Merced County supervisors OK paying firm to help search for new CEO
It will cost $25,000 to $30,000 to find qualified candidates...CORINNE REILLY
Merced County will seek the help of a headhunter to find a successor to its outgoing CEO, the Board of Supervisors decided Tuesday.
The five-member board voted unanimously to begin looking for an outside executive search firm to help recruit its new CEO. The county expects to pay the firm between $25,000 and $30,000 for its services, according a county report.
The county's current CEO, Dee Tatum, announced last month that he'd retire at the end of 2009. It was the second time in a year that Tatum, 62, said he planned to leave the county. He had made the same announcement in December 2007, then decided six months later to stay on as CEO at the request of the Board of Supervisors.
Board members argued it was a bad time for Tatum to go. They said they needed his expertise to help shepherd the county through what's expected to be a difficult year, especially because of the recession. The board approved a 5 percent pay raise for Tatum in exchange for his decision to stay.
After his first retirement announcement, the Board of Supervisors lagged in beginning a search for Tatum's successor. This time around the board appears to be moving more quickly.
"The county executive officer serves as an administrator for the county providing critical oversight of all county departments and operations," said the county report recommending the board hire a search firm. "Therefore it is requested the Board of Supervisors ... seek an executive recruitment firm to recruit a qualified CEO."
The county's human resources and administrative services departments will select the headhunter, then present their selection to the board for final approval.
When Tatum announced his retirement last month, he suggested the board begin identifying candidates to succeed him as soon as possible. He also hoped that it would conduct interviews by June to allow some overlap between the new CEO and Tatum. The county appears on track to do that.
Tatum began working for the county as director of its mental health department 12 years ago. Before that he worked for Fresno County's mental health department. In 1998 he was promoted to the position of assistant county administrator. He took over as CEO three years later.
Tatum, who earns about $230,000 a year, is the fourth CEO to serve the county in the past 50 years.
In other news, the Board of Supervisors also voted unanimously Tuesday to formally endorse a plan to re-route Highway 152 around the city of Los Banos.
It approved an amendment to the county's general plan -- a long-range document that details how Merced County should develop in the coming decades -- to include the long-delayed, 10-mile bypass project.
Most of the land slated to be paved over to build the new stretch of road lies within county boundaries. The board's vote helps preserve that land, which is now largely undeveloped, for the bypass.
Merced Mall's small shops fight the tide that has taken down large department stores...JONAH OWEN LAMB
An orange swirl of ice and juice spun inside a clear whirling blender as DeAnna Craft stood behind the counter of her store, Honey Treat Yogurt, in the Merced Mall one recent afternoon.
After pouring the slushy mango smoothie into a cup, she capped it with a white dollop of whipped cream and handed it across the counter.
As one of the few locally owned stores in the mall, and one of the oldest -- it's been here for 26 years -- DeAnna and her husband, Steve, have seen the mall transform and morph many times. She saw the Burger King come and go from the food court, as well as the Hot Dog on a Stick and two pizza places.
Now the current economic downturn, as well as the ever-shifting concept of malls everywhere, may be reshaping the Merced Mall once more.
The most recent shift is the absence of Mervyns, leaving the mall temporarily with one fewer anchor store.
And the economy's slowdown has made some smaller shops feel the pain, too.
Judy Jones, who manages her son's flower shop, Aloha Floral, said that business hasn't been so good. "Everybody seems to be down. A lot of the places in the mall are closing," she said.
Without the constant traffic that usually passes before the store -- the $2,200 monthly rent they pay as well as a percentage of their profits that goes to the mall owners -- the future is looking increasingly hard. "How can you make ends meet when you get only two sales a day?" she asked.
For now, Jones is betting that Valentine's Day will see an uptick in customers.
But Merced Mall's current woes aren't the only financial whitecaps rippling the surface of the mall industry.
General Growth Properties, a Chicago-based property owner that owns six shopping centers in the Central Valley, including ones in Visalia and Tracy, may be defaulting on some of its loans, according to the Central Valley Business Times.
Nationally, things look uneasy too. The occupancy rate for strip malls and regional malls has plummeted recently, according to a Reis research firm report, quoted by Reuters.
But Anita Kramer, senior director for retail development at the Urban Land Institute, said all malls aren't hurting to the same degree or in the same ways.
The malls that are hurting, she said, are those that either have lost one of their anchor stores or have lost customers to larger regional malls.
But another force -- call it taste -- is influencing the success or failure of malls in a much less obvious way.
Now, malls are moving away from being strictly shopping centers, said Kramer. More and more new malls are turning into mixed-use developments modeled to look like neighborhoods instead of malls.
Merced Mall, which opened in 1969, fits the mold of malls not changing with the times. Not only has it lost one of its anchor stores, but it also has not upgraded.
That may be changing. Codding Enterprises, which owns Merced Mall and seven other commercial properties in the state, is planning to make the architectural leap with one of its newest projects.
Sonoma Mountain Village, a mixed-use development in Rohnert Park in the planning stages, is one example of the shift.
"We are moving away from a bunch of shops that someone has to drive to and spend their money at," said Kali Sekera, project assistant on Sonoma Mountain Village.
A mall's success, she added, is its ability to adapt to its customers' needs: "Those that don't change may be less frequented."
Merced Mall probably won't undergo a total face-lift, but some changes to keep and regain customers are in the works. Codding Enterprises declined to specify any changes now.
The irony is that malls, which helped turn Main Streets everywhere into ghost towns, are now modeling themselves after those now-emptied civic centers.
Whether Merced Mall becomes a mall of the future or just gets a face-lift and a new anchor store, it's a safe bet that people will keep buying the cookies and frozen yogurt that the Crafts have been selling for almost three decades.
MID gives management raises, hikes water rates to growers...Carol Reiter
Last week, I wrote about the Merced Irrigation District and the wage increases that management gave themselves.
MID turned off water to the growers last year a full month before normal, because of the drought. They then offered to sell water to growers that they had obtained from another water district.
And now, they are asking for a $5 per acre foot increase in water rates for farmers who use MID. That’s not so bad, the growers actually were more than happy to pay the increase, as long as the district didn’t sell water to outside sources.
But at the same time, the top management gave themselves raises. They justified it to me by saying that their salaries are in line with the rest of the counties, cities and irrigation districts in the state.
We printed the salaries of those top managers, and not one of them makes less than $100,000 a year. That’s a lot of money, especially in this economic climate.
Growers are struggling with low prices for their commodities, and with the drought that has cut their water supplies. For those guys, and for the rest of us, to see the money that MID managers bring home grates.
To MID, come on guys, step up to the plate and face reality. We are in a recession, and those wages don’t make you guys look very good to the rest of us, especially the growers that are being hit with water rate increases.
THIS DOES NOT SURPRISE ME. MID EXPLOITS THEIR CUSTOMERS. THERE WAS ONE OCCASION WHERE I MOVED. PER MID'S REQUIREMENT I BROUGHT IN THE NEW LEASE CONTRACT FOR MY NEW RESIDENCE TO PROVE I HAD MOVED. THE MORONIC CLERK INCORRECTLY TYPED THE APARTMENT NUMBER INTO THE SYSTEM SO I NEVER RECEIVED MY BILL. AROUND THE USUAL DUE DATE I WENT INTO THE MID OFFICE TO ASK WHY I HADN'T RECEIVED A BILL AND THEY INFORMED ME I WAS ISSUED A 24 HOUR NOTICE DUE TO NONPAYMENT AND FORCED ME TO PAY A $200 DEPOSIT TO TURN MY SERVICE BACK ON! IT WAS ABSOLUTELY RIDICULOUS! THERE HAS ALSO BEEN MULTIPLE TIMES WHERE I PAID MY BILL CASH AND THEY CLAIMED I DID NOT PAY! LUCKILY I KEPT THE RECEIPT! ITS ABSURDLY UNETHICAL TO RAISE PRICES AT TIMES LIKE THIS WHEN PEOPLE ARE STRUGGLING TO MAKE USUAL PAYMENTS. THE ADDITIONAL PAY INCREASE JUST PROVES THEIR CROOKEDNESS!
Sounds to me like this should really go straight up the ladder... and I dont mean to any of the Local city officials, as they will not do much about this. What Im saying is, someone should send this directly to President Obama! Seems to me hes cracking down on Big Spending and Big Pay raises. Maybe he would give us a wink.
Yea, typical of Greedy People!
Stimulus package could bring millions to Valley...MICHAEL DOYLE, Sun-Star Washington Bureau
WASHINGTON -- An $825 billion stimulus bill set for House approval today could pour hundreds of millions of dollars into the Valley, where political sentiment appears divided along party lines.
Valley highway projects could receive an estimated $200 million. Lemoore Naval Air Station in Kings County could receive child care and housing assistance. Cities would receive money to hire police officers. Yosemite and other national parks would receive funding to fix themselves up.
Important questions remain unanswered.
California officials are still trying to figure out precisely where the dollars would flow. Economists are still debating whether the stimulus package would actually turn the faltering U.S. economy around.
Politicians are still lining up on one side or the other, though most already have made up their minds.
"It's a grab bag of projects that have been built up by leftist Democrats," said Rep. Devin Nunes, R-Visalia. "I don't think just throwing money out across the country is going to work." But some things are certain.
Definitely, the House will approve the package. Democrats currently control the House by a 255-178 margin, and party leaders want a bill on President Barack Obama's desk by mid-February.
Valley Democratic Reps. Jim Costa of Fresno and Dennis Cardoza of Merced stated late Tuesday afternoon that they were still undecided.
"There are parts of it I like, and parts of it I don't like," said Costa, who along with Cardoza belongs to the fiscally conservative House Blue Dog Coalition.
Cardoza, a member of the leadership-appointed House Rules Committee, said that while "it's obvious that the country needs a stimulus package ... there are things I would not leave in there." Unquestionably, most Republicans will vote against what Democrats call the American Recovery and Reinvestment Act of 2009.
Though they praised Obama's meeting with congressional Republicans on Tuesday, the Valley's GOP lawmakers still oppose the bill Obama wants.
"It's throwing a lot against the wall and hoping some of it sticks," said Rep. George Radanovich, R-Mariposa. "It doesn't really have within it the ability to change the tough times we're in." The bill totaled 647 pages as of Tuesday. House members had submitted more than 200 additional proposed amendments, though it wasn't clear how many Democratic leaders would allow votes on.
The bill will certainly change, as the Senate is writing its own version and then the two must be reconciled.
Leery of a political backlash, congressional leaders largely left out explicit earmarks. Still, some state-by-state consequences can be calculated.
Currently, for instance, 2.3 million California residents receive aid from the Supplemental Nutrition Assistance Program. It used to be called the Food Stamp program. These residents, including 147,000 in Fresno County, 35,000 in Merced County and 52,000 in Stanislaus County, would see a 13.6 percent increase in their benefits, offsetting higher food costs.
The overall House bill includes $30 billion for highway projects. The California Department of Transportation estimates California could get about $3 billion of this. Based on past experience, Caltrans officials further advised San Joaquin Valley congressional offices that the Valley's share could amount to roughly $200 million.
In a similar vein, California could expect a sizable chunk of the $1 billion proposed for the Community Oriented Policing Services grant program. In the past three years, the program has provided grants of $369,000 to the Merced Police Department, $94,000 to the Atwater Police Department and $81,000 to the Tulare County Sheriff's Department, among many other Valley recipients.
