12-8-08Modesto BeeRetest clears Turlock water after positive tests for bacteria...Bee Staff Reports http://www.modbee.com/local/story/526075.htmlTwo tests came back positive in November for bacteria in a water system serving 26 central Turlock customers, officials said Friday.Follow-up testing showed the bacteria were not harmful to humans -- Fecal coliform or E. coli -- according to the city of Modesto, which operates the system."No one was in danger," said Allen Lagarbo, deputy director of Public Works -- Water Operations. "The retesting proved the water was safe and clear."The state requires water quality testing and notification to customers when contaminants exceed the maximum levels. The Department of Public Health sets drinking water standards and has determined that the presence of total coliform bacteria is a possible health concern.Total coliform are common in the environment and are generally not harmful themselves. The presence of these bacteria in drinking water generally is a result of a problem with water treatment or the pipes that distribute the water, and indicates that the water may be contaminated with organisms that can cause disease.Sacramento BeeAM Alert: No budget, no infrastructure projects...Shane Goldmacher, Capitol Alerthttp://www.sacbee.com/static/weblogs/capitolalertlatest/017631.htmlThe entire state Legislature will meet today in a "joint convention" to get even more dire news about California's woeful financial situation.Treasurer Bill Lockyer, for instance, will tell lawmakers that unless a budget is adopted the state will stop financing construction projects for roads and other infrastructure. That's not just bond sales for future projects -- those will stop, too. It means projects that are underway will no longer be able to draw down cash from the treasurer's pooled account as the state's general fund moves toward insolvency. Thousands of jobs could be lost."No budget, no state financing," said Lockyer spokesman Tom Dresslar. "The spigot is completely off. We're talking about a complete shut-off of state infrastructure financing unless we get a budget fast."Lockyer, Controller John Chiang, Department of Finance Director Mike Genest and Legislative Analyst Mac Taylor will describe the consequences of failing to reach a budget compromise.The state faces an estimated $27.8 billion deficit over the next year and a half.Barring moves by the Legislature, Gov. Arnold Schwarzenegger said in a letter to state lawmakers last week that, "The state will experience a cash-flow crisis beginning in February or March."After the lame-duck Legislature failed to reach a budget accord, Schwarzenegger called for a special session of the new Legislature to address the state's "fiscal emergency." The new members -- including 25 "true freshmen" -- were sworn in only a week ago.Outside of the annual State of the State address or speeches by visiting dignitaries (such as the presidents of Mexico and Spain, in 2003 and 2001, respectively) - joint sessions are rare for California."There have been presentations by heads of state and distinguished policy experts but in those instances they were sharing their expertise with the Legislature," said Dotson Wilson, the Assembly's chief clerk and parliamentarian. "This particular joint convention is much more interactive," Wilson added.The format of the joint convention -- which is set to begin at 3 p.m. -- allows all 120 lawmakers to ask questions of those testifying before the Legislature."All the members are on the floor discussing a policy," said Wilson.Also, late Friday Senate President Pro Tem Darrell Steinberg named the membership and chairmanships of the upper house's five budget subcommittees. See who they are.Editorial: Public health is air board priorityhttp://www.sacbee.com/opinion/story/1456141.htmlNo one disputes the need to reduce the pollution spewing from trucks in California.Statewide regulators say diesel exhaust is responsible for an estimated 2,900 premature deaths a year, thousands of hospital visits and asthma attacks and millions of lost work days. Dirty air is also costly. It costs Californians $3.5 billion a year in lost work days and to treat illnesses caused by diesel pollution. Premature deaths cost another $16 billion yearly.New rules set for a vote by the California Air Resources Board this week will require owners of trucks operating in California to either replace their diesel rigs with cleaner models beginning in 2010 or install traps to capture the lung-searing diesel soot that trucks waft into the air. Air board officials say the rules they've designed are essential for the state to meet federal clean air standards. Given the threat of federal sanctions and the health impacts of diesel, the board cannot afford to postpone this decision. The state's trucking industry concedes the health impacts of diesel pollution but, given the collapsing economy, they have offered a less onerous alternative to the air board's proposal. It would achieve the same air pollution reductions as the air board's plan by 2021 but the requirements would be phased in over a longer period of time and the benefits would come more slowly.The truckers argue that the recession has negated some of the assumptions built into the air board's regulation. Many companies are having a hard time selling their old, dirty trucks or finding financing to buy new trucks or retrofit their old ones. They also argue that, with the down economy, there are fewer trucks on the road, cutting pollution and making it easier for the state to meet federal clean air standards.The trouble is, the air board's staff analyzed the truckers' alternative plan and found it would leave the South Coast and the San Joaquin Valley in violation of federal standards by as early as 2014. Compared with the air board's plan, the truckers' proposal would also expose Californians to higher levels of diesel particulate pollution, especially in the years from 2012 to 2018.In formulating its rule, the air board has tried to be sensitive to the truck industry's concerns. It has softened its original regulation, cutting the trucking industry's cost of implementation by about $1 billion. The state has also put together $1 billion in funding to help small trucking companies clean up their fleets.Even so, this regulation – years in the making – will be costly for the industry. The air board estimates that trucking firms and diesel bus operators, who also would be covered by the rule, will have to spend $5.5 billion over 13 years to comply.When it meets this week, the air board has no choice but to make public health its top priority. Adopting the industry alternative would mean more children suffering asthma attacks. There will be more heart attacks and more lung disease. More people will die prematurely. That is unacceptable.At the same time, the board needs to consider the possibility of an extended recession in California, and how such a recession would affect air quality and the ability of small trucking companies to comply with its rules.If the board finds that truck travel is likely to stay flat or even decline over the next five years, it should be receptive to giving small trucking companies some extra time to comply. But it should do so only if board members are confident the state could meet its deadlines under the Clean Air Act. Stockton RecordReal estate expert predicts '09 bottom...The Recordhttp://www.recordnet.com/apps/pbcs.dll/article?AID=/20081208/A_BIZ/812080318/-1/A_BIZGregory Paquin is president of the Gregory Group, a real estate information and consulting service in Folsom. The Record asked Paquin to talk about various aspects of the new home market, especially as affected by the region's foreclosure scene.Question: It's been the slowest year yet for home builders. When do you anticipate that the market will hit bottom?Answer: It is our expectation that the Central Valley will hit bottom during 2009 and begin to see the signs of recovery in 2010 and 2011, although some areas - Sacramento and some northern Central Valley communities - may experience the recovery sooner than others (some mid- and southern Central Valley communities). Several things will need to happen before the housing recovery can begin: a slowing of foreclosure activity, less fear about job losses, the stabilizing of the overall economy and the easing of credit markets - a swing of the pendulum back to the center.Question: In the first 10 months of this year, fewer than 700 permits were issued for the construction of single-family homes in San Joaquin County. That's not even a third of the 2,100-plus permits issued in the same period last year - and that was a very slow year, compared with the boom years. So what kind of houses are still selling, and who is buying them these days?Answer: The primary competition to new homes today is from the foreclosure activity that is significant in all of California but most prevalent in the Central Valley. However, in terms of new homes, 57 percent of all sales are for homes priced at less than $350,000. That compares with only 18 percent in 2007. The primary buyers tend to be those without a home to sell who are using FHA financing.Question: To what extent are builders offering purchase incentives to lure buyers, are they effective, and how different are they from what builders were offering at the start of the slowdown?Answer: Incentives are still a factor in the market. However, incentives have moderated as base pricing has come down. Basically, home builders are realizing a value that makes financial sense with lower base pricing and lower incentives. At the beginning of the downturn, home builders were much less willing to reduce base home prices and instead offered significant incentives.Question: Prices seem to be stickier going down for new homes than in the resale home market, where prices have plunged because fire-sale foreclosures are almost entirely dominating. Why haven't new home prices fallen more proportionally? For example, in San Joaquin County, Grupe Real Estate/TrendGraphix shows a median sales price high of $400,000 in December 2006, down to $194,000 in October, a 51.5 percent decline. Your own figures show a quarterly average high of $553,715 in the third quarter of 2005, down to $381,519 in the third quarter of 2008 - a 31.1 percent decline.Answer: The existing home market is being driven by foreclosures, which are pushing down prices faster then corresponding decreases in new home pricing. Many home builders have a price that they cannot go below in terms of profitability and cash flow, or they will simply close down the project, while existing home sales are individual and dependent on an individual's financial condition and motivation to sell. The result is a greater elasticity in existing home prices versus new home prices.Question: How much are foreclosure sales affecting new home sales?Answer: A significant number of the existing home sales throughout the Central Valley are foreclosure and short sales. In fact, a majority of existing home listings are now foreclosure or short sale listings as market rate existing homes have become tougher to sell. Many of the market rate existing homes that are listed for sale tend to be associated with what we call the "must moves" - in other words, because of births, deaths, marriages, divorces and job transfers. The great number of these homes and their low pricing has put significant pressure on sales of new homes. It should be noted, though, that some buyers are finding the foreclosure process challenging and for more affordable product are considering the purchase of a new home.Question: The economic news seems to be getting darker and darker. What impacts will the sinking economy and falling consumer confidence have on new -home sales?Answer: The primary impact will be felt in the job market. Potential home buyers that are nervous about losing their job tend to stay on the sidelines and not purchase a home (or a car, etc.) until they feel more secure. The exception tends to be first-time home buyers who do not have a home to sell, can qualify for an FHA loan with a 3 percent down payment (often getting down payment assistance from relatives), work in more secure jobs (i.e state and local government, education, etc.) and will end up paying the same or less in