We have prior claim on New Melones...Editorial
If you want to make the biggest splash, you do a cannonball. Devin Nunes has done a figurative cannonball into New Melones Reservoir. The Tulare Republican has written to President Barack Obama and Gov. Schwarzenegger asking that water from New Melones be sent to farmers in the south San Joaquin Valley. That water, he reasoned, is only being used to help save fish while California is "experiencing unprecedented water supply shortages."
Those shortages are real.
For the first time since the federal Central Valley Project and State Water Project came online in the 1950s and '60s, there is likely to be no water for many Southern California farmers. Up to 500,000 acres could go without irrigation; 40,000 jobs could be lost; farmers could go bankrupt; trees and vines could die.
Nunes' letter also noted that many Bay Area cities depend on federal water and that jobs created by the president's stimulus package (which he didn't care about enough to vote for) could be jeopardized.
"Current need demands that this water be made available to farmers and cities outside the historic place of use," he wrote.
Not so fast.
That "historic place of use" is right here. Much of the water in New Melones is only passing through. It belongs to farmers in the Oakdale and South San Joaquin irrigation districts and will be used to irrigate their orchards, vineyards and fields. Those Oakdale, Escalon, Manteca and Ripon farmers have dibs. Which is why the OID and SSJID have responded with a letter saying politely, "No."
Their letter points out that sending water from New Melones to others agencies would be a legal nightmare. The Bureau of Reclamation, which operates New Melones, already supplies more than 200 agencies, cities and irrigation districts each year. Many more, such as the East Stockton Water District, get water when available. Those supplemental users do not expect any this year, but before they would allow water to be sent south, they would insist on getting at least some.
Meanwhile, on Tuesday, the state Department of Water Resources and the Bureau of Reclamation appealed to be allowed to hold back more water now so it can be released later for environmental purposes.
As we said, it's very complex.
But Nunes doesn't really want a complex solution. He is after something simpler. He wants the pumps turned back on. In 2007, a federal judge shut down the enormous delta pumps to protect endangered fish. Nunes wants a way around that order. And there might be a path.
Rep. Dennis Cardoza's district stretches from the bone-dry Westlands Water District to Stockton. If Nunes' plan were adopted, many of those affected would be Cardoza's constituents. So, instead of dismissing the concept of sharing federal water, Cardoza is looking for solutions.
"One of the things we made clear to everyone," said Cardoza's policy adviser DeeDee D'Adamo, "is that we're in a drought and we need to be creative. But we have to be careful not to rob one area to provide water for another area. We're all suffering."
D'Adamo believes compromise is possible and discussions are ongoing.
But here's a consideration: If water is released now for drought relief, then it won't be available later to help fish. Would other reservoirs, such as Don Pedro on the Tuolumne and McClure on the Merced, be forced to release more to help those endangered fish?
Such a prospect doesn't seem likely enough to worry about. But two weeks ago, neither did a plan to drain New Melones to help farmers 200 miles away.
County Lawsuit Adds to Motor Sports Woes...John Lindt
Tulare County - A lawsuit Tulare County filed Jan. 28 challenging the approval of the Tulare Motor Sports Complex is adding a new hurdle for the developer and city.
Surprised City Manager Darrel Pyle huddled with county officials shortly after the suit was filed and said later they had assured him it would be withdrawn in favor of negotiation about a possible revenue sharing agreement between the city and county.
But on Feb. 12 Pyle told his staff in a memo: “It is apparent that the Board of Supervisors has chosen a path of legal actions.”
The Council of Cities, headed by Tulare Vice Mayor Phil Vandegrift, and the county have been in what appeared to be amicable discussions to develop a revenue sharing policy.
“After spending nearly two years in honest efforts to work with the county, I am truly disappointed by their actions,” Pyle said.
The suit is the latest in mounting roadblocks for Fresno developer Bud Long and his partners, who are attempting to finalize the 711-acre project. The Sierra Club also has filed a suit alleging the project's environmental impact report (EIR) and Long will have to ante up money for a bond because of the hold harmless clause the city has with the developer.
City officials report Long's account with the city to cover the cost of the EIR is fully funded and includes an additional $11,000. The City Council won't approve a development agreement with Long, however, until all the money the city is owed for the study is in the general fund. Critics worry the city will get burned.
Long faces other bigger problem, particularly with the International Agri-Center, which ended its escrow agreement to sell the developers 331 acres when he Long refused to put money down on the purchase. Agri-Center General Manager Jerry Sinift told the Voice that the news did not amount to a deal killer because the farm show board – at least by a slim majority – wants the annexation and development project to go forward – a development that would mean plenty of new hotels, restaurants and businesses for visitors attending Agri-Center events, including World Ag Expo.
Adding more visitor facilities could boost the use of the Agri-Center. That has been the argument proponents of the project have put forward to farmers.
