1-31-09
1-31-09
Merced Sun-Star
Andy Krotik: 2008, the year of foreclosures...Andy Krotik is a Realtor with 20 years experience. He currently serves as sales manager of Coldwell Banker Gonella Realty in Atwater. Sources of information for this article were obtained by Gonella Realty research, CAR, NAR, Data Quick and Merced County MLS. Special thanks to Michelle Gabriault-Acosta, president of the Merced County Association of Realtors, and Scott Oliver, Region 7 chairman of CAR. Other real estate information can be found on Andy's Web site at www.MercedCountyLand.com
http://www.mercedsunstar.com/109/v-print/story/666696.html
Until the month of December, foreclosures were outpacing property sales. Sales soured in December as prices continued to plunge. Several empty lot subdivisions also changed hands, skewing the numbers.
The year 2008 saw sales in Merced County increase 61 percent over the previous year. Although continued strong sales activity is expected, bank foreclosures will certainly outpace them the first two quarters of the new year. The flood of bank-owned properties has had devastating effects on property values. Last year saw prices fall 38 percent over the previous year. In a normal market with this type of sales activity, prices would be going up, but this isn't a normal market.
My first day as a Realtor, I sold a house. The home was on Vine Circle in Atwater, a new one built by the late Bud Raymond. It was a 3-bedroom, 1.5- bath with 1,072 square feet that I sold for $66,500. That was in August of 1989, 20 years ago. I have that same house listed today for $70,500.
If that doesn't demonstrate how far values have plummeted, then nothing will. The good news: More than 70 percent of those earning the median income can qualify for a home. With rates bumping along at 5.5 percent fixed for 30-year loans, first-time homebuyers are snapping up homes. In many neighborhoods it's now cheaper to own than rent.
Properties are now selling below what it would cost to rebuild them. Vacant lots are selling for less than it took to develop them. In fact, the cost of building fees in Merced is now nearly three times the market value of the residential building lot.
Brace yourself for another wave of bank-owned properties soon to hit Merced County as government tinkering has backfired. As this wave approaches, prices will continue to trend downward. Bad news for banks, good news for the consumer.
Buying activity in 2008 rivals the activity we saw in 2004 and 2005. This has cut the average days on the market in half. Today, it takes on average only 56 days to sell a home. Half as long as a year ago -- 111 days.
With all this activity you'd think all real estate companies were making bundles of money. With average commissions flirting with 1989-1991 levels, but office costs at 2009 levels, that's just not the case. Not looking for sympathy, just summarizing a fact. Budgets at most real estate offices are tight.
Still, 2008 was a welcome sight over the dismal 2007.
Good luck, see you next month. Here's how the numbers shake out.
Merced County Facts and Figures
Total number of closed sales 2007: 3,286
Total number of closed sales 2008: 5,364
Average number of days to sell a home in 2007: 111
Average number of days to sell a home in 2008: 56
County Average List Price 2007: $204,000
County Average List Price 2008: $125,900
Average Days on Market 2007: 111
Average Days on Market 2008: 56
County Average Sales Price 2007: $228,000
County Average Sales Price 2008: $115,000
Total Number of Foreclosures in 2007: 1,489
Total Number of Foreclosures in 2008: 5,143
Monthly Tidbit: Ideally. all things are negotiable between principals in a real estate transaction (buyers and sellers) Well, the same is true between principals and Realtors. Realtors routinely negotiate their commissions with sellers, but what about buyers? If you're a buyer, are you paying your Realtor a transaction fee? Remember -- that too is negotiable. Most buyers don't pay their Realtor a fee, but some do. Read the fine print, and remember it is negotiable.
Merced County wins judgment against Riverside Motorsports Park
Racetrack leaders owe $300,000 for work done on the proposal...CORINNE REILLY
http://www.mercedsunstar.com/167/v-print/story/666717.html
Merced County has moved to seize Riverside Motorsports Park's assets, the latest in a long series of developments that suggest the RMP project will never be built.
For months RMP has failed to repay Merced County about $300,000 in planning and legal fees. In an attempt to recoup the money, the county finished legal steps this week that enable it to claim any assets it can find in RMP's name, up to $300,000.
But the county may have trouble locating anything to claim. Besides the 1,200-acre property where RMP said it planned to build a quarter-billion-dollar motorsports park, the company appears to be broke.
The property, located just northwest of Merced near Castle Airport, has been for sale since September. That's where county officials are pinning their hopes to recover the $300,000, though it's unclear whether RMP has any equity in the land.
If RMP has no equity, and if no other assets in its name emerge, taxpayers could be left to pay the company's debts. County officials, however, said Friday they remain confident that won't happen.
"This is one additional step the county is taking to make sure we're as well positioned as possible to bring in all the money that's owed," the county's spokeswoman, Katie Albertson, said.
No one from RMP could be reached for comment.
The county now holds a court judgment against RMP that entitles it to seize what it's owed, plus 10 percent interest a year if the county can't recoup its money within 90 days of the order. It was filed in court Wednesday.
The judgment effectively puts the county third in line to collect money that comes from the sale of RMP's land. First in line are the bank that holds the property's mortgage and one other creditor, a law firm to which RMP owes $143,000.
RMP didn't oppose the county's effort to win the judgment, the order states.
"(RMP) was very cooperative through this process," the county's lead attorney, James Fincher, said. "They do seem genuinely interested in settling the debt."
Most of what RMP owes the county stems from a lawsuit filed against the county over the Board of Supervisors' 2006 decision to approve the RMP project. RMP lost the suit and agreed under a September order to pay the plaintiffs $279,000 for their legal costs. The order stated that if RMP failed to pay within 60 days, Merced County would have to put up the money.
RMP defaulted, and in November the county paid out $279,264.
RMP also owes about $20,000 to the County Counsel's Office and the County Public Works Department for time they spent reviewing and processing the company's proposal.
Besides that, RMP has repaid the county for all its expenses related to the company's project, Albertson said.
At least one other creditor has attempted to seize assets from RMP, a law firm that used to represent the company.
The firm, Sacramento-based Somach, Simmons & Dunn, won a judgment against RMP for $143,000 in August of last year, after the firm sued RMP to try to collect on an overdue bill.
Soon after the judgment was signed, the firm recovered about $600 by levying an RMP bank account, but that's all the money it could locate.
The 1,200-acre property where RMP planned to build is now the company's only known asset. It was listed for sale Sept. 30 with an asking price of $16.5 million. It hasn't sold. The price was recently dropped to $15.5 million.
It's unclear how much equity RMP has in the property, if any. The company has one outstanding mortgage on the land.