a new home versus an apartment project.Question: When will we see a housing recovery in this region?Answer: I believe that the Central Valley, and the north Central Valley in particular, will see a bottoming in 2009, stabilization in 2010 and a return to some level of growth toward the end of 2010 and into 2011.Question: So many national builders jumped into the Central Valley market during the boom. Are they feeling so burned by this severe market downturn that they will not be interested in the region again in the future?Answer: It is true that many public and larger private home builders have vacated the Central Valley, both in terms of closing projects and offices. However, we should all keep in mind that the coastal areas of California do not have significant developable land remaining, and given the projections for population growth during the next 20 to 40 years, only the Central Valley, or inland California, can support this type of growth. As such, the public builders and larger private builders will be back in the market. They will however, take a more conservative approach and run the division from the Bay Area or Sacramento until a time that it makes financial sense to open a division in the Central Valley.San Francisco ChronicleHomeowners who modified loans are in trouble again...ALAN ZIBEL, AP Real Estate Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/12/08/financial/f093740S29.DTL&type=printableMore than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency."I do have concerns about allocating federal resources" Reich said.However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers.The government's data don't include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. "The quality of the (modifications) are not what they should be," she said.The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.Unemployment stands at 6.7 percent, and the worldwide credit markets have only improved modestly from the freeze that led Congress to approve a $700 billion bailout before the election.Discussion on Monday's focused on how broad the government's intervention should be, rather than whether the government should play any role at all. The U.S. is on track for 2.25 million foreclosures this year."We need a bottom-up approach, in my view, by modifying people's mortgages and helping them stay in their homes," said New Jersey Gov. Jon Corzine.Corzine called for a three to six month halt to foreclosures while the government works out a more aggressive plan.Mark Zandi, chief economist at Moody's Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear to most Americans."It's now in every corner of the country," Zandi said. "I think that people understand that this is a broader issue."During an interview that aired Sunday on NBC's "Meet the Press," President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month.For nearly a year, some consumer advocates, lawmakers and think tanks have advocated a dramatic government response. The effort, they say, should be similar to created the Home Owners' Loan Corp. in 1933 to help borrowers refinance troubled home loans during the Great Depression.The Bush administration has focused mainly on voluntary industry efforts to modify loans, and those have not stopped the surge in foreclosures.Los Angeles TimesState may see shortage of educated workers, group says...Marc Lifsherhttp://www.latimes.com/business/la-fi-workforce8-2008dec08,0,1811090,print.storyReporting from Sacramento — California could run short of college graduates needed to keep its economy humming by 2025, a think tank warned in a report to be issued today.As a result, the state may not have enough teachers, computer programmers, scientists and other key workers to meet escalating 21st century demands. If current trends continue, in 16 years the state should expect 4 out of every 10 workers to earn at least a bachelor's degree, said a study by the Public Policy Institute of California.Whereas the number of college-educated workers grew significantly over the last two decades -- from 28% in 1990 to 34% in 2006 -- the pace is likely to slow because of California's fast-changing demographics, the San Francisco-based institute said.Having too few college graduates and too many non-college graduates in the workforce could contribute to growing income inequality between educational haves and have-nots, predicted Deborah Reed, the report's author.Closing the projected gap and creating "a workforce to fuel future economic growth" will require policymakers to focus "on the quality of education at all levels, from preschool to the state's universities," Reed said.Making that kind of costly investment, though crucial, might be difficult during the next few years as the governor and lawmakers grapple with a projected $28-billion shortfall in state funding for the current and coming fiscal years, she acknowledged.Much of California's educational spending and direction must be focused on the fast-growing Latino student population, which represents 48% of the state's 6.3 million public school students, said State Supt. of Public Instruction Jack O'Connell."It's more critical than ever to have a well-skilled, educated, critical-thinking workforce," O'Connell said. "That will come from the subgroups who continue to lag behind their peers." Getting more minority children through college is his state Department of Education's top priority, he said.Latino expansion, from 29% of the working-age population in 2006 to a projected 40% by 2020, is one factor in the expected slowing of growth in the number of California college graduates, Reed said. Two others are the retiring of members of the educated baby boom generation and the reversal in what historically had been a migration of people with degrees into California from other states and countries.Since 2000, more college-educated people have moved away from California than moved into the Golden State, Reed said.Churning out graduates through the University of California, California State University systems and private schools is essential to a strong economy but is only one piece of the education puzzle, said Jack Stewart, president