10-28-08Badlands JournalAnatomy of a foreclosure...Badlands Journal editorial boardhttp://www.badlandsjournal.com/2008-10-27/006933In the late 1990s, an entrepreneurial mechanic with a wife and one child bought a house for $65,000 with a down payment of $1,500 he took a fixed-rate FHA mortgage. His wife, a beautician, got a job as a clerk at a discount store. In the midst of the speculative real estate boom in Merced six years later, with three children now and a warehouse job, he took out an equity loan for $126,000, did some remodeling on the exterior (new stucco, paint, new lawn turf, foam sculpture), bought furniture, a big-screen TV and a nearly new Cadillac Escalade. It is estimated that about $35,000 went for the home improvements and goods. Where did the other $91,000 go? It didn’t go into the property. Why wasn’t the equity loan monitored for home improvements?  A year later, with four children and two big SUVs, the speculative real estate boom in full force, he took out a conventional variable equity loan on his house for $246,500. The paperwork doesn’t reveal if this was a wrap-around loan, including the mortageand the first equity loan. He bought a five-bedroom, two-story house for more than $300,000. He put about $160,000 down on the new house, bought an estimated $60,000 worth of new furniture and another used Escalade and hoped to put a swimming pool into the yard of the new house. It can only be speculated if or when he got an equity loan on his new house. He rented the old house to relatives, with an option to buy. The rent was based on the variable equity loan. It began in 2006 about$500 a month. The relatives have two children. The husband built trailer houses; the wife had a good job in food service. In the next two years, they had another child and the husband lost his job and she quit her job to go to school – all on the expectation of buying this house. In April, 2008, payments on the variable loan of $246,500 increased to more than $2,500 and the owner informed the relatives with an option to buy has increased five-fold. The relatives had no clue that the loan was variable. It’s possible the owner didn’t quite grasp that either. In any event, the relatives went shopping for a loan, without success, as the boom was turning into a bust.Now, let us consider the economics here. If the owner of the two houses, now with five children and a brand-new custom pearl white Escalade including the latest in rim technology, had just stayed in his first house and not taken out two equity loans, he would have been paying between $400-$500 a month on his mortgage. Even if he had spent the entire $126,000 to expand his 900 square foot house on a 10,000 square foot lot, and not borrowed another $246,500, in part to buy another house more good life toys, he might have been able to survive. Result, the relatives had to move out, the house is empty and in foreclosure, and the owner is months behind on his mortgage payments on his present house and his variable on the new house will kick in a year.Recently, someone seeking to buy the house, contacted a realtor. The realtor, after examining the documents for a month or two, told the prospective buyer that it is extremely difficult to tell who actually owns this house, title being clouded by 1) sloppy title-company work to begin with; 2) the number and size of the various, variable loans; and 3) who might possibly own those loans now. The present situation: here is an empty house worth between $50,000-$75,000 for cash, given that few if any will qualify for a loan on it in the present lending climate. Meanwhile, the grass has died in the front and back, junk was left behind, an old pickup stands in the driveway. It has joined that ever-growing number of residential properties in foreclosure, in decline and its title may be clouded by the different loans, all with different companies. Nor is it clear to realtors or prospective buyers whether there was a consolidation of loans or not. It will not be clear before the house goes through auction on the county courthouse steps. What were the owner and his lenders thinking? At a broader level, what were all the Valley business and political leaders thinking as they approved project after project, predicted the growth boom would go on forever, and universal prosperity would come to the Valley without jobs to support the inflated prices of the real estate?  