In interviews last month, RMP officials insisted they still planned to build the massive motorsports park. Though they acknowledged the company was out of cash, they said they hoped to announce major new financing deals within 30 days that would keep RMP alive. No announcements have been made.
For more than a year RMP officials have been saying they're close to finishing financing deals for the project.
Before that, John Condren, RMP's CEO, maintained that the money to build RMP had already been secured, some of his former business partners have said.
At this point there are no public documents that reveal how much RMP owes to all its creditors.
Condren first proposed plans in 2003 for what he has billed as the world's largest motorsports facility. He argued at the time that RMP would remake the county's struggling economy.
The project's initial blueprints called for an eight-racetrack motorsports park that would include shopping areas, a lake, restaurants and picnic space.
County Bank's losses mount
Parent company reports it lost $96 million in 2008...MIKE THARP
http://www.mercedsunstar.com/167/v-print/story/666749.html
The county's biggest bank and only publicly traded company is in much deeper trouble than it has said.
Capital Corp of the West, which owns County Bank, issued a news release after U.S. markets closed Friday declaring that a loss of $96 million last year caused it to question whether it could remain solvent.
Dense with legalese and numbers, the release confirmed that County Bank, like dozens of other U.S. financial institutions, has rammed head-on into the tough new realities of global economic recession.
Capital Corp blamed its deteriorating financial condition on both macroeconomic and San Joaquin Valley factors. The one-bank holding company said it could no longer guarantee that it would last as a "going concern."
The announcement raises the question of whether Capital Corp would declare bankruptcy or be taken over or bought by another financial concern or the U.S. government itself. The release indicated that its weak balance sheets could lead to "significant regulatory action."
Calls to the company spokesman, a vice president and two board members weren't returned by the Sun-Star's press time.
As a one-bank holding company, Capital Corp said its solvency depends mainly on "the bank's ability to continue as a going concern." It expressed "substantial doubt" about whether it could.
The bleak red numbers mirror those on the ledgers of numerous other U.S. and foreign banks. They reflect the year's increasing similarity to the 1929 stock market crash and the 1982 prolonged recession.
Capital Corp's weakened condition means that state and federal agencies could take "significant" regulatory action against its bank.
It blamed its cumulative losses on continued declines in the appraised values of real property collateral securing loans in its portfolio, a deteriorating economic environment, downgrades in internal risk ratings, an increase in nonperforming loans and regulatory reviews.
On Friday, it said that on a preliminary basis, it would be required to make a provision for loan losses of about $28.5 million in the fourth quarter of 2008, compared with a provision of $11.5 million for the third quarter of 2008.
The company estimated its cumulative provision for loan losses for the year ended Dec. 31, at around $55.4 million.
That helped propel its loss for the year to about $96 million, compared to a loss of $2.7 million for 2007. For the fourth quarter, the bank reported a loss of $35.1 million, compared to a loss of $14.3 million for the prior-year fourth quarter.
The provision for loan losses in 2008 was $55.4 million, compared to $29.8 million in 2007. Total nonperforming loans at Dec. 31 were $109 million, or 9 percent of total loans, compared to $54 million, or 3.6 percent of total loans a year earlier.
The allowance for loan losses at Dec. 31 was $38.2 million or 3.1 percent of total loans, compared to $35.8 million, or 2.4 percent of total loans in the year-earlier period..
The company said it expects that its capital ratios at year end will fall into the "undercapitalized" category under federal guidelines. It said it needs to raise some $75 million in new capital "in the near future" to be capitalized at acceptable levels.
To try to get there, the bank said it will convert $20 million of tier 2 capital (in the form of a subordinated note) to tier 1 capital upon the company's contribution of the note to the bank.
However, even if it had achieved that type of adequate capitalization at the end of last year, its total risk-based capital ratio would still have been undercapitalized.
No deals are in the works, Capital Corp said, that might help it escape the financial precipice it is teetering on.
In an effort to reassure depositors and investors, Capital Corp said the FDIC's general deposit insurance rules raised deposit insurance coverage to $250,000 per depositor (with separate coverage for joint accounts) per insured institution through Dec. 31, 2009.
In addition, under the Transaction Account Guarantee Program, the FDIC provides full coverage for noninterest bearing transaction deposit accounts, including all personal and business checking deposit accounts; NOW accounts earning interest rates of 50 basis points or less; and all attorney-client trust accounts through Dec. 31, 2009.
At Friday's close, the company's stock stood at 75 cents, down from 94 cents to begin the day. Its 52-week high was $20.20.
County Bank has 30 branch offices and six business lending centers serving the counties of Merced, Fresno, Madera, Mariposa, Sacramento, Stanislaus, San Joaquin, San Francisco, Santa Clara and Tuolumne.
Deposits in County Bank amounted to $1.43 billion as of Sept. 30, down from the $1.67 billion reported at the end of 2007.
Stimulus bill contains $50M for delta restoration efforts...MICHAEL DOYLE, Sun-Star Washington Bureau
http://www.mercedsunstar.com/268/v-print/story/666708.html
WASHINGTON -- The Senate thinks stimulating the U.S. economy and saving the Sacramento-San Joaquin Delta can go hand-in-hand.
A hefty stimulus bill heading for a Senate vote next week includes $50 million for delta restoration efforts.
That makes the delta one of the very few regions nationwide cited for specific assistance in the bill expected to cost well above $800 billion.
"We're pleased to have the money in the stimulus package," said Jeanie Esajian, public information officer for the CalFed Bay-Delta Program.
The $50 million could pay for Bureau of Reclamation levee improvements, habitat restoration, fish screens and other work around the tattered delta, upon which some 22 million California residents rely for at least part of their water supply.
State and federal agencies are collaborating in the long-running environmental effort.
Other California water works, too, would draw funding from the economic-stimulus package.
The bill, for instance, includes $110 million for small reclamation projects. Many of these are in California, such as water recycling efforts in Santa Clara and the East Bay.
The stimulus bill, though, does not name the specific reclamation projects slated for funding.
Mindful of criticism about pork-barrel spending, senators largely omitted mention of specific earmarks.
A 431-page draft of the stimulus bill's primary funding components only includes the word "California" once, and this comes in the reference to the state's environmentally sensitive Bay-Delta region where the $50 million would be spent.
Most other states and localities aren't explicitly mentioned in the bill at all. Other provisions to be added could bring the bill's total length to more than 1,000 pages.
Still, even with its nearly unique status with the Senate bill, the delta money isn't a sure thing.
House members did not include it in their $819 billion stimulus package approved Tuesday over unanimous Republican opposition. House and Senate negotiators will still have to resolve their differences.