But there is a problem. Long needs access to do survey work to finalize parcel maps on several other properties next to the Agri-Center's land but, as of now, the Agri-Center appears hesitant to allow that to go forward.
Next Field of Battle
The mixed signals from the Agri-Center may embolden efforts to defeat the project on the next battlefield – the March 2 meeting of the Local Agency Formation Commission (LAFCo), which must approve annexation for the project to move forward.
Memos from LAFCo staff to other agencies indicate the five-member organization might consider a new policy that would require the developer “to secure funding” for the project before an annexation might be approved. In addition, there is concern that the county wants to use LAFCo “to control growth.”
The big issue for Long has been that without all approvals in place, including annexation approval, no funding is assured.
City officials claim the county is holding up the motor sports approval as a bargaining chip to get the city and the entire Council of Cities to approve a particular revenue sharing plan. That plan is in anticipation of a new county general that requires cooperation of all the cities to collect impact fees the county wants.
A draft memorandum of understanding indicates some willingness to agree to a 10 percent bed tax sharing and 10 percent sales tax sharing with the county on new annexations outside the city sphere of influence. The county currently gets 5 percent.
Other cities say this deal is not final. Visalia officials' point out the county makes out famously on property tax increases when annexations occur with the cost of servicing those lands transferred to the city. “We do all the heavy lifting,” one Visalia council member says.
Pyle says the county apparently wants the city of Tulare to pressure all the cities to approve this 10 percent plan. But the problem is only Tulare stands to benefit directly from this proposed sales and bed tax annexation policy. For the other cities there is simply no urgency in setting up such an agreement.
No other city is planning an annexation except Visalia and that is for new high school. That leaves Tulare hanging out to dry and its officials asking why in a time of 15 percent unemployment the county is doing its best to scare away any chance this deal will succeed.
For Long, there is the additional urgency that those other escrows will also end if he doesn't buy the land by the end of March. LAFCO needs two meetings in March to make that happen. It isn't clear that the county – which staffs the agency – will go along.
Tulare city officials say the county is also to wanting to hold up all deals affecting Tulare right now, including the COS annexation.
The county's 18-page lawsuit calls for “a restraining order” on work being done on the project, which the county claims would adversely affect the county and its citizens and would do “irreparable harm.” Like the Sierra Club, the county suit claims the project will, among other negative impacts, affect air, water, wildlife corridors, add greenhouse gases, impact traffic, make noise, cause odors and affect agricultural lands.
The lawsuit doesn't mention any positives that proponents have advanced, including the likelihood that the property tax increase to the county itself would be huge or the thousands of jobs that have been projected in several studies.
Despite the rhetoric, there is every indication that a final revenue sharing agreement will make the county feel a lot better about the project and the suit would be quickly withdrawn if there were an acceptable agreement.
But if LAFCO delays or turns down the city's request to move forward or the court orders an injunction, there won't be any revenue to share. If the Agri-Center doesn't re-open the escrow there could be an argument that the annexation may be premature, ending any chance at least for now that the Agri-Center will get the hotels and other amenities it wants if the annexation goes forward.
The city has responded to all these legal moves by calling for a special meeting of the new Council of Cities that includes all eight incorporated communities for Tuesday to discuss “anticipated litigation.”
Developer pulls Wallace plan...The Record
SAN ANDREAS - The developer of the proposed 124-home second unit of Wallace Lake Estates in Wallace on Tuesday withdrew his application in the face of county government concerns over loss of California tiger salamander habitat and the water supply for the project.
The Calaveras County Board of Supervisors voted unanimously to allow Pinnacle Land Ventures LLC to withdraw the application without prejudice.
That means the company can submit a similar application in the future and begin the process over.
At its Jan. 27 meeting, supervisors narrowly voted to reject the environmental documents for the project and ordered the developer to do a full environmental impact study. Pinnacle Land Ventures had until Feb. 5 to say if it would agree. But the company ultimately declined, and Les Hock, a spokesman for the firm, asked to be allowed to withdraw the application.
Calaveras officials relocate meeting...The Record
SAN ANDREAS - The location of today's Calaveras County Planning Commission hearing on the Trinitas golf resort development has been moved to the San Andreas Town Hall, 24 Church Hill Road, San Andreas.
Planning Department officials announced the change Wednesday in anticipation of a larger-than-usual turnout because of widespread interest in the hearing.
The Planning Commission meeting is scheduled to begin at 9 a.m. today with the Trinitas hearing to begin at 10 a.m.
The Trinitas course has generated controversy since construction began in 2001 while the property's owner was still receiving a tax break in return for supposedly keeping the land in agricultural production. The Planning Commission must decide whether to approve a final environmental impact report that addresses how to mitigate for environmental damage caused by the construction.