In theory, the cities and counties receiving the COPS grants must agree to eventually shoulder the full costs of the newly hired officers.
Yosemite, Sequoia, Kings Canyon and other national parks that have seen deferred maintenance projects pile up would share $1.9 billion.
"Should money become available, we've got a huge amount of projects we could do," Yosemite spokesman Scott Gediman said Tuesday, citing utility improvements and trail work in particular.
Other elements of the House bill include:
$3 billion for Byrne Justice Assistance Grants. These are used for buying equipment, paying overtime expenses and supporting other law enforcement efforts. Last fiscal year, for instance, the city of Fresno received $283,000 from the existing grant program.
$350 million for Navy and Marine Corps housing and child care improvements. Lemoore has a housing backlog and hopes of expanding the current child care facilities.
$13 billion would go to the Title I education programs designed to assist students in high-poverty areas. San Joaquin Valley schools are major recipients of the Title I funds.
Vilsack returns grant money to specialty crop projects
Bush administration had moved millions to other task...MICHAEL DOYLE, Sun-Star Washington Bureau
WASHINGTON -- Central Valley fruit and vegetable growers have won a small but symbolic victory as the Obama administration starts steering the Agriculture Department in a new direction.
Facing political heat from California lawmakers, Agriculture Secretary Tom Vilsack has agreed to retain $3.18 million in a grant program that encourages fruit and vegetable consumption. The decision reverses a move made quietly in the dying days of the Bush administration. It also gives a little taste of how Washington works.
"We raised holy heck about it," Robert Guenther, vice president of the United Fresh Produce Association, said Tuesday when asked about how the Agriculture Department's original decision got reversed.
The Bush administration had wanted to spend the $3.18 million implementing a country-of-origin labeling program. Vilsack decided, instead, to return the money to a specialty crop block grant program.
Though the dollar amounts are modest, the former Iowa governor stressed he's sending a signal.
"It is clear, from what President Obama has indicated to me, that he wants this department to promote nutrition through the use of healthy fruits and vegetables," Vilsack said Monday.
The money at stake is part of a specialty crop block grant program, recently expanded under the five-year farm bill completed last year. Fruit and vegetable growers in states like California and Florida considered this block grant expansion, to $466 million over 10 years, one of their big successes in the overall farm bill debate.
Every state gets some of the money, but states with lots of fruit and vegetable production get more.
For instance, University of California, Davis, researchers have used past specialty crop block grant dollars to fund work on the "ecological footprint" of walnut orchards. The California Sustainable Winegrowing Alliance received funding for studies of greenhouse gas emissions. The California School Nutrition Foundation received money to establish salad bars in 40 California schools.
"We think that when block grant money is spent well, it can be very beneficial," said Jack King, manager of national affairs for the California Farm Bureau Federation.
Some skeptics even among farm lobbyists question the overall effectiveness of the block grants, but they enjoy influential political support. Nonetheless, during the Christmas holiday period, the outgoing Bush administration announced it was taking the $3.18 million for help with putting country-of-origin labeling into place.
After much delay, the final labeling rules take effect March 16. The labeling requirements cover meat, fish, fruits and vegetables, nuts and more. The Agriculture Department will need funds to administer the rules, which include potential fines for violators. Separately, industry will spend an estimated $2.6 billion in the first year to put labels and maintain records.
Bush administration officials said they would use the money lifted from the specialty crop program for a retail survey, training, auditing and the hiring of temporary workers. Lawmakers and industry leaders erupted, once they found out what happened.
"This action has significantly eroded the trust built up through our joint work on the 2008 farm bill," Rep. Dennis Cardoza, D-Merced, wrote then-Agriculture Secretary Ed Shafter on Jan. 7.
Cardoza chairs the House horticulture and organic agriculture subcommittee. Other lawmakers who share specialty crop interests weighed in as well. The chair of the House agriculture appropriations panel, Rep. Sam Farr, D-Monterey, got involved. Congressional staffers began calling around to complain, and farm lobbyists made sure the Obama administration's incoming farm transition team knew what all the fuss was about.
'People's vision' of Delta gathering scheduled Feb. 28...Matt Weiser
A group representing Delta landowners and environmental groups plans to develop its own "people's vision" for the estuary, starting with a symposium Feb. 28 in Lodi.
The public is invited to attend the daylong event, hosted by Restore the Delta, and help develop the vision. Attendance costs $40 and includes lunch.
Restore the Delta, based in Stockton, is a coalition of business interests, land owners and environmental groups interested in restoring the Sacramento-San Joaquin Delta and protecting its communities. It has been critical of recent government-led efforts to improve water conveyance and habitat in the estuary, fearing local residents and the Delta's economic base will be displaced.
The symposium will include presentations on current legal battles over the Delta, proposals to make California regions less dependent on Delta water, government reform, and new ideas to address risks to the Delta.
Registration deadline for the event is Feb. 25. For more information, view http://www.restorethedelta.org, or call (209) 479-2053.
Fix Rubicon Trail's problems or pay fine, water board tells El Dorado County...Matt Weiser
Water quality officials are threatening El Dorado County with enforcement action and fines for allegedly mismanaging the legendary Rubicon Trail off-road vehicle route.
In a draft order issued Friday, the Central Valley Regional Water Quality Control Board finds that erosion caused by vehicle traffic on the trail threatens fish habitat in the south fork of the American River and its tributaries.
The rate of erosion on trail segments examined by the agency is 50 times greater than from dirt logging roads in the same watershed.
The order also asserts that pollution from vehicle fluids and human fecal matter deposited by trail users have damaged public waterways.
"We received a number of complaints, and that's why we did inspections," said Wendy Wyels, the board's chief of compliance and enforcement. "We definitely found there's a concern about water quality impacts from the sediment coming off the Rubicon Trail."
Though it crosses U.S. Forest Service land, El Dorado County years ago asserted ownership of the Rubicon Trail within county boundaries.
The 60-mile trail between Georgetown and Lake Tahoe is one of the world's most famous off-road vehicle destinations. It offers four-wheel-drive enthusiasts access to challenging boulder fields and granite slabs.
The county obtained state grant funds to develop a management plan for the trail. Among the proposals were erosion-control projects at stream crossings, seasonal closures and a permit system to educate users and collect management funds.
But the county halted work on the plan last year, citing budget troubles.
Now the county could be forced to adopt many of the same protective measures in the stalled management plan, or be fined $10,000 per day for each water quality violation.
"They seemed to think they could get away with just doing no management," said Karen Schambach, a Georgetown resident and California director of Public Employees for Environmental Responsibility. "They're very short-sighted."
Tom Celio, the county's deputy director of transportation maintenance, said he hasn't reviewed the draft order in detail and declined to comment on specifics.
He said that the county has worked hard with volunteer groups to improve the trail. Recent improvements include a new restroom at the trail's Loon Lake access point, and numerous erosion control projects.
"We've done a significant amount of planning, a lot of work, over the last couple of years, actually," Celio said.
Randy Burleson, president of the Rubicon Trail Foundation, an off-roading group, said the county and trail enthusiasts have continued to work on many improvements proposed in the unfinished plan.
For example, he said, the planning is finished for new bridges over Gerle and Ellis creeks to prevent erosion. Those bridges are among the requirements proposed by the water board to address pollution problems.
"I think the county's done a fine job of managing the trail," Burleson said. "I question whether the water quality board has the authority to identify how a county road is to be managed."
To develop the order, the water board studied erosion rates on seven trail segments totalling about one mile in August 2008. It found that streambed gravel in Ellis Creek, downstream of a Rubicon Trail crossing, had become unsuitable for trout spawning because the gravel was clogged with sediment eroded by trail use.
Other measures in the draft order require the county to submit a trail management plan, which must include specific measures to control erosion and limit vehicle traffic.
The water board can finalize the order without a public hearing, said Wyels. Whether to hold a hearing depends on the nature of public comments received by a Feb. 23 deadline.
Septic system proposal attacked in Placer...Bob Walter
Placer County's message to the State Water Resources Control Board was loud and clear Tuesday as staff, supervisors and residents took turns trashing proposed statewide septic regulations.
Shouts and applause greeted each speaker, from Jill Pahl, Placer's environmental health director, to a parade of residents from a county with about 26,000 septic systems.
Pahl said the regulations include no funding or enforcement provisions and that Placer's existing regulations provide ample protection for waterways.
"Many of the regulations lack scientific basis," said Pahl. "(They) are unnecessary and very costly to citizens and the county."
A sampling of comments heard Tuesday:
• "The proposed regulations are intrusive, expensive and unneeded," said Supervisor Jennifer Montgomery. "They are addressing a problem that doesn't exist in Placer County."
• "They are using a scatter-gun approach," said Wally Reemelin, president of the League of Placer County Taxpayers.
• "We are united in our opposition," said board Chairman F.C. "Rocky" Rockholm. "It's ridiculous … . If it's not broken, don't fix it. And the state doesn't know how to fix anything."
Not a word of support was spoken for the statewide septic regulations that were spurred by sewage discharges along the coast and mandated by legislation in 2000. They are scheduled to be implemented July 1, 2010, and will affect all existing and new systems.
As proposed, the regulations' myriad impacts include forcing owners of septic tanks to have them inspected every five years – at a cost of some $325. They also could force owners of an on-site domestic well to have the water analyzed every five years, also at a cost of about $325.
Supervisors enthusiastically endorsed Pahl's plan to send written comments to the state water board and to coordinate with legislators and lobbyists to fight the proposed rules.
Montgomery said she will speak at a hearing on the regulations and the draft environmental impact report at 1:30 p.m. Feb. 9 in the California EPA Building, 1001 I St., Sacramento.
The final version will be presented next fall, with an effective date of Jan. 1, 2010.
More information on the proposed regulations is available on the state water board's Web site, www.waterboards.ca.gov, and the Environmental Health section of the county Web site, www.placer.ca.gov.
Editorial: Narrow interests top GOP's agenda
If California Republicans hope to shed their reputation as the Scorched Earth Party, they won't do it by gutting environmental rules as a condition for a state budget deal.
With California just days away from running out of money, Republicans are quietly insisting that Democrats and the governor weaken state rules to allow greater diesel pollution from construction equipment, more use of pesticides by farmers and more greenhouse gas emissions from development projects.
Many of these changes are being sought by construction contractors, farm businesses and developers who have contributed big bucks to the Republican Party and GOP lawmakers in recent years.
Apparently, these industries are willing to let the state descend into insolvency, unable to sell bonds for highway and flood control projects, unless they can get regulatory relief they couldn't get through a normal public process.
Consider just one of the rollbacks the GOP seeks – a delay in state rules requiring construction companies to reduce diesel pollution from bulldozers and other equipment.
The California Air Resources Board enacted these regulations in 2007 after dozens of public hearings. Because of the rules, many construction companies have already invested in cleaner construction equipment, which could go a long way toward protecting public health.
Now, at the 11th hour, Republicans want to use a closed-door process to gain regulatory relief for construction companies that, instead of investing in cleaner equipment, have put their money into a lobbying campaign. If they are successful, they'll undermine California's efforts to meet clean air standards while putting proactive construction firms at a competitive disadvantage.
It's shameful that businesses that have so much to gain from state construction bonds would be using their leverage with Republicans in this way. But what is truly shameful is the Republican leadership. At a time when Californians need them to step up for the state's interests, they are again fouling the air for a handful of special interests.