of the California Manufacturers and Technology Assn. The education system is failing to train technical workers, such as plumbers and electricians, that employers need, he said."The system has walked away from the old idea of preparing a student for a lifelong career," Stewart said. "Instead, it's trying to prepare all of them for college and not doing a good job of that. Our universities are full, and the idea of doubling the number of students who get four-year degrees is ludicrous."All students, whether they graduate from college, high school or technical training, should benefit if the state holds them to tough standards, especially in the lower grades, said Allan Zaremberg, president of the California Chamber of Commerce.Studies show that children who perform poorly on a seventh-grade assessment test also fail an 11th-grade test, Zaremberg said."We have to have good high schools, good middle schools and good elementary schools," he said. "But we have to demand grade-level proficiency."Valley residents make fighting foreclosures a community affairCommunity leaders in Pacoima and other northeast San Fernando Valley areas have organized more than 500 Latino immigrant families to negotiate with banks as a group rather than individually...Jessica Garrisonhttp://www.latimes.com/news/local/la-me-pacoima8-2008dec08,0,807296,print.storyShortly after Father John Lasseigne took over last summer as head of Mary Immaculate Church of Pacoima, a man and woman and their well-dressed children came to him after Mass and asked the priest to pray for them because they were about to lose their home.The startling request was Lasseigne's introduction to the epidemic of foreclosures afflicting his flock in the northeast San Fernando Valley, a working-class, heavily immigrant area where more than 8,000 homes are either in default or have been foreclosed upon.Over the last three months, Lasseigne and other community leaders have come up with an unusual response: They have organized more than 500 Latino immigrant families who are behind on their payments into teams that will seek to negotiate with banks as a group.They also intend to compile detailed records of how and whether lending institutions agree to modify loans -- information they say could be given to government officials in an attempt to give distressed homeowners more favorable terms."If we don't make progress with the banks, we certainly expect to make progress with our elected officials," said Lasseigne, whose congregation is a member of the community-organizing group One-LA, a local affiliate of the left-leaning Industrial Areas Foundation.The effort represents an unusual attempt at collective negotiation between a community and banks, as well as information-sharing among homeowners, housing experts say, and leaders in the northeast San Fernando Valley say they hope it can be a model for other places.It comes as policymakers grapple with the news, announced Friday, that 1 in 10 U.S. homeowners with a mortgage were either one month behind on a payment or in foreclosure at the end of September.But the effort has also prompted skepticism from some who say it is unrealistic to expect banks to bail out homeowners who got in way over their heads -- especially as a group."The loans were not made en masse," said Tom Kelly, spokesman for Chase Bank. "The issue of mortgages is a home-by-home, mortgage-by-mortgage issue."Modifying may be particularly tricky in an area such as the northeast San Fernando Valley, where home values have fallen hundreds of thousands of dollars from their level of a few years ago. That's because many borrowers have low-paying jobs and poor credit -- and may not be able to afford even a modified loan at a fixed rate under strict lending standards.Many in Pacoima and surrounding communities say they have to do something -- and trying to negotiate on their own with banks does not seem to be saving their homes.The effort had its first big event Sunday, when about 60 homeowners met at a law office in Pacoima with representatives of Chase Bank, which now also handles loans serviced by Washington Mutual."Individually, they won't listen to us. If we come together as a community, maybe we have a chance," said Jose Hernandez, a 28-year-old special education teacher at Arleta High School who is hoping to save his parents' home, where he lives with his mother and father, two sisters and three nieces, all of them pooling their resources to scrape together the mortgage payment on a three-bedroom house.Community leaders say the story of the Hernandez family is sadly typical of what happened to many in the northeast San Fernando Valley.Hernandez's parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold."This was something my mom wanted so bad," Hernandez said, gesturing around the living room. Pride of ownership was evident in myriad little touches, including carefully tended roses in a bed of white gravel out front, a fruit bowl on the shiny dining room table, and an oil painting of a mountainous Latin American village on the living room wall.At first, Hernandez said, the purchase seemed like a dream. His mother was thrilled to be able to throw birthday parties for her granddaughters in the backyard -- and with everyone in the house contributing toward the mortgage, "it felt good. We were all helping each other."Then things started to fall apart.Hernandez said his mother had wanted a fixed rate but was instead steered toward a negative amortizing loan, in which the family was allowed to make less than a standard principal and interest payment each month, and so the total principal slowly increased. Today they owe more than $500,000.At the same time, the value of their house has plummeted and might now be worth less than $300,000.Looking back, Hernandez said he can't believe he was foolish enough to let his mother get into a loan under such terms, but a broker he trusted assured him he would be able to refinance.Recently, the terms of the loan changed so that the family must now start paying back their principal, meaning their monthly payment has shot up to $4,000 from $2,300.On a recent afternoon, Hernandez held the bill stub in one