If they became concerned, the public certainly heard nothing of their concerns. Whatever else they did, while predicting eternal housing growth at ever-rising values, they did not see the largest confidence game the world has ever seen, evident as early as 2000 to Arab bankers in Saudi Arabia and the Gulf States (Hsu, Global Research, 10-23-08).The entrepreneurial warehouseman should not have been given the first equity loan on his first house. Politicians from city councils to boards of supervisors to state legislators to members of Congress and the media are blaming poor people for their irresponsibility. Meanwhile, in Merced, the foreclosure section of the Merced Sun-Star announced 10 days ago that Hank Vander Veen, the publisher of the Merced Sun-Star, presumed to be far better educated, more worldly and wealthier than the warehouseman, walked away from a $507,000 house in suburban McSwain, and today the foreclosure section notified that public that two top community leaders -- Paul Lo, an attorney, and Merced City Councilman Noah Lor -- walked away from a $236,000 house in Merced.Merced Sun-StarFuture hazy for bankrupt developer's Merced County projectsCompany's subsidiary building in Bellevue...JONAH OWEN LAMBhttp://www.mercedsunstar.com/167/story/519104.htmlThe ground squirrels are taking over at the half-completed Bellevue Ranch development in Merced.Construction has stopped.Now one of the project's builders, Woodside Homes Inc., has become another casualty of an ailing economy. The Utah-based company filed for Chapter 11 bankruptcy reorganization on Sept. 16."As it stands now, Woodside continues to operate in the normal course of business" said Jennifer Mercer, Woodside's spokeswoman. That may be true, but it's hard to predict the impact of the filing for the company's two Merced projects. The company's fate was further confused from lack of disclosure. Woodside Homes and two of its many subsidiaries failed to notify local officials about its financial status. At the same time, one operating unit was asking for a new project to be brought into the Los Banos city limit. "They didn't say anything, but as soon as it hit the local paper I gave them a call," said Paula Fitzgerald, the Los Banos planning director. Fitzgerald had to call the Woodside office in Modesto to find out what was up.Kim Espinosa, Merced's planning manager, still didn't know of the bankruptcy on Monday. "That's certainly something we would like to know," she said. Woodside's Los Banos project, which is in the planning stage, is being run by a Woodside subsidiary, Danville Land Investment, and it's not included in the bankruptcy. "As long as Danville can adhere to their commitments, then that's all they need to tell the city council," said Mercer about disclosing the company's financial health. "I think the company was as forthright as they were able to be at the time."This may be true, but both projects are still in limbo.Although Mercer said the Los Banos project wasn't included in the bankruptcy, she did acknowledge that anything is possible. "Their non-filed subsidiary could be brought in," she said of Danville. But, she added, "For today, that is not a possibility." John Young, chairman of the American Bankruptcy Association's real estate committee, says subsidiaries may be protected from bankruptcy cases, depending on corporate structure. "If it's a true subsidiary of one of the bankrupt companies, the ownership of the LLC belongs to the bankrupt estate," he added.In other words, there's a chance Danville Land Investment could be taken over by creditors or liquidated.Young said in similar cases -- there are about 10 builder bankruptcy cases in the courts right now -- one of two things usually occurs. Either the creditors continue lending the builder money and the project goes on, or they sell off their assets. "Most of them that I've seen are doing self-managed liquidations," he said, which is a company-managed sell-off, instead of one controlled by creditors.Even if the worst-case scenario took place -- total sell-off -- there are often other buyers ready to take over, said Espinosa. But, points out Young, when the housing market is crumbling and credit is tight, there are fewer companies willing to buy than there used to be."Not many banks are wiling to continue lending on these projects," he said. The fallout could also mean that promised parks and projects will stay unbuilt and faulty buildings can go unrepaired. "When you are in financial distress you often don't meet your obligations," Young explained.Mahnaz Afshar, lead sales agent for Woodside in Merced, said the company has offered buyers warranties on their homes. Bonded Builder Warranty Group has been brought in by Woodside to guarantee any future problems with the homes."No matter what happens to the market, they will have their warranty," she said of homeowners who sign the agreement.Either way, at least the ground squirrels are happy.Modesto BeeJudge says Calif. wild steelhead must be protected...SAMANTHA YOUNG, Associated Press Writerhttp://www.modbee.com/state_wire/story/477514.htmlA federal judge on Monday upheld protections for wild steelhead trout in California rivers, rejecting an argument by forestry groups that argued the success of hatchery-raised steelhead has made the population sufficiently robust.U.S. District Court Judge Oliver Wanger in Fresno disagreed. He said hatchery-raised fish are no substitute for wild steelhead.While science shows that hatchery-fish can be beneficial, they also can be detrimental to wild steelhead, Wanger wrote in his 168-page ruling.Steelhead are listed as either threatened or endangered in different parts of California.In a related claim, the judge also rejected a bid by Central Valley farmers to remove steelhead trout from the federal Endangered Species Act. The farmers pointed to an abundance of resident rainbow trout, steelhead that do not migrate to the ocean.The