Normally, environmental impact reports are done before major projects are built. Some Calaveras County groups, including the Deputy Sheriff's Association, are eager to see plans for the resort's lodge, clubhouse and luxury homes approved in hopes it will boost the county's economy and tax revenues.
San Francisco Chronicle
Smallest fall run of chinook salmon reported...Jane Kay, Chronicle Environment Writer
The smallest number of Pacific Ocean salmon ever recorded swam back to the Sacramento River via San Francisco Bay last fall, the latest evidence of the decline of the storied fish along the West Coast, officials said Wednesday.
The Pacific Fishery Management Council, a federal body that regulates commercial and sport fishing, estimated that only 66,286 adult salmon returned to the Sacramento River to spawn. Six years ago, the peak return was 13 times higher.
In 2007, only 87,881 of the fish returned to spawn in the river, falling far short of the agency's goal of 122,000 to 180,000 fish.
The latest count comes as officials consider imposing fishing restrictions off California's coast again this summer.
Chinook - also known as king salmon - are the prized fish of Northern California streams, once proliferating in four genetically distinct runs, or races.
For centuries, they have fought their way up the Sacramento and San Joaquin rivers and their tributaries to bear young, which hatch in the rivers, swim through the bay and live in the ocean until they return three years later to spawn and die in their natal streams.
The fish have supported an economy worth hundreds of millions of dollars and supplied restaurants and retailers with a local source of heart-healthy protein famous for its rich, buttery flavor.
The Sacramento River fall run, the bread-and-butter chinook run, is the one facing collapse, although Lagunitas Creek in Marin County this year had its smallest run of coho salmon ever recorded.
Scientists believe warmer ocean conditions in 2005 and 2006 led to a lean food supply as young salmon were entering the ocean. That played a part in the low spawning returns in 2007 and 2008.
In addition, in 2004 and 2005, the years the chinook were born and traveled to the ocean, the federal Central Valley Project and the State Water Project exported record amounts of Sacramento-San Joaquin River Delta water to urban and agricultural customers throughout the state, documents show.
Federal researchers also blame 50 years of water management in California for the decline of the fish. The state and federal water projects constructed dams and conveyance systems that separated the fish from their habitats. Pumps, canals and hatcheries built to make up for lost water also depleted once-diverse runs, at one time the pride of the state.
Next week, the management council, which is made up of representatives of states and tribes as well as government agencies and fishing groups, is expected to release numbers estimating the chinook salmon available in the ocean, agency spokeswoman Jennifer Guilden said Wednesday.
Based on stock assessments from the National Marine Fisheries Service and other federal agencies, the management council then will set quotas for the fishing season, which typically begins in May.
Last year, the low estimates resulted in a ban on commercial fishing off California and Oregon, the first time all seasons were closed in California history. Similar restrictions are expected this year, according to officials who have seen the stock assessments.
"Almost for certain there will be no fishing this year," said Zeke Grader, executive director of the Pacific Federation of Fishermen's Associations, which represents commercial fishermen. The industry has received some financial aid, which Grader says may have to carry over to this season as well.
His group was lead plaintiff in a 2004 lawsuit asking the federal government to deem the winter and spring runs of salmon in jeopardy of extinction. The fish are listed under the federal Endangered Species Act.
The system in the Klamath and Trinity rivers had 31,000 returning spawners, a better return than in the Central Valley, but still short of its management goal of 40,700 fish, according to the Pacific Fishery Management Council.
According to the National Oceanic and Atmospheric Administration's Southwest Fisheries Science Center in Santa Cruz, the fall run appears to have suffered from "poor ocean conditions when the juveniles left the fresh water to enter the ocean," said Churchill Grimes, fishery biologist and a leader of the group preparing a paper on causes of the decline.
But the ultimate cause of the decline is "sort of by 1,000 cuts" related to habitat destruction of the delta, once 1,500 square kilometers of rearing habitat, he said.
"It was a huge marsh, habitat for all of the runs. Now it's been diked, levied and rip-rapped until it's not more than a big ditch," Grimes said. Dams, pumping water by the state and federal water projects and the operation of hatcheries all contribute to the problem, he said.
Hot and gone, Wal-Mart signs prompt NRC action...CHUCK BARTELS, AP Business Writer
Federal regulators have instructed dozens of companies to count their exit signs that use a low-level radioactive compound and report any that are missing, a directive issued after Wal-Mart Stores Inc. said it could not find 15,000 of the signs.
The world's largest retailer said Tuesday it has checked all of its U.S. stores and removed any glow-in-the-dark signs that use tritium, a hydrogen isotope that, when used in the signs, has a radioactive strength similar to that of a smoke alarm.