Even the Senate's provision does not by itself guarantee funding.
The Senate bill states the $50 million "may" be spent on the Bay-Delta, but does not say it must be spent.
The stimulus bill is on a fast track, with congressional Democrats hoping they can get a final version to the White House for President Barack Obama's signature within several weeks.
Between now and then, Capitol Hill negotiators must iron out many differences going well beyond the delta funding.
The Senate bill, for instance, omits $50 million that the House bill includes for the National Endowment for the Arts.
Over the past year, the federal agency has provided grants to Fresno's Radio Bilingue, the Monterey Jazz Festival and the San Francisco Mime Troupe, among others. Supporters say the additional arts funding would help sustain jobs.
Mortgage assistance reflects another potential difference to be worked out. Senate Republicans, cheered on by some House Democrats, are considering adding a provision allowing current homeowners to refinance their homes at a 4 percent interest rate.
Merced Democrat Dennis Cardoza authored a House version of the proposal, but it was not included in the House stimulus bill.
"I am pleased to see not only a bold, far-reaching solution emerging in the Senate, but from across the aisle," Cardoza said.
"This is the exact bipartisan cooperation that President Obama has called for."
For farmers, the Senate bill includes the latest in a long line of disaster payments, notwithstanding pledges last year that the new 2008 farm bill would eliminate the need for such ad hoc, year-by-year assistance. The House bill does not include agricultural disaster assistance.
Our View: A milestone for wilderness
Congress is close to designating more than 2 million acres, including in California.
http://www.mercedsunstar.com/181/v-print/story/666728.html
In these difficult economic times, Americans need places of solitude where they can get back to the basics.
These places are known as wilderness -- public lands that are free of roads and machinery and beckon to hikers, horseback riders and anglers.
Fortunately, Congress is close to passing legislation that would designate more than 2 million acres of new wilderness, including 700,000 acres in California.
The result of years of hard negotiations, these wilderness designations are part of an omnibus lands bill the Senate passed two weeks ago. It now goes to the House, where lawmakers should quickly approve it and send it to President Obama for his signature.
Californians who cherish the outdoors will have much to celebrate if this package passes.
Wildlands on the border of Yosemite, Sequoia and Kings Canyon national parks would all be protected. Some 105 miles of streams would become wild and scenic rivers.
Within a day's drive of Merced, perhaps the biggest prize is a proposed 79,000-acre addition to the Hoover Wilderness near Bridgeport in Mono County. This proposed addition includes dozens of alpine lakes and meadows, and is the product of a remarkable compromise.
For decades, conservationists had clashed with users of snowmobiles in this area. Environmentalists sought to ban snowmobiles from a wide expanse, but were unsuccessful.
Finally, in 2005, the various groups sat down to hammer out a deal. As a result of this trade-off, snowmobile groups would get 11,000 acres of new winter recreation areas. Conservationists would realize their dream of permanently protecting meadows and lakes with an expansion of the Hoover Wilderness.
Such accommodations had to be worked out for many of the public lands in the omnibus package. Here in California, credit goes to a bipartisan group that includes U.S. Sen. Barbara Boxer and Reps. Howard "Buck" McKeon, R-Santa Clarita, Devin Nunes, R-Tulare, Jim Costa, D-Fresno, and Mary Bono Mack, R-Palm Springs.
With 160 separate bills, this omnibus package surely includes some pork and other lamentable projects, such as a road through a wildlife refuge in Alaska.
But it also includes some vital investments, such as restoration of the San Joaquin River. That's another reason the House should send it to Obama with little delay.
Patterson Irrigator
New owners working to fix Diablo’s water...James Leonard
“The water is clearer. We don't get the yellow color and junk in the water that we did. We still get real dry skin and everything. I don’t know if there’s something else in the water, but it is clearer.”— Mark Weller, Diablo Grande resident
http://pattersonirrigator.com/content/view/2843/42/
Diablo Grande’s water quality got worse in the fourth quarter of last year, but in all fairness to the development’s new owners, they hadn’t done anything about it yet.
Now they have, and while residents have reported some improvements in the water, it won’t be known for months how much it’s really helping.
The golf resort and upscale housing development in the hills west of Patterson has been out of compliance with state drinking water regulations regarding the presence of trihalomethanes — a chemical compound that can lead to cancer or other serious health ailments if consumed over a period of many years — off and on since 2004.
Residents have complained about discoloration of the water, and some have claimed the water has directly or indirectly caused physical ailments ranging from dry skin and hair to heart palpitations and migraines.
The latest test results, provided by the California Department of Public Health, show Diablo Grande’s water with a trihalomethane count of 110 parts per billion, well above the state’s limit of 80 ppb and an increase over the 103 ppb found in the previous quarter.
The numbers are not a reflection of the new ownership, though. According to a spokeswoman for Laurus Corp. — a company that new owner World International LLC chose to manage Diablo Grande — a powder-activated carbon system was installed to treat the system Dec. 15 and was still undergoing testing early this month.
The fourth-quarter test results from the state were an average of samples taken Oct. 3 — four days before the new owners even took over — and Dec. 1.
Frederique C. Szita, Laurus’ marketing manager, said in an e-mail to the Irrigator that testing done by Fresno-based BSK Analytical Laboratories on the carbon system early this month showed improved water quality. She also said it could take as long as a month from the time of installation for the carbon to make its way through the entire water system.
Residents said they’ve noticed some improvements, but the water still has problems.
“The water is clearer,” Diablo Grande resident Mark Weller said. “We don’t get the yellow color and junk in the water that we did. We still get real dry skin and everything. I don’t know if there’s something else in the water, but it is clearer.”
The carbon system, which cost the new owners about $15,000 to install, is only a short-term fix being used until a more effective and much more expensive chloramine system can be installed. The carbon, according to Szita, absorbs contaminants in the water that lead to the creation of trihalomethanes.
Ken August, a spokesman for the Department of Public Health, said the chloramination process involves adding ammonia to the water in addition to chlorine to create a disinfectant that reacts less with natural organic material than chlorine alone.
August said chloramination has proven to be successful throughout the state. Szita said World is likely to select a contractor in February to install the system, which is expected to cost about $300,000 and take around six months to complete.
Honeymoon period
Meanwhile, World’s honeymoon at Diablo Grande appears to be continuing. The Mexican resort developer purchased the project for $20 million in a bankruptcy sale in October, and the public’s dissatisfaction with previous owner Donald Panoz has led to a warm welcome for the new guys.
Laurus has helped facilitate the transition by meeting with homeowners and laying out ambitious plans for the future of the developing project.