Modesto Irrigation District had argued that rainbow trout are essentially the same species as wild steelhead. Wanger agreed with federal wildlife scientists, who have said wild steelhead are distinct and indispensable to the survival of the species.The rulings signify another victory for federal wildlife agencies and the fishing and conservation groups that had intervened in the cases.It is the third instance in two years in which a federal court has rejected arguments that hatchery fish ought to be counted as part of salmon or steelhead populations, said Steve Mashuda, an attorney at Earthjustice, a nonprofit group that represented the conservation and fishing groups.Studies have shown that while wild and hatchery fish in a river may be genetically the same, they have behavioral differences that make wild fish more successful at surviving. Hatcheries can boost overall numbers of fish in a stream, but the fish they release also have poor reproduction rates and can compete with wild fish for food and mates.In some cases, they can hurt the sustainability of wild fish stocks, scientists have found.Environmentalist have argued that the goal of the Endangered Species Act is to restore steelhead and other struggling species to self-sustaining levels, without intervention from humans."One day, the act contemplates we would no longer need hatchery fish," Mashuda said.But the law also complicates efforts by agriculture groups that seek greater access to water and to timber companies that want to log in sensitive habitat.The groups pressing the cases say federal wildlife managers should assess an entire fish's population - both wild and hatchery-raised - when deciding whether to protect it."Once you have identified a given population for listing, the ultimate determination of whether you list that population has to be based on the entire population," said Damien Schiff, an attorney at the Pacific Legal Foundation, which represents agriculture and forestry groups.Schiff said it was too early to know whether the group would appeal the judge's ruling.A representative with the Modesto Irrigation District could not reached for comment.Fresno BeeFish policies upheld in court rulingJudge says feds have steelhead discretion...John Ellis http://www.fresnobee.com/local/v-printerfriendly/story/967296.html      A federal judge in Fresno ruled Monday that the U.S. government has discretion to recognize differences in steelhead fish populations when determining whether they are eligible for listing under the Endangered Species Act. U.S. District Judge Oliver W. Wanger issued a 168-page ruling on two challenges to how the National Marine Fisheries Service viewed California's steelhead populations. One case challenged the government's practice of counting hatchery steelhead populations separately from wild populations. The Pacific Legal Foundation had argued that Endangered Species Act listing decisions could be based on the numbers of hatchery steelhead produced each year. Based on that, the foundation had asked the court to remove five separate populations of steelhead from the list of endangered species. In his decision, Wanger wrote that the "best science available" used by the NMFS "strongly indicated that naturally-spawned and hatchery-born [steelhead] are different." Environmental groups said the Pacific Legal Foundation wanted the federal government to look at wild and hatchery-spawned steelhead the same, which could lead to higher fish numbers and the species being removed from the endangered list. The other case argued that steelhead -- which go out to the ocean -- should be removed as federally listed endangered species because genetically similar rainbow trout -- which don't go to the ocean -- could replace extinct steelhead populations. Addressing that case, Wanger wrote that "the very fact that these two populations end up in different environments for portions of their lives supports dividing them into separate [populations]." Wanger also wrote that "it is undisputed that the steelhead life form is indispensable to the species as a whole." That case was filed by the Modesto Irrigation District. MID officials could not be reached to comment. Steve Mashuda, an attorney with Earthjustice, said he was pleased with Wanger's decision. Addressing the Pacific Legal Foundation lawsuit, he said it would be "biologically bankrupt" to rely 100% on hatchery fish when determining the health of steelhead species. In both cases, Earthjustice said the ultimate goal was to "strip protected status from five populations of wild steelhead trout." Damien Schiff, an attorney with the Pacific Legal Foundation, was disappointed in the ruling, but said the San Francisco-based 9th U.S. Circuit Court of Appeals recently heard oral arguments on two similar cases the foundation also lost -- one in Oregon and another in Washington. Decisions on those appeals are pending. City at risk if Granite Park failsBut biggest losers would be taxpayers, those who live near the development...Editorialhttp://www.fresnobee.com/opinion/v-printerfriendly/story/967259.htmlThe city has a mess on its hands with the Granite Park development in east-central Fresno, and