11-1-08

 11-1-08Merced Sun-StarPublic NoticeFelix Torres Farm Worker Housing Center Seasonal and Year-Round Facilitieshttp://www.legalnotice.org/pl/mercedsun-star/ShowNotice.aspxINVITATION TO BID Felix Torres Farm Worker Housing Center Seasonal and Year-Round Facilities The Housing Authority of the County of Merced (HACM) and Brown Construction Company, Inc. (BCI), General Contractor/Construction Manager (GC/CM), License No. 396120, will receive subcontractor bids for the Felix Torres Farm Worker Family Center construction, which is located at 925 North Plainsburg Road, Planada, Merced County, CA. The project is designated and involves two separate components: Seasonal Farm Worker Housing and Year-round Farm Worker Housing. The work consists of the construction of 67 single-story wood framed buildings, totaling 100,186 sq. ft., and the development of the 20.9 acre site. BCI, (916)-373-9300 is providing management services; with 98% of the actual work to be subcontracted to other companies... Familiar faces look to lead GustineMelville, Ford have lots of experience in government...VICTOR A. PATTONhttp://www.mercedsunstar.com/167/v-print/story/526377.htmlGUSTINE -- Voters in this idyllic Westside city affectionately called the county's last "Norman Rockwell" town will go to the polls Tuesday to either keep their mayor or give someone else a chance.Tuesday's election will rematch incumbent Rich Ford and challenger Mark Melville. Ford defeated Melville by a narrow margin in 2006, the first year the city held a mayoral election......Melville's name is also familiar because he is vice president of Riverside Motorsports Park, a proposed racing complex that appears to be in limbo, but remains the subject of much public debate.Gustine's budget...Melville and RMPMelville acknowledged that he's still involved in Riverside Motorsports Park as vice president. First proposed more than five years ago, the RMP project is still far from breaking ground.The Merced County Board of Supervisors approved RMP's proposal in December 2006. But a judge threw out those approvals earlier this year when she ruled against RMP in a lawsuit filed by environmental groups and the Merced County Farm Bureau.The Sun-Star reported earlier this year that RMP had been on shaky financial footing for many months and had problems paying its bills. After the company failed for months to make more than $150,000 in delinquent payments to the county, the Board of Supervisors voted to require RMP to pay up front for future permitting and legal services.Melville said while he was "an employee" on RMP, he never had any control "of the purse strings" or recruiting for investors."My job was to get it though the government process, get it thought the entitlement process," Melville said. While Melville admits that his detractors continue to throw the controversy surrounding RMP "in his face," he said it's all about "economic development" and "trying to put people to work.""RMP is a regional recreational project (that would put) $180 million estimated into the local economy. If you want to fault me for trying to do that, then fault me. Because that's what I was trying to do," Melville said.As for whether he has business ties with Ranchwood Homes and its owner Greg Hostetler, Melville described Hostetler as "a friend," but said his dealings don't go much further than that. Would his friendship with Hostetler influence his leadership of the city? Melville said it wouldn't. "Greg is a friend of mine. OK? I don't work for Greg, I have never worked for Greg. As small as I am, there is no way that I am going to ever be able to enhance his pocketbook. Especially in Gustine," Melville said. "I have nothing to do with his business or his business interests. He's not going to get any favoritism. Nobody is going to get any favoritism."Melville is not the only candidate whose background has been the subject of some criticism. An article published on WestsideConnect.com, the Web site for the Westside Index and the Gustine Press-Standard, stated that some community members expressed concerns about the fact that Ford receives city-paid health insurance...City will map out underpass work Monday...SCOTT JASONhttp://www.mercedsunstar.com/167/story/526357.htmlMerced's City Council, in broad brush strokes, will paint a picture Monday night of how it wants the G Street underpass designed. The finer points of the project will be shaded in during the coming year. The council will meet 5:30 p.m. Monday for a public workshop on the $18 million project that's been one of the city's top goals for years. The city, with $9 million from the state, will build an underpass so traffic can go below the train tracks even if a locomotive is barreling through town. An average of 70 trains go across the northern set of tracks.Work is scheduled to begin in 2010 and end in 2011. Residents are fretting about what'll happen in between those dates and in the years to