hand and clutched his forehead with the other."This is our home. We don't want to lose it, but at the same time, there is no way we can do a $4,000 payment," he said.Hernandez did not know where to turn and said he had given $300 to a so-called foreclosure vulture who promised to save his home and then stopped returning his phone calls.Then he heard an announcement at church.So many people at Mary Immaculate and other local Roman Catholic churches are facing foreclosure that the church began making announcements about it at Mass and set up a table outside services where people could get information. Lasseigne, the priest, had teamed with other leaders from One-LA to try to organize a response.Over the last few weeks, parishioners have confided a stream of stories to one another -- in some cases marking the first time they admitted to anyone the trouble they are in.Not everyone is in the same situation. Some people appear to have been pushed by unscrupulous brokers into loans that seemed almost designed to fail. Others were so desperate to own homes that they got in over their heads, paying more for houses than they could afford. Still others have lost jobs or suffered illness, making it difficult for them to make their payments.Government officials and policy experts are watching the effort -- especially because financial leaders lately have been saying the private sector has not done enough to prevent foreclosures."Foreclosures are a disaster not only for homeowners and lenders but for the communities in which they occur," said Rep. Brad Sherman (D-Sherman Oaks) in a written response to questions from The Times."The current loan modification process is very cumbersome and confusing to borrowers, and, far too often, lenders and mortgage servicers are uncooperative. . . . I am very interested in seeing the information that these community groups plan to collect."City Councilman Richard Alarcon, who represents the area, said the effort may be a long shot -- but it is one he applauds.Many of his constituents, he said, are financially unsophisticated and may not speak English well.Some were victims of predatory lending. Others do not understand the foreclosure process well and don't know what their rights are. Many feel trapped.Meanwhile, he said, his district is growing more blighted. Some vacant homes have become magnets for rave parties. Other houses have turned into parched wastelands as water bills go unpaid and upkeep undone."The need is crying out," Alarcon said.San Diego Union-TribuneChollas, which is used only for recreation, loses millions of gallons each year...Jeanette Steelehttp://www.signonsandiego.com/news/metro/20081208-9999-1m8chollas.htmlSan Diego, a city teetering close to mandatory water conservation, spends at least $140,000 annually to pump about 53 million gallons of drinking water into Chollas Lake for fishing.Chollas Lake, a 16-acre basin in southeastern San Diego, is unique because it is not one of the city's tap water reservoirs. That is, the water isn't being saved for future drinking or showers.The Park and Recreation Department says the lake is an acceptable use of city water and money because it supports youth fishing and is the centerpiece of the much-loved Chollas Lake Park. Critics question this use of ever-more-precious drinking water when the city is urging residents to conserve 20 gallons a day. “Can we afford to be putting especially treated water that could be used for drinking water in a big man-made hole so people can fish?” said Geoffrey Smith, a San Diego consultant who has worked for consumer activists. “There are plenty of reservoirs in the county where fishing is allowed but water is held for potable use.” Neighborhood advocates say the city should drain the lake, use money from recently passed Proposition C to line it to avoid water loss, and refill it in a few years. If the city advances to a Stage 2 water emergency in the spring, it might stop replenishing the lake anyway. A spokeswoman for Mayor Jerry Sanders said the city will re-evaluate all water used for recreation at that point. A comparable water use would be the $135,000 spent annually on fields around Ocean Beach's Robb Field. “If we need bigger cuts . . . maybe Chollas Lake will be one of them,” said spokeswoman Rachel Laing. City Heights resident Theresa Quiroz appeared before the City Council recently to suggest lining the lake, which was built as a reservoir in 1901 but hasn't been part of the drinking water system since at least 1966. "The price of water is just going up and up, while the money that Park and Rec has keeps going down and down,” said Quiroz, whose family goes to the lake on Sunday afternoons. The last thing she wants is for the city to close the lake because of ongoing water loss. Proposition C, passed by voters in November, sets aside money for a handful of city parks, including Chollas. “This is the perfect time to do this,” Quiroz said. Parks director Stacey LoMedico said a liner could cost $400,000, and labor probably would push the project price up to $1.5 million or so. There's also concern that a liner could harm the fish stocked in the lake. LoMedico said her office hasn't looked closely at specifics because officials don't believe there is a leak that can be plugged. Chollas Lake appears to be unique in the county. Other reservoirs – Lake Murray and Miramar, for example – are filled by rain, runoff and water piped in by the San Diego County Water Authority. The water is held until it's needed for drinking, then it is treated and piped out to homes and businesses. Chollas has no purpose other than recreation. The artificial lake is reserved for fishing for children 15 and younger. The surrounding Chollas Lake Park is popular with adults, however. The parking lot is often packed with the cars of people using the dirt path around the lake for walks and jogging. Rustic play equipment is available for children. Southeastern San Diego residents have been protective of their lake. The community got into an uproar in 2007 when a rumor spread that the city was going to stop filling the lake because of the cost to the Water Department. The park department