Will AB 32 have any real impact on emissions?...Janice Keating. Keating is a Modesto City Council member and active with the AB 32 Implementation Group, comprised of business, taxpayer and consumer groups statewide.
When times are tough and money is scarce, it is the duty of locally elected leaders to ask tough questions about government programs. No program should be exempt from this scrutiny, including Assembly Bill 32 (the Global Warming Solutions Act), which is one of the largest regulatory schemes ever approved by the state of California.
AB 32 will impact every citizen directly in the form of higher prices for gasoline and increased utility costs. Virtually every product and service we purchase will be impacted as businesses pass along their increased costs to consumers.
With many scientists believing that the release of greenhouse gases is at least contributing to global warming, it is understandable that many Californians believe something should be done to reduce emissions. The question is, will implementation of AB 32 have any real impact on carbon emissions?
Looking to Europe as a model, where AB 32-style regulations have been in place for several years, the results are less than encouraging. Total emissions have continued to rise each year in Europe despite a carbon credit trading scheme similar to that proposed in California.
What will AB 32 cost? Here are some examples based on the California Air Resources Board’s analysis and other reports:
$11 billion per year for a Low Carbon Fuel Standard, which will result in higher gasoline and diesel costs;
11 percent increase in electricity costs;
8 percent increase in natural gas costs;
Increased costs of $50,000 for a new home to comply with new green building standards.
AB 32 will further harm businesses and families, meaning lower tax revenues for local governments and higher demand for social services.
The AB 32 scoping plan acknowledges that most small businesses will have a hard time paying the costs of AB 32 implementation. These businesses are likely to have to lay off workers or close altogether, taking revenues and jobs with them.
Food banks and homeless shelters already are reporting exponentially increasing demand for their services as the economic crisis worsens; AB 32 costs are likely to force even more families to seek public assistance.
AB 32 will make California less competitive with neighboring states and other countries. As costs rise here, businesses continue to leave for other states with less stringent regulations. As a result, California won’t be reducing global warming, but we will be reducing employment and tax revenues at a time we can least afford it.
It is instructive to note that other countries have dramatically scaled back or suspended their global warming reduction plans due to the economic crisis. German Chancellor Angela Merkel recently stated her opposition to any global climate deal that would endanger jobs or investments in Germany. With the European Union, the world leader in climate change regulation, stepping back from the brink, it would seem appropriate for California to re-evaluate implementation of the current regulations.
The recently adopted AB 32 Scoping Plan, the blueprint for this incredibly ambitious policy initiative, failed to recognize the economic challenges facing our state and the nation. Like many overly optimistic government projections, it failed to account for the full costs of programs required to achieve the energy efficiency savings it projects will be realized in 2020. By underestimating the costs, and overestimating the savings, the Scoping Plan threatens to balloon the state’s already disastrous budget deficit and subject the private sector to billions of dollars in additional costs.
Before moving forward on any new rules or policies under AB32, the California Air Resources Board should direct its staff to accurately calculate and disclose the near and midterm costs of each and every proposed Scoping Plan policy and adopt only the most cost-effective approaches to meet AB 32’s emission- reduction goals.
The goals of AB 32 may be worthy, but the state’s plan for implementing it is dangerously flawed. In addition to taking a common-sense, fiscally responsible approach, we should consider whether the task of tackling climate change isn’t more appropriately addressed at the national or international level, so meaningful results can be achieved and costs fairly shared. It is unreasonable to expect citizens of our state to disproportionately bear the burden.
Federal, state tax breaks give home buyers boost of up to $18,000...J.N. Sbranti
Two new government deals that provide up to $18,000 in income tax credits for those who buy homes this year should help Northern San Joaquin Valley builders sell houses.
At least they hope so.
Home construction virtually has disappeared in Stanislaus, Merced and San Joaquin counties because builders haven't been able to find willing, qualified buyers.
The three counties issued only 88 home building permits during January, compared with more than 1,500 per month during the 2005 building boom's peak. That's caused massive job losses in the construction trades and put many builders out of business.
So lawmakers have sweetened the pot for home buyers to coax them into purchasing homes now.
The federal government is offering credits up to $8,000, and California is chipping in up to $10,000 more. But relatively few buyers would qualify for both because the federal cash is strictly for first-time buyers and the state money is only for those who buy new homes.
