Our View: Are we ready for the 'new normal?'
The evidence shows California's climate may be moving into a long period of austerity.
Even with the recent storms, this winter in California is likely to finish in austere mode, just like the economy.
With reservoirs already low after three years of weak precipitation, the impact will be harsh on every aspect of the state -- its farm industries, its environment and people who live in wildfire zones.
Some communities are now taking steps to cut back water use, and the Department of Water Resources has urged everyone to reduce water consumption by 20 percent.
Yet officials are often delivering these messages with the suggestion that this will be a temporary drought -- one that we can get through if we all make some short-term sacrifices.
That may be wishful thinking.
Whether or not you believe in global climate change, the chances are great that California could be entering a period that is much drier than the last 150 years.
Scientific studies have found evidence of past droughts in the West that lasted hundreds of years.
The tree stumps found at the bottom of Lake Tahoe suggest that the lake shrank to dramatically low levels during a drought that started in the early 1200s and lasted a century, allowing forests to grow where there is now deep water.
California not only gets its liquid assets from the Sierra; it imports trillions of gallons yearly from Lake Mead on the Colorado River.
If weather patterns hold or get drier, scientists at the Scripps Institution of Oceanography think it's possible that Lake Mead will drop too low within a decade to provide water or generate power.
Scripps scientists and other groups have coined a term to describe this daunting scenario: the "new normal."
Use of the term suggests that water managers should not make plans based on the hydrology of the past, but on a much more stingy future.
Conservation, improved efficiency and recycling of water must all be in this mix, along with cost-effective methods of increasing supply.
But investments in new water projects must recognize the reality: The Pacific storms that have blanketed the Sierra and fed the Colorado River may not be as generous in the 21st century as they were previously.
The "new normal" will require a rethinking of every aspect of water management in the West.
State Water: Governor declares state of emergency...Samantha Young, The Associated Press
SACRAMENTO -- Gov. Schwarzenegger declared a state of emergency Friday after three years of below-average rain and snowfall in California, a step that urges urban water agencies to reduce water use by 20 percent.
Mandatory rationing is an option if that and other measures prove insufficient.
"This is a crisis, just as severe as an earthquake or raging wildfire, and we must treat it with the same urgency by upgrading California's water infrastructure to ensure a clean and reliable water supply for our growing state," he said in a statement.
In signing the emergency proclamation, Schwarzenegger said California faces its third year of drought and must prepare for more.
The drought has forced some farmers to fallow their fields, put thousands of agricultural workers out of work and prompted conservation measures in cities throughout the state.
The proclamation directs state agencies to provide assistance for affected communities and businesses, orders the Department of Water Resources to protect water quality supplies by installing temporary barriers in the Sacramento-San Joaquin Delta and calls for a statewide conservation campaign.
Three dry winters have left California's state- and federally-operated reservoirs at their lowest levels since 1992.
15% from state, 0 from feds
Federal water managers announced last week that they would not deliver water this year to thousands of California farms, although that could change if conditions improve. The state has said it probably would deliver just 15 percent of the water contractors have requested this year.
These restrictions affect much of the western and southern parts of the San Joaquin Valley, which draw directly from the delta. The outlook is not so dire for agencies with long-held river rights, including the Modesto and Turlock irrigation districts, but they are watching their supplies closely.
In June, Schwarzenegger declared a statewide drought but stopped short of calling a state of emergency.
His 2008 executive order directed the DWR to speed water transfers to areas with the worst shortages and help local water districts with conservation efforts.
Worsening drought conditions prompted Schwarzenegger to follow last year's action with a formal state of emergency, a step not taken by his predecessors during dry spells in the 1970s and 1990s.
The federal government also stepped in this week, creating a federal drought task force to help California.
Over the past few weeks, storms have helped bring the rain total to 87 percent of average, but the Sierra Nevada snowpack remains at 78 percent of average for this time of year. State hydrologists say the snowpack must reach 120 percent to 130 percent of average to make up for the two previous dry winters and replenish key reservoirs.
No consensus on what to do
Low rain and snowfall hasn't been the only culprit behind California's water shortage.
Court decisions intended to protect threatened fish species have forced a significant cutback in pumping from the delta, the heart of the delivery system that conveys water from north to south.
Schwarzenegger, U.S. Sen. Dianne Feinstein, Republican lawmakers, farmers and water agencies have argued for years that California must upgrade its decades-old water supply and delivery system.
Plans to do so have gone nowhere in the face of opposition from Democrats, who hold majorities in both houses of the Legislature, and environmentalists, who say greater conservation, investment in water recycling and desalination plants are what's needed.
Schwarzenegger's emergency order leaves the door open for more severe restrictions later. Additional measures can include mandatory water rationing and water reductions if there is no improvement in water reserves and Californians fail to conserve on their own.