come.In the short-term, construction will inconvenience people and tax nearby streets. In the long run, G Street will likely see more traffic as residents use it to avoid train delays... The council is faced with three main choices as the long-awaited project moves forward.First, should G Street at the Burlington Northern Santa Fe Railway crossing be closed during construction, expected to last about 18 months? If the street's closed, it means the 31,000 daily car trips across that section of G Street will be using M and R streets to move north and south in Merced.For an extra $2 million to $3 million, the city could build a detour. It would tack an extra six months on the project. G Street would only be closed for six months...Second, how should Santa Fe Drive, just north of the train tracks, connect to G Street? The city can close the street entirely and turn it into a cul-de-sac. It's the cheapest option, at $40,000, but it'll increase traffic on nearby streets as residents leave their homes. On average, there are about 2,800 car trips daily on that part of the road.The city can keep the road connected to G Street in two ways. It can get rid of some garage access and buy a section of land. That option would cost about $600,000. It could curve the road to the south, keep garage access and still buy a chunk of land. It'd cost $400,000. The cost of buying the land is not included in those estimated costs of the other construction. Both options suggest low to moderate impacts on traffic because left turns from Santa Fe Drive to G Street wouldn't be allowed for safety reasons. Right turns would be allowed. Third, the council must decide how West 23rd, 24th and 25th streets should connect to G Street. According to the city engineer, 23rd Street can stay connected with only right turns. However, West 24th and 25th need to be closed and turned into cul-de-sacs. It's possible that West 25th Street could stay open for emergency vehicles...Commentary: A rush to judgment on G Street underpass?Neighbors worry about change...John and Mary HofmannJohn Hofman was an urban planner for 31 years with the city of Merced. He retired in 2004. Mary has been a teacher and librarian at Rivera Middle School for 21 years.http://www.mercedsunstar.com/177/v-print/story/526374.htmlThe G Street underpass plan is clearly a rush to judgment with only the slimmest disguise of public input.The city is about to radically change the lives of hundreds of residents and school children and contribute to the destruction of Ragsdale and other neighborhoods as well as downtown.We and our neighbors and many of the residents of Merced say stop, wait, consider and plan.As residents of Ragsdale since 1975, we have concerns, indeed major fears, about the future of our neighborhood in light of the consequences inherent in the city's sudden rush to push through the G Street underpass.During more than 30 years of living in Ragsdale, there has been a definite increase in traffic through the neighborhood. The neighborhood middle school may explain some of that.However, residential growth in east and northeast Merced, with almost no access out of the area between Bear Creek and the BNSF railroad tracks has been increasingly worrisome.For quite some time, extension of Parsons Avenue southward to effectively access Highway 99 has been the expected counter to anticipated residential growth likely to need a Ragsdale conduit.Residents also realize that the city has long been thinking about some kind of intervention to facilitate the movement of traffic on G Street grade, although not nearly as long as the Parsons Avenue corridor.The sudden notification of the surrounding neighborhoods of an imminent decision that could radically affect their lives, their property values and their future is alarming on many levels.From the public presentation given on Oct. 23 by city staff, it is clear that concrete planning on the part of the city has been in the works for some time without citizen input. A grant had to be written, submitted, and approved by the state, during which time no contact with those affected was made. At the public meeting Oct. 23, those who attended were told the city had received approval on Aug. 28 to go ahead with the G Street, two months before the single public workshop was held. Yet, at that same meeting, city staff said they had a time crunch of only a week to get the plans approved. Residents of Ragsdale and other neighborhoods around the planned underpass have barely had time to recover from the shock of the announcement and the presentation of the plan.They have not been given an opportunity to organize like neighborhoods, such as Parsonsm consistently have. Why? Because the city might lose $9 million, which, we were told, "came out of the sky."This is a truly suspicious claim, because the funding came as a result of a carefully written grant proposal. If the Parsons Avenue corridor project is ever completed, corridor