it could end up costing taxpayers a bundle. But the real losers in the deal have already been singled out: the neighbors of the development, who were once regarded as among the prime beneficiaries. It's a complicated story, as The Bee reported Sunday. The land involved is a 42-acre parcel once home to Harpain's Dairy, an iconic memory for an older generation of Fresnans. The Granite Park project comes in two parts: a nonprofit recreation area and a for-profit commercial zone. The for-profit portion has lagged somewhat, in part because of the current dreadful economic climate, but it does have four restaurants open and is generating some revenue. The nonprofit recreation area is the bigger problem. That's because four years ago the city guaranteed a loan to cover the development of that portion of Granite Park, and the facilities have now fallen into raggedy disrepair. That's where the neighborhood loses: The promise of park and recreation space in an area of the city where it is in desperately short supply has been broken. And the city may be on the hook for the $5.5 million loan it co-signed. That's money the city doesn't have. If the bank that holds the loan forecloses -- and it hasn't received a loan payment for a year now -- the city could be stuck with the debt and the 18 acres of weed-choked playing fields. The city's options are limited. The land would be ideal for a park, but it has no easy access, unlike the commercial portion of the property. It has limited value now as a private development. Residential uses are restricted because of the land's proximity to the airport, and the current market means the city wouldn't recoup its investment soon, and perhaps not for many years. Granite Park's developer, Milt Barbis, says he is trying to line up an investor to pump money into the project and keep it alive by turning it into a sort of theme park, complete with rollercoasters and other rides. Let's hope so, because the other options at this point are bleak. And Barbis may be in a difficult position with the City Council and many Fresno residents, who will not be pleased if they get stuck with the bill for a failed project while its commercial sibling next door is beginning to shows signs of success. All in all, it's a potentially painful headache for City Hall and taxpayers. And then there are the nearby residents, who've been promised many things over the years and have been left, for now, with nothing but an eyesore. Many of the people who live in the working class neighborhood won't be able to afford the upscale entertainment venues now opening or planned -- the new Cabo Wabo Cantina offers a special, limited-access room where patrons can chug $600 shots of tequila, just the thing for hardworking, blue-collar folks at the end of a long day. But then the interests of working people have always been easy to overlook when glittering plans are rolled out at City Hall. More's the shame. San Francisco ChronicleNew endangered species rules clear hurdle...Dina Cappiello, Associated Presshttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/28/MN9H13P00Q.DTL&type=printableThe Bush administration on Monday said that the changes it wants to make to endangered species rules before President Bush leaves office will have no significant environmental consequences.That's the conclusion of a draft assessment released by the Interior Department that represents one of the last remaining hurdles for the regulations to become final before Jan. 20.The administration in August proposed letting federal agencies approve power plants, dams and other projects without consulting government wildlife experts in some cases. Current regulations require government biologists to be consulted in all cases - even when a project is unlikely to harm threatened wildlife or the places they live.The administration acknowledges the change will reduce the number of consultations required under the 35-year-old law. But it concludes that the new regulations will focus government expertise on cases where it is most needed and result in no harm to species or habitats protected by the statute.Environmentalists, however, say the review - which was completed by lawyers and political appointees rather than scientists - failed to consider all of the environmental repercussions.Noah Greenwald, director of the biodiversity program at the Center for Biological Diversity, said he is particularly concerned that the agency failed to thoroughly evaluate the part of the proposal that exempts the gases blamed for global warming from endangered species reviews."The assessment continues the Bush administration's attempt to sweep environmental problems under the rug in a mad rush to weaken a rule that protects endangered species," Greenwald said.Tina Kreisher, an agency spokeswoman, said both the Fish and Wildlife Service and the National Marine Fisheries Service reviewed the assessment and signed off on its conclusions. A 10-day public comment period will help decide whether a more thorough environmental review is needed, she said.The release of the environmental assessment on the proposed rules follows the conclusion of a 60-day public comment