Sacramento's commercial vacancy rise is 10th-highest rate in U.S....Dale Kasler
Storefronts are going dark in Sacramento at one of the fastest rates in the nation, a reflection of the weak economy and the hollowing out of the housing market.
The region's retail vacancy rate jumped 1.6 percentage points during the 12 months ending Oct. 31, according to a study by commercial real estate broker Marcus & Millichap. That was the 10th-highest jump in the nation.
Sacramento's vacancy rate reached 7.6 percent on Oct. 31, lower than the national average of 8.1 percent.
But the increase in vacancies is proceeding faster here than across the country.
The empty storefronts are certain to grow.
The third-quarter figures don't include the demise of such retail chains as Mervyns, which went out of business in late December, and Circuit City Stores, which has just begun its liquidation sales.
Analysts are keeping a close watch on Fresno-based Gottschalks Inc., which has filed for Chapter 11 bankruptcy and needs new financing.
The increase in Sacramento-area vacancies is a clear result of the collapse in the region's housing market, said Scott Crowle, an associate director in Marcus & Millichap's Roseville office.
Almost every other city in the top 10 has experienced a major increase in residential foreclosures, he said.
"It's not a surprise," he said. "When you look at that list (of cities), you can make a direct correlation to … the residential foreclosures."
No. 1 on the list is Fort Lauderdale, Fla., where retail vacancies jumped 2.7 percentage points in a year's time.
The Inland Empire had the highest increase in California and the third highest in the nation, with vacancies jumping 2.5 percentage points in a year's time.
Downturn in foreclosures may be short-lived...Jim Wasserman
A year that will be long remembered for financial earthquakes and trouble for homeowners ended with a surprise.
Foreclosures fell in California and the capital region to their lowest levels in months during the final quarter of 2008. But don't think it's over.
The first drop in foreclosures in more than two years may be temporary, analysts warned Tuesday.
Even as new legislation, moratoriums and alternatives such as short sales and loan modifications have slowed foreclosures, another wave could begin this year, many warn, as new categories of risky housing boom loans reset in higher-end neighborhoods.
"The last 60 days it's really become palpable. More El Dorado Hills and Sierra Oaks agents are seeing more people request homes for sale with short sales," said Mike Lyon, head of Sacramento-based Lyon Real Estate.
Short sales, in which borrowers ask banks to accept less than owed, are a warning of defaults and foreclosures.
Accelerating job losses, too, are pushing California households toward the cliff, said the Mortgage Bankers Association, a lending industry trade group in Washington, D.C.
That's the new face of struggling borrowers, confirmed Martha Lucey, president of Fresno-based By Design Financial Solutions. She said her nonprofit loan counseling firm with offices in the nation's leading foreclosure belt – the Central Valley – sees fewer subprime loan problems and more "individual family issues. Somebody lost their job. Somebody got a divorce."
Statistics released Tuesday by La Jolla researcher MDA DataQuick show 4,413 fourth-quarter foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.
That was down from 7,769 in the third quarter and the lowest since the end of 2007.
Foreclosures by county:
• Amador, 35.
• El Dorado, 157.
• Nevada, 82.
• Placer, 450.
• Sacramento, 3,167.
• Sutter, 148.
• Yolo, 211.
• Yuba, 163.
California had 46,183 fourth-quarter foreclosures, about the same as the first quarter of 2008.
The capital region closed 2008 with 23,525 foreclosures. That was twice the region's 10,049 foreclosures during 2007.
California finished 2008 with 237,131 foreclosures, according to DataQuick. That was almost triple the 2007 total of 84,326 foreclosures. The researcher said 2.8 percent of California's 8.5 million homes and condos went back to lenders last year.
Nationally, about 1 million homes went into foreclosure in 2008, according to Fair Oaks-based foreclosures.com, a Web site for investors.
In a statement Tuesday, DataQuick President John Walsh said forecasting 2009 is almost "impossible," given today's "atypical market trends."
While falling home prices and rising unemployment threaten new foreclosures, Congress is simultaneously ramping up pressure on lenders to ease up on borrowers. Lawmakers are threatening to let bankruptcy judges rewrite loan terms.
Much of the lending industry is opposed.
"On this position we will not waiver," said Mortgage Bankers Association Chairman David G. Kittle, in a Monday conference call with reporters.
Congress is also expected to pass an $825 billion economic stimulus plan containing $50 billion to $100 billion to help borrowers keep their homes.
On Tuesday, DataQuick attributed California's dramatic late 2008 drop in foreclosures to a state law, Senate Bill 1137, that took effect in September. It forces lenders to make contact with struggling borrowers and offer alternatives before foreclosing.
Statistics show the law immediately slowed the number of defaults. In September, lenders filed just 14,995 notices of default statewide, compared with an average of 40,000 from March through August.
But that was temporary. Defaults reached 39,993 in December, suggesting a major resumption of foreclosures in months ahead.
Defaults in Sacramento and Placer counties also reverted to August levels by December, DataQuick said.
"Realistically, unless loans can be restructured or modified, this law only serves to delay the inevitable," wrote Garrick Brown, director of research at broker Colliers International in Sacramento, in a regional forecast this week.
Lyon said he recently told the Placer County Association of Realtors it will take another four years to work through the region's housing slump.
Partly, he said, that's due to projected waves of resetting Alt-A loans (a category often given to the self-employed; it's not as risky as subprime, but is riskier than traditional 30-year fixed loans) and so-called pick-a-payment loans, also known as option ARMS (loans that keeping growing as people make the minimum of four payment options).
"I think it really gets back to those Alt-A's," he said, explaining rising stresses in capital-area neighborhoods that have considered themselves immune from the housing crisis.
"Those loans are adjusting, and people are stuck," he said, "paying 7 percent to 9 percent interest."
Environmental News Service
Port of Stockton Tenants Pollute Impaired San Joaquin River
STOCKTON, California, January 26, 2009 (ENS) - The U.S. EPA has ordered four industrial tenants at the Port of Stockton to prevent chemicals and trash from polluting the stormwater running off their sites.
Two materials recycling companies, a steel products manufacturer and a power plant are required to comply with federal Clean Water Act stormwater regulations or risk potential fines of up to $32,500 per day.
Industrial materials such as fuel, oil and debris are carried by stormwater from these facilities, which discharge directly into the San Joaquin River and the Stockton Deep Water Ship Channel and also flow through municipal storm drains running to the river, which is already listed as impaired.
"Contaminants in stormwater run-off are a significant source of water pollution to the San Joaquin River," said Alexis Strauss, water division director in the EPA's Pacific Southwest region. "We'll be working with the Port of Stockton and its tenants, and the Central Valley Regional Water Board, to resolve various compliance issues noted in our inspections."
The San Joaquin River is listed on the Clean Water Act 303 (d) list as impaired for elevated levels of boron, chlorpyrifos, DDT, diazinon, electrical conductivity, pesticides, selenium and mercury.
The Stockton Deep Water Ship Channel is listed as impaired for dioxins, furans and polychlorinated biphenyls.
In addition, the Lower San Joaquin River and southern portion of the Sacramento-San Joaquin Delta is listed for low levels of dissolved oxygen. These listings are but several of many recognized water management problems on the river.
Given the concentration of industrial facilities at the Port of Stockton and their proximity to the San Joaquin River, in March 2008, the EPA and the Central Valley Regional Water Quality Control Board reviewed stormwater management practices and conducted inspections at industrial facilities at the Port.
They were seeking to determine tenants' compliance with the state's industrial stormwater permit.
"We are pleased to be working with U.S. EPA to enforce the stormwater laws that protect our water resources." said Ken Landau, assistant executive officer, Central Valley Regional Water Quality Control Board.
In March 2008, EPA inspectors conducted stormwater inspections of 25 Port of Stockton tenants in the presence of Port environmental officials.
The orders issued by the EPA Thursday require each of the four tenants to fix violations found during the March 2008 inspections, including on-the-ground corrective measures.
The EPA has issued orders to four Port of Stockton tenants:
- A-Plus Materials Recycling, based in Stockton, is in the refuse services business.
- Alco Iron and Metal Company, a family owned business, provides demolition, recycling, and metal fabrication services and metal sales from Stockton and two other California locations.
- Macsteel Service Centers USA, Inc. is owned by the global steel company, Macsteel Holdings of South Africa. The company processes and distributes carbon steel, stainless and aluminum products.
- Posdef Power Co. LP is a small power company based in Stockton
In a letter to Port of Stockton Director Richard Achieris describing the results of the compliance audit, the EPA did not lay blame on the Port. Strauss said the EPA inspectors found Port staff to be cooperative and "knowledgeable and dedicated" and said "many aspects of the Port's stormwater management program are well implemented."
Due to their close proximity to major U.S. waterways, port industries' compliance with stormwater requirements has been identified by EPA officials as an emerging national enforcement priority area.
Through its Ports initiative, the EPA's Pacific Southwest regional office is evaluating stormwater management other California ports in addition to Stockton. This effort involves both individual inspections of port tenants and audits of the municipal stormwater programs implemented by the ports.
The EPA says the initiative is intended to improve water quality by working with facilities to bring them into compliance and collaborating with states to improve stormwater permits for ports.
Grim water outlook for Nevada and California...MARTIN GRIFFITH – 10 hours ago
RENO, Nev. (AP) — Experts have offered a grim water outlook for Nevada and California, saying farmers can again expect to receive less water than normal this year because of a drought.
U.S. Bureau of Reclamation officials, meeting with water users at a conference last week in Reno, said the snowpack water content is again averaging below normal so far this winter in both states.
In Nevada, it's currently running 71 percent in the Lake Tahoe basin, 68 percent in both the Truckee River and Carson River watersheds, 62 percent in the Walker River basin and 78 percent in the Humboldt River watershed, said Kenneth Parr, the agency's Lahontan Basin Area Office manager in Carson City.
Parr said that in addition to his fear for farmers, he also is concerned about the impact of a skimpy snowpack on smaller ski resorts around Lake Tahoe.
"The corporate ski resorts are facing no problem," he said. "I'm worried about the smaller ski resorts up there."
Ron Milligan, the bureau's Central Valley operations manager in Sacramento, Calif., said his office's initial water allocations will be "relatively low" this year because of the drought.
His office, which oversees farmers in California's Sacramento and San Joaquin valleys, plans to wait until Feb. 20 to announce specific figures to gain a better idea of the Sierra snowpack.
"Clearly, this is going to be a tight year," Milligan said. "The amount of water in storage is very low and the run-off projections at this point are very low. It's going to be very challenging to meet the various needs."
As of Jan. 22, the snowpack water content was 49 percent of average for the date in Northern California, 57 percent in Central California and 64 percent in Southern California, according to Milligan.
Bill Diedrich, an almond grower in Fresno County, said he's facing the prospect of losing some of his orchards because of the drought.
"Quarter sections of almonds may be dead by the end of the year. It's one of the grimmest water situations we've ever faced," said Diedrich, a member of a fourth-generation California farm family.
As many as 40 other farmers in his San Luis Water District are not planting annual row crops because of speculation they could get zero surface water, Diedrich said.
"You can't plant an annual crop when you're facing such an uncertain water situation," Diedrich said. "We need for everyone to understand it's an absolute emergency and anything to get water flowing quickly is needed.