That means first-time buyers purchasing new homes priced at $200,000 or more could get $18,000, while current homeowners who buy used houses would get nothing.
"People are excited when we tell them about it," said Mattie Zedlitz, who sells homes at Valley Blossom and Valley Park in Manteca. "We've had four sales in the last week, and our traffic's been wonderful. ... Most of our customers are first-time buyers, so they're getting $18,000."
The result hasn't been as great for other developers.
"I don't know exactly how much these tax credits are going to matter, but it's nice," said Michael Spencer, whose construction company is trying to sell its last couple of "Mansionettes" in Livingston. "Just about anything our government is trying to do is helpful."
While luring buyers with tax credits may tempt some, Spencer said the real issue is lack of funding for mortgages.
"What we're struggling with every single day is credit," Spencer explained. "Our biggest challenge is just getting people approved."
Even buyers with good credit who have loans lined up too often have mortgages denied at the last minute, Spencer said.
The other major obstacle for new home sales is competition from bargain-priced foreclosed homes.
Median home price plunges
More than 11,000 Stanislaus homes have been repossessed by lenders during the last two years. Most of those foreclosed houses have been resold by the banks at deep discounts. That's caused Stanislaus' median home sales price to plunge 64 percent from its $396,000 peak in 2005 to $140,000 this January.
Construction costs, unfortunately, haven't declined nearly that much, so new home prices have a tough time competing.
"I don't think anything is going to help (builders) until we get through all these foreclosures. ... The banks are almost giving them away," said Robert Martelli of JKB Homes, which has developments in Hughson, Denair and Riverbank.
Martelli said that after comparing new home prices with foreclosures, shoppers may conclude that buying a bank repo is a better deal. But he said the two options -- repo or new -- are not equal, considering new homes come with full warranties and are much more energy-efficient.
New home prices also have come down significantly the last three years. In Stanislaus, the median sales price topped out in June 2006 at $476,000, but it fell to $310,000 in December 2008.
JKB Homes in Riverbank start at $239,000 for 1,575 square feet.
"We're basically selling them at cost or below cost just to keep going," Martelli said.
Some of the lowest-priced new houses are selling in Newman, where SCM Homes is offering 1,260-square-foot houses in Park Villas at Sherman Ranch for $119,900.
Even though homes in Ripon are priced higher, sales there are on the rise, according to Rich DePonte who runs sales at the Cornerstone development. He said that's partly because prices have been reduced, with 1,870-square-foot homes now starting at $274,000.
"Our traffic has picked up. We've sold more homes in the last 45 days than we had in the previous six months," DePonte said. Since the year's start, he said, eight homes have sold and three additional houses have been reserved. "We're selling good, but we're not making any money."
Nevertheless, DePonte's builder, McRoy-Wilbur Communities, will open a development next week in Turlock.
The 81-home Cottage Park project will be for "active adults" age 55 and up. Homes in the gated community will be priced between $250,000 and $300,000.
"I don't think the federal tax credit (for first-time buyers) is going to help us," DePonte said, noting that most of his customers have owned homes before. "But the state credit (for new home purchases) definitely will help us."
Deadline nearing for air plans
Valley cities and counties that haven't amended general plans are at risk of losing lawsuits over development...Editorial
The general plans that govern development and land use in the cities and counties of the Valley must include ways to reduce air pollution, under a law that goes into effect this summer. But a number of local governments are behind the curve in updating their plans, and it could come back to bite them down the road.
The law -- AB 170, passed in 2003 -- requires that cities and counties in the Valley amend their general plans to include reports on local air-quality conditions, a summary of air-quality regulations and "comprehensive" goals, policies and objectives to improve air quality. The plans must also list measures to meet those goals.
Without those air quality elements in their plans, local governments could wind up on the losing end of lawsuits to stop new developments.
That's not much of an issue right now, with development at a standstill in the current recession. But assuming a recovery is somewhere in our future -- the sooner, the better, of course -- construction of new developments, and all the jobs it would bring, could be stymied just when it's needed most.
The state Senate's local government committee warned of that scenario in a recent memo: If local officials fail to meet the deadline, but still proceed with major land-use decisions, "a court could invalidate those decisions and other development projects as well."