The missing 15,000 signs were purchased by Wal-Mart between 2000 and 2007, a period in which Wal-Mart added or remodeled thousands of its domestic Wal-Mart, Sam's Club and Neighborhood Market stores. The Nuclear Regulatory Commission said Wal-Mart bought 70,000 of the signs during that time.
The NRC has not told Wal-Mart or other companies to stop using the signs.
The federal agency said the signs are "inherently safe" and don't require a special license or special worker training to handle them. But improper disposal could lead to an expensive cleanup.
Wal-Mart spokeswoman Daphne Moore said the signs were used in about 4,500 Wal-Mart facilities in the U.S. and Puerto Rico. The Bentonville-based company began an inventory of the signs in 2006 and in 2007 decided to expand the search to all its stores, Moore said.
"We assembled a staff, that included contractors, and went to each store and club in the U.S. and Puerto Rico," Moore said. "The program was a complete inventory and removal and replacement."
The team talked to staff, reviewed documents and signs on hand, she said, adding that the same team removed the signs. She said the signs were disposed of according to proper procedures.
In a Jan. 9 news release, the Nuclear Regulatory Commission said it had asked 61 entities, as varied as the Church of Jesus Christ of Latter Day Saints in Salt Lake City to the Outrigger Hotel in Honolulu, to inventory their signs and report any that could not be accounted for. The agency asked businesses and organizations with 500 or more of the signs to report in writing to the NRC on the status of the signs.
Wal-Mart said it has replaced the signs with other non-radioactive notices that can be seen in the dark.
"Wal-Mart's inability to account for all the tritium exit signs the company purchased demonstrates that organizations may not be fully aware of the regulatory requirements for owning these signs," said George Pangburn, NRC deputy director for Federal and State Materials and Environmental Management Programs.
He said organizations have to account for the number of tritium signs they have and they are responsible for disposing of the signs properly when necessary to replace them.
"Tritium exit signs pose little or no threat to public health and safety and do not constitute a security risk," the NRC said in the news release. "However, the NRC requires proper record keeping and disposal of all radioactive materials. Proper handling and record keeping are important because a damaged or broken sign could cause minor radioactive contamination of the immediate vicinity, requiring a potentially expensive clean up."
Included in the list of groups named by the NRC are retailers, such as Home Depot, and federal operations, such as the General Services Administration and the Smithsonian Institution. Also included are other businesses, state government entities, universities and school districts.
The NRC allowed 60 days for the organizations to respond. The agency wants to know how an organization complies with regulations for handling the signs and wants an explanation regarding any discrepancies in the records over the number of signs a company has. The NRC developed its list of entities from a tracking system that includes manufacturer sales data.
"They are also subject to NRC or state inspection and enforcement action (including fines) for violating ... requirements," the NRC said.
California sees hope in mortgage rescue plan...Carolyn Said
President Obama's ambitious moves to halt housing's downward spiral have special significance in California, the epicenter of boom-and-bust real estate.
"The real estate problem in California is obviously much deeper, worse and widespread than in the nation," said Sung Won Sohn, economics professor at Cal State Channel Islands. "Any support from the government to help housing in general should help California disproportionately."
Two facets of the three-fold plan - loan modifications for struggling homeowners and more capital for Fannie Mae and Freddie Mac to help reduce mortgage rates - are likely to prove a much-needed boost for California and the Bay Area, experts said.
However, a third aspect - access to low-cost refinancing for people whose homes are dwindling in value - could be off-limits to many homeowners in California and especially the Bay Area, because it applies only to mortgages of less than $417,000.
"These refinances are all for mortgages that were originally issued by Fannie Mae and Freddie Mac," said John Quigley, professor of economics, public policy and business at UC Berkeley. "The California housing market had higher prices and was more overheated, so a much smaller fraction of mortgages in California were through Fannie and Freddie and under the conforming limits." Until a year ago, conforming mortgages were those less than $417,000. "That means homeowners in California will not be advantaged by this program as much as those in lower-cost areas."
That disparity is even more pronounced in the Bay Area. In 2005 and 2006 - at the height of the housing boom - about 60 percent of all purchase loans in the nine-county region were nonconforming jumbo loans, according to MDA DataQuick, a real estate research firm in San Diego. In the same years, about a third of all purchase loans in California were jumbos, it said.
None of those jumbo loans qualify for the refinancing designed to help "responsible homeowners" (meaning those who put money down and have made payments on time) reduce their monthly payments, even if they have little or no equity in their homes.
About half of all people who bought homes in the Bay Area in 2005 and 2006 are now underwater - owing more than their homes are worth - according to real estate service Zillow.com. Such homeowners cannot refinance their loans under current guidelines, but the Obama plan would allow even those who owe 5 percent more than their home's value to refinance - but only if their original loan was less than $417,000.
"They should expand (the refi program) to the broader market (of larger loans)," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. "It would be foolish not to. This helps California a lot less than the rest of the country. California should demand refinances for our higher house prices."