"The real story here is food security. I believe it's a national issue," Diedrich added, noting California grows fruits and vegetables that are consumed nationwide.
As of Jan. 1, electronic sensor readings taken throughout the Sierra showed the overall water content of the snowpack at 76 percent of normal, compared to 60 percent last year.
"This doesn't bode well," Milligan said. "We'll have to see how the dynamics of the Pacific play out the rest of the season... and whether we get any major storms. It could go either way."
On the Net: U.S. Bureau of Reclamation: http://www.usbr.gov
Water tops county agenda...Zachary K. Johnson
STOCKTON - Water issues in San Joaquin County floated to the top of the state and federal legislative platforms approved Tuesday by the county Board of Supervisors.
Flood protection, water supply and the fate of the Sacramento-San Joaquin Delta ranked highest on the list of issues and concerns the county wants elected officials in Sacramento and Washington to consider when crafting legislation and regulations over the next year.
The platform distills and focuses county issues so the annual trip by supervisors and other officials to Washington can be more effective, Chairman Leroy Ornellas said.
"You have to focus on the most important two or three issues," he said, noting that the time spent with lawmakers and key staff members in the federal government can be limited. Focus and face-to-face meetings build relationships and can result in attention to county issues and money for county projects, he said.
The county singled out six priorities of 45 items on the county's federal platform. Included among the priorities is the county's desire to see a new regional medical facility for veterans in French Camp, upgrades at Stockton Metropolitan Airport and improvements to Highway 4.
The other three priorities focus on water: flood protection along the Lower San Joaquin River, a plan to capture Mokelumne River water and positions on other water issues that include protection of the Sacramento-San Joaquin Delta.
Three of the four priorities listed in the county's 62 items of its state platform were the same water issues found in the federal platform. The fourth priority was to collect promised funding for the expansion of the overcrowded San Joaquin County Jail.
Environmental concerns halt home development...Dana M. Nichols
SAN ANDREAS - Worries over water and the threatened California tiger salamander prompted the Calaveras County Board of Supervisors to reject environmental documents Tuesday for a proposed 124-home development in Wallace.
The vote was 3-2, with Supervisors Gary Tofanelli and Russ Thomas opposed.
Tofanelli represents the district that includes Wallace and said he recently visited the proposed Phase II of Wallace Lake Estates.
"I think this development is a good development," Tofanelli said.
County planning staff had recommended that the board send the project back to the planning board, but only because of the salamander. Federal authorities have said that the project needs to be redesigned to protect the salamanders, which live largely on the north end of the proposed site.
On Tuesday, however, members of the Board of Supervisors said they were more worried about water supply issues, particularly the claim by the East Bay Municipal Utility District that flows that appear to be recharging the development's wells are coming from nearby Camanche Reservoir, and thus belong to EBMUD.
"That's my main concern, is the water," said Supervisor Tom Tryon, who voted with the majority to reject the proposed environmental mitigations and send the project back to the developer for a detailed environmental study on water and salamander issues.
Such a study may never happen, however, effectively killing the project.
Representatives of Wallace Lakes developer John D. Reynen have said they will refuse to do additional studies, especially since the Board of Supervisors did not raise the salamander in 2007, when it indefinitely delayed consideration of the project.
"There's no item to do an EIR on," said Tom Jeffries, a local consultant who has worked on the Wallace Lakes project.
Thomas, the Board of Supervisors chairman who voted in the minority, apologized to the Wallace Lake Estates developers, noting that the Phase II application has been limping through the county's approval process since 2003 and that the original phase of the development began in 1987.
"Because somebody died, it didn't get built out," Thomas said.
Meanwhile, the developers have until mid-February to decide if they will comply with the order to further study the water and salamander issues.
If not, the project will come back to the board for a final rejection.
John E. Taylor, who was interim Community Development Agency director before that agency was disbanded earlier in Tuesday's meeting, said it was not viable to follow the developer's suggestion to put off the question of how to mitigate for the salamander by simply requiring the developer to get the necessary federal permits.
That's because federal authorities have made it clear that quite substantial changes, such as shifting the location of houses and concentrating them in the southern end of the project, might be required. And California environmental law, in turn, requires a public process during which members of the community can comment on that proposed mitigation.
In other words, going ahead without resolving the salamander issue would leave the county and the developer open to legal challenges.
That's what prompted Supervisor Merita Callaway to make the motion, which ultimately prevailed, to reject the environmental documents and send the project back for more study.
"I feel this is the best interest of the county at the moment," Callaway said.
Budget restraints force Calaveras to kill controversial agency...Dana M. Nichols
SAN ANDREAS - After 2 1/2 stormy years, Calaveras County's Community Development Agency is no more.
The Calaveras County Board of Supervisors on Tuesday voted 3-2 to disband the agency and allow its parts, the Building and Planning departments, to operate independently. The economic downturn did what years of complaints from builders and real estate interests could not - swinging a board majority to kill the CDA.
Although a narrow board majority still says it supports the concept of such a one-stop-shop agency for development and land use issues, the board was at the same time unwilling to budget the money to pay the salary of a CDA director. That prompted CDA proponent Merita Callaway to shift her vote to disbanding the agency. "We are saying we want it, but we are not going to fund it," Callaway said. "What kind of structure are we asking to have?"
Also Tuesday, interim CDA Director John E. Taylor gave the board a letter announcing he will resign, effective Friday. Taylor has headed the CDA since August. Taylor had recommended possibly even joining the CDA with more departments - the county's environmental agency and the Public Works Department - to truly provide one place where builders and developers could obtain all the county permits they need.
But the unpopularity of the last merger, combined with a reluctance during a fiscal crisis to make changes that could cost money, killed that proposal.
Taylor stepped into his interim role after CDA Director Stephanie Moreno resigned last summer amid a political struggle over the agency that split the board and prompted a grand jury investigation.
Moreno was brought in in spring 2006 with the idea that merging the two departments could improve customer service and stop the two departments from issuing conflicting and inconsistent answers to builders and developers. Past problems cited as reasons for the merger included everything from the Trinitas golf resort (built in an agricultural preserve without prior environmental review), to homes built in areas without legally proven road access or with driveways inaccessible to firetrucks.
Yet instead of smoothing the path for builders and developers, changes under Moreno's administration only made it more difficult to win prompt approval for projects, builders said. And real estate brokers and agents were similarly displeased when Moreno began enforcing a long-overlooked rule that requires people to have some legal way to drive to their proposed home site before they can get a building permit.
Critics said that Moreno's enforcement of such rules flew in the face of long tradition and brought the already-slowing housing industry in Calaveras County to a faster halt.
Paul Stein, a former Calaveras County supervisor who is now vice president of land planning for Castle and Cooke, was among those who praised the return to separate Building and Planning departments. He said that rather than restructuring those agencies, county officials could instead improve customer service by assigning an employee who could serve as an advocate to individuals and businesses who apply for permits.
In contrast, Lew Mayhew, a frequent critic of the Trinitas golf resort, said he doubts that reverting to the previous structure will result in improved service or more consistent enforcement of land and planning laws. "I think we are headed back to the not-so-good old days," Mayhew said.
Meanwhile, Taylor's resignation worsens a leadership vacuum. Former Planning Department Director Robert Sellman retired at the end of last year and has not been replaced. In his resignation letter, Taylor said he has in effect become the acting planning director, "a position and role that I am ill suited to perform."
Taylor's letter was written before it became clear that the Board of Supervisors would kill the CDA. "I find it necessary to remove myself from the discussion," Taylor wrote.
In addition to processing routine business, such as applications for subdivisions and zoning changes, the Planning Department is also in the middle of a years-long process to revise the county General Plan, the document that guides where new development happens and what protections are given to ranches and open space.
Taylor wrote that he hopes his letter will help the board to get on with appointing interim leadership until a permanent land use official is hired.
The Board of Supervisors, upon learning of the letter, called an emergency closed-door session to discuss the letter and Taylor's resignation.
Mortgage default notices drop in S.J.
Decline attributed to change in state law...Bruce Spence
The number of mortgage default notices filed against San Joaquin County homeowners fell last quarter by one-third from the fourth quarter of 2007, and most areas of the state also saw declines of varying degrees, the real estate information service DataQuick reported Tuesday.
A total of 2,546 notices were filed countywide, compared with 3,746 a year earlier, the report said.
The rate drops are likely to be short-lived, though, because they are the result of a state law that took effect in September requiring that lenders at least contact homeowners to try to work out a way to keep them in their homes.
The law mostly just delayed defaults, said Jerry Abbott, president and co-owner of Grupe Real Estate in Stockton.
"It's a pause in the storm," he said. "It's going to be more of the same in 2009."
While most previous foreclosure problems arose from adjustable-rate mortgage resets, he said, a new layer of foreclosure woes is arising from homeowners who have lost work because of the recession.
La Jolla-based DataQuick said that in each of the first eight months of last year, lenders were filing about 40,000 notices of default - the first step in the foreclosure process, filed after three missed mortgage payments.
Default notices plunged to fewer than 15,000 in September as lenders took added steps to reach troubled borrowers, the report said, but default numbers rose again, to nearly 40,000, by December.
"No one expected defaults to stay at the much lower levels we saw immediately after the new law took effect last fall," Data-Quick President John Walsh said. "The bigger question is whether or not the housing market has hit a low and is dragging along bottom or if the markets that so far have remained unaffected by the foreclosure problem are due for a fall. With today's atypical market trends, it's impossible to predict."
DataQuick reported that a total of 75,230 default notices were filed statewide in the fourth quarter of last year, down 7.7 percent from 81,550 in the same period in 2007.
Most of the foreclosure activity was going on in affordable inland areas where subprime finance fueled a buying and refinancing frenzy in 2005 and 2006, the report said.
Last year was the second consecutive rugged year for completed foreclosures in San Joaquin County.
According to the latest figures from Irvine-based RealtyTrac, which tracks the foreclosure market, nearly 12,200 houses were repossessed by lenders, up threefold from about 3,800 in 2007.
The continuation of many foreclosures in the Stockton area will keep a pall on the residential market, keeping prices down and prompting more investor buying, said Terry Hull, whose Stockton-based family business Property Management Experts manages apartment complexes, duplexes, triplexes and rental homes from Elk Grove to Fresno.
"It's crazy," he said. "In my entire career, I've never seen such buying opportunities."
And despite the ongoing flow of foreclosure homes onto the residential market, the repossessed homes are selling briskly, often with multiple offers, San Joaquin County brokers have reported.
Fed moves to help distressed homeowners (7:10 a.m.)
WASHINGTON (AP) — With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.
Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan.
It’s unclear how many homeowners would benefit. However, the relief plan would apply to the billions of dollars of mortgage assets the Fed is holding on its books because of last year’s bailouts of Bear Stearns and insurer American International Group.
In general, a borrower must be at least 60 days delinquent to qualify for help, although the Fed has leeway to make some exceptions. A 2008 law that set up the $700 billion bailout fund instructed the Fed to take such foreclosure relief action.
“The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank,” Fed Chairman Ben Bernanke wrote in a letter Tuesday to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
Bernanke has repeatedly urged Congress and — more recently — the administration of President Barack Obama to ramp up efforts to curb home foreclosures, which are aggravating the economy’s problems. The new administration is examining ways to stem foreclosures.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, welcomed the Fed’s program and called it “an important advance.”