residents may indicate feeling nonplussed and inconvenienced.But their situation has been a matter of public record for decades and, like residents complaining about the noise from an already existing airport, information regarding what they were getting into has been readily available. Yet the city has on numerous occasions over the years delayed substantive action on this traffic corridor.If the G Street underpass is literally railroaded through in the next week and approved by the City Council, there will be several long-range consequences that will be substantial and life changing for residents of Ragsdale and other neighborhoods.The neighborhoods themselves could be changed permanently without even the smallest opportunity for residents of Merced to discuss these changes.Letter: Support Measure M...REP. DENNIS CARDOZA, Mercedhttp://www.mercedsunstar.com/177/v-print/story/526363.htmlEditor: Earlier this month I had the great pleasure of attending the 50th celebration of Atwater High School.I continue to be proud of both my own high school, as well as all of those throughout our entire community. They provide us and our children with wonderful educational opportunities.My recent attendance at my own school's celebration reminded me of just how important it is to ensure our schools receive the funding they need for infrastructure improvements.That's why I am happy to support Measure M this year for the Merced Joint Union High School District.I hope you will join me in doing the same.Modesto BeeWater system upgrade gets OKTuolumne River supply off the table for now, SF says...Bee Staff Reports and News Serviceshttp://www.modbee.com/local/story/483358.htmlSAN FRANCISCO -- San Francisco officials have approved a $4.4 billion plan to upgrade and seismically retrofit the Hetch Hetchy water system but have backed off plans to divert more water from the Tuolumne River for another decade.The original proposal would have taken up to 25 million gallons per day from the Tuolumne. That plan was strongly opposed by environmentalists, fishing groups and the Modesto and Turlock irrigation districts -- which have controlling rights on the Tuolumne that date back to the 1890s.Environmental groups such as the Tuolumne River Trust also urged San Francisco's Public Utilities Commission to amend its original plan."This is a major victory for the wild and scenic Tuolumne River," said Peter Drekmeier, Bay Area program director for the Tuolumne River Trust. "A year ago, we faced a proposal to divert an additional 25 million gallons of water per day from the Tuolumne -- enough to fill 1,000 swimming pools. We've come a long way."The MID's top administrator also was pleased with Thursday's decision in San Francisco."We will continue to review the plan, but are pleased that there is talk of San Francisco exploring drawing water from resources other than the Tuolumne," said Allen Short, general manager of the Modesto Irrigation District.The city's planning and public utilities commission adopted an alternative to cap water sales for at least 10 years. But the SFPUC left open the possibility that it could take an additional 2 million gallons per day from the Tuolumne under drought conditions. California is experiencing a drought and many Southern California water districts are planning to ration water this summer."TID fully supports San Francisco's need to improve the safety and reliability of their drinking water supply system through the seismic upgrades," said Michelle Reimers, a TID spokeswoman. But the TID was protective of its water rights."San Francisco has acknowledged that they do not have rights to divert any additional water from the Tuolumne. Additional diversions would only be possible if TID entered into a water sales agreement with San Francisco. TID has no plans to sell any water to the city and county of San Francisco."New sources to be tappedInstead of taking more water off the Tuolumne, the SFPUC will rely more heavily on conservation measures such as using recycled water from golf courses and parks and by tapping new groundwater sources. The Tuolumne River Trust said the plan approved Thursday includes several amendments aimed at minimizing the need for additional river diversions.San Francisco officials say the massive upgrade is needed to keep the system safe in case of a major earthquake or prolonged drought.The plan calls for 80 individual projects, including replacing a dam at the Calaveras Reservoir (on the border of Alameda and Santa Clara counties) that is not seismically safe and laying more pipeline.The Bay Area system takes water piped 150 miles from the Hetch Hetchy Reservoir in Yosemite National Park to distribute to 2.5 million customers in San Francisco and its neighboring counties.Water from the Tuolumne also flows into Don Pedro Reservoir, where it is held for irrigation and for urban customers. The city of Modesto gets about 40 percent of its drinking water