At least 25 water agencies throughout the state have imposed mandatory restrictions, and 66 others have voluntary measures in place. Modesto and several other valley cities have permanent rules for saving water, including limits on the hours of outdoor watering, but they could tighten if the situation worsens.
Opposition mounting against Radanovich
Former supporter sends out letter, plans to find someone to run against 14-year House veteran...Michael Doyle and John Ellis
WASHINGTON -- Rep. George Radanovich faces a revolt by some former GOP supporters.
With 14 years of House service under his belt, the Mariposa Republican still can count on support from San Joaquin Valley officials and constituents content with his performance. But with notable vehemence, an influential Valley Republican is going public with his attempt to lead an insurrection.
"It is the American way. If you don't like your representative, you need to get a new one," Fresno-area businessman Bob Smittcamp said Friday. "So I am looking for somebody to run against George who is more attuned to the problems we have here in the Valley, because in my opinion he ignores them."
Driving the point home, Smittcamp and an ally, GOP activist and one-time congressional candidate Tal Cloud, e-mailed an anti-Radanovich letter to a group Smittcamp dubbed "500 of my closest friends."
Smittcamp, president and chief executive officer of Lyons Magnus, a frozen and canned fruit company, matters in Republican circles. He has contributed more than $139,000 to federal candidates and campaign committees over the past decade, Federal Election Commission records show.
Smittcamp's past contributions include $9,700 to Radanovich since 2003. In 2006, he donated instead to Radanovich's Democratic opponent, T.J. Cox.
"Bob is a fine, upstanding member of the community," Radanovich said in an interview. "I have very much enjoyed getting his support, and I regret this" new opposition.
At the same time, Radanovich insisted that "it's a relatively small group" that's voicing dissatisfaction. This is, in fact, the key question for Radanovich right now: Is Bob Smittcamp isolated, or the tip of an iceberg that threatens Radanovich's future political course?
Some things are clear.
Certainly, Radanovich retains allies throughout the 19th Congressional District, which connects Modesto with Fresno via the Sierra Nevada. He has easily held the solidly Republican district since first winning election in 1994.
"He is doing good things for us," said Oakdale Mayor Farrell Jackson, a fellow Republican. "He is very in touch with constituents, and I think he's very well liked."
Despite occasional rumors, no Republican has stepped forward to say he will challenge the incumbent in 2010. Smittcamp said he has "three or four candidates on my radar screen," but declined to identify them.
One name mentioned as a possible challenger is Republican Assembly Member Mike Villines of Clovis. On Friday, Villines said he was too busy with state budget issues to consider any political moves. He said he hasn't seen Smittcamp's letter.
Much of the conflict arises over a river restoration plan backed by Radanovich and many other California officials. Some farmers fear it will undermine irrigation water supplies to the San Joaquin Valley's east-side farmers.
"This is over the water issue, and the frustration over that," Radanovich said, adding that "I can understand the frustration that people feel out there."
As then-chair of the House water and power subcommittee, Radanovich in September 2005 joined with Democratic Sen. Dianne Feinstein in urging San Joaquin Valley farmers to negotiate their river differences with the Natural Resources Defense Council. Without a negotiated settlement, a federal judge in Sacramento would have been the one allocating San Joaquin River water.
The settlement is supposed to restore water flows and, by 2013, a salmon run to the long-parched river channel. It is endorsed by the 20 irrigation districts of the Friant Water Users Authority.
"Everybody but a small group of people thinks they're better off with the settlement," Radanovich said.
Among the disenchanted is Kole Upton, a Chowchilla Water District director who has now become one of the river restoration plan's leading opponents.
Cloud, under the organizational name Families Protecting the Valley, already has been attacking Radanovich with ads and public letters. Cloud is a local businessman and Republican activist who in 1992 waged a bitter battle against Democratic Rep. Richard Lehman. In the end, Lehman narrowly won, but ended up losing two years later to Radanovich.
Radanovich's GOP colleague, Rep. Devin Nunes of Visalia, likewise has clashed with Radanovich over the river restoration bill.
Nunes' chief of staff, Johnny Amaral, said Friday that Nunes supports Radanovich for re-election and had nothing to do with Smittcamp's letter.
The river issue may not be the only potential chink in Radanovich's political armor.
Last fall, Radanovich upset part of his Republican base when he switched his position to vote for a $700 billion package that had become known as the Wall Street bailout. More recently, some Madera County farmers have grown unhappy over their belief that Radanovich will not try to secure federal funding for a proposed
underground water bank.
Radanovich introduced the bill authorizing the water bank. He said he still supports it, while holding to his new pledge to forego congressional budget earmarks.
"I will do everything I can to get it funded, outside of an earmark," Radanovich said of the Madera project.
When asked specifically whether he would ask the House Appropriations Committee to provide money for the Madera water bank, Radanovich repeated that he would "do everything I can outside of an earmark" to obtain funding. He did not elaborate.