Rosen and other experts said the plan's other components of modifying mortgages for struggling homeowners and providing capital infusions to help lower mortgage rates should clearly benefit the Golden State.
"Any plan that helps stabilize housing prices and reduce foreclosures will benefit California disproportionately because prices in California have gone down more than any other state and the foreclosure rate is particularly high in California," said Jed Kolko, a research fellow at the Public Policy Institute of California in San Francisco
California prices are down 25 percent since the market's peak a couple of years ago, Kolko said. That figure varies widely around the state, ranging from more than 50 percent depreciation in parts of the Central Valley to less than 10 percent in Bay Area regions such as San Francisco and Marin County.
Among the plan's most controversial aspects is Obama's call to reform bankruptcy law so judges can reduce mortgage principal to match a home's current value. That move would require congressional approval and is fiercely opposed by bankers, who say it would drive up rates for everybody, because mortgages would become "unsecured debt" like credit cards.
But for homeowners who owe more than their homes are worth, it looks like an escape hatch.
East Oakland resident Nadine Scott, 47, was pleased to hear about that provision. Scott said she fell into foreclosure on her home, and subsequently into bankruptcy, after a disability forced her to retire early from her job with U.S. Postal Service.
She owes $535,000 on a home that is now worth about $180,000, and her monthly payments are more than $4,000, she said.
"That really gives people like me hope," she said.
Nationwide, about one in seven homeowners owe more than their home is worth. The number is much higher here, according to DataQuick, with 26 percent of Californians and 24 percent of Bay Area homeowners underwater.
"The folks out here have seen 52 percent-plus declines in values," said Thomas LaFleur, executive vice president at Pacific Community Services, which has offices in Pittsburg and Fairfield to counsel troubled homeowners. "If this (Obama) program doesn't enable them to restructure and have substantial principal reduction, I think it won't have the effect here that it may in other areas."
Bankruptcy is such a drastic step that experts said they don't expect homeowners to pursue it cavalierly.
"People do everything they can to avoid bankruptcy," Rosen said. "No matter what some lenders say, people are not going to file for bankruptcy just to take advantage of this. You lose your credit; it's an awful experience."
A total of 236,231 homes statewide, or 2.8 percent of all California's housing stock, were repossessed by lenders last year, according to DataQuick. In the nine-county Bay Area, lenders took back 35,709 homes, or 2 percent of all homes and condos, it said.
Stopping the foreclosure hemorrhaging - and the associated plunge in value as lenders unload homes at fire-sale prices - is key to Obama's plan.
Details to come
Full details of the $75 billion loan modification plan won't be available for two more weeks. But based on the initial description, consumer advocates said they are optimistic that it will help, although it's too soon to say whether it will actually reach all 4 million households Obama promised.
"For the first time, the modification piece will provide a consistent set of standards with some transparency and some very strong incentives to lead to long-term, affordable loan modifications," said Paul Leonard, director of the California office in Oakland for the Center for Responsible Lending. However, he added, "I don't think anybody is pretending this is going to prevent all foreclosures. Their goal is 3 million to 4 million loan modifications, compared to the Credit Suisse estimate that there will be 8 million foreclosures by 2012."
Contra Costa Times
Merced reflects Obama's challenge...BLOOMBERG NEWS
It has taken Susan Erb just three years to see the value of her Merced home plunge by more than half to $350,000. Next month, her mortgage payment jumps 20 percent to $3,321 and she knows she can't afford it. Her bank won't rework the loan unless she stops paying altogether.
"Now I know how people feel when I go knocking on their door," said Erb, 53, a real estate agent who works for a company that notifies residents in foreclosed properties that they must vacate. "I'm in their shoes."
Merced, the epicenter of the U.S. foreclosure crisis, demonstrates the steep challenges President Barack Obama will face in trying to stem defaults. One in 59 housing units in the Merced metropolitan area received a foreclosure filing in January, the highest rate in the U.S., according to RealtyTrac Inc., an Irvine-based seller of default data. For- sale signs are everywhere and a building boom fueled by subprime mortgages has been brought to a standstill. Just 18 construction permits were issued last year. In 2005, there were 1,427.
"We're ground zero," said Merced Mayor Ellie Wooten, 75. The city, population 81,000, had an unemployment rate of 15.5 percent in December, "and it's going to get worse," she said.
$75 Billion Plan
Obama unveiled a series of measures in Phoenix on Wednesday to reduce record home foreclosures and halt the erosion of property values. The administration is seeking to help as many as 9 million people restructure or refinance their mortgages.
The program will use $75 billion to bring down interest rates and encourage loan modifications, the Treasury Department said in a statement. The department also said it would double the amount of stock purchases of Fannie Mae and Freddie Mac to as much as $200 billion of each company.