from Modesto Reservoir, which is supplied by the Tuolumne River.Officials with the Modesto and Turlock irrigation districts have challenged San Francisco's proposal to divert additional water from the Tuolumne.Stockton RecordSalmon run watched with wary eyesDisastrous 2007 season has many anglers worried...Alex Breilterhttp://www.recordnet.com/apps/pbcs.dll/article?AID=/20081101/A_NEWS/811010328Salmon fishing season - if you could call it that - begins today on the Sacramento River, even as biologists wait to find out how many of the migratory fish will return after a disastrous 2007.One fishing guide holds little hope for the future. The present hasn't treated him very well."It's been a double-whammy this year," said guide Jack Findleton of Sacramento, who relies on river salmon fishing for about 40 percent of his business. "Not only did they close the salmon fishing, but we've been hit by this economic crisis. The first thing that goes when money is tight is recreation."It's still unclear exactly how this year's salmon run is shaping up. On the Mokelumne River, a biologist for the East Bay Municipal Utility District said this weekend's storms might trigger a surge of upstream migration to the hatchery below Lake Camanche.In 2007, the river saw 1,500 adult fish return to spawn; an average year would yield about 4,000 fish.Further south, on the Stanislaus River, exact numbers weren't available Friday. But the salmon run was looking good, "all things considered," private fish biologist Doug Demko said.Most salmon head north up the Sacramento River, but a count on fall-run Chinook passing through Red Bluff was not available Friday.Salmon angling is allowed today through Dec. 31 on the Sacramento River from Knights Landing to Red Bluff. Fishermen are allowed one salmon per day.A normal season would see up to six months of fishing with two fish per day. But wildlife managers decided in May to cut inland fishing dramatically - a potential $20 million hit for the state economy - due to plummeting numbers of adult fish returning to spawn last fall.Ocean fishing was also canceled, exponentially increasing the economic toll in California to $255 million.The salmon crash has been blamed on a slew of potential factors, including poor ocean conditions, a loss of river habitat and the export of water from the Delta.Fish caught in November and December will be considered late fall-run salmon and should have little impact on the spawning of the main fall run, biologists have said.In a statement, Neil Manji, Department of Fish and Game fisheries chief, said it's important anglers cooperate with the restrictions "to allow this fishery to open again in 2009."Wardens would be keeping "close scrutiny" on fishermen, he said.Findleton, a guide for 28 years, said he doubts there will be much interest in such limited fishing. He got one phone call from a prospective customer back in September."I don't hear people talking about going salmon fishing," he said. "Everybody seems to be discouraged."San Francisco ChronicleEPA curbs factory farm pollution...H. JOSEF HEBERT, Associated Press Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/10/31/national/w153830D88.DTL&type=printableThe Environmental Protection Agency issued new pollution control requirements for large livestock feedlots Friday that would allow farm operators to avoid having to get a permit if they claim the facility will not put harmful discharges into nearby waterways.EPA officials said the new requirements call for a "zero discharge standard" and also will require farm operators to develop management plans that prevent the runoff of excessive environmentally damaging nutrients such as nitrogen and phosphorous into lakes and streams.The new rules provide "a strong national standard for pollution prevention and environmental protection while maintaining our country's economic and agricultural competitiveness," said Benjamin Grumbles, the EPA's assistant administrator for water, in a statement.Environmentalists have long complained that animal feedlots — the large farm operations where hogs and cattle are fattened before slaughter — pollute waterways because of their huge buildup of manure which is piled up or spread across the land.The EPA issued new pollution control requirement on such feedlots in 2003, but that regulation was overturned by the courts two years later. The rules issued Friday, to go into effect next February, are an attempt to meet the court's concerns.Under the rules, a feedlot would not automatically have to obtain a pollution discharge permit and could be certified as voluntarily complying with the "zero discharge" standard. Operators would determine whether their facility is releasing or will release pollution into waterways based on the design of the facility and its operation. If they conclude no discharges will take place, they can operate without applying for a federal permit.Environmentalists complained