took over the costs in its budget. City officials subsequently studied the lake's water use. They determined that 48 million gallons yearly are lost to two factors: evaporation and a sponging effect from the 17 acres of eucalyptus trees that surround the lake. Eucalyptuses are thirsty trees with deep roots, and the city believes they are drinking considerable amounts of water. Also, water is delivered to the lake via trenches atop the banks. It's an inefficient method, LoMedico said, and probably accounts for some of the water loss. The dam also leaks a bit, the city says. Water lost in that manner is estimated at 260,000 gallons annually. An undetermined amount also seeps into the ground below the lake. Chollas Lake Recreation Council member John Stump doubts the city's math. Stump said he believes much more water is leaking into South Chollas Landfill nearby and possibly into Chollas Creek. The city has said it can't say definitively whether the lake water is entering the landfill, which is also unlined. For these reasons, Stump is another proponent of lining Chollas Lake. “We have the Prop. C money; we have the crisis; we have need,” he said. “It's time to make a long-term investment.” On a recent weekday morning, several boys were casting their poles into the greenish water. Their chaperone was Mike Ito of La Mesa, a neighbor of the boys' foster home. “This is a great resource for the kids,” said Ito, who was wearing a United Anglers of Southern California ball cap. “Adults can drop off the kids to fish, and they can walk around the lake. It's a chance to get them out of the house, away from electronics and video games.” Nine-year-old Kyle Harvey said he has fished there at least 15 times, though he had never caught anything. “It's just fun,” said Kyle, sporting a blond crew cut and a sunburned nose. Ito said water is better used at the lake than by automatic sprinklers that overspray at some people's homes. Karen Franz of San Diego Coastkeeper agrees. “Looking at some of the other ways we use water, this is really minor compared to, say, the 60 to 70 percent of residential water use going to landscape irrigation,” said Franz, Coastkeeper's watershed program director. “That's something we need to address and has a much, much greater impact on the region.” High-speed rail seen as a boon for border Leaders want line to go past downtown San Diego...Steve Schmidthttp://www.signonsandiego.com/news/metro/20081208-9999-1m8rail.htmlSouth Bay leaders want the state agency cooking up plans for a high-speed rail system in California to head for the border. The massive public-works project – still very much on the drawing board – is expected to link the state's biggest cities via trains traveling as fast as 220 mph. Current plans call for the south terminus of the system to be at the Santa Fe Depot in downtown San Diego. But a growing number of South Bay business leaders and elected officials want the line to end at the U.S.-Mexico border, saying that would ease travel and improve trade. “That linkage would be invaluable,” said Chula Vista Councilman Jerry Rindone, a member of the Metropolitan Transit System board.State voters last month approved a $10 billion bond measure to jump-start development of the electric-powered system that backers expect to cost as much as $45 billion. The California High-Speed Rail Authority is seeking federal and private-sector funding to cover the difference. Board Chairman Quentin Kopp, a former state senator, said a border stop is worth looking into, noting the system is still in the planning stage. Construction on the initial part of the system – the critical Los-Angeles-to-San-Francisco leg – is expected to start as soon as 2011. Kopp noted that recent state legislation capped the number of stations at 24. The authority Web site lists at least 25 possible stops, including Sacramento, San Francisco, Fresno, Los Angeles, Riverside and Murrieta. Kopp said having too many stops would undercut the system's main selling point – speed. As envisioned, a San Diego-to-San Francisco trek would take less than four hours. “Obviously, you don't have a high-speed system if you have a proliferation of stations,” Kopp said. Cindy Gompper-Graves, chief executive officer of the South County Economic Development Council, thinks running the rail to the border would have a positive ripple effect on the region and beyond. “It's imperative to us that the train continue to South County and not just stop in San Diego,” Gompper-Graves said. “We see it as an engine for economic growth.” Backers of a South Bay station, perhaps in the San Ysidro or Otay Mesa areas, say it would ease traffic and trade along one of the nation's busiest border crossings. “Economically, it makes a lot of sense,” said Jim Janney, mayor of Imperial Beach. Gompper-Graves favors connecting the system to a possible cross-border airport terminal and perhaps running it parallel to state routes 905 and 125. At a South County economic council gathering last week, a rail authority manager outlined plans for the system. The authority will spend much of the next two years trying to raise federal and private-sector money for the project – a task made easier by last month's passage of Proposition 1A, Kopp said. He thinks the prospect of securing federal funding is gaining ground, noting that President-elect Barack Obama and others are talking about pumping more money into public-works projects to prop up the faltering economy. The federal government also has set aside specific funds to help pay for high-speed rail systems. At the same time, authority officials say there is great interest within the private sector to invest in the project. Private companies have played a central role in building and operating bullet trains in France and other nations. Some transit experts have voiced skepticism about the ability of the authority to attract public and private money, especially given the sagging economy. Meanwhile, the authority is talking with South Bay officials, the San Diego Association of Governments and other agencies about possible station locations. The authority Web site lists three possible stops in San Diego