The measures come amid a worsening economy and plunging home values that have put 17.6 percent of mortgage holders underwater, or owing more than their property is worth, Seattle-based Zillow.com said Feb. 3.
The Obama plan probably can't help Merced residents Bountay and Khamtanh Rattanavongsa, who walked away from their adjustable-rate home loan last year and were foreclosed upon after monthly payments jumped to $3,500 from $1,800.
They're now renting a Bellevue Ranch house constructed by Kimball Hill Homes, the Rolling Meadows, Illinois-based homebuilder that filed for Chapter 11 bankruptcy protection in December. Across the street, wooden frames of partially built two-story homes, with no windows or doors, are clustered in a former cattle pasture.
Khamtanh, 63, a retired school aide, came to the U.S. from Laos in 1978 with her husband, 60, who works as a custodian. Their son lives with them and helps pay the $1,500 rent.
"I loved my house, I never thought I'd lose it," Rattanavongsa said. "Now I have no credit. I've got nothing."
Modifying loans and reducing principal may not be enough to keep people in their homes and fix the housing market, said Ethan Harris, co-head of U.S. economics research for Barclays Capital Inc. in New York, in an interview.
"There's a chunk of these loans that are unsustainable, where people have gotten divorced or lost their jobs, or the loans were way beyond the borrowers' capability to pay in the first place," said Harris. "A lot of the loans were not designed to be repaid, they were designed to be refinanced. That works only when housing prices are going up."
The "sheer volume of bad loans" is also a challenge, said Harris. "Getting the process going is very tough to do with such volume, even when it's in everybody's best interests."
U.S. homeowners lost an estimated $3.3 trillion in house value last year, real estate valuation service Zillow said. In California, the state with the most foreclosure filings, the share of underwater owners will rise to a third of all mortgage holders by the end of the year, according to data provider First American LoanPerformance of Santa Ana.
Merced, located about 110 miles southeast of San Francisco in California's agricultural Central Valley, became a housing boom town in the early part of the decade as buyers with subprime loans sought affordable property within commuting distance of Bay Area job centers, said Jeff Michael of the University of the Pacific's Eberhardt School of Business in Stockton.
Median home prices in Merced rose from $150,000 in January 2002 to a peak $382,750 in December 2005, according to MDA DataQuick, a San Diego-based property research firm. In December 2008, the median stood at $120,500, down 52 percent from a year earlier, as four out of five resales involved properties that had been foreclosed on in the prior 12 months.
"There were a lot of young families and first-time buyers with not a particularly high income, so it was perfect ground for subprime lending," said Michael, who directs the school's business forecasting center. "You had people streaming in from the Bay Area. This was their chance to get in."
Many of the people coming to town were immigrants priced out of other parts of California. About 17 percent of Merced's population is of Laotian descent and 52 percent is Hispanic, city spokesman Mike Conway said.
Homebuilders constructed subdivisions to the north, west and east of the downtown, and today "no area is untouched" by the foreclosure crisis, said Brad Grant, city finance director.
Merced's general fund revenue, mostly from property and sales taxes, will drop 12 percent to $38.6 million for the fiscal year ending June 30, and will probably decline a further 7 percent next year, Grant said. The city won't fill 35 jobs and department managers are to cut budgets by 12 percent.
Bankrupt retailers including Mervyn's LLC, Circuit City Stores Inc. and Linens 'n Things Inc. have cut almost 200 jobs in town, and Quebecor Inc. may close its Merced printing plant and fire about 100 workers, Wooten said.
Rina Serrano, 35, an after-school program supervisor for the Merced County Office of Education, may lose her job next year due to budget cuts. The value of her house, built by Calabasas, California-based Ryland Group Inc. in the Bellevue Ranch development, fell by at least a third since she purchased it in 2007. Her husband's cabinetmaking business is down by half.
"Nobody has given us any options, but my feeling is there should be some assistance," said Serrano, 35, a mother of four. The couple took out a 30-year fixed loan and aren't behind on payments but they are underwater by about $70,000.
Speculators helped drive up Merced prices during the boom, said Greg Parle, co-owner of the Branding Iron steak house on Main Street, not far from a historic courthouse built in 1875, three years after the city was established.
"We had a tremendous wave of Bay Area people coming through, and they were rolling houses," Parle said. "You couldn't touch a two-bedroom condo for less than $600,000 there. But you could buy a three-bedroom house for $250,000 here."
Los Angeles Times
California budget plan would weaken air pollution rules
A major provision would delay the retrofitting of heavy diesel equipment, which would save the construction industry millions but also hurt efforts to reduce harmful emissions...Margot Roosevelt
California's proposed budget contains a major provision that would weaken air pollution regulations while saving the construction industry millions of dollars.