this provision will let many of the feedlot operators off the hook."This regulation allows these industrial meat farms to avoid the Clean Water Act altogether by certifying that they have taken voluntary action to avoid discharges," said Eric Schaeffer, a former EPA enforcement official who now is director of the Environmental Integrity Project, an advocacy group.Because feedlot owners are allowed to determine whether they should seek a pollution permit "it literally puts the foxes in charge of their gigantic henhouses, as well as hog and dairy confinement operations," said Schaeffer.The EPA estimated that the requirements will prevent the release into streams, lakes and other waterways of 56 million pounds of phosphorous, 110 million pounds of nitrogen and 2 billion pounds sediment a year.The National Pork Producers Council called the new rules "tough but fair" and said they set a high environmental standards for the feedlots, known within the industry as Concentrated Animal Feeding Operations (CAFO)."Pork producers are ready and willing to comply with the new regulations," said Randy Spronk, a pork producer from Edgerton, Minn., who is chairman of the council's environment committee.Spronk acknowledged that "many CAFOs may choose not to get a federal permit because they are confident they will not discharge." But he added "with or without a permit, swine operations that are not well managed and have discharges are facing severe penalties."Coho salmon fry discovered up a remote creek...Peter Fimritehttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/01/MN5613NOAH.DTL&type=printableJennifer Carah is a scientist who doesn't normally squeal, especially not when she is under water, but a recent snorkeling expedition in an obscure creek on the North Coast caused her to abandon all scholarly protocol."Yeeeee heeeeee," she shrieked through her snorkel upon spotting a mass of little fish behind a rock in Pardaloe Creek, a remote tributary of the Garcia River, in the heavily logged forests of Mendocino County. The critters that elicited the squeal were endangered coho salmon. In fact, juvenile coho were found in 10 places where they had not been seen in years in the 72,000 acre Garcia River watershed. "I was pretty excited to find them there," said Carah, a field scientist for the Nature Conservancy. "We've checked the data of other agencies and haven't heard accounts of coho being up there before. These sightings have generated a whole lot of enthusiasm, especially given the fact that coho are pretty much on the brink of extinction."The discovery of coho in the headwaters of the Garcia River is especially eye-opening because the watershed once was destroyed by logging. Now it is part of a unique experiment that involves what conservationists call sustainable forestry, or selective logging. "As we all know, parks are struggling to manage the lands they already own, and local governments, particularly in rural counties, don't like to see big swaths of private land put into parks because it takes it off the tax roles and takes the land out of public use," said Chris Kelly, the California program director for the Virginia-based Conservation Fund, which paid the timber company Coastal Forestlands $18 million in 2004 for the 23,780-acre Garcia River Forest. "Why not own it and manage it as a productive forest and use the timber to pay for the restoration and management of the property?"The Nature Conservancy paid $3.5 million for a conservation easement on the property that allows them to conduct studies and monitor fish and wildlife populations in the watershed. The Conservation Fund is in charge of managing the forest by repairing roads, fixing erosion and hiring loggers to selectively thin out stands and remove sick trees. In exchange, the land is protected forever from residential and vineyard development.The forests of Mendocino County are a crucial testing ground for this type of strategy because it is in this region that coho salmon once were extremely abundant.Decline of the cohoA large American Indian fishing village once was located on the Garcia River, but when white men arrived in the 1850s and 1860s, the native Bokeya, or Central Pomo Indians, were moved out, land was cleared, and lumber production began. By the late 1870s, more than a dozen mills were operating in the watershed. Meanwhile, salmon from the Garcia River were netted by the thousands, smoked and shipped to San Francisco. The Nature Conservancy's Carah estimates that as many as 500,000 coho once squirmed and wriggled their way up California streams every year as late as the 1940s. Old-timers living in Mendocino County remember spearing coho in the Garcia. After the first rains, dozens of young coho could be seen in every pool and eddy. They were so abundant that people simply ignored the 25-fish limit, sometimes just scooping the fish out of the water. The fish began to disappear when the widespread clear-cutting