“What’s nice about the new ownership is they’re forthcoming with information, and they’re approachable,” said Gary DeSantis, president of the Diablo Grande Legends West Board of Golfers and a longtime resident.
One of the most immediate and visible of the planned changes is the new name. Szita said the company is performing trademark analysis on a couple of names and is not yet ready to announce the possibilities.
But the changes go beyond the superficial.
Szita said the company has decided to retain Sierra Golf Management to run Diablo Grande’s golf courses but that there will be an increased emphasis on the clubhouse, food and beverage facilities, as well as other amenities.
World is also looking at partners with whom to begin construction on new luxury homes and plans to expand Diablo Grande’s winery to attract larger winemaking companies.
Szita said the slumping economy and challenging housing market won’t prevent World from accomplishing its goals at Diablo Grande. She said the plan is to begin construction on about 100 homes within 18 months, increasing production as the economy improves.
The owners are also in the process of revising Diablo Grande’s master plan, hoping to build more homes that face green areas and relocate the planned hotel and shopping center to emphasize the land’s majestic views.
DeSantis said that while prices of existing homes have dropped dramatically at Diablo Grande, the number of sales has remained strong. He said those who live or plan to live there should remain patient.
“With a development of this size, with this much open space, to get in on the ground floor is a great opportunity,” DeSantis said. “At the same time, there are no amenities (yet) besides the pool, tennis courts and golf courses.
“For a first-class development like I think this is going to be in about 10 years, it just takes time.”
The final word on Wal-Mart — or not...Editorial
http://pattersonirrigator.com/content/view/2849/41/
With Wal-Mart Week in Patterson nearing the realm of Wal-Mart Month, we’ve had plenty of time to ponder this potential development and come to a conclusion.
If the comments section on the article on the Irrigator’s Web site is any indication, a vast majority of local residents have made up their minds. Many of them vehemently oppose bringing a Wal-Mart to Patterson. Even more seem to support it wholeheartedly.
And in a terribly unscientific poll on our site, less than 2 percent of respondents say they’re “Not sure” about Wal-Mart.
But despite all these days to think about it and read about it, we’ve so far decided nothing.
Part of what’s making this such a difficult decision is the divisiveness of the issue and the way both sides have drifted farther and farther toward one extreme or the other. What has ensued is essentially a battle between two caricatures:
n Do you believe Wal-Mart is the knight in shining armor, riding in on a white horse with a satchel of tax revenue slung over his shoulder, ready to save this little town by simultaneously slaying the fire-breathing dragons of recession, high prices and the inaccessibility of goods?
n Or do you believe Wal-Mart is the gargantuan, fire-breathing dragon, looking to prey upon unsuspecting moms and pops and ready to hatch a cunning plot to rob local workers of their will to live while rewarding them with slave wages, pokes in the eye and health care plans that cover only death?
We like to think we’re a little more reasonable than that, and we’ve gone out of our way to not be swayed either by the longtime residents who are totally convinced this will be the end of Patterson as we know it or by Wal-Mart’s frighteningly efficient public relations machine.
(People are getting e-mails from Wal-Mart immediately after visiting its Web site? Maybe we should sick these guys on Osama bin Laden.)
We’re having a hard time with this one. Yes, Patterson is in desperate need of the tax revenue a Wal-Mart could offer — tax revenue currently going to Modesto, Turlock and Tracy. But we don’t want to see smaller businesses go belly-up. Then again, what small businesses here even offer the types of goods Wal-Mart offers?
Wal-Mart would bring lots of jobs. But how much would those jobs pay, how many of them would go to local residents, and how would those workers be treated? Then again, in this economy, who’s going to complain about any job?
This feels like West Park to us. We’re all for developing the Crows Landing Air Facility and bringing jobs to Stanislaus County, just like we’re all for bringing tax revenue and more jobs to Patterson.
Yet our question to both projects is the same: Does it really have to be so darned big? We’d be much more likely to support both West Park and Wal-Mart if their ambitions could somehow be reigned in and their footprints shrunk. That does not seem likely in either case.
So for now, we’ll go so far as to say this: A Wal-Mart in Patterson might not bring the apocalypse, but it’s not going to bring us any closer to our own version of heaven, either.
Fresno Bee
Keep the Williamson Act
Vital program has helped preserve many precious Valley farmlands...Editorial
http://www.fresnobee.com/opinion/v-print/story/1167102.html
The state's difficult financial picture offers an opportunity to get rid of government programs that aren't working, and we support an aggressive approach to ending wasteful spending. But state budget negotiators also must ensure that good programs aren't tossed out with the wasteful ones.
Given the many meetings Gov. Arnold Schwarzenegger and legislative leaders have had on the budget, they should be able to tell the difference. We believe they should save the Williamson Act, which helps preserve farmland from development.
This program is important in the San Joaquin Valley, which has seen prime farmland gobbled up during the housing boom. Critics say the slowdown in housing will have the same result as the Williamson Act without costing anything. But the housing slowdown won't last forever, and development will again be replacing farms in our region. Once that land is paved with streets and houses built, those farms are gone.
That's why we believe the programs must be protected. Gov. Arnold Schwarzenegger has again proposed eliminating funding for the Williamson Act, which at $39.1 million a year is rather inexpensive considering the results the program produces.
It has helped keep more than 1.5 million acres of farmland out of development in Fresno County. There are 16 million acres enrolled in the program in the state.
The money replaces property taxes that are lost to counties when farmers put their land into Williamson Act contracts. The 10-year contracts give the farmers a tax break in return for passing up often lucrative offers to sell the land to developers.
Fresno County gets approximately $5.6 million for the program, and there's no way the financially strapped county can make up that money if it's stripped from the state budget.
The California Farm Bureau Federation says the Williamson Act is the state's only significant contribution to farmland protection.
The state has finally begun taking steps to rein in the sprawl that has characterized development in California for decades, notably with last year's Senate Bill 375, which creates strong incentives for greater density in urban areas.
But the Williamson Act has been serving much the same purpose for years, protecting farmland from development, and thus slowing the rate of sprawl. Why abandon one good tool just when we are creating others?
A recent survey of farmers participating in the program found that one in three would not be able to continue to farming without the program. This program is worth funding, and the governor and lawmakers should be able to find $39 million to pay for it.
There are huge boondoggles in state government, including the out-of-control state prison system. But taxpayers get their money's worth with the Williamson Act.
Stockton Record
Insult to injury?...Alex Breitler's Blog
http://blogs.recordnet.com/sr-abreitler
Delta landowners aren't going to be happy about the state's request to perform environmental surveys on their properties over the course of the next three years.
Especially when you consider that the end result of that work may well be a peripheral canal.