The Fed’s Bear Stearns’ portfolio is valued at $27 billion, although the central bank doesn’t say how much of that is in home mortgages. The Fed’s AIG assets include one portfolio valued at nearly $20 billion of residential mortgage-backed securities and a second portfolio valued at nearly $27 billion of collateralized debt obligations, which are complex financial instruments that combine various slices of debt.
More than 2.3 million homeowners faced foreclosure proceedings last year, a whopping 81 percent increase from 2007. And more than 860,000 properties nationwide were actually repossessed by lenders last year, more than double the 2007 level, according to RealtyTrac, a California-based foreclosure listing firm. Nevada, Florida, Arizona and California had the highest foreclosure rates last year.
Housing, credit and financial crises — the worst since the 1930s— have plunged the country into a recession, now in its second year. So far, a slew of radical government programs have failed to remedy the problems.
San Francisco Chronicle
Offshore Calif. drilling deal could be scuttled...NOAKI SCHWARTZ, Associated Press Writer
An agreement paving the way for the first oil drilling off the California coast in nearly 40 years has run into unexpected opposition that may sink it altogether Thursday.
The plan, which could be worth billions, was announced last year by an unusual alliance of environmentalists and a drilling company. But supporters were blindsided by sudden opposition recently after it sailed through local approval and reached the state level.
The proposal hinges on a commitment from key environmental groups to lobby for expanded drilling off Santa Barbara if Plains Exploration & Production Co. would help fund hybrid buses, set aside thousands of acres of land and — most importantly — end all its local drilling by 2022.
"This is a once-in-a-lifetime opportunity," said attorney Linda Krop, who negotiated on behalf of three lead environmental groups. "If people really want to protect the coast from offshore oil and gas development, this is the best opportunity to do that."
State and federal lawmakers from California to Washington, D.C., are now challenging the plan, saying it could invite more offshore drilling along the California coast and undermine efforts to reinstate a federal drilling moratorium that was lifted by the Bush administration.
The three-member State Lands Commission has the power to scuttle the deal Thursday. Already the chairman, Lt. Gov. John Garamendi, has said he'll vote against it. The other two members — state controller John Chiang and state finance director Michael Genest — have not disclosed their intentions but Genest is leaning for it and Chiang against, setting up the possibility the plan could die on a 2-1 vote.
Supporters, now including 25 environmental groups around the state, had thought the landmark partnership and terms of the deal would be enough to push it through the regulatory process.
The commission's staff has recommended rejection, saying there is no guarantee that the company, known as PXP, will have to eventually shut down operations. The staff's finding prompted two major environmental backers of the plan — the Sierra Club and the Planning and Conservation League — to send a letter to the commission this week saying their support was contingent on the terms being fully enforced.
The company had no comment ahead of the vote. Previously, it has called the plan a win-win deal for oil exploration and the environment.
The vote is scheduled for the day after the 40th anniversary of a massive oil spill off Santa Barbara that coated miles of beaches with oil and killed dolphins, seals and thousands of birds. The spill helped lead to the Clean Water Act and a moratorium on offshore drilling, galvanizing the modern environmental movement.
If approved by the lands commission, the proposal would then go before the California Coastal Commission, which regulates coastal development.
Opponents see Thursday's vote as critical. Garamendi believes "very, very strongly" that if the board approves the plan, drilling proponents will use the vote to push for more exploration in the West.
"I'm not going to go there," he said. "I'm not going to allow that argument to take place."
Chiang has the same concerns but has yet to decide how he will vote, spokesman Hallye Jordan said.
Genest will be represented at the meeting by his deputy, Tom Sheehy. He sees the deal as a financial boon to the cash-strapped state — perhaps $5 billion over the life of the project — and believes the terms are specific to Santa Barbara so it won't lead to drilling elsewhere.
"There's tremendous environmental benefits to be had on this project," Sheehy said, adding: "We can't turn a blind eye to the financial benefits."
Garamendi said he has spoken with House Speaker Nancy Pelosi, D-Calif., and other members of the California congressional delegation who expressed "significant concern" that approving a drilling proposal could undercut their efforts to reintroduce a federal moratorium on the practice.
Rep. Lois Capps, a Democrat who represents Santa Barbara, supports the deal led by three groups, the Environmental Defense Center, Get Oil Out! and the Citizens Planning Association of Santa Barbara County. She warned both sides not to rush.
"I think if any decision is made on Thursday it will be to kill the deal," she said, adding that the commission could require more concessions from the company.
"Push them. See how far they'll go," Capps said.
Robert Deacon, a professor specializing in environmental economics at the University of California, Santa Barbara, understands the opposing arguments but thinks it's still a good project. He wondered whether the politicians are simply concerned about being seen as pro-drilling.
"We have an oil company that's agreed to environmental mitigations that more than offset any environmental harm the project would impose," he said. "And this assessment was made by some of the most vigilant environmental watchdogs."
Make drilling part of big plan, Salazar says...Dina Cappiello,H. Josef Hebert, Associated Press
Interior Secretary Ken Salazar said Tuesday that the expansion of offshore oil drilling should be worked out with Congress as part of a broad energy blueprint and not independent action by his department.
In an interview with the Associated Press, Salazar indicated the drilling plan left on his desk by the Bush administration probably will be scrapped. It would open the entire Atlantic and Pacific coasts for drilling.
Salazar declined to single out any waters considered automatically off limits to oil exploration.
"There are places that are appropriate for exploration and development, and there are places that are not," he said.
Salazar, who resigned as Colorado senator to join President Obama's Cabinet, said he wants to work closely with Congress on "a plan that makes sense" for offshore oil and gas development, but that any expansion of drilling should be part of a comprehensive energy plan.
Congress last year failed to renew the long-standing moratorium on oil and gas exploration across 85 percent of the nation's Outer Continental Shelf, leaving all waters potentially open to drilling. Congressional Republicans and energy lobbyists have argued against even a partial reimposition by Congress of an offshore drilling ban.
Four days before leaving office, officials in the Bush administration issued a draft of a five-year drilling plan that calls for energy leases to be made available in both the Atlantic and Pacific waters, including vast areas that until recently had been off limits for a quarter century.
But Salazar indicated that plan is all but dead.
"It seems to me the appropriate place to address the OCS and issues like royalty reform would be in the context of an energy bill," said Salazar, referring to Outer Continental Shelf development and an overhaul of the way his department collects royalties from drilling in federal waters.
Meltdown 101: What it means to nationalize a bank...RACHEL BECK, AP Business Writer
Buying stakes in troubled banks. Taking control of toxic assets.
Some of the tactics the government has turned to, or proposed, as it tries to rescue the financial system have inspired a discussion of whether the institutions should be nationalized.
But what does it really mean to nationalize a bank? And what are the potential consequences of an expanded government role in the financial industry?
Here are some questions and answers about what this all could mean:
Q: What is nationalization?
A: A textbook definition would say nationalization involves the government seizing control of a private-sector entity by taking a majority stake in it and dictating how it is run.
But that may be too literal for the way "nationalization" is being discussed today. Even without a controlling interest, the government certainly is influencing decisions at the nation's banks after injecting more than $200 billion into them as part of the Troubled Asset Relief Program, or TARP.
At some companies — namely Citigroup Inc. and Bank of America Corp. — the government also has agreed to absorb the losses tied to the banks' most toxic assets, a figure that could run well into the hundreds of billions of dollars.
At banks where the government is the most entrenched, Charles Geisst, a professor of finance at Manhattan College, compares its influence to a father co-signing a car loan for his teenager.
"That sure sounds like the dad is the de facto owner, doesn't it?" Geisst said.
Q: Is more government involvement expected?
A: The TARP, passed by Congress last fall, was originally intended to buy up the toxic assets on the banks' books. Those are the mortgage-related securities and other risky assets that have tumbled in value over the last year, causing big losses for the banks.
But instead of going that route, the Treasury Department decided to use that money to inject capital into the banks as a way to shore up their balance sheets. That has left the banks with troubled assets still on their books.
Given that the losses keep mounting, the government could decide to buy those assets from the banks and hold on to them until they can be sold off at higher rates. That's where nationalization could be expanded.
A big question looms, however: At what price would the government value those assets when buying them from the bank — at the depressed market value, or at a higher rate?
Banking industry consultant Bert Ely said that is a significant obstacle to taking this route. If the assets are bought at depressed prices, the banks will still end up with huge losses on their books. Buying the assets at higher prices, meanwhile, would be very costly for the government, which might never recoup the money.
Q: Who is pushing for nationalization?
A: The idea of nationalization is a political hot potato. Those who are wary of government interference in free markets call it socialism; others seem reluctant to use the term "nationalization," but seem to be supportive of the idea if it would help stabilize the financial system.
In an interview Sunday on "This Week" on ABC, the House speaker Nancy Pelosi was asked about whether the only way to fairly deal with banks that are close to insolvency is through nationalization, or partial nationalization.
"Well, whatever you want to call it," the Democrat from California said. "If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization."
But she also said that she wasn't talking about "total ownership."
"Would we have ever thought we would see the day when we'd be using that terminology? Nationalization of the banks?" Pelosi said.
Q: What are the benefits of nationalization?
When a bank is nationalized, the public's interests are put before shareholders. That means a struggling bank can be restructured in ways that best suit the financial health of the nation.
In addition, if the government bought up the toxic assets, that could wipe out some of the uncertainty that has been plaguing financial markets for months because it hopefully would keep the value of the assets from falling further.
Q: Are there risks to nationalization?
A: If the government begins to nationalize banks, it won't likely be a widespread action but instead will involve only the banks that need it most.
In this scenario, the nationalized banks would be seen as having an unfair competitive advantage over banks that aren't nationalized, Ely said. Private investors might decide to avoid the banks that remain fully private because of the higher perceived risk. And that could bring even more banks to the edge of collapsing.
Q: Are there similar situations the United States can draw on from the past?
A: The U.S government isn't generally in the business of nationalizing private-sector entities, but it has done it before. During World War I, the government nationalized railroads, telegraph lines and the Smith & Wesson Company. During World War II, it seized railroads, coal mines, Midwest trucking operators and many other companies — and even, briefly, retailer Montgomery Ward.
In 1984, Washington seized the failing Continental Illinois Bank and Trust. It continued to exist, with some 80 percent of its shares owned by the federal government, until 1994, when it was acquired by what is now Bank of America.
Contra Costa Times
NM lab warns workers, visitors of contamination...The Associated Press
LOS ALAMOS, N.M.—Los Alamos National Laboratory says nearly 1,900 workers and visitors might have been exposed to beryllium, a substance that can cause lung disease.
The lab began notifying current or former employees and visitors after finding beryllium contamination in a storage area. They will be offered a chance to be tested, and decontamination of the area is under way.
Beryllium is a metal used in defense and aerospace industries that's hazardous in finely powdered form. In rare cases, individuals who inhale the particles can develop a serious lung problem called chronic beryllium disease.
The contamination was discovered late last year. Officials say 240 employees who work in the affected area had the most potential exposure.
Santa Cruz Sentinel
Students, workers rally on UCSC campus over stalled contract...J.M. BROWN
SANTA CRUZ -- Several hundred UC Santa Cruz employees and students rallied Tuesday to nudge the university to settle a stalled labor battle with 8,500 janitors, bus drivers and other service workers statewide who have not had a contract for a year.
"Students and workers are united -- we are committed from day one," said Nicolas Gutierrez, a 14-year custodian who serves on his union's bargaining team. "We will continue to do rallies like this ... and do what it takes to get a contract."