County – Escondido, University City and the Santa Fe Depot. The local leg of the system is expected to connect to Riverside, with much of it running parallel to Interstate 15. SANDAG and Lindbergh Field officials also have raised the prospect of an airport stop. Jose Martinez, a regional manager with the authority, said airport and border stations are both worth serious consideration. Martinez said it is unlikely the system would include a stop at the airport and downtown San Diego, given their close proximity. Martinez said he is in contact with other regions of Southern California that have raised the idea of stations, but that interest seems particularly high in the South Bay. The authority plans to formally identify stations by the middle of next year.CNN Money53% of rescued borrowers default anywayTop federal regulator says many mortgages that are modified end up in default within 6 months.http://money.cnn.com/2008/12/08/news/economy/mortgage_summit/index.htm?postversion=2008120815WASHINGTON, D.C. -- More than half of delinquent homeowners whose mortgages were modified earlier this year ended up redefaulting within six months, a top bank regulator said Monday. Some 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified in the second quarter could not keep up with payments within six months, according to U.S. Comptroller John Dugan, who spoke at a housing conference. The report, which will be released in full next week, covers nearly 35 million loans worth a total of $6 trillion -- or 60% of all primary mortgages in the United States.The high redefault rate raises concerns about the long-term effectiveness of loan modifications, which many are pushing as a key solution to the nation's financial crisis. Dugan said the Office of the Comptroller of the Currency is asking servicers for more details on these loans to determine what went wrong."These answers are important, because they have important ramifications for the foreclosure crisis and how policymakers should address loan modifications, as they surely will in the coming weeks and months," Dugan said.Other regulators speaking at the conference questioned the quality of the loan modifications, saying that early efforts to restructure loans were not very effective. Many simply tacked on the missed payments and penalties to the end of the loan."The quality of the modifications are not what they should be," said FDIC Chairwoman Sheila Bair, a vocal proponent of adjusting loans by reducing interest rates, extending loan terms and deferring principal.As the housing crisis continues to spin out of control, lawmakers, economists and community activists are increasingly demanding that financial institutions and the Bush administration do more to help homeowners by modifying loans to affordable monthly payments. In recent months, banks and federal agencies such as the Federal Deposit Insurance Corp. and Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) have stepped up efforts to adjust loans so that payments are no more than 38% of a borrower's monthly income.Rep. Barney Frank, D-Mass, who heads the powerful House Financial Services Committee, said Monday that Congress will not give the Bush administration the $350 billion left in the $700 billion financial system bailout package unless loan modifications are part of the plan.However, other regulators said that federal money may be better spent on economic stimulus and job creation since a growing number of foreclosures are caused by unemployment. In those cases, loan modifications won't help.A record 1.35 million homes are in foreclosure, while the number of borrowers who have fallen behind on their payments soared to a record 6.99%, the Mortgage Bankers Association said last week. Focusing on job creation is a better way to spend federal money, especially if the loan modification process is only partially effective, said John Reich, director of the Office of Thrift Supervision.Small banks want their bailoutIndustry giants like Citigroup have eaten up a big chunk of the money set aside for the financial rescue plan. Now, community banks hope to get some crumbs...David Ellis  http://money.cnn.com/2008/12/08/news/companies/tarp_deadline/index.htm?postversion=2008120815NEW YORK (CNNMoney.com) -- The Treasury Department better order some new checkbooks.So far, the Treasury Department has invested $161.5 billion in 52 companies as of last week. Another 93 banks have won approval for $48.4 billion in funds, according to analysts at Keefe, Bruyette & Woods.And thousands more are expected to apply for government funds by the time the deadline for private and thinly traded banks expires on Monday.As of last week, the Federal Deposit Insurance Corporation had already received approximately 1,200 applications from small community banks looking to enroll in the Troubled Asset Relief Program, or TARP.That may come as a bit of a surprise given that many smaller banks have sidestepped the mortgage mess that has caused so many problems for the likes of Citigroup (C, Fortune 500) and other large banks.But the slowing U.S. economy has prompted some banks to give the program a second look as they face the threat of rising loan losses in the coming year.Paul Merski, chief economist for the Independent Community Bankers of America, said several smaller banks are applying for government funds even as board members and shareholders continue to weigh the merits and disadvantages of the program."There is a tremendous amount of interest in getting an application in so they have that oar in the water," he said.Since Treasury first announced in October that it planned to inject capital into banks by purchasing preferred stakes in them, the program has faced plenty of skepticism. Bank bailout: Who's getting the moneyWashington lawmakers have grilled bank executives as to why some institutions have hoarded the money instead of using the cash to boost lending.And bankers have been apprehensive about the program, given its dilution to shareholder value, restrictions on executive compensation and limits on dividends for common shareholders. At the same time, the banks face the cost of paying big dividends to