Here is the permit that the state wants landowners to sign, granting them access. Note the many tasks that are covered (digging, drilling, trapping, etc.)
http://online.recordnet.com/projects/blog/2009/0130temppermit.pdf
And here's a cover letter that accompanied the permit:
http://online.recordnet.com/projects/blog/2009/0130letter.pdf
Water attorney Dante Nomellini says he'll help defend any property owners who refuse to allow access.
See story in this weekend's paper for the full details.
This could get interesting...
Manteca Bulletin
The California water torture: Mother Nature flaking out on Sierra snow...Dennis Wyatt
http://www.mantecabulletin.com/news/article/1085/
It isn’t a snow job.
California is in deep trouble.
The Department of Water Resources Sierra snowpack survey this week showed it is at 61 percent of normal. A growing number of water experts are warning Californians the outlook for adequate water to irrigate crops, fight fires, run businesses, flush toilets, and water lawns is growing dismal with each passing day of dry winter weather.
“It’s not good,” pointed out South San Joaquin Irrigation District General Manager Jeff Shields. “The next eight weeks are critical for us.”
The district figured last month they’d eke by with a fairly decent January in terms of snowfall. Now, however, with January not only being a bust for big Sierra storms but historically the No. 1 month in the Sierra for precipitation, the situation is getting precarious.
February and March are the last two months of major precipitation. The Sierra needs a normal amount of snowfall in each month or else water deliveries may be cut back even further than the 15 percent of normal from the Bureau of Reclamation reservoirs. Similar major cutbacks are anticipated in State Water Project deliveries as well.
Shields said the SSSJID board has no intention of waiting. They are dusting off drought contingency plans and updating them to reflect realties that have never been dealt with in other water shortage years including 1976-77 and the early 1980s. The biggest change is the court order that diverts water to maintain minimal flows in the Delta. The board will take steps to put drought contingency measures within the month.
That includes working with the three cities – Manteca, Lathrop, and Tracy – that receive treated surface water from SSJID.
In the past SSJID has rented pumps and drew on the underground aquifers to dump water into irrigation wells. That may end up being problematic this time around due to major salt water intrusion into the aquifer. Too much salt in the water and it can kill crops and essentially sterilizes soil.
While Shields said he doesn’t want to make any concrete, dire predictions, he said “it would be smart if people started making a serious effort to conserve water now instead of later.”
New Melones Reservoir, the linchpin for the water supply for SSJID and Oakdale Irrigation District was at 48 percent on Jan. 19. At this point in January, the reservoir should be at 71 percent of capacity based on a 15-year average.
New Melones, compared to other state and federal reservoirs, is in great shape. Folsom is at 48 percent of capacity, Shasta is at 44 percent capacity and San Luis Reservoir – critical for Southern California – is at 38 percent of capacity.
The district is moving toward monitoring soil moisture to fine tune crop irrigation. At the same time, though, Shields said there is concern that people don’t understand how wasteful it is to keep automatic sprinklers on during rain storms or the day after – as what happened last week – or on so long that they floods gutters.
Snowpack
The following are the year by year water content in Sierra snowpack based on an average taken in January:
Northern Sierra
2007 2008 2009
49% 119% 49%
Central Sierra
2007 2008 2009
42% 102% 63%
Southern Sierra
2007 2008 2009
40% 122% 68%
San Francisco Chronicle
Donated scout land often ends up as cash cow...Lewis Kamb, Hearst Newspapers. Lewis Kamb is a reporter for the Seattle Post-Intelligencer. Post-Intelligencer news researcher Marsha Milroy and Houston Chronicle reporter Lise Olsen contributed to this report.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/31/MN8P15G717.DTL&type=printable
It's been 62 years since conservationist Virgil McCroskey gave the Boy Scouts 400 acres of timberland near this village in Idaho's panhandle, with big ideas for a big new camp.
But don't expect any pup tents or even the faintest whiff of smoke from Camp McCroskey these days.
Rarely used for camping, the land instead has become a moneymaker for the Inland Northwest Council of Boy Scouts. Over the past 35 years, the council has repeatedly logged the property, collecting hundreds of thousands of dollars. Some of the money helped pay the mortgage on council headquarters in far-off Spokane, a former council board member says.
Never mind that McCroskey specified how the scouts should use the land when he deeded it in 1947: "for camp and recreational purposes, the site to be known as Virgil Talmadge McCroskey Camp."
Council officials interpret McCroskey's deed to mean they can log the land, so long as revenues are spent on anything related to "recreational purposes."
Friends and relatives of McCroskey say he'd be appalled.
"They've basically used it as a cash cow," said Bob McCroskey, a cousin to the late land donor. "They just waited till he died."
Like McCroskey, many donors nationwide have given land to local scout councils, thinking they'd be preserved or used by boys for outdoor activities. While some gave properties with little more than a handshake, others wrote deed restrictions meant to require councils to conserve the land.
But a Hearst Newspapers investigation found that in dozens of cases, scouting councils have logged or sold such donated properties, sometimes going to court to overturn deed restrictions that might otherwise have interfered, records show. Such actions have sparked several lawsuits and public outrage in Washington, New York, Texas, Florida, Ohio and other states.
"This has happened in too many places for it to be a random thing," said Anne Miller, who sued an Arizona scout council to block developers from acquiring land her father donated to the scouts for a camp.
Scouting officials say that as private nonprofits, local councils manage their own lands. Officials say they don't want to log or sell donated properties, but sometimes have no other option.
Donated land may not be properly zoned, they say. It may pose security risks or simply not be suited for camping, they say. Other land gifts that once served well as camps may have become too costly to maintain or have fallen out of use due to encroaching development or scouting demographics shifts, they say.
"Society at the time that many of these donations were made was so different than it is today," said Doug Dillow, North New Jersey Council executive.
But critics say scouting officials too often sell off donated lands when seeking to pay other expenses. That's a slap in the face to donors, they say.
Bequests and clear-cuts
When their local scout council began clear-cutting Camp Lowman near Athens, Ohio, in 2000, 8-year-old Cub Scout Jeb Branner and his father, John, sued.
Businessman Willard Lowman had donated the land in 1948 for a camp. Officials for the Allohak Council planned to spend most of $40,000 in expected logging proceeds for a new dining hall at another camp.
The Branners won an injunction to stop the logging, and after Lowman's son came forward to testify to his late father's wishes, the council agreed to preserve the camp, John Branner said.
"It's a nice camp with a lot of virgin timber that makes for a nice Boy Scouts retreat," said David Lowman, the donor's son. "That's what (my dad) wanted."
The council executive at the time of the controversy did not return phone calls seeking comment.