of forests began after World War II. The rampant building of logging roads in the watershed, the removal of riparian vegetation and huge amounts of silt running off into the creeks ruined their habitat.The Garcia River Forest has been clear-cut twice, the last time in the 1940s, according to Kelly.Coho now make up about 1 percent of their historic population on the North Coast. The construction of dams, pollution and the emergence of global warming appears to be making things even worse. So few spawning chinook salmon returned to the Sacramento River and its tributaries this year that ocean fishing for salmon was banned in California and Oregon. Coho, which are more sensitive to water temperature and quality than other salmonid species, are in worse shape than chinook. The species was listed as endangered in 2005 under the Endangered Species Act. On top of that, fisheries analysts report a 73 percent decline in the already dismal number of coho returning to the creeks and tributaries along the coast of California during the 2007-08 spawning season. Coho in Oregon showed a 70 percent decline.'Encouraging sign'Pardaloe Creek, which at 2,470 feet is the highest point of the Garcia watershed, had been surveyed six times between 1975 and 1999 by the state Department of Fish and Game and the Mendocino County Resource Conservation District. Not a single coho was spotted in any of the surveys. In fact, the farthest up coho were found was in Inman Creek in 1997, 11 miles downstream from Pardaloe Creek.The Nature Conservancy and the Watershed Fund have been working together to build wood structures in the streams to create pools for fish, upgrading logging roads to reduce sediment and choosing only non-thriving trees to harvest.The coho were discovered during the first survey of the upper reaches of the watershed since the restoration work began. Success is hard to measure, Carah said, and one field survey is hardly definitive evidence of a recovery, but she thinks the little fish she saw in the creek are a message that better times could be ahead. "Because coho are so sensitive, they really serve as kind of a canary in the coal mine for Northern California coastal rivers and streams," Carah said. "It is a really encouraging sign to find them in 10 places and especially way up in the headwaters given the status of coho in the state. I think it does indicate that we are having some success." Kelly said the kind of forest management being practiced in the Garcia watershed might be the best way left to preserve woodland ecosystems, watersheds and fish."A forester would look at this land and say it doesn't meet my 8 or 10 percent return on investment, but we don't have a rate of return expectation. All we need to do is pay the bills," Kelly said. "I look at it as an intervention. We are preserving the viability of the forest and watershed in a feasible way that over the next 10 or 15 years could restore the productivity and volume of timber and again make the timber industry meaningful."New York TimesBush’s Last-Minute Rule Making Has Environmental Implications...Tom Zeller Jr., Green Inc.http://greeninc.blogs.nytimes.com/2008/10/31/bushs-last-minute-rule-making-has-big-environmental-implications/?pagemode=printNew rules from a variety of agencies are being considered by the Office of Management and Budget. Last May, the White House chief of staff, Joshua Bolten, sent a memo to regulatory agencies advising them to pull together any proposed rule changes they might wish to pursue by June 1, with an aim toward making them final by Nov. 1. This, Mr. Bolten explained, was to avoid a mad dash for midnight regulations — those last-minute tweaks to federal rules made in the twilight of a departing administration. Of course, room would be made for “extraordinary circumstances,” Mr. Bolten wrote. OMB Watch, a nonprofit group monitoring the activities of the White House Office of Management and Budget, noted last month, “it appears there are a lot of ‘extraordinary circumstances’ to be found.” Indeed, The Washington Post reports today that as many as 90 new regulations are in play — and many of them appear aimed at easing environmental rules governing everything from commercial fishing to power production. Writes The Post: A rule put forward by the National Marine Fisheries Service and now under final review by the O.M.B. would lift a requirement that environmental impact statements be prepared for certain fisheries-management decisions and would give review authority to regional councils dominated by commercial and recreational fishing interests.