Amending general plans is a complicated process and time-consuming process. It can also be costly, which no local government wants to hear in this time of shrunken budgets. But the price of failure to meet the requirements of the law could be even higher.
The San Joaquin Valley Air Pollution Control District must review and approve the amended plans. Officials there said some cities and counties have not yet met the requirement. They'd better get moving: The deadline for cities in Fresno and Kern counties is June 30. Other municipalities have until Aug. 31, 2010.
The air district has guidelines for crafting general plans that meet air quality demands.
The issue is not trivial. Air pollution affects us all, and every activity we engage in can be linked to something in the Valley's air that causes harm.
Development is a particular problem. Years of neglectful and sometimes downright bad planning have led to urban sprawl across broad swatches of the Valley. That has led in turn to long commutes, traffic congestion and high levels of vehicle emissions. Neighborhoods haven't been planned to be air friendly -- walkways, bike paths, easy access to nearby goods and services were overlooked in favor of a vehicle-centered lifestyle.
We can't afford to build like that any longer, and local rules for development must reflect that fact. Cities and counties that haven't updated their general plans to meet the new realities must do so, and soon. Otherwise, they run the risk of seeing growth -- even smart growth -- shut down by litigation. Avoid the rush; start good planning now.
Valley's general plans need air quality element now...Russ Minick
Cities and counties in the Valley could be putting future development at risk if they don't comply -- and soon -- with a state law that requires their general plans to account for air quality impacts when new residences and buildings are approved. That's the subject of our editorial today.
AB 170 -- passed in 2003 -- requires that cities and counties in the Valley amend their general plans to include reports on local air-quality conditions, a summary of air-quality regulations and "comprehensive" goals, policies and objectives to improve air quality. The plans must also list measures to meet those goals.
The hitch is that without the required language in the general plans, developments could be the object of litigation by environmentalists and others who want to stop the growth. It would be a cruel irony if the Valley were beginning to emerge from the recession, only to have job-creating development cut off by lawsuits that could have been avoided.
Some Sacramento homebuyers walk away from big loans...Jim Wasserman
Something about the way global finance flew so dangerously high and then spiraled into chaos tells Victor Clawson that trouble with the four houses he owns in Natomas isn't his fault.
"We are players in a game and the game is controlled by somebody else," said Clawson.
This sense of being unfairly bruised by powerful financial forces is key to understanding why Clawson is strongly considering walking away from his mortgages. Given the risky, ethically questionable behavior of lenders and financial institutions that caused "this enormous machine to grind to a halt," should he feel obligated to keep paying on houses now worth far less than he owes?
It's become a familiar question in the Sacramento region's real estate market. Some borrowers stop paying the mortgage because they can't afford it. But many who can afford their payments have decided it's no longer worth it. They walk, or, as is becoming the trend, park rent-free in the house for months until they get the boot.
It's a question that Ryan Jessup of Sacramento answered a year ago, when he, too, sensed the financial game had turned against him. Early in 2008, the software engineer stopped making payments on his Victorian house in Oak Park. A long habit of playing by the rules, he said, had provided him a good income, a credit score of 804 and a lovely $430,000 house.
But when playing by the rules meant riding down the housing market to who knows where, he said, "It came down to morals or survival. I chose survival. It made no sense to stay."
Greg McBride, a senior financial analyst at Bankrate.com, said "this situation is extremely common, particularly in places like California, Florida, Arizona and Nevada."
No statistics exist for how many of California's 321,457 foreclosures in 2007 and 2008 – 33,574 in the eight-county Sacramento area – were due to people who could afford their mortgage payments escaping their negative equity.
Analysts say many investors long ago sided with survival and walked away. Now the question is increasingly passing to the capital region's everyday homeowners, an estimated 36 percent of whom owe more than their homes are worth, according to researcher MDA DataQuick.
Many borrowers like Clawson and Jessup no longer feel so obligated to a financial system they believe overstimulated the housing market, sold them questionable loan products, sometimes by fraud, and then didn't provide help they need in the face of falling home values. Even the Obama administration's new $275 billion housing rescue plan has limits that may not convince people who owe 20 percent to 50 percent more than the home is worth to stick it out.
Sacramento mortgage lender Jeff Tarbell is among market watchers seeing the mental shift among borrowers. And he understands the frustration.