period, which ended earlier this month. The agency received 300,000 comments on the proposal, most of them negative. Mercury NewsS&P: Home prices post 17 percent annual drop in August...J.W. Elphinstone, Associated Presshttp://www.mercurynews.com/breakingnews/ci_10835886NEW YORK — Home prices tumbled by the sharpest annual rate ever in August, with little indication of a turnaround in sight, a closely watched index showed today. The Standard & Poor's/Case-Shiller 20-city housing index dropped a record 16.6 percent from August last year, the largest drop since its inception in 2000. The 10-city index plunged 17.7 percent, its biggest decline in its 21-year history. Both indices have recorded year-over-year declines for 20 consecutive months. "The downturn in residential real estate prices continued, with very few bright spots in the data," said David M. Blitzer, chairman of the index committee at S&P. Prices in the 20-city index have plummeted more than 20 percent since peaking in July 2006. The 10-city index has fallen nearly 22 percent since its peak in June 2006. No city in the Case-Shiller 20-city index saw annual price gains in August — for the fifth straight month. However, the pace of monthly declines did moderate last month from July, and Boston and Cleveland showed monthly gains from July to August. Boston, the first city to post price declines in the 20-city index starting in October 2005, has recorded five straight monthly gains in home values. But on the other hand, Dallas and Denver both showed negative returns in August after four consecutive months of increases. Price declines in Las Vegas and Phoenix surpassed 30 percent in August, according to Case-Shiller, while prices in Miami, Los Angeles, San Francisco and San Diego all plunged more than 25 percent. Home prices likely won't improve in September either as other key housing indicators have shown the housing slump still in full swing. Recent data the government and the National Association of Realtors showed the median prices for new and existing homes both tumbled by 9 percent in September. Los Angeles TimesL.A. is hit hard as home prices continue their record-breaking fallFigures for August show a 26.7 % decline for Los Angeles and Orange County compared with a year ago. The numbers from 20 metropolitan areas show a 16.6% drop...Peter Y. Honghttp://www.latimes.com/business/la-fi-homes29-2008oct29,0,3429832,print.storyU.S. home prices continued to fall at a record-breaking pace in August, with the Los Angeles area posting among the sharpest declines, according to a prominent index released today .The Standard & Poor's /Case-Shiller index of home prices in 20 metropolitan areas was down 16.6% in August from the same month a year ago. Los Angeles and Orange County home prices were down 26.7% in August compared with August 2007.Every one of the 20 regions in the index reported an August price decline from August 2007. Phoenix's 30.7% drop from the previous year was essentially matched by Las Vegas, which posted a 30.6% decline from a year ago.Close behind in their August annual price drops were Miami (28.1%), San Francisco (27.3%) and San Diego (25.8%).The smallest August yearly declines were in Dallas (2.7%) and Charlotte (2.8%).In the Los Angeles area, lower-priced homes showed greater price declines than the high end of the market. The lowest-priced third of homes, those under $380,000, declined 39% in value in August compared with August 2007, according to the index. Prices of the top third of homes, those priced above $573,000, fell 19% in August compared with a year ago.Lower-priced Los Angeles area homes dropped 42% from their fall 2006 peak price. The highest-priced third of Los Angeles area homes were down 21% from their peak in the summer of 2006.Overall, Los Angeles area home prices were down 31% from their fall 2006 peak and matched spring 2004 prices.The Case-Shiller 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 created to show price changes. An index score of 100 reflects January 2000 prices. The August index score for Los Angeles was 189.18.San Diego Union-TribuneWater conservation lags usage spikes offset urban savings...Mike Lee http://www.signonsandiego.com/news/metro/20081028-9999-1m28water.htmlWater districts in more urban areas of the county such as San Diego, Encinitas and Del Mar made big strides to reduce their use of tap water over the summer. But increased conservation by residents and businesses in those communities was essentially offset by rural districts, where farmers didn't conserve as heavily from July through September as they had during the first half of 2008. Overall, the county's 23 main water districts continue to save more water than they did last year, but their combined conservation rate fell slightly during the summer from 12.8 percent to about 12 percent. And less than half the districts are meeting the regional goal of trimming water consumption at least 10 percent. The data, provided by the San Diego County Water Authority, compare January through September with the same period in 2007. The uptick in non-farm conservation gave water officials reason for mild optimism heading into the winter, but