In Texas, the Three Rivers Council convinced the nonprofit Stark Foundation to waive deed restrictions in 2001 to allow the sale of Camp Bill Stark, a 132-acre pine woodland near Beaumont.
Lutcher Stark had donated the land some 70 years earlier, specifying it be used for a camp. Scouting officials said they couldn't afford to maintain it, and promised to use sale proceeds to improve another camp. But once released from the deed restriction, they sold the land to an investment firm, and most of it was immediately clear-cut.
Foundation Chairman Walter Riedel III, an Eagle Scout, said scout leaders assured foundation officials that part of the woodland would be preserved as a camp.
"Being a scout - I expected them to do the right thing and be honest with us and I'm not real sure that happened," Riedel said.
Former executive Jack Crawford, who no longer works for the scouts, declined comment.
Some critics contend the scouts specifically look for ways to profit off land gifts.
John Shontz, a lawyer in Helena, Mont., said an aging doctor hired him several years ago to help bequeath 1,500 unspoiled acres on the Missouri River to the Montana Council.
But council officials brought in a regional director and a lawyer who refused to agree that the land could only be used for recreation. That nixed the deal.
"It was obvious to both me and my client ... they wanted to turn around and log, develop or sell it to make a huge profit," Shontz said.
Retired scouting executive Norman Stone said the dynamic nature of land requires councils to avoid taking gifts with strings.
"I don't know any organization that will say, 'Restrict me for life on this as a camping property,' because at some point, it may be unsuitable for camping," he said. "You have to be able to divest property that no longer fits your objectives."
'Recreational purposes'
McCroskey was a dedicated outdoorsman of the 1940s and 1950s who donated the land for two state parks, including Mary Minerva McCroskey State Park in Idaho, which he named for his mother.
Next to McCroskey Park, he set aside land for a scout camp, working for years with boys and volunteers to cut trails, install a well water system and build basic shelters.
Few structures have survived the high-impact logging at the camp. In 1974, two years after McCroskey died, the Spokane council sold timber on the camp for $675,000 to the Potlatch Corp., records show. The ensuing clear-cut harvested about 3 million board feet of timber.
"Virgil would be turning over in his grave if he knew about it," said Lee Sahlin, a former scout leader whose wife is related to McCroskey.
The council has logged parts of the camp at least three more times since 1996.
Tim McCandless, the council's current executive, said recent logging has been responsibly done under a long-term management plan. Because it's land-locked with steep terrain, the camp "isn't as desirable for camping" as the council's three other camps, he added.
Any logging revenue goes into an endowment that pays for other camps' upkeep, McCandless said. "So I would argue that Camp McCroskey, indeed, is being used for 'recreational purposes' as the deed states."
About the series
This series investigates the land-use and conservation practices of the Boy Scouts of America, the nation's largest youth organization and among the largest nonprofit landowners in the United States. The staffs of five Hearst Newspapers - The Chronicle, the Seattle Post-Intelligencer, the San Antonio Express-News, the Albany Times-Union and the Houston Chronicle - contributed to this report.
Sunday: Damming the Little Sur - When operators of a Scout camp allegedly dewatered a pristine California river, the Scouts faced sanctions for despoiling a protected fishery. Then the Scouts turned to friendly politicians.
Lots of land, few new camps for scouts
Lewis Kamb, Hearst Newspapers. Lewis Kamb is a reporter for the Seattle Post-Intelligencer. Chronicle staff writer Seth Rosenfeld, San Antonio Express-News reporter Todd Bensman, Albany Times-Union reporter Nadja Drost, Houston Chronicle reporter Lise Olsen and Seattle Post-Intelligencer news researcher Marsha Milroy contributed to this report.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/31/MN8P15G2SF.DTL&type=printable
The last large stand of woods in a Seattle suburb. A scenic canyon just outside of Los Angeles. Rangelands deep in the heart of Texas.
All are set to be felled, filled and bulldozed so that stately homes, a reservoir and perhaps even a hydroelectric plant may one day rise in their place.
Aside from their now unspoiled, ecologically sensitive settings, the lands share a common bond: The Boy Scouts of America sold them for development.
From Arizona to Virginia, New York to Washington, urban sprawl has replaced timberland and green spaces where boys once camped and learned outdoor skills, a Hearst Newspapers investigation has found.
Over the past 20 years, Boy Scout councils across America have reaped tens of millions of dollars from selling camps and other properties the organization had owned for years. Other scout-owned camps and wildlands are now, or soon could be, on the market.
Forestland "will be in the hands of the Boy Scouts for a long time, and then, 'Oh, gee, we can make a lot more money if we sell it and develop it,' " said Brian Boyle, former Washington state public lands commissioner who now leads the Northwest Environmental Forum, which seeks to keep timberlands forested.
"It's ironic. People work hard to save a piece of property for the scouts, and then they turn around 10 or 15 years later and go sell it to developers."
A review of property deeds, court documents, federal tax filings and other records also revealed cases in which local councils sold lands that were bequeathed to the scouts to be used for outdoor recreation.
Meanwhile, scout lands that are home to protected plants and wildlife have been sold for development, despite protests from the public and scouting volunteers. In some cases, scout councils sought to conserve properties only after public controversy or criticism arose about pending land deals.
That happened in 1999, when the Dallas Council sold a 177-acre camp inside the city limits, sparking outrage among local homeowners. Eventually much of the camp was preserved as open space.
"They just wanted to get their money and go on their way," said Michael Jung, an attorney and board member of the Texas Land Conservancy, which helped the homeowners group work a deal to preserve the camp.
Public controversies helped kill potential mega-deals in Florida and Michigan, among several states where recent offers to buy scout lands for development have led to lawsuits and community protests.
Some scouting officials cite financial need as the key reason for such land sales. Encroaching development and high maintenance and operating costs also can spur a need to sell, they said.
Over the years, as membership and demographics shift, scout councils also have been forced to merge and economize, leading officials to consolidate property assets that can cost millions to maintain, yet sometimes are rarely used, they say.
"All camp sales are not negative," said Dan Clifton, executive of the Longhorn Council in Fort Worth, Texas. "At some point, all assets need to be converted and redeployed."
Texas Rangelands
Boy Scout enthusiast Frank Underwood had specific ideas for the use of 1,200 acres of wooded hills near Amon Carter Lake when he sold the land to his local scouting council in 1965. The sprawling ranch northwest of Dallas in Montague County was home to bobcats, wild turkey and other wildlife.
Although the sale - at a price of $56,000 - imposed no restrictions on how the ranch would be used, Underwood thought it would always be a place where boys could learn about nature, the late businessman's son said.