The measure, largely overlooked in a public debate focused on taxes, would delay requirements for builders to retrofit bulldozers, scrapers and other soot-spewing equipment, slashing by 17% the emissions savings that health advocates had hoped to achieve by 2014.
"There are people who will die because of this delay," said Mary D. Nichols, chairman of the state Air Resources Board.
"It is sad in an era where most people understand that strong environmental standards actually help California's economy as well as public health . . .
"Anti-tax zealots were able to force a weakening of our anti-diesel-pollution standards as the price of a balanced budget."
California's off-road diesel regulations, adopted in 2007, were the first in the nation to require construction companies to retrofit existing heavy equipment.
Diesel machines are responsible each year for an estimated 1,100 premature deaths, more than 1,000 hospitalizations for heart and lung disease, and tens of thousands of asthma attacks in California, according to the Air Resources Board.
The building industry, backed by national groups that fear a precedent could be set in California, had lobbied heavily to stall the diesel rules.
Without retrofitting existing construction vehicles, Los Angeles, the San Joaquin Valley and other highly polluted regions will be unlikely to meet federal air quality deadlines. Diesel equipment can last 30 years before it is retired.
But a pullback would be "welcome news for the thousands of construction workers that have lost their jobs across the state," said Brian Turmail, a spokesman for Associated General Contractors.
The rule was "well-intended," he said, but "would have forced thousands of small-business owners to replace perfectly good equipment instead of putting Californians back to work."
No public hearings were held on a diesel rule rollback, nor has there been a debate in the state Legislature.
But "there were two years of public hearings on the diesel regulation that is now getting weakened," said Kathryn Phillips of the Environmental Defense Fund. "What the big construction companies couldn't get into the rule in the light of day, [they] managed to get through a back-room deal."
The rollback of the diesel standards would eliminate the sort of "green jobs" that Gov. Arnold Schwarzenegger has championed, Nichols said.
A number of companies had revved up to install tens of thousands of diesel retrofits, a labor-intensive process involving complex new equipment.
Bradley L. Edgar, chief executive of Cleaire Advanced Emissions Controls, a San Leandro company, said that for every five retrofits, a new job is created.
"Most of these jobs are local because the retrofits are local," he said. "We manufacture in San Diego and source many components from California suppliers . . . which translates to economic stimulus."
Environmentalists see little chance of gaining the Legislature's attention amid the budget impasse.
"With the magnitude of the forces at play here, the environmental issues have taken a back seat to taxes," said Bill Magavern, the Sierra Club's California director.
"Reform of the budget process, especially the elimination of the two-thirds requirement for passing budgets and taxes, is desperately needed to prevent this kind of fiscal blackmail."
The budget also suspends state support for local transportation for the remainder of 2009 and into the next five years. That would bring mass-transit funding cuts to $3 billion over the last two budgets.
But several controversial environmental measures sought by Republicans were turned back, including a prohibition on factoring greenhouse gases into state environmental impact reviews and a weakening of pesticide rules.
California brown pelican may be removed from state endangered species list...Kelly Burgess
The California Fish and Game commission has voted unanimously to remove the California brown pelican from the state endangered species list. This is the first time the commission has voted to delist an endangered species due to recovery.
"Every Californian should be proud of this landmark decision," commission president Cindy Gustafson said in a news release. "This is a story of magnificent success. In the 38-year history of our protection of endangered species under the act, the California brown pelican is the first species to fully recover. We hope to have many more."
The delisting recommendation made to the commission by Department of Fish and Game biologists is based on studies showing an increased breeding population of brown pelicans on West Anacapa Island in the Channel Islands, where there is now an estimated 8,500 breeding pairs. This is the only area in California where these birds nest.
The decision will move on to review by the state Office of Administrative Law before the birds can be officially removed from the list.
No matter the outcome, it will remain illegal to harm or kill a brown pelican in California.
New York Times
$275 Billion Plan Seeks to Address Housing Crisis ...SHERYL GAY STOLBERG and EDMUND L. ANDREWS. Sheryl Gay Stolberg reported from Mesa, Ariz., and Edmund L. Andrews from Washington.
MESA, Ariz. — President Obama announced a plan on Wednesday to help as many as nine million American homeowners refinance their mortgages or avert foreclosure, saying that it would shore up housing prices, stabilize neighborhoods and slow a downward spiral that was “unraveling homeownership, the middle class and the American Dream itself.”
The plan, which was more ambitious and expensive than many housing analysts had expected, drew praise from consumer advocates as well as the financial industry.
It could ultimately cost taxpayers as much as $275 billion — $75 billion in direct spending to keep people in their homes and the rest in additional financial backing for the government-controlled mortgage giants, Fannie Mae and Freddie Mac.