"Eight of 10 calls I take are people I cannot do anything for in a new loan," he said. "They're in a position where they're either upside down (owing more than the house is worth) or so far behind with payments that no lender will take them.
"Nobody's thinking, 'How do I salvage this?' It's 'how do I get away?' " said Tarbell, managing partner of Comstock Mortgage.
Across California, one in four homes is now worth less – often far less – than what's owed on it, reports DataQuick. In the hardest-hit neighborhoods of North and south Sacramento, North Highlands and Rio Linda, up to 61 percent of homes are worth less than their mortgages.
Such extreme statistics make this a region of sleepless nights. It has instilled in thousands of homes bought or refinanced after 2004 a nagging sense of futility.
As values continue to sink and monthly payments remain high – without a chance to refinance – thousands of households are being forced to face the choices.
As described by Bankrate.com's McBride:
• They can continue their payments on a losing investment and trust in the long run.
• Or they can stop writing checks and face certain ruin of their credit scores.
Bill Andrews of Stockton, who said he owes $180,000 more than his house is worth, is planning to stick it out.
"I've got to live somewhere. What do you do?" he said.
Jessup walked away.
"I haven't even looked (at the credit score)," he said. "It's like being hit by a train or a bus."
At credit reporting agency Experian, spokeswoman Rosalyn Whitehurst said the typical "walkaway" or foreclosure will stay on a borrower's credit report for up to seven years. McBride said it may take three to five years to buy another house. Some real estate brokers say it can be done as soon as two years with Federal Home Administration loans.
These individual decisions are a profound force shaping the real estate economy.
"If you have everybody doing this it undermines the entire system, which is all based on confidence," said Richard Holden, an economist who owns a home in Elk Grove with more loan than value. "It undermines neighborhoods, too. It undermines where people live."
He knows staying is "a losing proposition." But "I want to hang on," he said.
Bank of America spokesman Rick Simon said lenders always prefer that a borrower at least talk with them about options. He said short sales, in which the lender accepts less than owed to avoid the higher costs of foreclosure, and deeds in lieu, where the lender simply takes back the home, are becoming a bigger alternative for lenders who can persuade investors to agree.
The bank did 2,000 deeds in lieu last year, he said. Both options leave less damage on a borrower's credit score than a walkaway or other foreclosure, he said.
In Natomas, Clawson assumes his score has already declined from 760, which helped him finance home buys in 2000, 2003, 2005 and 2007. All but the earliest are worth less than he owes. He lives in one; the rest are investment properties.
His current troubles are with the especially risky pick-a-payment loan type, which keep growing if an uninformed borrower makes only the minimum payment. Clawson said he understood the loans and their risks, and knew they worked well in a rising market.
Then the housing market collapsed. Clawson blames hidden excesses and fraud in the global finance system for triggering the sudden decline that undermined him.
"If you played by the rules you're supposed to be a winner overall," he said. "But because the game was so much bigger we've all become losers, basically."
Clawson is still weighing options, still working with his lenders. But if assistance isn't forthcoming, he said, "I have no problems walking away."
Jessup, looking back, has no regrets. He lives with a friend now who has also stopped making payments on a condo bought at the peak of the market in 2005.
"I don't think housing is going up for a long time," he said.
Judge makes plea for environmental officials to compromise on salmon, dams in Northwest...ROCKY BARKER, McClatchy Newspapers
PORTLAND, Ore. -- U.S. District Judge James Redden has struck down two salmon and dam plans for the Columbia and Snake rivers.
But he wouldn't say yet whether he's going to make it three.
Redden told attorneys for salmon advocates, federal agencies, Indian tribes and Northwest states that he's still not sure the federal government can follow through on all its promises to fix salmon habitat to offset the impacts of dams.
He recommended federal attorneys ask their new clients - President Barack Obama's environmental officials - if they might want to compromise on their plan to protect 13 endangered stocks of salmon and steelhead.
Then he gave salmon advocates a reason to consider settlement talks themselves.
"I may end up saying this is a fine one as it is," Redden told the packed courtroom Friday.
The fate of the dam plan, called a biological opinion, affects everything from electricity costs and water for irrigation to shipping between Idaho and the Pacific.
Todd True, an attorney for EarthJustice representing environmental groups, sporting businesses and commercial fishing groups, got the settlement message.