…Two other rules nearing completion would ease limits on pollution from power plants, a major energy industry goal for the past eight years that is strenuously opposed by Democratic lawmakers and environmental groups.One rule, being pursued over some opposition within the Environmental Protection Agency, would allow current emissions at a power plant to match the highest levels produced by that plant, overturning a rule that more strictly limits such emission increases. According to the E.P.A.’s estimate, it would allow millions of tons of additional carbon dioxide into the atmosphere annually, worsening global warming.A related regulation would ease limits on emissions from coal-fired power plants near national parks.A third rule would allow increased emissions from oil refineries, chemical factories and other industrial plants with complex manufacturing operations.Midnight regulations, of course, are nothing new, and the Clinton administration made a name for itself with a raft of last-minute rules of its own. Many were aimed at strengthening environmental regulations and reducing greenhouse emissions. In any event, despite Mr. Bolten’s memo to agencies, few observers expected anything less than a rush to tweak things this time around, as the Bush administration prepares to take its leave. Speaking to The Times’s John M. Broder last year, Susan E. Dudley, the head of the Office of Information and Regulatory Affairs, which oversees rule making throughout the regulatory branch, put it this way: “Every administration does it. It doesn’t matter the party the president comes from or who controls Congress. While I’d like to say this administration won’t, I have to accept that we’ll likely see an increase in activity toward the end of our time here.”CNN MoneyHousing plunge: The Fannie fixTwo scapegoats in the mortgage mess, Fannie Mae and Freddie Mac, could play a key role in a housing revival...Colin Barr, senior writerhttp://money.cnn.com/2008/10/30/news/fannie.housing.fortune/index.htm?postversion=2008103107NEW YORK (Fortune) -- Falling house prices are still a problem. Could Fannie Mae and Freddie Mac be part of the solution? The government is moving forward on a plan to reduce foreclosures by guaranteeing some troubled mortgages after lenders agree to reduce loan balances. But while that $50 billion program will help some troubled homeowners, by consensus it will take a broader solution if the feds are to have any success in slowing the house-price declines that are wreaking havoc on financial institutions. The answer, some market observers propose, is to bolster housing demand by bringing down mortgage rates. And one way to do that, believe it or not, involves another federal takeover of Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) - this time, for good. The mortgage giants were partially nationalized last month in an earlier, unsuccessful government-led effort to ease the problems in the housing market. "If you're trying to stimulate demand, the best way is to bring down mortgage rates," says Len Blum, a managing director at New York investment bank Westwood Capital. "Doing that attacks two of the big problems in housing right now." Blum sees three primary factors driving house prices lower. Sale prices, despite the plunge of the past year, remain above rental rates in most markets. Meanwhile the inventory of houses for sale remains near record levels, while mortgages are largely unavailable except for the most creditworthy borrowers. All of these factors tend to reduce either the pool of interested home buyers or the prices they'll pay. Blum says one possible solution is for the feds to fully nationalize the companies, eliminating the public-private hybrid structure that survived September's partial takeover and bringing their debt onto the Treasury's balance sheet. Once Fannie and Freddie are explicitly part of the government, they should be able to borrow at Treasury rates, which are substantially lower than the rates the so-called government-sponsored enterprises have been forced to pay since their finances came into question earlier this year. That should help bring down the effective cost of buying a house. A full nationalization of Fannie and Freddie could conceivably allow the companies to shave rates on 30-year conforming mortgages by as much as 2 percentage points, to around 4.5%.Shaving 2 percentage points off the rate on a $200,000 mortgage could save the buyer around $250 a month, he says. The difference could be particularly telling for buyers who borrow through the Federal Housing Administration, which requires smaller downpayments than private lenders in midst of the credit crunch. "A program like this allows more homeowners into the market," says Blum. Investment strategist Ed Yardeni, who advocates a similar plan, says adopting it should "revive the economy very quickly."Another bazooka?There are risks, of course, as the Treasury learned in its earlier dealings with Fannie and Freddie. In July, Treasury Secretary Henry Paulson asked Congress for the authority to invest in the companies. Invoking his now infamous bazooka analogy, Paulson said he believed he'd never have to use the money, because the sight of a huge federal credit line would scare the companies' detractors out of the market and