it doesn't change the perilous situation the county faces next year. Water district officials countywide said 2009 is likely to bring mandatory water-use restrictions and higher rates meant to decrease demand. “Hopefully, the combination of the cooler weather, the shorter days and the advertising messages getting through to people means that we will see this (conservation) trend continue” in urban areas, said John Liarakos, a spokesman for the water authority. At the end of September, some of the biggest conservation gains came in districts that had lagged behind the pack at midyear. San Diego, by far the region's largest water user, substantially improved from 1.3 percent in June to 5 percent in September. “That would be to me an indication that folks have actually stepped up and they have started to hear the message,” said Alex Ruiz, a deputy director in the city's Water Department. He and other city leaders, including Mayor Jerry Sanders, have been holding community forums around San Diego to educate residents about the drought.The city's success was tarnished by the fact that it ranks second-worst regionally in conservation rate – behind the Lakeside district – and is only about halfway to its goal of 10 percent, water authority figures show. In June, the Olivenhain Municipal Water District in Encinitas had the worst year-over-year conservation rate at less than 1 percent. The most recent numbers show the rate is up to 5.4 percent compared with 2007. General Manager Kimberly Thorner attributed the improvement to a districtwide survey that got people thinking more about water use. “Most of our customers have done something to conserve water and they are willing to make more changes,” she said. Olivenhain is among the districts preparing for drastic measures by next year. Under the most extreme conditions, the district is preparing to increase its water rates up to 75 percent more than the rates proposed for 2009. In Del Mar, residents and businesses managed to slash water use more than 20 percent this year compared to last. Public Works Director David Scherer said the huge decline is due to several factors, including a few dozen neighborhood meetings about the region's water shortage, the city's civic spirit and aggressive conservation at the Del Mar Fairgrounds. Still, Scherer isn't satisfied. “Though we have conserved, we still have a ways to go,” he said. Several other water agencies in the county showed little change from their midyear conservation rates. Water use in rural areas remains well below that of 2007, in part because many farmers had contracts that mandated 30 percent reductions. In the first half of this year, farmers saved far more than they had to in case they needed that water to get through heat waves. Over the summer, the conservation rate slipped a few percentage points in many agricultural districts as farmers watered a little more liberally during the hottest part of the year. Pension contributions suspended for 18 years...James P. Sweeneyhttp://www.signonsandiego.com/news/education/20081028-9999-1n28ucretire.htmlSACRAMENTO – For 18 years, breathtaking investment returns that single-handedly bankrolled the University of California's pension plan seemed too good to be true. They weren't. But they were too good to last. Now after a contribution holidaythat was remarkable and perhaps unprecedented, the UC and 122,000 of its employees must restart payments to the dwindling $40 billion fund.That figures to be much more difficult than it was to suspend the pension contributions nearly a generation ago, and there's little time to waste. “The UC retirement plan is unique in that it has been without contributions for so long and yet it could be the state's biggest near-term pension funding problem,” said Jason Dickerson, a pension specialist with the Legislative Analyst's Office. Because no money is flowing into the UC pension fund, when it falls below 100 percent funded – which it almost certainly has – the system will have to quickly ramp up contributions to as much as 21 percent of payroll in the next few years to cover annual costs approaching $1.4 billion. “I hate to remind everybody that there is an issue that some of us had wanted to deal with for a long time,” UC Regents Chairman Richard Blum told the board last week. “It's now become a real problem and that's the pension fund. “Fifteen months ago, we were at 110 percent of funding. We're now down to probably 80 percent or below.” Restarting payments to the plan will mean asking state lawmakers who cut the UC budget and still face a multibillion-dollar deficit to come up with several hundred million dollars a year. It also will require reaching agreements with as many as 20 collective bargaining units that represent 58,000 UC employees. At least one of those unions, still angry over a change in management of the fund, is pushing for a direct role in future management decisions. “We want shared governance of the plan,” said Lakesha Harrison, president of an American Federation of State, County and Municipal Employees local that represents 20,000 UC workers. “We're the only state employees who don't have a seat at their own