No arrests or injuries were reported at the rally.
However, Gutierrez was arrested in San Francisco on Friday, along with two UCSC students and a dining hall worker, during a sit-in at the private investment firm of Regents Chairman Richard Blum. About 20 demonstrators, who were later released on charges of trespassing, sought to draw attention to what the American Federation of State, County and Municipal Workers, Local 3299 calls poverty wages for the university's lowest-paid workers.
Since talks started in 2007, UC negotiators say they have increased the university's wage offer 30 percent to $26.5 million for a three-year package. But talks have done little since November, when the university says a three-year counteroffer from AFSCME came in at more than $80 million.
The university offered to increase the minimum hourly pay rate to $12 in the first year, with 1 to 1.5-percent increases in the second and third years. AFSCME wanted a $14 minimum hourly rate and hikes of 6 percent and 8 percent for employees earning above the minimum rate in the second and third years.
UC spokesman Paul Schwartz said the university's hands are tied because state funding is a major source of revenue for employee pay. The university's ability to cut a deal shrinks as the state deficit deepens amid legislative gridlock.
"The economy is worsening, living costs continue to rise and our employees deserve the raises we're offering," Schwartz said. "It is time to bring these talks to a close."
Gutierrez declined to state the union's bottom line on compensation, but said the university is "far apart from what the workers need."
"They have been making movement lately in the right direction, but it's still not close enough," Gutierrez said. "This is why the rally is going on today."
The event is part of a week-long slate of campus activities designed to galvanize students around the contract dispute. Students and workers will socialize over late-night coffee Thursday and host a joint barbecue Friday.
Three-home Las Lomas project rejected over water issues...JIM JOHNSON, Herald Salinas Bureau
A month after approving a much-larger housing project nearby, a split Board of Supervisors rejected a three-home subdivision in the tiny North Monterey County community of Las Lomas because of water issues.
On Tuesday, Supervisor Lou Calcagno cast the deciding vote to uphold the appeal against the project, filed by North County community activist Marjorie Kay. The project was designed to allow three families — the Renterias, the Gomezes and the Fernandezes — to build homes on 3-acre lots near the Jehovah's Witness South Spanish Congregation church off Sill Road.
Calcagno, who represents the area on the board, was joined by Dave Potter and Jane Parker in the 3-2 vote, all of them citing the long-debated North County water shortage and the project's potential impact on the area's water supply. Simon Salinas and Fernando Armenta voted in favor of the project.
Calcagno said he has received regular complaints from other North County residents who are being forced to import water after their wells ran dry, and said they were drawing from the same water source as the proposed project. Calcagno argued that the area's water supply issues need to be addressed before any new projects are approved.
'Net-zero' water use
Attorney John Bridges, who represents the three families, argued that the board had previously asked the applicants to work with the county staff to devise a plan to reduce the project's water use, which they had done. Bridges said the resulting plan reduced the project's water use to a "net-zero" impact, meaning it wouldn't use any more water than is currently being used.
The plan included using storm runoff for irrigation, using low-flow water fixtures, using minimal irrigation landscaping, and converting more than 16,000 square feet of the church's turf into drought-tolerant landscaping.
As a result, the county staff recommended project approval. The recommendation included a finding by county Water Resources Agency General Manager Curtis Weeks that the project would have a long-term water supply.
But opponents argued that water offset plans can't eliminate the continued overdraft of the North County water supply, and the issue should be addressed before more building is allowed.
Kay said it was "disturbing" that the Water Resources Agency, Environmental Health and Planning departments, and the Board of Supervisors "don't realize how extensive the water problems are in North County."
However, Bridges said, the project shouldn't be held up by the entire area's water issues.
"My clients cannot solve all the water problems in North County," he said.
Bridges had already argued that the county abdicated its right to decide the appeal when it failed to review the issue in December, and threatened to sue if the board didn't grant approval.
He said project opponents could appeal to the Coastal Commission, while his clients would have to sue because the county's new general plan would ban any new subdivisions in North County. "This is their last shot," Bridges said. "Their only recourse is being forced into court, and they do not want to do that. We ask for fairness for these three families."
Calcagno acknowledged that it might be easier to pass the project on to the Coastal Commission.
"But passing it on to the Coastal Commission isn't addressing the problem," he said.
Last month, the board approved the 76-unit Rancho Los Robles project despite a Planning Commission recommendation for denial over water and traffic concerns, essentially assuring that the Coastal Commission would make the final decision on the subdivision and allowing the county to avoid litigation by developer Heritage
But Parker's arrival on the board, replacing appointed Supervisor Ila Mettee-McCutchon — who voted for Rancho Los Robles — shifted the vote. Calcagno and Potter also voted no on Rancho Los Robles.
North County has been in overdraft for decades, but development has been allowed anyway, and the absence of a long-term water supply in the area served by the beleaguered Pajaro Valley Water Management Agency has helped sink previous housing proposals in the area.
Los Angeles Times
California home foreclosures top 236,000 in 2008
The number of homes lost last year is up 180% from 2007. Rising unemployment is exacerbating the trend...William Heisel
More than 236,000 homes were lost to foreclosure in California last year, topping the previous nine years combined, data released Tuesday show. And the number of borrowers who defaulted on their payments hit a record high of more than 404,000.
The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans. But lenders and industry analysts say the trend is now being exacerbated by rising unemployment, which has shot up to 9.3% in California.
"The people who are defaulting now are not really people who recklessly got into loans they never could have afforded," said Evan Wagner, the communications director for IndyMac Federal Bank, a big mortgage lender that, having collapsed last year, is being bought by private investors. "These are people who have lost their jobs or who have had their hours cut back at work."
Wagner said that up to 80% of the borrowers seeking an easing of their loan terms are doing so because of the loss of a job or income.
More evidence of that trend can be found in the default rate on "prime" loans, those made to borrowers with good credit. Defaults on these loans rose 340% in the three months ended Sept. 30 over the same period in 2007, according to the latest data from the Mortgage Bankers Assn.
California was last hit by massive foreclosures in the early 1990s, when the state was also struggling with an economic downturn and rising unemployment. At that time, there were about 10 foreclosures for every 100 layoffs, said John Burns, an Irvine real estate consultant.
In this cycle, he said, there will be about 15 for every 100.
"The price declines have been more severe this time, and the job losses are looking worse," Burns said. "Consumers are more likely to give the keys back to the bank because they don't have anywhere to turn."
In California, the number of homes lost to foreclosure rose 180% last year compared with 2007, according to MDA DataQuick, a real estate data firm. It was the largest number of foreclosures since DataQuick began tracking them in 1988.
The number of foreclosures actually dropped this fall, to about 14,000 in November from about 25,000 in September. But that decline was probably a temporary blip due to a new state law that forced lenders to make more efforts to contact borrowers before foreclosing, and doesn't signal a reversal of the trend, said DataQuick analyst Andrew LePage.
Indeed, foreclosures rose 14% in December from November. And notices of default, the first step in the foreclosure process, also dropped this fall but had rebounded sharply by December.
"We know the new law has impacted the filings, and there is some catch-up going on now," LePage said. "And there are all of these other avenues that lenders can steer borrowers into now that aren't going to show up as foreclosures. It could be that we're holding steady, and it could be that the distress out there is climbing and not showing up in the numbers."
An analysis by investment bank Credit Suisse suggests that foreclosures will start to taper off this year because the number of subprime loans resetting to higher interest rates has peaked. But there is another potential time bomb: Resets on prime loans will peak at more than $40 billion in mid-2010.
Many of those loans could go into default if the borrowers cannot refinance because they've lost their jobs or their homes have plunged in value, analysts say.
"I think that we're in some ways uncharted waters in terms of the magnitude of the situation that we're facing today," said Peter Tatian, a senior research analyst at the Urban Institute in Washington. "That's why we need some very radical steps to pull us out of the nose dive that we're in."
On the positive side, lenders have come under pressure to work out new payment terms to prevent foreclosure.
"We are working out two troubled loans for every one on which we foreclose, nearly double the ratio of a year ago," said Jumana Bauwens, spokeswoman for Bank of America's Countrywide division, the nation's largest mortgage lender.
But modifications work only if people can show they have the income to make the lower payments.
"You can't work with the bank to modify your loan if you have no income," said Ralph R. Roberts, a coauthor of "Foreclosure Self-Defense for Dummies." "And usually when people lose their jobs and reenter the market they end up with a lower income. That means they will be trying to cover the payments they missed and the new payments with less money."
In California, the areas that have been hardest hit by foreclosures include the Inland Empire, the Antelope Valley and the Central Valley, where many first-time homeowners flocked to buy new homes.
In some San Bernardino County ZIP Codes, there were more than 20 foreclosures for every 1,000 homes. Foreclosures have tended to be less common in more established communities.
The glut of foreclosures has changed the real estate market in dramatic ways. For one thing, they have helped drive down prices. The median price for a home in Southern California was $278,000 in December, down from $415,000 in January 2008.
In addition, most of the homes being sold now are foreclosures.
"My guess is that you have a fair amount of speculation going on, which might not be the best thing in the long run," said Conrad Egan, president of the Center for Housing Policy in Washington. "But I'm sure that people in those neighborhoods are glad to have an investor buy a home and stick a renter in there than to see it sit empty and boarded up."
Foreclosures have become so common, in fact, that they are straining the ability of the market to handle them all.
"Probably for most of the state, we've reached the point where the lenders and the market really can't absorb that much more foreclosure activity," DataQuick analyst John Karevoll said. "The operating manual for the real estate market has been thrown out."
Wilmington crowd protests proposed truck expressway
Freeway foes who fear cancer risk from the project question data used to support the plan as a regional benefit...Louis Sahagun
More than 100 people gathered at Banning's Landing Community Center in Wilmington on Tuesday night to express their concerns about a proposed truck expressway that will increase cancer risks in a neighborhood that for years has felt overwhelmed by massive port expansion projects.
The Alameda Corridor Transportation Authority has offered to install -- free of charge -- high-efficiency air filtration systems in eight modest homes on East Robidoux Street that computer models indicate would face cancer risks above the South Coast Air Quality Management District's "significant cancer risk" threshold of 10 people per million.
But opponents questioned the data used to support the Transportation Authority's promises of a regional benefit in the Wilmington area due to trucks being diverted onto the $687-million Schuyler Heim Bridge and State Route 47 Expressway Project.
"We're challenging their numbers," said Jesse Marquez, executive director of the Coalition for a Safe Environment and a lifelong Wilmington resident. "We believe the health risks are significantly worse than what they are saying.
"They say only eight houses are at significant risk, but there are about 86 houses within 700 feet of the same proposed source of toxic diesel truck emissions," he said.
The meeting was held so that project engineers could explain the health effects that would be generated by replacement of the unsafe Heim Bridge spanning the Cerritos Channel and construction of the proposed four-lane, 1.7-mile-long elevated expressway that would move about 20,000 trucks a day from Terminal Island to warehousing facilities and distribution centers in the South Bay area.
The engineers had their work cut out for them. Over the weekend, opponents went door-to-door in neighborhoods on the east side of the 10-square-mile community, about 20 miles south of Los Angeles, and distributed more than 1,000 fliers -- in English and Spanish -- urging residents to fight the project designed to accommodate future growth at the nation's largest port complex.