bring down the rates they were paying to borrow.As it turned out, Paulson did have to fire the bazooka, putting the companies into government conservatorship - but even that didn't bring down Fannie and Freddie's rates for long. One reason lies in the mayhem that followed Treasury's takeover of the companies, including the collapse of Lehman Brothers and the near bankruptcy of AIG (AIG, Fortune 500). All these factors conspired to drive investors away from assets riskier than Treasury securities, including so-called agency securities - the bonds Fannie and Freddie sell to finance their operations. This time around, the biggest worry stems from the fact that a full takeover would add to the federal balance sheet, at a time when taxpayers are already running a tab on the bailout of the financial industry and various fiscal stimulus plans. For years, economists have warned that Americans' habit of spending beyond their income and borrowing the difference from overseas is unsustainable. At any time, the thinking goes, the foreign central banks that buy huge amounts of U.S. government debt might shy away, forcing interest rates here higher. "That's really the $64 trillion question," says David Merkel, chief economist at Finacorp Securities. "How well are we able to borrow in that environment?" But so far, so good. Despite the rising tab of cleaning up the meltdown, the U.S. for now remains in what appears relatively safe territory, with federal borrowing recently tabbed at about 83% of gross domestic product. Merkel says buyers of government bonds typically "tend to start choking" on new issues when borrowing reaches around 150%. What's more, there has been no lack of demand for Treasuries during the financial crisis - a trend some observers expect to continue in what's shaping up as an era of rather limited investment options. "The U.S. was supposedly the basket case nation with the massive deficits whose currency was destined to lose its reserve status and whose credit rating was going to get cut at some point," writes Merrill Lynch economist David Rosenberg. "It appears that the full faith of Uncle Sam must still mean something, even as contingent liabilities head to the stratosphere."Bailout beneficiary takes over Florida bankRegulators close down Freedom Bank, a Florida-based bank with total assets of $287 million....Catherine Cliffordhttp://money.cnn.com/2008/10/31/news/companies/bank_failure/index.htm?postversion=2008110111NEW YORK (CNNMoney.com) -- Fifth Third Bancorp, which is receiving $3.5 billion in bailout money, will acquire Florida's failed Freedom Bank.The Bradenton, Fla., bank, which was shut down on Friday by state regulators, is the 17th bank failure this year. It had total assets of $287 million and deposits of $254 million, according to the Federal Deposit Insurance Corp.In addition to taking over the deposits of the failed Freedom Bank, Fifth Third of Grand Rapids, Mich. will purchase $36 million of assets. The FDIC will retain the remaining assets - mainly loans - to dispose of later. The failed institution had $214 million in loans, as of June 30, according to a July letter to shareholders.Fifth Third Bank this week said it has received $3.5 billion as part of the federal government's $700 billion plan to recapitalize the nation's financial system.Fifth Third is the second bank in a week to announce an acquisition after receiving its share of the government bailout funds. On Friday, PNC said it would acquire struggling regional bank National City in a deal worth about $5.6 billion. PNC is receiving $7.7 billion from the government.Banks have come under fire for signaling they would use the money for acquisitions, rather than to resume lending to businesses and consumers. The federal government is strongly encouraging institutions to jumpstart their lending to revive the weak economy. In Friday's announcement, the FDIC said that that the cost to the Deposit Insurance Fund will be between $80 million and $104 million. "Fifth Third's acquisition of all deposits was the least costly resolution" for the FDIC's insurance fund, the FDIC said in a statement. The four branches of the failed Freedom Bank will open on Monday as branches of Fifth Third Bank. All customer accounts were automatically transferred to the new bank and their accounts will continue to be insured by the FDIC, according to the release. No deposit customer at Freedom Bank will lose any of their deposit savings, according to Fifth Third. Customers of the banks can still access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual, according to the FDIC's statement.The transaction will give Fifth Third approximately $675 million in deposits in the Bradenton-Sarasota-Venice area, and raise its deposit market share in that market from 8th to 4th, according to recent FDIC data. Fifth Third already had 16 branches in the Bradenton-Sarasota market as part of its nearly 1,300 branches in 12 states.