pension table. The university makes all the decisions.” Until a few years ago, few second-guessed those decisions. In one fiscal year, 1982-83, the fund earned more than 52 percent on investments. In the fiscal years that ended in 1985 and 1986, it earned 32 percent and 39 percent, respectively. The UC suspended university and employee contributions in late 1990 as the pension plan approached 140 percent of funding. In the decade that followed, the banner years marched on with an occasional pause. During the mid-1990s, the fund posted four consecutive years of earnings that exceeded 20 percent and it peaked at 154 percent funded in 2000. Since 1990, the fund has averaged annual earnings of more than 12 percent. Thanks to the stunning returns, 80 percent of UC employees have never contributed to the pension fund, UC officials say. Almost 4,900 former UC San Diego employees receive payments from the fund and 15,400 more UCSD employees participate in the plan. “You could retire and you might have worked there an entire generation and contributed nothing or next to nothing to your pension benefit,” Dickerson said. “That's a remarkable achievement.” The university didn't suspend payments just because the pension fund was flush. At the time, the university was dealing with tight state funding, said Randolph Scott, UC's executive director of human resources. By suspending its contributions, which were then 4 percent of payroll for most of the UC work force, the university could use that money for other programs. Other public pension plans with surpluses took similar actions at the same time, Scott said. But none apparently deferred contributions for so long. The 18-year contribution holiday “is unprecedented as far as we know of for any public employer,” Scott said. The UC's fund peaked about the same time the board of regents made a controversial switch from internal to external management of the investments. In addition, the dot-com bubble burst, sending the stock market into a three-year swoon starting in 2000. The university also had sweetened its benefits over the years and lowered from 62 to 60 the age at which employees could retire. And it began sending retirement checks to former employees who are on the leading edge of the baby boomer population, Scott said. At the end of June, the UC plan stood at 103 percent funded, based on a five-year “smoothing” of fluctuations. Since then, the UC's balance and those of the huge California Public Employees' Retirement System and the California State Teachers' Retirement System – both of which had been under 90 percent funded in recent years – have taken a beating in the stock market. Before the market slide, regents and other UC officials had known for several years that the time to restart pension contributions was near. “We went to the state Legislature two to three years ago to say this day will come, and we could barely get a hearing,” Scott said. Regents had hoped for a gradual transition, but it appears to be too late for that. “The day that we've been talking about effectively is here,” actuary Paul Angelo told the regents last month. Next month, regents are expected to consider recommendations on a percentage level at which to restart pension contributions, and how that should be split between the UC and its workers. Those decisions will be complicated by many factors, including that most employees had to continue contributing 2 percent of their pay to individual accounts separate from the pension fund. Of the many unions, some are in various stages of negotiations, some have open contracts, some have agreed to restart contributions when the university does and some insist they won't resume payroll deductions until they receive more money, Scott said. The UC just reached a tentative agreement on a five-year contract with patient-care workers from the American Federation of State, County and Municipal Employees. The proposed contract does not address pension payments and the union's president said UC should put up some of the money it saved by suspending its contributions before it seeks anything from employees. “I think they need to pony up their fair share first,” the union's Harrison said. In addition to the state and its employees, the UC will be able to go to its medical centers, other self-sustaining enterprises and federally funded operations for help with the looming pension obligation. “So there are ways to spread it around,” said Dickerson of the Legislative Analyst's Office. “But $1.4 billion is the number. It's a lot of money by any measure, considering the budgetary times we are in.” Washington PostDirtier AirA proposed EPA change in a power plant rule would worsen pollution...Editorialhttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/27/AR2008102702467_pf.htmlTHE ENVIRONMENTAL Protection Agency is pushing to issue an ill-advised rule that would allow old, pollution-spewing power plants to increase deadly emissions without restriction. This should not happen. If it does, it will be yet another astonishing decision by an administration that insists that its record on the environment and climate change is misunderstood and underappreciated.Since 