"I would have preferred it stay in Boy Scouts' hands, to protect as many wild areas as we can," said Gregory Underwood, an attorney and former mayor of nearby Bowie, Texas, who remembers camping on the land as a child.
For years, the scouting council kept what was dubbed the Horizon Wilderness Scout Ranch in its unspoiled state. Today it's the Silver Lakes subdivision. In 2002, Northwest Texas Council officials sold the property to Florida developers, Bluegreen Southwest, for $1.1 million. The woods have been cut to accommodate the 1- and 2-acre lots, and homes are under construction. Scout council officials cited financial woes and the availability of other scout camps nearby as factors in the sale of the camp.
"It was a strain on the budget and wasn't being utilized like it should," said executive Guy Wilemon. "The scouts thought it was a wise business decision."
The million-dollar payout for the Northwest Texas Council, which was struggling to stay in the black, is a drop in the bucket compared to other scout land deals - even in Texas.
In 2005, the Longhorn Council in Fort Worth sold a thickly forested chunk of its Sid Richardson Scout Reservation, a 3,500-acre camp fronting Lake Bridgeport near Dallas, for $5.45 million. The scouts were given the property in 1967 by the foundation set up by the camp's namesake, a billionaire oil wildcatter.
Today, the 500-acre live oak forest that spilled along the lake's western shore has been resold and bulldozed into lots for upscale homes.Scouting officials said the scouts didn't use the forest much, and the sale helped build an endowment to fund scout programs. Sid Richardson is long dead, but officials for his foundation say they're satisfied that sale revenues will benefit scouting today more than the land would.
The Longhorn Council also sold its 300-acre Leonard Scout Camp along the Brazos River to developers in 2001 for an estimated $3 million.
Council officials cited encroaching development as the reason for selling land that had been donated decades earlier. But they didn't widely advertise the camp sale, sparking criticism from scout volunteers, who learned about it only after the fact. Some critics now contend council officials should have sought a buyer interested in preserving the land, not developing it.
Scenic canyon
A legal fight erupted in Southern California after the Los Angeles Area Council sold more than 2,500 acres of its Firestone Scout Reservation in 2000 to the City of Industry for $16.5 million.
The city bought the land - an "ecologically significant area" near Diamond Bar - with plans to build a reservoir and hydroelectric plant. The scout council used money from the sale to offset upkeep costs. Other environmental groups said they made higher offers, but the scouts chose to sell to the city, in part because that offer allowed them to keep 980 acres for scouting. The Sierra Club and others unsuccessfully sued to block the deal.
Carlyle Hall, a lawyer who filed the lawsuit, said the city's planned "reservoir would, of course, flood and kill everything in the canyon."
"Everybody was quite disappointed that the scouts were willing to sell it for what would be the utter destruction of whatever environmental values were there," Hall added.
The reservoir hasn't been built, and the camp is still in business.
Elsewhere, partnerships with conservation groups have led to the preservation of some scout camps. In Pennsylvania, the Natural Lands Trust has helped broker deals to preserve more than 5,200 acres at two camps. Other government entities and preservationists have helped to buy and save camp lands elsewhere.
Still, scouting councils say the constant creep of development makes preserving formerly remote camps difficult.
"When you're on a camp-out and can hear the TV blasting and smell the steak barbecuing from the house just beyond the trees, that kind of kills the whole outdoor experience," said Rich Szymanski, properties director for the Cascade Pacific Council in Portland, Ore.
Often, the only financially viable solution, scouting officials say, is to sell such lands to builders that typically have more money than conservation groups.
A task force for the Portland council recently recommended selling its popular Scouters' Mountain camp for no less than $30 million, a chunk of which would be used to help replace $600,000 in annual funding the council lost after scouting organizations nationwide banned gays and atheists. A tentative deal was struck in 2007 with a developer who planned to build up to 500 homes on part of the 200-acre camp, but the deal fell through when the economy soured, officials said.
Suburban Seattle
The sagging economy has helped delay at least one other project set for scout land, giving opponents time to ready a lawsuit.
In suburban Bothell, Wash., developer CamWest plans to build luxury homes on woodlands primarily owned by the Chief Seattle Council. But in recent months, the project seems stalled. That suits neighbor Sandra Clement just fine.
Clement, who lives at the woods' edge, has spearheaded the grassroots, Help Our Woods campaign to fight the project.
"I always thought the Boy Scouts were about trying to teach young boys about nature, how to conserve it and make it better," Clement said. "Not logging it and building over it."
Her group contends the land contains old-growth trees and provides habitat to coyotes, owls, eagles and other wildlife. They have gathered signatures, hired a lawyer and count among volunteers a wildlife biologist, who has observed "protected species" on the site, Clement said.
Another biologist, hired by the city, also found discrepancies in the developer's wildlife report, saying its assertion that "wildlife use of the site is minimal" just isn't correct.
Officials for the scouting council, which received the land from local entrepreneur Ellen Fortin in the early 1980s, say the project plans are up to the developers. But the council's agreement to sell the woodland was done to live up to the donor's intent, they said.
"The land was donated to us for the express purpose of selling it," said Alicia Lifrak, the council's chief operating officer.
Inside: Many donors gave the Boy Scouts land on the condition that it be preserved or used by boys for outdoor activities. In dozens of cases, the land was sold for development. A9
Boy Scouts of America
Headquarters: Irving, Texas
Founded: Feb. 8, 1910
Founders: William D. Boyce, Ernest Thomas Seton, Daniel Carter Beard
Total membership since founding: 112 million
Current (2007) youth members: 2.855 million
Adults: 1.138 million
Number of troops or other units: 121,034
Motto: "Be Prepared"
Source: www.scouting.org
Los Angeles Times
Why the Santa Barbara oil deal collapsed
A lack of disclosure by the company and environmentalists helped lead a state panel to kill the offshore drilling deal...Editorial
http://www.latimes.com/news/science/environment/la-ed-drill31-2009jan31,0,816572,print.story
There's no place in the country, or possibly the world, where offshore oil drilling is as sticky a subject (literally and figuratively) as Santa Barbara. Forty years ago to the day last Wednesday, a gigantic spill from an ocean platform wrecked beaches, massacred sea life and helped transform the national environmental movement from a tweedy nature-appreciation society into a political force. So when many of Santa Barbara's most determined anti-drilling activists teamed up to back a deal that would allow an oil company to drill under state waters off the city's coast, it was a jaw-dropping moment.
Just as surprising, given the deal's powerful backing, was its collapse Thursday, when the State Lands Commission rejected it on a 2-1 vote. The failure shows that, despite high oil prices that turned "Drill, baby, drill" into a Republican mantra last year, it remains phenomenally difficult to expand drilling in California.