the government in exchange for the fundsJim Barrett, chief financial officer of Wainwright Bank (WAIN), a Boston-based bank with a dozen locations, said that paying a dividend that starts at 5% on the preferred shares to the government plus the impact of warrants is a bit onerous.Nonetheless, the bank announced last month that it applied for and received $22 million through TARP. Barrett said it became necessary to ask for government funding as it became difficult to access capital in the wake of the credit freeze. "This almost couldn't have come at a better time," said Barrett, whose firm boasts $1 billion in assets.Still, other small banks are wary of applying due to fears about what the government may force them to do in the future.The American Association of Bank Directors and the Independent Community Bankers of America have expressed concerns that language in the original $700 billion bailout legislation allows Congress to alter the terms of the agreement as they see fit. This is of particular concern since Democrats will have a bigger majority in Congress next year, in addition to having a Democrat in the White House.Jason O'Donnell, a senior research analyst who tracks mid-Atlantic community banks at Boenning & Scattergood, said some bank executives are worried that lawmakers could order banks participating in the program to submit to mandatory loan modification programs, for example."There is a general cautiousness and skepticism about what is going to happen," he said.Ronald Paul, the chairman and CEO of Bethesda, Maryland-based EagleBank (EGBN), said he expects to take the $38 million in government funds it qualified for but added that if Congress starts changing the terms of the program, there could be a large backlash from community banks.Still, some smaller banks that are interested in funds are being left out in the cold. About one third of the more than 8400 institutions insured by the FDIC don't currently qualify for TARP funds. Included in this group are mutual organizations that are unable to issue any stock as well as smaller community banks structured as S corporations, which are limited to 100 shareholders and don't sell the type of stock needed to participate in the Treasury program. This is a problem since these institutions may be at a disadvantage to others who are able to tap the TARP funds. And many consumers and small businesses rely on these local lenders for their banking needs.A Treasury spokeswoman confirmed that the agency was working on a program for these banks but could not give any indication on when the details might be unveiled. Some banks in this group have already anticipated such a move though and have filed applications with their respective regulators.Compounding matters for small banks is the fact that there is only $15 billion of the first $350 billion approved for the overall bank bailout program that remains unallocated. And it is not clear that Congress will allow the Treasury to use any of the remaining $350 billion of the financial rescue package to invest more in banks.FDIC Chariman Sheila Bair has urged Congress to consider using some of the TARP funds to create a program aimed at helping delinquent homeowners and to halt the rising tide of foreclosures. That proposal has won the support of some lawmakers.The securities industry has also been lobbying heavily for the Treasury to purchase troubled assets from banks and securities firms, which is what Treasury Secretary Henry Paulson said he would do when he first pitched the bailout to Congress.But Merski of the Independent Community Bankers of America said that using some of the $20 billion left to help smaller banks currently unable to access TARP would go a long way toward stabilizing the financial system. But the government needs to act soon."Time is running out and money is running out too," he saidBailout, part 1: $335B down, $15B to goTreasury says only $15 billion remains of the original $350 billion installment of the $700 billion bailout package.http://money.cnn.com/2008/12/08/news/economy/meltdown_bailout.ap/index.htm?postversion=2008120814WASHINGTON (AP) -- The government has just $15 billion left to spend from the first $350 billion pot of financial bailout money, the Treasury Department announced Monday.The department said $335 billion has been allocated from the first half of the $700 billion program, which was enacted on Oct. 3. The information was contained in a report to Congress.Treasury Secretary Henry Paulson, who is overseeing the program, is weighing tapping the second $350 billion. The main goal of the program is aimed at getting financial institutions to lend money more freely again, which would help revive the economy.Of the $335 billion spoken for, $250 billion has been pledged for capital infusions to banks. In return, the government receives partial ownership stakes in the financial institutions.Another $40 billion was provided to help bail out insurance giant American International Group (AIG, Fortune 500), and an additional $25 billion was part of a rescue package for Citigroup Inc. (C, Fortune 500) Of that piece, $20 billion was in the form of a fresh capital infusion to the New York City-based bank and $5 billion to absorb potential losses as part of the government's guarantee of certain risky assets held by Citigroup.Separately, $20 billion was provided to the Federal Reserve for credit protection as part of a new program to boost the availability of consumer loans.On Capitol Hill, lawmakers have blasted Paulson for his handling of the $700 billion package, complaining that his shifts in strategy sent confusing signals to the public and Wall Street, and hurt confidence in the government's ability to deal with the crisis.Paulson has defended his management, including his decision to officially abandon the original rescue strategy: buying rotten mortgages and other bad debts from banks to free up their balance sheets and spur lending."Although financial conditions remain far from normal and many challenges remain, greater confidence in financial markets and financial institutions will contribute importantly to the recovery process," the report said