"He certainly would like to see that happen," True said. "We would like to see it, too, if we could get all the issues on the table." Redden said he wouldn't make a decision before the end of this month, but in the end said he would make his ruling based on the Endangered Species Act, the toughest environmental law ever written.
Redden waited until the end of the day to bring up the most controversial subject - breaching four dams on the Snake River in Washington, which he urged federal attorneys to consider in the plan as a contingency.
"I don't know if breaching the dams is the solution. ... " Redden said. "I hope it's never done." But he seemed to agree with the federal side's argument that putting water in spawning tributaries like Idaho's Pahsimeroi River near Challis and restoring tidal marshes and other salmon habitat in the Columbia's estuary were the major issues to be resolved.
What he wasn't sure was that the federal government and its new partners - all of the Columbia River tribes except Idaho's Nez Perce - could guarantee that the promised more than $1 billion of habitat restoration could be done.
"I want you folks to have some thoughts about how we can make reasonably certain it will occur," Redden said.
Earlier, Justice Department attorney Coby Howell said federal dam operators would spill water over eight dams on the Snake and Columbia rivers to help migrating endangered salmon this spring even though it's not required.
Spilling water over the dams away from hydroelectric turbines reduces the capacity of the dams to generate electricity and revenues for the Bonneville Power Administration, the federal agency that markets power from the dams.
"We want to make clear this does represent a significant compromise on our part," Howell said.
The salmon are a living icon of the wild character of the Pacific Northwest that still provide millions of dollars in economic benefits to fishing-related businesses and spiritual sustenance to the region's Indian tribes.
But to restore their numbers to sustainable levels across the Columbia Basin - an area the size of France - will take sacrifice on the part of the region's more than 9 million residents.
BPA already has announced an electric rate increase to cover the $1 billion for recovery measures across the region included in a collaborative agreement reached with tribes and the states of Washington, Idaho and Montana.
Yakima tribal attorney Tim Weaver has been challenging federal salmon plans since the 1980s - until this one. He said tribes now have a seat at the table when fish policy is made.
"I think we have a historic opportunity to bring back the fish instead of bringing back the lawyers to fight about it," Weaver said.
Dan Walters: New reservoirs would have caught California rain
Nine days ago, Gov. Arnold Schwarzenegger declared a statewide "drought emergency," citing a third winter of subnormal precipitation and the precariously low levels of major reservoirs.
"Even with the recent rainfall, California faces its third consecutive year of drought and we must prepare for the worst – a fourth, fifth or even sixth year of drought," Schwarzenegger said. It's rained quite a bit since he uttered those words, either an ironic quirk of nature or a testament to the governor's persuasive powers.
The late winter rains may be a welcome, albeit partial, relief from the looming water crisis, but as Schwarzenegger also said on Feb. 27: "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."
As Schwarzenegger issued his declaration, the Legislature's perpetual political struggle over water policy resumed. And the often-heavy rains are themselves evidence that the state has been irresponsibly neglecting its water infrastructure.
When the skies opened, the Sacramento River that flows just 10 blocks from the state Capitol and is the state's most important source of water began rising.
The Sacramento didn't get anywhere near flood stage, but it rose high enough that the flood bypass channel that protects the capital was opened. Even so, as much as 50,000 cubic feet a second surged past the city.
Let's put that in perspective. At least a half-million acre-feet of water flowed past Sacramento in the first week after Schwarzenegger's drought declaration, half the capacity of Folsom Lake. But the most interesting aspect of that flow is that it didn't come from Folsom or the other two major dams on the Sacramento River system, Shasta and Oroville.
The operators of all three dams shut outflows to a trickle, rightly seeing the storms as an opportunity to replenish their seriously depleted reservoirs. All three quickly jumped from about one-third full to over half full.
Virtually all of that water gushing down the Sacramento River to San Francisco Bay and the sea was storm runoff from below those dams, a clue that we need more ability to capture winter rains and hold the water for drier periods. In other words, we need to build the off-stream reservoir north of Sacramento that the state has long proposed, but that environmental groups have shortsightedly opposed.
What happened in early March was a harbinger of what lies ahead for California if the theories about global warming prove true. We will get more of our precipitation in the form of rain and less in the form of snow, which means we will need more water storage capacity as the natural reservoir of the Sierra snowpack shrinks.