Is that a bad thing? Yes and no. No new drilling in state waters has been approved since 1969, under a very sound philosophy that the things that would be harmed by drilling -- the marine life and beaches destroyed by spills -- are more valuable than the oil that would be extracted. Yet it's possible to craft compromises that compensate for environmental damage and provide economic benefits. The Santa Barbara deal came within a hairbreadth of achieving that but was rightly rejected because of bad tactics and a lack of enforcement mechanisms.
Under the publicly disclosed terms of the deal, Plains Exploration & Production Co., which owns a platform in federal waters just beyond the three-mile limit controlled by the state, would have drilled several wells from the platform into oil reserves on state property. In return, it would have closed that platform, three others it operates off Santa Barbara and two onshore processing facilities by 2022 and donated 4,000 acres of land for preservation. Over the life of the project, the state would have collected up to $5 billion in tax revenues.
Bizarrely, the company and the environmental groups that were parties to the bargain kept the rest of its terms confidential. It is not unheard of for environmentalists to sell out the public interest for political or financial reasons, and no elected official should ever approve a secret deal that affects public resources. The company finally announced that it would disclose the full agreement during Thursday's Lands Commission hearing, but that was months too late.
What's more, there was no way to guarantee that the drilling platforms would be closed in 2022 as promised. The platforms are in federal waters, and the U.S. government has a strong interest in ensuring that drilling continues. The state has no power to force the feds to give up their oil leases; the federal government could force Plains Exploration to keep drilling. Even the land donation was in question. Company lawyers told Lands Commission staff that some of the parcels had title problems that made their transfer uncertain.
With the collapse of the deal, the company's platforms and others off Santa Barbara will keep running until the cost of extracting oil is greater than the oil is worth, which could take decades. We'd love to see a transparent plan with enforceable deadlines to shut them down sooner.
New York Times
‘No Holds Barred’ in California Climate Negotiations?...Felicity Barringer, Green Inc.
http://greeninc.blogs.nytimes.com/2009/01/30/no-holds-barred-in-california-climate-negotiations/?scp=7&sq=epa&st=cse
Lisa Jackson, the new administrator of the federal Environmental Protection Agency, told a New York audience Friday that a recession was no excuse for cutting back on environmental protections.
Across the country in California, environmental advocates hoped that their governor was listening.
Arnold Schwarzenegger may have burnished his reputation as one of the country’s greenest governors with his advocacy of stringent targets for cuts in greenhouse gases, but he is also trying to break an impasse and broker a solution to the $42 billion deficit in the state budget for this fiscal year and next.
Republicans in Sacramento have spiced the difficult negotiations with demands for curbs on the people and programs that handle environmental protections.
In particular, they want to ensure that the state’s air regulators –- the ones formulating the curbs on greenhouse-gas emissions needed to meet the governor’s targets –- must submit any new rule to the state business, transportation and housing agency for economic analysis and then answer questions raised by that analysis.
This and other demands, like softening requirements to put filters on diesel engines to reduce fine-particle pollution, were laid out earlier this week in an article in The Sacramento Bee.
The prospect of having the economic and technical specialists of the California Air Resources Board second-guessed by the economists at the business, transportation and housing agency conjures up nightmare scenarios in the minds of environmentalists.
The worst, which few think is possible, is that the federal E.P.A. could grant California its waiver, allowing curbs on the greenhouse-gas emissions of cars and trucks. Then, with the long-delayed measure set to take effect, the business, transportation and housing economists would claim the retroactive right to analyze the rules, giving the auto manufacturers another forum in which to fight.
More likely is that the rules that the air regulators have to develop going forward — namely, apportioning out the right to emit greenhouse gases among various industries, and then slowly lowering the emissions ceiling on all industries — will have to be justified not just within the air agency, but to outside economists who may or may not know about the technical details of controlling air pollution.
“So,” said Tina Andolina, legislative director of the Planning and Conservation League, “there’s another agency that has no air quality expertise looking over your shoulder and delaying every needed air-quality and global-warming measure.”
The Chamber of Commerce in Sacramento was not able to make a representative available for comment late Friday, but its opponents believe it is pushing for the new controls on environmental regulators.
And the governor? A press spokesman, Aaron McLear, said, “I can tell you that provision was not in our proposal. But as far as what’s being negotiated, it’s no holds barred.”
CNN Money
Three regional banks fail
FDIC says local banks in Maryland, Florida and Utah were closed by financial regulators Friday...Ben Rooney
http://money.cnn.com/2009/01/30/news/economy/failed_banks/
index.htm?postversion=2009013019
NEW YORK (CNNMoney.com) -- Three regional banks were closed Friday, bringing the total number of failed banks this month to six, as the financial crisis continues to take a toll on small banks nationwide.
Suburban Federal Savings Bank in Crofton, Md., was closed by the Office of Thrift Supervision. The FDIC said the failed bank's seven offices will reopen on Saturday as branches of Tappahannock, Va.-based Bank of Essex.
The FDIC said it entered a "loss-share" agreement with Bank of Essex, whereby the purchasing bank will share some of the losses associated with certain of the failed bank's "asset pools." The arrangement is intended to maximize returns on the assets by keeping them in the private sector, according to the FDIC.
In Florida, the Office of the Comptroller of the Currency shuttered the four locations of Ocala National Bank and entered into a purchase agreement with CenterState Bank in Winter Haven, Fla.
Ocala National Bank had total assets of $223.5 million and total deposits of $205.2 million, while Suburban Federal had total assets of approximately $360 million and total deposits of $302 million.
Taken together, the two failures will cost the FDIC an estimated $225 million.
Separately, the FDIC said it was unable to find another financial institution to take over the banking operations of Salt Lake City-based MagnetBank, which regulators also closed on Friday. As a result, it expects to mail checks to retail depositors for their insured funds Monday morning.
MagnetBank, which is estimated to have no uninsured deposits, had total assets of $292.9 million and total deposits of $282.8 million as of last month, according to the FDIC. It was the first bank to fail in Utah since 2004.
The FDIC said it conducted "an extensive marketing process" to seek a buyer for MagnetBank's assets, but it found no takers.
David Barr, an FDIC spokesman, said MagnetBank had only one branch and did not have the "franchise value" or the "core assets" that would have made it attractive to other banks.
So far this year, bank failures are averaging more than one per week. Last year, 25 banks were closed nationwide, which was the highest annual total since 1993, when 42 banks went under.
Economists expect the number of failed banks to continue rising this year as the financial crisis plays out and the economic outlook remains dark.