2005, the EPA has been trying to change the new source review (NSR) provisions of the Clean Air Act. The NSR provisions require pollution controls based on how power plant emissions will affect surrounding communities. Currently, existing power plants must undergo NSR whenever they make renovations that increase their annual emissions. The Bush administration would change the review trigger from annual emissions to maximum hourly emissions. This is a problem because repairs to those old power plants might leave the maximum hourly emissions unchanged but increase total operating hours, meaning annual emissions could rise.The EPA has argued that there was no need to worry about increased pollution as a result of the new NSR rule because of the Clean Air Interstate Rule (CAIR). This regulation sought to reduce the amounts of contaminants from power plants that settle downwind in another state by 70 percent for sulfur dioxide and 60 percent for nitrogen oxide. It covered the District of Columbia and 28 states in the Midwest and the East. In announcing the new NSR rule in 2005, the EPA said it was needed to "harmonize" and "complement" CAIR and other clean air rules. But here's the next problem: The CAIR rule was vacated by the U.S. Court of Appeals for the District of Columbia in July.Undaunted, the EPA is pressing forward. In response to a request in June from Rep. Henry A. Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, the agency revealed the results of three computer models that showed that its proposed NSR rule would increase carbon dioxide emissions by 74 million tons annually. Mr. Waxman contends that this would be "roughly equivalent to the total annual CO2emissions of about 14 average coal-fired power plants."Sen. Barbara Boxer (D-Calif.) and Sen. Thomas R. Carper (D-Del.), as well as the Natural Resources Defense Council, have called on the EPA to undertake a new analysis of the impact of its proposed NSR rule, given that the CAIR regulation has been nullified. They also demanded that the agency publish a notice for public comment on any new analysis. We agree. Instituting this rule would be willful disregard of science, the intent of the Clean Air Act and the public's right to have a voice in such an important decision. And it would cement the Bush administration's say-one-thing-and-do-another reputation on climate change. The planet is warming faster than scientists had predicted. What the EPA might do would make it worse.Wal-Mart to increase focus on emerging markets...Nicole Maestri, Reutershttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/28/AR2008102801545_pf.htmlNEW YORK (Reuters) - Wal-Mart Stores Inc (WMT.N) will focus on expanding its international business by putting more capital toward emerging markets and store remodeling projects, the world's largest retailer said on Tuesday.The announcement comes a day after Wal-Mart said it would slow the opening of new stores in the United States and focus on remodeling existing locations to improve sales.In the past five years, Wal-Mart said it has allocated roughly 67 percent of its capital in its international division toward mature markets, like Canada and Japan.But over the next five years, it will allocate roughly 47 percent toward mature markets and 53 percent for emerging markets, like Mexico, China and Brazil.The retailer expects spending for new stores to remain roughly flat this year and next year, but it will put more money toward remodeling efforts."We are building smaller stores and we're building stores that require less capital to enter a market," said Mike Duke, Wal-Mart's vice chairman of international. He was speaking at Wal-Mart's analyst meeting that was broadcast online.Wal-Mart expects total international capital expenditures for its current fiscal year, which ends in early 2009, of $4.5 billion to $4.8 billion, and spending of $4.8 billion to $5.3 billion next year. Last year, its international capital spending was $4.6 billion.With Wal-Mart reaching the saturation point in many U.S. markets, it has highlighted its international businesses as a growth engine.The division accounted for 24 percent of Wal-Mart's $374.53 billion in net sales in the last fiscal year. While sales at its namesake discount stores rose 5.8 percent last year, they jumped 17.5 percent in its international division.Wal-Mart said its international markets are not immune from the tough economic times."These are difficult times, not just in the United States but around the world," Duke said.But Wal-Mart, with its low prices, is well positioned to weather the current climate, Duke said.The retailer said that in Japan it expects to operate three distinct store formats -- supermarkets, food and drug stores, and supercenters. Wal-Mart is also becoming "very aggressive" in remodeling stores in that country to improve sales, and Wal-Mart Japan is open to exploring potential mergers or acquisitions.Wal-Mart also expects to open its first cash-and-carry center in India in the first half of 2009. Wal-Mart has a venture with India's Bharti Enterprises for cash-and-carry wholesale operations.(Reporting by Nicole Maestri; Editing by Brian Moss)