It's ironic that the folks who raise alarms about global warming are the same folks who oppose our preparing for its consequences.
Editorial: Waste not, water not?
Up until recently, Sacramento's wastewater treatment district was making big plans for expansion, with little regard to how its current discharges could be harming the Sacramento River and the Delta below it.
To their credit, leaders of the Sacramento Regional County Sanitation District are now revisiting those plans. One idea they've floated is to recycle some or all of the district's treated wastewater.
Some communities in California – Orange County is the largest – are already recycling their effluent into drinking water, through intensive treatment.
Here in Sacramento, it wouldn't be economical to treat wastewater to that degree. But the regional sanitation district could potentially filter its effluent to a level that would be safe for use on golf courses, parks and other landscaping.
Each year, landscaping consumes roughly half of all residential water used in the Sacramento area. If the county and its cities could move to irrigating lawns and parks with gray water instead of drinking water, it could potentially save billions of gallons that are now sucked out of local rivers and the ground.
What could the county do with those savings? With the right permits, it could sell the saved water to an interested customer. Or it could use some of the savings to replenish groundwater basins in the south county that are overtapped.
Recycling of the district's wastewater would also result in less ammonia going into the Sacramento River.
Although sanitation district leaders dispute claims that ammonia is harming the Delta and its fish, further scientific review could prove them wrong.
Regardless of how the ammonia debate plays out, recycling of wastewater is an option that all California communities should be pursuing. As the state grows, water recycling should be mandatory. Water is simply too valuable a resource to squander and waste.
San Francisco Chronicle
Wyoming regulates storage of emissions
Development: With climate change, it's easier to tackle symptoms than causes
What it means: Last week, Wyoming adopted a set of laws designed to establish a legal framework for storing carbon emissions underground in the state. They're important rules, but they're not really designed to ward off the looming catastrophe of climate change. Wyoming lawmakers are paving the way for underground sequestration because their state is one of the most productive sources of fossil energy in the nation. Unless they find something to do with the emissions from all that coal, oil and gas, national carbon legislation could nudge the state's economy toward extinction, just like those fossilized prehistoric critters and plants it relies upon.
The recent rules build upon statutes Wyoming enacted last year. The state is considered a leader in such legislation, though other Western states - including New Mexico and Montana - are putting together carbon capture laws of their own.
- Terray Sylvester
Wolf as scapegoat
Development: Wyoming considers testing wolves for a livestock disease
What it means: Some Wyoming legislators are straining to connect the dots between two of their biggest management headaches. The livestock disease brucellosis, which causes cows to abort their calves, has cost ranchers millions. And the gray wolf, reintroduced in '95, has created huge controversy. Now, a state lawmaker is asking for $45,000 to test wolves for brucellosis - despite the fact that studies have shown that wolves cannot transmit the disease to other animals. In fact, 15 years of testing in the state has never found an infected wolf.
Elk and bison, however, do carry brucellosis, so Wyoming officials have vaccinated entire elk herds and killed thousands of bison that wander out of Yellowstone. In the battle over taking wolves off the endangered species list, Wyoming has proposed that wolves be handled like coyotes - hunters could shoot them on sight across most of the state. It's a long shot to establish a link between wolves and brucellosis. But if one were found, it'd give the state more ammo for curbing its wolf population.
- Jodi Peterson
The sagebrush rebellion
Development: Environmentalists hit setbacks in the West
What it means: Not everything's rosy in the West for greens these days. Montana's Legislature may soon pass a bill that will make it difficult for the public to challenge coal, oil and other industries' projects for environmental reasons.
And Idaho's Legislature is considering laws to make it tougher for wildlife agencies to transplant animals into ranchers' territory, and it passed a measure that says mining companies don't have to clean up pollution that leaks into groundwater, as long as that pollution doesn't spread beyond the boundaries of their property. Meanwhile, the Sagebrush Rebellion - the 30-year-old Western movement that rejects federal environmental laws on federal lands - reared its head in Utah, where state Rep. Mike Noel introduced a bill that would make it more difficult for environmentalists to challenge state actions that favor drilling, new power plants and so on.
Symbolic proposals to express state sovereignty over federal law also showed up in legislatures in Arizona, Idaho, Washington and Montana.
- Ray Ring