Environmentalists, landowners help endangered falcons soar...Maria Recio, McClatchy Newspapers
WASHINGTON — The endangered Northern Aplomado Falcon, a regal gray bird with beige markings that was common across Texas and the Southwest until 1952, is making a comeback.
A combined effort by conservationists, federal agencies and private landowners has led to 40 breeding pairs in South Texas and soon, the falcon's reintroduction in West Texas and New Mexico.
"We saw this as a species that deserved a second chance," said Peter Jenny, the president of The Peregrine Fund, a Boise, Idaho, foundation that champions birds of prey.
The success has been so great that he thinks the Northern Aplomado Falcon will soon be delisted as an endangered species. Aplomado is the Spanish word for lead-colored.
Jenny talks while Stella, a 6-year-old Northern Aplomado Falcon that's about 16 inches tall and can fly more than 100 mph, rests calmly on his gloved wrist during an interview in the Environmental Defense Fund's Washington office. When she spreads her three-foot wingspan and shows off her grey and beige bands, the roomful of visitors ooh and ahh.
Stella, raised in captivity and used to humans — who Jenny says she thinks are falcons — isn't part of the release program but serves as one of the fund's goodwill ambassadors.
"The bird is the best ambassador of all," Jenny said.
The Northern Aplomado Falcon's resurgence has relied, more than most rescue efforts, on the goodwill of private landowners. Texas lands are about 97 percent privately owned, limiting the power of the federal government to force change.
"We met with landowners to restore the rich wildlife heritage of Texas," Jenny said.
That resounded with South Texas rancher Frank Yturria.
"I've been a conservationist all my life," said Yturria, 86, who let the fund build platforms for the birds to build their nests over a decade ago on a 12,000-acre ranch he co-owned near Brownsville. Yturria said that he was sitting in the office of a bank he owned when he was told that "a guy and a falcon" were downstairs.
Yturria, who was taken with the bird, a Peregrine Falcon, and with Jenny, its handler, was the first landowner in the state to open his land — a breakthrough for the Northern Aplomado Falcon's fans.
"They're a beautiful, majestic bird," said Yturria, who's proud of his role in the falcon's re-emergence. "It makes me feel good. It's part of the legacy I can leave to my children and grandchildren."
The Environmental Defense Fund helped create an inducement for landowners in the mid-1990s with a "safe harbor" provision to the Endangered Species Act that protects private property from federal intrusion when landowners set acreage aside for endangered animals.
"In return for access, the landowners get a permit from the U.S. Fish and Wildlife Service" that gives them legal cover, said Michael Bean, a senior attorney with the defense fund. "There are now 2 million acres in Texas in the program."
Yturria participated even before the safe harbor program.
"One of my friends said, 'Are you crazy?'" he said, laughing. Yturria also has set aside land at another ranch as part of a federal program to protect the ocelot.
The Northern Aplomado Falcons, which began nesting on his property, are now scattered over South Texas. And when the Fish and Wildlife Service determines that there are 60 breeding pairs, the Northern Aplomado Falcon will be de-listed from the endangered species list.
"This is a real success story," Jenny said.
The Northern Aplomados mate for life and, unusual among raptors, hunt in pairs, Jenny said.
The Peregrine Fund is pushing for more federal funds for its programs, including $300,000 for the Northern Aplomado.
Yturria remembers seeing the Northern Aplomado Falcons back in the 1940s and 1950s and even thinks he may have shot one or two while he was quail hunting.
Now, he says, he sees them overhead from time to time on his ranch and smiles. His new role is their protector.
ON THE WEB
The Peregrine Fund Web site
The Environmental Defense Fund Web site
Timber firm, Sierra Nevada environmental groups settle dispute...Bee correspondent
Two Sierra Nevada environmental groups have settled lawsuits challenging the rezoning of 12,541 acres of timberland owned by Sierra Pacific Industries, the largest private landowner in California.
The settlements announced Friday rescind actions in Sierra and Lassen counties that would have changed forests from timberland production zones to those that eventually would allow residential development.
"We're pleased with this decision because it puts the brakes on the unnecessary loss of California forestlands," said Laurie Davis, president of Friends of Lassen Forest, which filed the lawsuit in August.
The zoning change would have affected nearly 5,500 acres that include the headwaters of several sensitive streams, the spawning grounds for the Eagle Lake trout and land next to a U.S. Forest Service wilderness area.
In Sierra County, the settlement reached with High Sierra Rural Alliance affects 7,083 acres along Henness Pass Road in a remote and environmentally sensitive area within the checkerboard of Tahoe National Forest.
"It doesn't make sense to convert remote forested lands for development in view of the environmental challenges we are facing due to climate change and the critical role forests play in enhancing watershed and habitat health," said Stevee Duber, a spokeswoman for the environmental alliance that filed the lawsuit in July.