But analysts and administration officials alike cautioned that it would not come close to halting the tidal wave of foreclosures. Nor would it provide much help to millions of homeowners who are “under water,” or holding mortgages that are bigger that the market value of their houses.
“This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild,” Mr. Obama told a crowd here, in one of the communities hardest hit by the housing crisis. “It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”
Almost one in 10 home mortgages is either delinquent or in foreclosure, and analysts estimate that at as many as six million families could lose their homes over the next three years in the absence of government action.
The plan has three components. The first would help homeowners who are still current on their payments, but who are paying high interest rates and cannot refinance because they do not have enough equity in their homes, a problem afflicting growing numbers of people as housing values tumble.
A second component would assist about four million people who are at risk of losing their homes. It would provide incentives to lenders who alter the terms of loans to make them affordable for the troubled borrowers. A third component would try to increase the credit available for mortgages in general by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac.
Beyond luring lenders with government money, the plan also calls on Congress to give bankruptcy judges the power to change the terms of mortgages and reduce the monthly payments.
The banking industry has vehemently fought that proposal for more than a year, saying it would make investors unwilling to finance future mortgage lending. But Democrats in Congress strongly support the idea and banking executives are putting up less resistance than before.
Republican lawmakers reacted cautiously to Mr. Obama’s plan. Representative John Boehner of Ohio, the House Republican leader, called it “an important step,” but raised questions.
“Does your plan compensate banks for the bad mortgages they should never have made in the first place?” Mr. Boehner asked. “Will individuals who misrepresented their income or assets on their original mortgage application be eligible to get taxpayer-funded assistance?”
Mr. Obama’s announcement came a day after he signed his $787 billion economic stimulus package, and administration officials said that the initiatives would work in tandem to stabilize the economy.
The plan will take effect March 4, when the administration publishes detailed rules explaining it.
Except for the provision that empowers bankruptcy judges, almost all the other elements can be enacted by Mr. Obama without further action by Congress.
To help the estimated four million homeowners in danger of foreclosure, Mr. Obama will create a $75 billion program to subsidize loan modifications that would reduce a family’s monthly payment to as little as 31 percent of its gross monthly income.
As envisioned, a mortgage lender would have to first make enough concessions to reduce a borrower’s payments to 38 percent of monthly income. To encourage lenders, the government would offer incentives, like a $1,000 upfront payment for every loan modified and more payments if the borrower stays current.
If the lender gets the monthly payments down to 38 percent of the borrower’s monthly income, the government would then match, dollar for dollar, additional reductions to bring the payment as low as 31 percent of monthly income.
The changes could be accomplished in several ways, from stretching out the repayment period of a loan to reducing the interest rate or reducing the outstanding principal.
But analysts noted that lenders, or the mortgage-servicing companies that administered the loan, would still have the last word on whether to make concessions. If a lender decides that the cost of the concessions is higher than the cost of foreclosing, even with the government subsidies, then a borrower would probably still lose the property.
A potentially big limitation on the rescue portion of Mr. Obama’s plan involves second mortgages. To avoid the need for a down payment, or to minimize the down payment, millions of people bought homes with piggy-back mortgages that went alongside the primary mortgages.
Administration officials said on Wednesday that their plan to help homeowners facing foreclosure did not deal with second mortgages. Because those second mortgages were often made by a different lender than the first mortgages, that could greatly complicate negotiations over a loan modification.
To help homeowners who can still keep up with their payments, but who may resent the idea of rescuing others, Mr. Obama’s plan would make it easier to refinance at today’s very low interest rates.
The plan would apply to people with fairly traditional loans that are owned or guaranteed by Fannie Mae and Freddie Mac — about 30 million homeowners. The new loans would not be subsidized, but borrowers would not need to have a 20 percent equity stake in the house.
Normally, Fannie Mae and Freddie Mac require that such borrowers pay private mortgage insurance, which can add hundreds of dollars to a monthly payment. Administration officials estimated that this portion of the plan could help 4 million to 5 million borrowers.
The big limitation of the refinancing portion of the plan is that it would not help most borrowers who are current, but under water. It would only be available for mortgages that are not more than 5 percent above the current market value of the house. Mark Zandi, chief economist at Moody’sEconomy.com, estimated that the plan would help less than a million of the 14 million homeowners who are under water.
A third, more vague component of the plan is aimed at propping up the mortgage market as a whole by having Fannie Mae and Freddie Mac step up their purchases of mortgages and mortgage-backed securities.
2-23-09 Merced County Hearing Commission meeting...8:30 a.m.
2-24-09 Merced County Board of Supervisor meeting...10:00 a.m.
Posted 72 Hours Prior To Meeting
2-25-09 Merced County Planning meeting...9:00 a.m.
Posted 72 Hours Prior To Meeting
2-26-09 LAFCo meeting...10:00 a.m.