efforts were fruitful, many were not. The business retention and recruitment will now fall squarely on the shoulders of city and county governments. Hopefully, a cooperative arrangement among these entities, which does already exist, can be strengthened and our county will realize more job opportunities and improved economic conditions in the near future."
Elaine Post, development manager for the city of Merced, noted that in her previous job in Los Banos, the Westside leaned heavily on MCEDCO for help until last year as the economy remained stagnant. "It's a shame we can't afford to have this type of organization," she said. "How are we going to promote all our cities? That's what MCEDCO did. When someone (a company) was looking at California, we'd know."
As MCEDCO's demise appeared inevitable, some officials had begun talking about forming a joint powers authority, which would require a memo of understanding from the county's various city councils and boards. An authority would need a board of directors, regular meetings and ways to promote the economic interests of all the cities. And it would face the same lack of funding that drove MCEDCO out of business.
Some analysts believe that unless the private sector becomes more engaged with helping to attract new investment, promote job creation and grow businesses, no single agency will be able to fill the role MCEDCO did for 18 years.
Frank Quintero, director of economic development for the city of Merced, likened the shutdown of MCEDCO to cities statewide losing their redevelopment agencies after an order from Gov. Jerry Brown.
"It's another lost tool from our economic development belt," he said. He did note that in the last quarter of 2011, 24 businesses opened in downtown Merced and that Gilroy-based Pinochio's Pizza had pulled a business license to open at the site of the former Bishop's on the Square.
Quintero said a Dollar General Market would soon open in the shopping center at Highway 140 and V Street.
Spaur had more than 25 years of experience as a consultant, economic development director, president/CEO and chief operating officer for public and private sector entities in more than 20 cities in four counties. Included were the city of Sacramento, Placer County, Fresno County, San Luis Obispo County, Mesa, Ariz., and Coconino County, Ariz.
MCEDCO, which was established in 1994 as a private/public nonprofit organization, focused on serving cities and unincorporated communities in Merced County by encouraging new employment, increasing investment and diversifying the county's economic base. It sought to do that through retention and expansion of businesses, recruitment of new enterprises and encouraging entrepreneurs and small business startups.
2-1-12
FDIC sues former County Bank officials for mismanagement leading to $42M loss…Phil Milford, Bloomberg. Sun-Star Executive
Editor Mike Tharp contributed to this report.
http://www.mercedsunstar.com/2012/01/31/v-print/2212208/bloomberg-fdic-sues-former-county.html
The Federal Deposit Insurance Corp. sued former officials of County Bank in Merced, part of Capital Corp. of the West, claiming their mismanagement caused $42 million in losses through bad loans.
Named in the suit, filed Jan. 27 in federal court in Fresno, were former County Bank Chief Executive Officer Thomas T.
Hawker; John J. Incandela, Dave Kraechan, and Edwin Jay Lee, who are former vice presidents; and Edward Rocha, the former chief operating officer and bank president.
"Defendants caused or allowed County to make imprudent real estate loans," the FDIC said in the complaint. The bank, which was established in 1977 and provided residential construction loans in the Central Valley, failed in 2009, according to the complaint. The FDIC is receiver for the bank.
"Management repeatedly disregarded the bank's credit policies and approved loans to borrowers who were not credit worthy" or lacked sufficient collateral, the FDIC alleged.
A spokesman in Sacramento for Rabobank, for which Rocha is now North Central Valley regional president, said neither the bank nor Rocha would have any immediate comment "so it doesn't affect the outcome of the litigation."
Other former officers either had no phone number listed or had an unlisted number, and couldn't immediately be located for comment on the lawsuit.
Before its failure in early 2009, according to earlier Sun-Star reports, County Bank was by far the biggest financial institution in Merced County and the only publicly traded company with headquarters here. It had 39 branches in 13 California counties, most of them in the Central Valley.
A community hallmark since 1977, County Bank had battled for months to stay afloat. Its financial condition began spiraling downward with the collapse of the San Joaquin Valley's real estate market.
The bank reported its first annual loss, $3.7 million, at the end of 2007. It struggled to find enough investors to offset its mounting troubles and announced in February 2009 that it lost $96 million in 2008. In mid-2008, County Bank had 38 percent of Merced County's banking market share, representing $676 million in deposits. It was closed in February 2009 and its business was transferred to Westamerica.
In January 2009 the Federal Reserve Board and FDIC sent a team to County Bank, according to a report by the Fed’s Inspector General. That team concluded:
"...the root causes of County's failure were (1) a precipitous decline in the local real estate market that caused significant losses concentrated in the construction and land development loan component of the bank's commercial real estate portfolio and (2) the Board of Directors' and management's failure to mitigate the bank's credit risk exposure in the face of sharply deteriorating real estate market conditions. County was closed after loan losses mounted, earnings and capital were impaired, liquidity was strained and efforts to raise capital or find a buyer or merger partner failed."
The current case is FDIC v. Hawker, 12-CV-00127, U.S. District Court, Eastern District of California (Fresno).
To contact the reporter on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net. To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
2-2-12
Rep. Dennis Cardoza
http://by155w.bay155.mail.live.com/mail/InboxLight.aspx?FolderID=00000000-0000-0000-0000000000000001&InboxSortAscending=False&InboxSortBy=Date&n=52113165#n=1562556410&fid=1&fav=1&mid=c12c2297-4de0-11e1-9077-00215ad80c0e&fv=1
This week, I welcomed President Obama's new housing initiative that closely mirrors the far-reaching re-financing bill I first introduced in 2009, the Housing Opportunity and Mortgage Equity (HOME) Act.  Like my bill, the President’s new plan will allow responsible homeowners to refinance their mortgages at the current historically-low interest rates, saving them up to $1000 a month and helping them hold on to their homes.
President Obama’s support for a sweeping refinancing program like my HOME Act is a monumental step toward bringing the housing market back from the brink.  Millions of homeoers across the country have been devastated by plummeting home values and an epidemic of foreclosures.  Banks have so far failed to cooperate in stemming the housing crisis. It will take a bold and sweeping initiative like this to get us back on track.
Like my HOME Act, the President’s plan would allow any homeowner, as long as they are current on their payments, to refinance their mortgage at the current market rate.  Many of these homeowners are locked in at rates approaching 9% and have been unable to refinance because the housing crisis has pushed their homes “under water,” so that they owe more on their mortgages than their homes are worth.  Refinancing would significantly lower the homeowner’s monthly mortgage payments, saving them money and stabilizing the housing market by preventing unnecessary foreclosures. 
The Central Valley has been ground zero in the housing crisis.  In some communities, over 53 percent of mortgages are underwater and over 70,000 people have lost their homes to foreclosure since the crisis began in 2007.  Ending this crisis is critical to the Valley’s economic recovery and I couldn’t be happier that the President has decided to seriously attack the housing crisis.  I look forward to working with all of my colleagues in the House and Senate to implement the President’s housing plan and bring homeowners the relief they desperately need.
To read more about the President's new housing plan, click here (or go here: http://www.whitehouse.gov/the-press- office/2012/02/01/fact-sheet-president-obama-s-plan-help-responsible-homeowners-and-heal-h)
Sincerely,
 
Dennis Cardoza