Sierra and Lassen counties are among eight Northern California counties where the Anderson-based timber company had sought to remove a total of about 40,000 acres of its forests from timber production zoning. New zoning designations would start a 10-year countdown that would end the tax benefits Sierra Pacific has enjoyed under timberland production zoning, approved by the Legislature in 1976 to encourage long-term working forests.
After 10 years, the company could request new zoning designations that permit development.
With the settlements in Sierra and Lassen counties, only Tehama and Shasta counties have authorized the company's rezone requests on a combined 6,339 acres.
Sierra Pacific recently withdrew applications for rezoning 34,237 acres of timberlands in Butte, Lassen, Plumas, Sierra, Siskiyou and Trinity counties, said Mark Pawlicki, a company spokesman. The requests ranged from 7,826 acres in Plumas County to 2,537 acres in Tehama County.
Although it has no plans for development, the company is not abandoning zoning changes on some of its 1.7 million acres, Pawlicki said.
Instead of a piecemeal approach, company officials want to take a more comprehensive view that adheres to the legal processes required by state environmental laws, he said.
"It's the same way we look at timber harvests and wildlife – by compiling cumulative-effects analyses," Pawlicki said.
In addition to lawsuits in Sierra and Lassen counties, the company's zoning-change requests drew comments from state Attorney General Jerry Brown.
Rezoning 3,846 acres in Siskiyou County on the southern slopes of Mount Shasta could affect hundreds of important Sierra species, including spotted owl, fisher and pine marten, Brown said in a Nov. 3 letter to Ruth E. LaTourelle, county assistant planner.
The potential loss of forested land also would contribute to increased greenhouse gases, he wrote.
Brown's four-page letter challenged the county's conclusion that the zoning change would have no potential to cause significant impacts to the environment.
The High Sierra Rural Alliance and Friends of Lassen Forest lawsuits raised similar challenges and disputed the counties' claim that the rezoning was exempt from the California Environmental Quality Act. Both lawsuits charged that the supervisors' actions violated the counties' general plans as well as a specific plan for the Eagle Lake area in Lassen County.
Sierra Pacific has agreed to cover the court costs of the two environmental groups.
California unemployment rate jumps to 10.1 percent (12:47 p.m.)
SACRAMENTO (AP) — California’s unemployment rate jumped to 10.1 percent in January, the state’s first double-digit jobless reading in a quarter-century.
The jobless rate announced today by the state Employment Development Department represents an increase from the revised figure of 8.7 percent in December. It also is 2.5 percentage points higher than the national jobless rate in January of 7.6 percent.
A year ago, California’s unemployment rate was 6.1 percent. Since then, steep declines in the construction, finance, information and retail industries have put thousands out of work.
The number of people without jobs in California soared to more than 1.8 million, up 754,000 from January 2008.
Stephen Levy, senior economist for the Palo Alto-based Center for Continuing Study of the California Economy, said the last time California’s unemployment topped 10 percent was June 1983.
“They’re confirming what we already know, which is that we’re in a very, very deep recession that is going to last for many months,” Levy said.
Nonfarm payroll jobs declined by 494,000, or 3.3 percent, from a year ago, according to the state’s survey of California businesses. A separate federal survey of households showed a drop of 283,000 jobs from December, or a loss of 437,000 jobs from January 2008.
Of California’s jobless, nearly 1 million had been laid off while about 127,000 left their jobs voluntarily. The others were new to the labor market or were trying to re-enter.
In a statement, Gov. Arnold Schwarzenegger said the unemployment numbers released today are “a sobering reminder” that rejuvenating the state’s economy should be government’s top priority.
The two-year state budget package approved last week includes economic stimulus measures such as a $10,000 tax credit for buyers of new homes and tax credits for movie studios and multistate corporations. It also relaxes environmental rules for some construction projects and provides incentives for small businesses that hire more workers.
“It is extremely important that we put people back to work. This is why we negotiated all the extra pieces in the budget,” Schwarzenegger said during a today campaign event in Fresno to promote six budget-related measures that will appear on the May 19 special election ballot.
Home builders are looking to the homebuyer tax credit, which takes effect April 1, to start pulling the industry out of its slump.
“Hopefully, that will give a shot in the arm for the housing markets that have been so depressed in the last two years,” said Tim Coyle, senior vice president of the California Building Industry Association.
The industry typically expects to build about 200,000 housing units a year. In 2008, it built just 66,000, resulting in roughly 300,000 lost jobs, he said.
The last time California’s unemployment rate was over 10 percent was during a 12-month period that ended in June 1983.
Construction, manufacturing, transportation, trade, information, and professional and financial services were among the sectors posting the biggest losses, according to the figures released today. They lost a combined 86,700 jobs over the past month. Adding the hospitality and leisure industries, those sectors lost 537,000 jobs from a year ago.