Of particular concern is the projected "significant cancer risk" from diesel emissions -- a known carcinogen -- in two hot spots: the houses on the north side of East Robidoux Street and a lone house in Carson, a few miles away, said John Doherty, chief executive of the Transportation Authority. Health risks elsewhere, including homes next door to the targeted residences, would be below the significance risk level, Doherty said.
In any case, it remained unclear whether Transportation Authority officials would pay homeowners in the impact zones to run their air filtration systems day and night, and maintain them year-round. "Beyond that, this is going to strip property values in the area overnight," said David Pettit, a senior attorney for the Natural Resources Defense Council.
USC health professor Andrea Hricko called into question traffic volume projections used to support Transportation Authority claims that the project will enhance mobility on local freeways by diverting 5% to 8% of their port-related big rigs.
For example, she said, the data shows that the volume of trucks at nearby Elizabeth Hudson School would nearly double by 2030 compared to 2003 if the project is not built, and also nearly double if it is built.
"Can someone please provide an explanation," she asked, "of how this demonstrates a reduction in traffic volumes and cancer risk in the project areas as a benefit of building the SR-47 Expressway?"
Salazar to revisit recent Interior Department actions
The department's new chief will review many of the energy and environmental decisions made in the waning days of the Bush administration...Jim Tankersley
Reporting from Washington — Interior Secretary Ken Salazar said Tuesday that he was reconsidering a series of controversial energy and environmental decisions handed down in the waning days of the Bush administration, including a move to open federal land near national parks to oil and natural gas drilling.
Opening parts of the Mountain West to oil shale development -- a sensitive issue because of the huge quantities of water required to extract oil from the rock -- will also be reviewed, he said in his first formal news interview since wining Senate confirmation last week.
"I'm very concerned about a number of the midnight actions that were taken by the Bush administration," Salazar said. "We barely have moved in, but we already know enough to know there are many issues we need to revisit."
In addition to oil and gas leases near national parks and the oil shale issue, Salazar said the list of decisions to be reviewed included starting the process for resumption of oil exploration in coastal areas and several rulings on the Endangered Species Act.
He suggested he would like to reinstate a rule that requires federal agencies to consult with scientists before approving projects that could affect threatened plants and animals -- and leave open the possibility that the department would consider the effects of global warming on species habitat, which Bush ruled out.
Almost all the Bush decisions were strongly opposed by environmental groups, many of which supported Barack Obama in last year's presidential election. But reversing some of these decisions will be easier than others, both legally and politically.
For example, Salazar could overrule Bush and maintain endangered species protection for the gray wolf essentially on his own authority, without going through any legal process or consulting with Congress. By contrast, rewriting the oil shale regulations approved by the previous administration could take months or even years under the department's formal rule-making procedures.
Industry lobbyists warned that reversing some of the Bush decisions would slow domestic energy development and put Salazar at odds with his, and Obama's, energy independence goals.
"It would really throw a wrench into the way things are going toward getting the country off our so-called addiction to foreign oil," said Michael Olsen, a former Interior official under Bush who now lobbies for energy interests at Bracewell & Giuliani in Washington.
Environmentalists urged swift action. "Salazar has a free hand" to kill the drilling leases near national parks in Utah, said Trip Van Noppen, president of Earthjustice, which has sued to block the leases and several of Bush's other controversial decisions. "The secretary has an opportunity here to set a new direction."
Salazar joined eight other administration officials, including Energy Secretary Steven Chu and special climate-change advisor Carol Browner, for a lunch meeting Tuesday to discuss Obama's initiatives on energy independence and global warming. In the interview, Salazar said the Interior Department would play an integral part in that effort.
A centrist former senator from Colorado, Salazar takes over a department weakened by scandals involving sex, drugs and improper political influence stretching back several years.
Government auditors have detailed how an Interior staff member manipulated endangered species decisions to advance political agendas. They painted a sordid picture of cocaine, sex and oil royalty graft in the department's Minerals Management Service.
In his Senate confirmation hearing, Salazar pledged to clean up the department. On Monday, he outlined new ethics standards in a memo to Interior Department staff.
He said Tuesday that he would travel to Denver this week to address the Minerals Management staff, and he said he would set "the highest expectations for integrity and ethics, from secretary down to each of the agencies."
He stressed the importance of science in agency decision-making, particularly in regard to endangered species. Late last year, the Bush administration said federal agencies would not be compelled to consult biologists about whether government projects such as new roads or dams would harm endangered wildlife or plants.
Salazar said he would reconsider that rule and would work to enhance Endangered Species Act protections for streams and habitat. "At the end of the day, it should be the scientific foundation that drives the decisions," he said.
Calling climate change "one of the signature issues of our time," he also said he was revisiting a Bush administration decision to exclude global warming considerations when acting to protect endangered species such as the polar bear, which is declining in part because of the shrinking polar ice.
Park official says science on canyon was ignored...Washington Post
Washington — Interior Department officials ignored key scientific findings when they limited water flows in the Grand Canyon to optimize generation of electric power there, risking damage to the ecology of the spectacular landmark, according to documents obtained by the Washington Post.
A Jan. 15 memo written by Grand Canyon National Park Supt. Steve Martin suggests that the department produced a flawed environmental assessment to defend its actions against environmentalists.
The Grand Canyon Trust, an advocacy group, has sued Interior for reducing the flow of water from Glen Canyon Dam at night, when consumer demand for electricity is low, on the grounds that the policy hurts imperiled fish species and erodes the canyon's beaches.
"The government's brief as presented continues to misinterpret key scientific findings related to the humpback chub, status of downstream resources in Grand Canyon, and the need for the secretary to acknowledge [National Park Service] authorities and responsibilities to protect resources under [National Park Service] administration," Martin wrote in a memo that the Post obtained from the group Public Employees for Environmental Responsibility.
Mike Snyder, the park service's intermountain regional director, said Tuesday that he concurred with the superintendent's analysis and had tried to petition Interior's top officials to reexamine the Colorado water experiment.
The issue highlights what Interior Secretary Ken Salazar will face as he evaluates Bush administration rules.
Salazar vows review of Interior scandals...H. JOSEF HEBERT, The Associated Press
WASHINGTON -- Interior Secretary Ken Salazar is calling for a top-to-bottom review of ethical misconduct and reforms at the Interior Department, raising the possibility that investigations closed by the Bush administration may be reopened.
Appearing at the White House, Salazar told reporters Wednesday the department over the last eight years "has been tarnished by ethical lapses and criminal behavior that has extended to the very highest levels of government."
He said he wants his own review of what happened, what has been done to address it and what steps still need to be taken.
Salazar cited the 2007 criminal conviction of Steven Griles, former deputy Interior secretary, who pleaded guilty to lying to a Senate committee about influence peddling and his association with disgraced lobbyist Jack Abramoff.
The Interior Department is "now a department that the American people associate with Jack Abramoff," said Salazar as well as one that has been "tarnished by a scandal involving sex, drugs and inappropriate gifts from oil companies."
Last November, more than half a dozen workers at the Minerals Management Service office, which oversees the oil and gas royalty program, were disciplined _ and several were fired _ because of the scandal in which workers partied, engaged in sex and used drugs, and accepted gifts from oil and gas industry representatives.
"Some employees engaged in blatant and criminal conflicts of interest and self-dealing," said Salazar. "It is one of the worst examples of corruption, abuse and of government putting special interests before the public interests."
Salazar said he will visit the MMS office in Lakewood, Colo., on Thursday and talk with the people who work there. Recently in an address to Interior Department employees, Salazar said the department's 67,000 employees had been "unfairly" tainted by actions of a few including political appointees.
"We will no longer tolerate those types of lapses at any level of government from political appointees or career employees," Salazar said, promising a "long term-effort to enact comprehensive, top-to-bottom reforms."
The Interior Department with a budget of $15.8 billion, is the landlord overseeing more than 500 million acres of federal land including the national parks. Its programs range from protecting endangered species to issuing oil and gas leases. Last year it collecting $23 billion in royalties from oil and gas taken from federal land and waters.
Interior Ignored Science When Limiting Water to Grand Canyon...Juliet Eilperin
Interior Department officials ignored key scientific findings when they limited water flows in the Grand Canyon to optimize generation of electric power there, risking damage to the ecology of the spectacular national landmark, according to documents obtained by The Washington Post.
A Jan. 15 memo written by Grand Canyon National Park Superintendent Steve Martin suggests that the department produced a flawed environmental assessment to defend its actions against environmentalists in court. The Grand Canyon Trust, an advocacy group, has sued Interior for reducing the flow of water from Glen Canyon Dam at night, when consumer demand for electricity is low, on the grounds that the policy hurts imperiled fish species such as the endangered humpback chub and erodes the canyon's beaches.
"The government's brief as presented continues to misinterpret key scientific findings related to the humpback chub, status of downstream resources in Grand Canyon, and the need for the Secretary to acknowledge [National Park Service] authorities and responsibilities to protect resources under [National Park Service] administration," Martin wrote in a memo that The Post obtained from the group Public Employees for Environmental Responsibility. Martin added that his agency continues to fear that the current policy "will significantly impair Grand Canyon resources."
The behind-the-scenes skirmish, which took place just days before President George W. Bush left the White House, highlights the sort of challenges Interior Secretary Ken Salazar will face in his new position. While Salazar declined to comment specifically on the Grand Canyon case because it is the subject of an ongoing legal battle, he said in an interview yesterday that he would emphasize "the need to have sound science in all decision making in the Department of Interior."
"Science should not be shoved under the table in order to deal with special interests that are knocking at the door," said Salazar, adding that he will be looking at several last-minute decisions made by Bush before he left office. "My point of view is, nothing is sacrosanct in terms of being reexamined."
The federal government has spent about $100 million studying water flows on the Colorado River, and the studies indicate that the ecosystem would benefit from occasional short bursts of massive amounts of water along with more regular flows during the day and night. This pattern would mimic the river's natural fluctuations and deposit sediment on canyon beaches while also sustaining fish populations.
Last February, however, Interior approved a five-year "experiment" in which it would allow only one river surge, in March 2008, and afterward would control the water and prohibit any high flows through 2012. Martha Hahn, chief of science and resource management for Grand Canyon National Park, said the power and water industry representatives belonging to Interior's advisory committee on the plan "didn't want to see a high flow" on the Colorado River.
Leslie James, executive director of the Colorado River Energy Distributors Association, said the utilities that use the power generated by the dam do not see why federal authorities would change the water flows, because the number of humpback chub in the river has increased recently.
"Hey, it's a good thing, so let's not make any radical changes," James said, adding that timing the water flows to meet public demand saves money for the 4 million customers using electricity generated from the river.
Hahn, however, said the canyon's humpback chub population is still struggling. The fish's numbers had dipped from 15,000 in the mid-1980s to 2,000 before rising to 5,000 recently, she said: "That's hardly a recovery."
Bureau of Reclamation spokesman Kip White said he could not discuss the controversy in detail because it was "under litigation," but he noted that a federal judge had already ruled that Interior had not violated any laws in drafting its operating plan for the Colorado River.
Mike Snyder, the Park Service's intermountain regional director, received Martin's memo this month. He said yesterday that he concurred with the superintendent's analysis and had tried to petition the Interior Department's top officials to reexamine the Colorado water experiment.
"I think we have some really good science. My concern is we're not using that science to make our decisions," Snyder said. "This is an issue of protecting the resources and values of the Colorado River and Grand Canyon National Park."