The information industry posted the largest decline in the past month, shedding 27,700 jobs, while the construction trades posted the largest year-over-year decline on a percentage basis, losing 130,800 jobs or 15.5 percent.
Education and health care services saw job increases.
“It looks like California’s precipitous manufacturing decline continues,” said Gino DiCaro, spokesman for California Manufacturers and Technology Association. “Since January 2001, we have now lost close to 500,000 manufacturing jobs in California. That’s a quarter of California’s industrial base, and those are simply high-wage jobs that California can’t afford to lose.”
DiCaro said his group has studied private sector vs. public sector job growth since 2001 and found that the private sector accounts for just 15 percent of new jobs.
“California’s got a lot of work ahead of it to improve the job climate in the state,” he said.
Job losses could be on the horizon for state government workers as the Schwarzenegger administration looks to trim costs further.
The governor’s office has said the state must reduce its payroll by 10 percent, which could include laying off up to 10,000 state employees. Cities and counties across California also are laying off public employees.
“The government sector has certainly slowed down, where before it was one of the top three job sectors,” said Jodi Chavez, a Newport Beach-based vice president at the national staffing firm Ajilon.
She said her agency is seeing increased hiring among beer and wine distributors and manufacturers of video games.
“I think families are spending more time at home than going out,” she said.
The rising jobless rate is putting a strain on the state fund that pays out unemployment insurance.
The Employment Development Department said 717,525 Californians were receiving unemployment insurance benefits in January, up from 480,858 at the same time last year.
In January, California began borrowing from the federal government to keep its unemployment insurance fund solvent. The employment department projected the state will need to borrow $2.4 billion through year’s end and $4.9 billion in 2010 if the state doesn’t adjust its benefits or taxes on employers.
One potential bright spot in today’s report: New jobless claims in California fell to 75,514, down from 87,979 in December.
On the Net: California Employment Development Department: www.edd.ca.gov
Pacific Ethanol plant closes
Company shuts third facility in past two months...Reed Fujii
STOCKTON - Pacific Ethanol Inc. announced Friday a temporary shutdown of production at its $140 million ethanol plant in Stockton as well as a similar facility in Burley, Idaho.
Together, the two, 60 million-gallon-per-year plants represent more than half of the Sacramento-based company's total capacity. Pacific Ethanol on Jan. 12 also suspended operations at its 40 million-gallon-per-year plant in Madera.
Paul Koehler, vice president of corporate development, in a telephone interview said he did not have the exact number of Stockton employees affected by the shutdown.
"We've reduced our staffing there by about two-thirds," he said. "We're maintaining a core staff for ongoing maintenance and being in the position to restart."
When the plant began operations last fall on a 30-acre site leased from the Port of Stockton, officials said it would employ the equivalent of 40 full-time workers. A two-thirds reduction would be about 26 jobs.
The company hasn't missed any rent payments, said Jeff Kaspar, deputy port director.
"They are current with us as far as any financial arrangements are concerned," he said.
When the Pacific Ethanol lease was approved, the reported cost was about $610,000 annually in rent and facility fees.
Kaspar expressed the hope that market conditions that led to the shutdown would soon turn around. "We're hoping the market will continue to assist them, but they're having a tough time," he said.
The company is simply being squeezed by the price for corn - its primary feedstock - and weak demand for ethanol, which is related to low petroleum prices.
"It's the spread between buying corn and selling ethanol that needs to open up," Koehler said.
Pacific Ethanol also announced Friday that it had won another month's time to renegotiate loan terms with its major creditors, including Wachovia Capital Finance Corp., WestLB AG and Lyles United LLC.
Earlier this month, the company said it was in violation of certain conditions of its loans and that creditors had given it until today to meet those conditions or negotiate new loan terms.
Now the lenders have given Pacific Ethanol until March 31 to work things out.
Contra Costa Times
State's salmon up but probably not enough to allow fishing this year...Mike Taugher
Salmon fishing off California is probably headed for closure again this year even though salmon runs elsewhere on the West Coast rebounded nicely from a widespread decline.
From the Columbia River in Washington to the Klamath River in Northern California, federal regulators said they anticipate healthy runs this fall and plenty of fish in the ocean.
But the traditional workhorse of California's salmon fishery, the Sacramento River's fall-run chinook, remains low. That is likely to mean that any fishing season off the coast of California and nearly all of Oregon will be sharply curtailed or banned.
"It's not an entire West Coast thing. It's a California and most of Oregon thing," said Chuck Tracy, a salmon scientist for the Pacific Fishery Management Council.
That stands in contrast to conditions last year, when all of the West Coast's salmon runs dropped severely. Fishing off most of the coast was shut down for the first time in history, prompting a federal disaster declaration and $170 million in federal aid to fishermen and fishing businesses.
Scientists say a natural variation in northern Pacific sea temperatures had been bad for salmon in recent years but those conditions have reversed and are now favorable. Because of that change, it is possible that 2010 will be a good year for California salmon.
The report released Wednesday projects 122,200 Sacramento fall-run salmon will return to spawn this year, which is twice as many as returned last year but just barely within the target range of 122,000 to 180,000 fish. Another way to look at that figure: it provides, at best, 200 fish for all anglers off California and most of Oregon.
"They will likely have in-river sport fishing (in the Klamath.) That's the only thing these numbers guarantee," said Duncan MacLean, a salmon fisherman from Half Moon Bay who represents California's commercial fishermen on an advisory panel to the council.
Because salmon live about three years and spend most of that time in the ocean, their numbers can rebound quickly given enough food in the sea and healthy rivers and spawning grounds.
For months, anglers and environmentalists have been buzzing about the low numbers of salmon that returned to the Sacramento River last fall, but Wednesday's report is the first official estimate on numbers expected this fall.
Though the numbers remain low, the fact that even the Sacramento River run was expected to double was encouraging, according to one of the state's leading fisheries biologists.
"That's actually good. Ocean conditions have been good," said Peter Moyle, a professor at UC Davis. "We're starting from pretty low numbers to begin with. The hatcheries have been cranking them out like mad."
The decline has been blamed mostly on an ocean cycle that had been producing less food until 2007.
"They didn't have anything to eat," said Churchill Grimes, director of a federal fisheries science laboratory in Santa Cruz and the co-leader of a work group appointed last year to investigate the cause of the West Coast's salmon collapse.
"We're not for a minute saying we don't understand that the cause of the demise of the Central Valley salmon is death by a thousand cuts," Grimes added.
Those cuts in California's rivers and Delta include: dams that block fish from migrating to colder spawning grounds, pollution, habitat degradation, water diversions and reliance on hatcheries for salmon, Grimes said.
Hatcheries tend to produce fish that are genetically similar and so those fish tend to behave similarly. That can lead to wild population swings, both up and down, Grimes said.
The council is gearing up to set fishing limits for salmon along the West Coast by early April.
WAL-MART WAR: Council mulls ban of large-scale combined retailers
Council mulls ban of large-scale combined retailers...JIM JOHNSON, Herald Salinas Bureau
Call it a "prohibition against large-scale combined retailers" if you want, but everyone knows the proposed ordinance the Salinas City Council will be discussing next week is all about Wal-Mart.
An ongoing national and local debate over the massive chain and the city's attempts to limit its influence will take center stage in Salinas next week.
On Tuesday, the council will consider an ordinance to restrict retail stores of 90,000 square feet or larger to a maximum of 5,000 square feet for nontaxable merchandise, such as groceries.
On Feb. 18, the city Planning Commission voted 4-1 to recommend passage of the current version of the ordinance, which was revised from an earlier proposal aimed at retail stores 100,000 square feet or larger.
Supporters and opponents of the ordinance acknowledge the debate is centered on Wal-Mart. In November, the retail behemoth purchased the vacant Home Depot building in the Harden Ranch shopping center.
Wal-Mart representatives indicated to city officials they would like to designate about 25 to 30 percent of the 102,000-square-foot structure to nontaxable items, though they said they have no plans to make the store a Super Wal-Mart.
In response, Salinas Councilwoman Jyl Lutes brought forward the current ordinance, which is backed by slow-growth groups such as LandWatch Monterey County and employee unions.
Chris Fitz, LandWatch's executive director, said allowing large-scale retailers to offer more than a token amount of groceries is a recipe for "urban blight" because of the effect on the rest of the city's businesses, which can't compete.
"It may be a good business plan for (the retailers), but the strategy of combining retail with grocery goods is bad for the community because it cannibalizes existing business," Fitz said.
But Russ Pratt, co-owner of the Harden Ranch center, said there is no indication Wal-Mart will drive out other businesses, and noted that several retailers in his shopping center are counting on the big retailer to bring in customer traffic that has been missing since Home Depot's exodus.
Pratt said the city needs the sales tax revenue in a struggling economy, as well as the estimated 300 jobs it will provide. He said the real motivation behind the ordinance is simply to preclude Wal-Mart from moving in.
"The agenda is to stop Wal-Mart," he said. "But it's a bigger issue for the city than just the anti-Wal-Mart crowd. We need city services."
Councilwoman Janet Barnes said she is opposed to any ordinance that limits business and agreed that it is being driven by an "anti-Wal-Mart" sentiment.
"We should be supporting more economic growth," Barnes said. "This is not a good time to be putting restrictions on business."
Councilman Steve Villegas said he isn't opposed to Wal-Mart, but he has concerns. He noted the store will be on the edge of the city's future growth areas, which are designated for mixed-use and would provide housing and retail.
He is worried that Wal-Mart's presence might dissuade other retailers from coming to Salinas. Villegas said he is concerned that Wal-Mart might decide to close its Davis Road store if business lags, creating a vacancy.