When asked whether he had been cautioned by political appointees to mute his criticism of the water plan, Snyder responded, "I was counseled on the importance of having a single Department of Interior family response [to environmentalists' criticism], particularly as it relates to lawsuits."
Jeff Ruch, executive director of Public Employees for Environmental Responsibility, challenged Salazar to change the policy and allow for a more natural water flow. "If Secretary Salazar really means to clean house at Interior, he needs to start right here," Ruch said.
In the interview, Salazar said he had made it clear to his department's 64,000 employees that "the ethical lapses of the past will be no more" and that he will push for greater accountability at Interior. On Thursday, he plans to travel to Lakewood, Colo., to address Minerals Management Service employees. In September, the Interior Department inspector general accused more than a dozen MMS employees of engaging in unethical and criminal behavior.
Mass layoffs surge in 2008, continue at rapid pace...CHRISTOPHER S. RUGABER, The Associated Press
WASHINGTON -- Mass layoffs involving 50 or more workers increased sharply last year, and large job cuts appear to be accelerating in 2009 at a furious pace.
Boeing, Pfizer, Home Depot and other U.S. corporate titans have announced tens of thousands of job cuts this week alone.
The economy is likely to continue to shed jobs for the rest of this year, even if an economic stimulus bill pushed by President Barack Obama is approved, economists said.
The Labor Department reported Wednesday that 21,137 mass layoffs took place last year, up from 15,493 in 2007. That's the highest annual total since 2001, the last time the economy was in recession, and the second-highest since the department began tracking mass layoffs in 1995.
More than 2.1 million workers were fired as a result of last year's mass layoffs, the department said.
Large corporations continued to hemorrhage jobs Wednesday, as Boeing Co. said it would cut 5,500 positions, on top of 4,500 layoffs announced earlier this month. Airlines are ordering fewer planes as air travel declines due to the global economic slowdown.
Time Warner Inc.'s AOL division said Wednesday that it is cutting up to 700 jobs, or about 10 percent of the online unit's work force. IBM Corp., meanwhile, has cut thousands of jobs in its sales, software and hardware divisions in the past week, without announcing specific numbers.
Home Depot Inc., Pfizer Inc. and General Motors Corp. also have announced plans to lay off thousands of workers this week. Companies have announced more than 125,000 layoffs in January, according to an Associated Press tally.
The financial markets, meanwhile, rose Wednesday on news that the government may take additional steps to assist the nation's ailing banks. The Dow Jones Industrial average rose nearly 201 points, or about 2.5 percent, to 8,375.45.
Still, the current recession, which began in December 2007, likely will result in greater job losses than any downturn since the late 1950s, said Adam York, an economic analyst at Wachovia Corp.
Total employment will drop by 3.5 percent by the end of this year, a sharper decline than the 3.1 percent fall that took place during the steep 1981-1982 recession, York said. Employers cut 2.6 million jobs last year and will likely eliminate more than 2 million this year, he said.
One indication job cuts will continue is that some companies this week have said they will lay off workers without providing additional details.
Government contractor Halliburton Co. said it will reduce its work force, but didn't provide more information. And Target Corp. said it will cut 500 workers sometime later this year when it closes a distribution center.
President Barack Obama sought to use the mounting employment losses to ramp up support for his $825 billion economic stimulus package, which the House is expected to vote on later Wednesday.
"These businesses that are shedding jobs to stay afloat _ they cannot afford inaction or delay," Obama said Wednesday. "The workers who are returning home to tell their husbands and wives and children that they no longer have a job, and all those who live in fear that theirs will be the next job cut, they need help now."
Meanwhile, the Federal Reserve acknowledged Wednesday that the economy is continuing to deteriorate and signaled it would use unconventional tools, such as buying longer-term Treasury securities, to cushion the fallout. Such a move could help drive down mortgage rates and provide help to the stricken housing market, economists said.
The Fed also kept the key interest rate it controls at nearly zero and said it would remain at that level for "some time."
Illustrating the worldwide pain being felt during the recession, the International Monetary Fund said Wednesday the global economy will grow by only 0.5 percent this year, the slowest since World War II and a sharp reduction from its projection of 2.2 percent growth in November.
The world economy is hamstrung by potential credit losses of $2.2 trillion stemming from U.S. mortgages and other loans, the IMF said.
"A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit makers are unclogged," the IMF said.
The Labor Department said that, on a seasonally-adjusted basis, mass layoffs did drop slightly in December, to 2,275 from 2,328 in November. Mass layoffs are job cuts of 50 or more by a single employer.
But on a nonseasonally-adjusted basis, mass layoffs soared in December to 3,377, up from 2,167 a year earlier, costing 351,305 people their jobs. The government seasonally adjusts many economic indicators to smooth out fluctuations resulting from weather changes, holidays and other predictable factors.
Twelve industries reported record high levels of job losses, the Labor Department said, including construction, mining, manufacturing, transportation services and financial services.
On Tuesday, specialty glass company Corning Inc. said it would cut 3,500 jobs, or 13 percent of its work force, as demand slumped for glass used in flat-screen televisions and computers.
On Monday alone, roughly 40,000 more U.S. workers got the grim news, including 5,000 workers at heavy equipment maker Caterpillar Inc. Pharmaceutical giant Pfizer, which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, each said they will slash 8,000 jobs.
The government will provide another snapshot of the labor market Thursday when it reports how many people filed first-time claims for jobless benefits last week.
Economists forecast that about 575,000 initial claims were filed, down from 589,000 the previous week. Last week's figure matched a 26-year high reached in November, though the labor force has grown by about half since then.
Engineers: U.S. infrastructure a 'D'
American Society of Civil Engineers says under-funding has caused the nation's infrastructure to crumble - and stimulus won't do enough...David Goldman
NEW YORK (CNNMoney.com) -- The nation's roads, bridges, power grid, water supply, schools and transit systems are all in a state of disrepair due to under-funding - and the proposed stimulus plan will not go far enough to solve the problem, according to a report released Wednesday.
The American Society of Civil Engineers, which represents 146,000 engineers across the country and grades the nation's infrastructure every four years, assigned a "D" grade to the country's infrastructure. The group said the cost to repair crumbling public structures has risen to $2.2 trillion from $1.7 trillion in 2005.
"The nation's infrastructure crisis is endangering our future prosperity," ASCE President Wayne Klotz said at a press conference. "Crumbling infrastructure has a direct impact on our personal and economic health."
The group rated 15 infrastructure categories, none of which received a grader higher than "C+." Drinking water, inland waterways, levees, roads and wastewater facilities all received a "D-," the lowest grades on the 2009 report card.
Roads got a particularly poor grade, as Americans spend an estimated 4.2 billion hours a year stuck in traffic, which costs the economy about $78.2 billion a year, according to ASCE. Highway construction is set to receive $30 billion from the stimulus plan - the largest portion of infrastructure spending in the bill.
The national power grid, another key project in the stimulus plan, got a "D+." ASCE said public investment on the grid has not met rising demand for power and electric utility investment needs could rise to $1.5 trillion in 20 years. President Obama has proposed updating the existing structure to a new "smart" grid.
But even if the federal government passes its economic stimulus plan, ASCE still estimates that infrastructure will be under-funded by $1.1 trillion. State and federal spending will only amount to $903 billion in the next five years, according to the group's estimates, and stimulus spending is expected to be less than $100 billion.
The group said the stimulus program would amount to a good start, but the country "clearly still has a long way to go."
"By all accounts, infrastructure investment only represents a small percentage of the overall package," said Klotz. "Even with the stimulus package, there remains a still significant - some would say staggering - $1.1 trillion gap in funding."
Still, Klotz supported the bill, calling government's effort a historic level of leadership." He said that each billion dollars spent on infrastructure supports 35,000 jobs and is a key element of the economy's recovery efforts.
The report also presented several broad solutions to the problem, including increasing infrastructure investment on a state and federal level, promoting a culture of sustainability and developing plans for future public works programs
Wells Fargo: No need for more bailout $
The bank posted a big loss, due mainly to charges tied to Wachovia. But Wells maintained its dividend and said it has no plans to ask for more TARP money...David Ellis
NEW YORK (CNNMoney.com) -- Wells Fargo reported a $2.6 billion fourth-quarter loss Wednesday, hurt by its acquisition of Wachovia and rising credit costs. But excluding a host of charges, many of them related to the merger, earnings beat Wall Street estimates.
The San Francisco-based bank posted a loss of 79 cents a share, down from $1.36 billion, or 41 cents a share, during the same period a year ago. Excluding the numerous charges, the company would have reported a profit of 41 cents. That topped consensus estimates of 33 cents per share on that basis.
Wells Fargo chief financial officer Howard Atkins said in a statement that a big addition to the company's credit reserves, as well as a $3.9 billion provision related to its purchase of Wachovia, were the main reasons for the quarterly loss. He called the loss "disappointing."
But the company also revealed Wednesday that it had no plans to ask for additional government capital. Wells received $25 billion last year from the Treasury Department.
The bank added it would not cut its dividend, even as some analysts speculated the company would have to do so in order to conserve capital.
That news helped send Wells Fargo (WFC, Fortune 500) stock sharply higher. Shares of the bank, which have lost 45% of their value so far this year, soared nearly 28% higher in afternoon trading.
Bank stocks were broadly higher Wednesday on speculation that the Obama administration was finalizing plans to create a so-called "bad bank" that would purchase toxic assets from large financial institutions.
Many investors had feared in recent weeks that conditions in the banking industry had become so severe that the government may have to nationalize some banks.
"That cloud seems to be lifting now," said Brian Gardner, an analyst for investment firm Keefe, Bruyette & Woods. "People are starting to understand what the administration is generally going to propose."
A closer look
After several of its peers, including Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), reported substantial losses in recent weeks, many analysts were anticipating the worst from Wells Fargo.
Driving those fears was the company's all-stock purchase of Wachovia, which was announced in October and completed in December.
Had Wachovia remained an independent company, it would have reported a loss of $11.2 billion in the fourth quarter.
Wells Fargo moved to clean up Wachovia's books during the quarter, taking $37.2 billion in writedowns on nearly $94 billion of high-risk loans.
Top executives at the bank seemed encouraged about the progress being made on the merger, saying it was, for the most part, ahead of schedule.
"I feel better about this deal now than I did when it was first announced," Wells Fargo CEO John Stumpf said during a recorded investor conference call Wednesday.
Nonetheless, the deteriorating U.S. economic environment, marked by higher unemployment, weighed on Wells' results, particularly in its home equity loan and its credit card portfolios.
Overall net charge-offs, or loans a bank doesn't think are collectable, more than doubled from a year ago.
"That's not pretty because Wells has been so much more conservative than many others," said Bart Narter, an analyst for the Boston-based financial research and consulting firm Celent.
Wells, along with rival JPMorgan Chase (JPM, Fortune 500), has been viewed as one of the better-run big banks during the ongoing crisis. The company's profits have beaten Wall Street expectations for the past three quarters.
But in a sign that the economy could deteriorate further, Wells Fargo said it set aside a total of $5.6 billion during the quarter to cope with future loan losses, with $3.9 billion of that total tied to the Wells-Wachovia merger.
The company also revealed it was not immune to the Ponzi scheme allegedly committed by Bernard Madoff, adding that it took $294 million in charges during the quarter related to the fraud.