Wal-Mart spokesman Aaron Rios called the proposed ordinance "unfortunate" and "discriminatory," but wouldn't say whether the restrictions would wreck the chain's plans for the Harden Ranch site.
He said the plan is to "retrofit" the Home Depot building, move the Davis Road store into the newly renovated site, then retrofit and re-open the Davis Road store. Both stores will have food, he said, but merchandising plans have not been finalized.
Bank Failures Take Toll on Insurance Fund...Binyamin Appelbaum
The federal insurance fund that protects most bank deposits is being drained by a sharp rise in bank failures and has dwindled to its lowest level since 1993, the Federal Deposit Insurance Corp. reported yesterday.
Depositors are not at risk because the fund is backed by the government, but taxpayers could be forced to reach into their wallets if the decline continues.
When a bank fails, the FDIC pays up to $250,000 to each account-holder to replace whatever money does not remain in the vaults. The fund is replenished by assessments on banks, but over the last year, much more money left than arrived. And the pace of bank failures continues to increase.
The fund held $52.4 billion at the beginning of 2008. One year and 25 bank failures later, the fund held $18.9 billion.
So far this year, 14 banks have failed, draining another $1.7 billion from the insurance fund.
The FDIC's board is scheduled to vote this morning on increasing the quarterly assessment that banks must pay. The board also could vote to impose a one-time special assessment to replenish the fund more quickly. FDIC officials declined to say yesterday how large an increase was likely.
If money cannot be collected quickly enough from the industry, the FDIC could be forced to borrow money from taxpayers by taking a loan from the Treasury Department.
Some banking trade groups favor that approach, because they say that a sharp increase in the assessment on banks would overly burden a struggling industry, taking away money that banks otherwise could use to lend. Banks would then repay the money gradually and as the industry's situation improved.
But FDIC Chairman Sheila C. Bair said yesterday that the industry must carry the cost, and she noted that the fund is a huge boon to banks at a time when some people and companies might otherwise hesitate to deposit money.
"It's painful to get your premiums raised, but I think deposit insurance is a really good bargain right now," Bair said. "It's a value, and unfortunately we're going to have to charge more for it."
The FDIC also reported yesterday that the nation's banks collectively lost $26.2 billion in the fourth quarter, the first negative quarter for the industry since 1990. Total lending in the fourth quarter declined 0.4 percent compared with the same period in 2007, the agency said. The report is based on data provided by each bank.
Regulators shutter 2 more banks
The FDIC said the failures of Heritage Community Bank and Security Savings Bank will cost the Deposit Insurance Fund a combined $100.7 million...Catherine Clifford
NEW YORK (CNNMoney.com) -- State bank regulators closed two more banks on Friday, the 15th and 16th banks to fail this year, as the worsening recession pulled more regional banks underwater.
The announcement marks the seventh consecutive week of bank failures being announced on a Friday evening.
The Federal Deposit Insurance Corp. said that Security Savings Bank of Henderson, Nevada, had $238.3 million in assets and $175.2 million in deposits as of December 31, 2008. Heritage Community Bank of Glenwood, Illinois, had assets totaling $232.9 and deposits totaling $218.6 million as of December 5, 2008.
Combined, the two bank failures will cost the Deposit Insurance Fund approximately $100.7 million.
Bank of Nevada agreed to assume all of Security Savings Bank's deposits, and purchase approximately $111.3 million of the failed bank's assets. The FDIC will retain the remaining assets, and estimates that the cost to its fund will be $59.1 million.
Heritage was purchased by MB Financial Bank, N.A., of Chicago, Illinois, which agreed to acquire all of the failed bank's deposits and $230.5 million of the failed bank's assets, said the FDIC, which estimated the cost to its fund at $41.6 million.
Customers will be able to access their deposits with debit cards and checks over the weekend. Those who owe loan payments should continue making those payments.
The FDIC fully insures individual accounts up to $250,000 through the end of 2009.
In all of 2008, 25 banks failed and the FDIC's list of troubled banks grew to 252 during the fourth quarter, marking the highest level since 1994.
Bank failures could cost the FDIC fund $65 billion by 2013, the agency said Friday at its board meeting.
In order to prevent larger banks from failing, the government has injected billions of dollars into those institutions.
On Friday, the government said it had taken control of 36% of Citigroup, which had already received $45 billion from the government.
Citigroup’s Third U.S. Rescue May Not Be Its Last, Analysts Say ...Christine Harper
Feb. 28 (Bloomberg) -- The U.S. government’s third attempt to help rescue Citigroup Inc. won’t stanch the company’s losses, which will continue to swell and may lead the bank to require more money in coming months, analysts said.
Yesterday’s action didn’t furnish the New York-based bank with new money, although it cuts expenses by eliminating dividends on preferred stock. Instead, it converted preferred shares into common equity, which absorbs the first hit in the event of further losses, at an above-market-value price of $3.25. The stock, which has fallen 78 percent since the beginning of the year, closed in New York trading yesterday at $1.50, its lowest since November 1990.
Vikram Pandit, 52, Citigroup’s chief executive officer, told investors yesterday that increasing tangible common equity to as much as $81 billion from $29.7 billion should “take the confidence issues off the table,” regarding the company’s ability to absorb losses. Still, Citigroup, which lost $27.7 billion in 2008, is expected to lose $1.24 billion in the first six months of 2009, according to the average of analysts’ estimates compiled by Bloomberg.
“There’s no difference here,” said Christopher Whalen, co- founder of Institutional Risk Analytics, a Torrance, California- based risk-advisory firm. “It won’t fix revenue, and you’re still going to see loss rates.”
One immediate change from yesterday’s announcement was that the value of the government’s investment fell by more than half. The government said it would convert as much as $25 billion of its preferred stock to common shares for a 36 percent stake in the bank. At yesterday’s closing price of $1.50, that investment is worth about $11.5 billion. Citigroup has a stock market value of $8.2 billion today.
“Taxpayers are being ripped off,” Congressman Brad Sherman, a Democrat from California who sits on the House Financial Services Committee, said in a statement. “The only thing worse than nationalizing a bank is to pay for the entire bank and only get one-third of it.”
Goldman Sachs Group Inc.’s analysts, led by Richard Ramsden, recommended that investors avoid Citigroup shares because “it is unclear whether this is the last round of capital restructuring, which means that existing equity may be further diluted in the future.” The analysts also noted that the bank’s new 4.3 percent ratio of tangible common equity to total assets falls to just 2 percent if deferred tax assets are excluded. Those will only become valuable if and when the bank returns to profitability.
Rather than boosting confidence, the move led Moody’s Investors Service to cut its senior debt rating for Citigroup to A3 from A2 and prompted Standard & Poor’s to change its outlook on the bank’s debt to “negative” from “stable.”
“Citi will face a tough credit cycle in the next two years, which will likely result in weak and volatile earnings,” S&P analyst Scott Sprinzen wrote in a statement. “We cannot rule out the possibility that further government support may prove necessary.”
Some analysts and investors were more heartened by yesterday’s news. David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller in New York, said the transaction fortifies the bank’s balance sheet, and he expects the stock to rise back to $3 “once the emotion of the moment passes.”
William Isaac, chairman of Secura Group LLC and a former chairman of the Federal Deposit Insurance Corp., said that while he hopes yesterday’s action is enough, the government may need to put in more money if the economy continues to deteriorate.
“If they need more money we should put it in,” Isaac said. “The best approach is to do what you think will work as you go along.”
In its first two efforts to rescue Citigroup, the U.S. Treasury provided $45 billion by buying preferred stock and joined the Federal Reserve and FDIC in agreeing to guarantee the bank against all but $29 billion of losses on a $301 billion portfolio of assets. Yesterday, the Treasury, as well as other preferred stockholders including the Government of Singapore Investment Corp. and Saudi Prince Alwaleed bin Talal, gave up their dividends and agreed to take common stock at $3.25 a share.
“The administration and the past administration have tried so many different ways that we can only hope and pray that this time they get it right,” said Charles Rangel, a Democratic congressman from New York who serves as chairman of the House Ways and Means Committee. “It seems like with the banks it is a never-ending thing.”
The government was in a near-impossible position trying to set a price to convert the stock, said Tony Plath, a finance professor at the University of North Carolina at Charlotte.
“You can’t massively overpay because the taxpayer will scream, but you can’t pay market price because that doesn’t give them enough tangible common equity,” Plath said. “The value of the equity is close to zero, but you can’t let it fall to zero because so much of it is owned by private money outside the U.S.”
Institutional Risk Analytics’ Whalen said the government’s efforts are mainly protecting those who hold Citigroup bonds, which he said are widely held by other financial institutions and foreign governments.
“The taxpayer is funding the operating loss and protecting the bondholders,” Whalen said. “The subsidy for the banks will become one of the biggest lines in Washington’s budget.”
Boon for Bondholders
Citigroup’s $3 billion of senior unsecured bonds that mature in May 2018 rose to 87 cents on the dollar yesterday from 85 cents a day earlier, according to data reported on Trace, the real-time bond-price reporting service of the Financial Industry Regulatory Authority.
Whalen said it would be better if the government organized bondholders in Citigroup and insurer American International Group Inc., which got a $150 billion U.S.
bailout, and reach a deal to convert some debt to equity.
Standard & Poor’s, in cutting its outlook on Citigroup’s debt to negative, said even bondholders may be affected.
“Debt holders could eventually be required to participate in further government-led restructuring actions,” S&P said.