5-26-09

 
5-26-09
Badlands Journal
Sorcery...Badlands Journal editorial board
http://www.badlandsjournal.com/2009-05-25/007239
This letter to the editor by Rep. George Radanovich, R-Mariposa gave us a headache.
The issue is why the American Recovery and Reinvestment Act, popularly known as the "stimulus package" did not include funds for a fix in the Delta, called the "Two Gate Solution," that would protect the Delta Smelt, whose population is plummetting to extinction due to over-pumping since the Colorado River Agreement.
Consider the congressman's logic.
He is shocked that the project was not included in the final list for funding. He castigates the bill as Obama's "massive spending plan under the pretense of creating or saving American jobs." As is well known, every farmworker in the San Joaquin Valley is an American citizen or is a legal permanent resident.
He voted against the bill and now damns the funding for "going to projects that improve the environment." The vote from the Valley congressmen went down on straight party lines, Democrats McNerney, Cardoza and Costa, Aye, Radanovich and Nunes, Nay, right in line with California's entire congressional delegation. Actually, the Two Gates project sort of looks like an environmental project itself, to protect an endangered species, with the added boon to mankind of allowing more pumping to the south Valley, where an estimated 40,000 seasonal agricultural jobs are in jeopardy. His fellow Republican, Nunes, has said as high as 80,000 jobs are threatened.
As far as west side water districts facing 0-percent water delivery this year, the press is reporting that even the most threatened districts are going to get some water this year. Meanwhile, a federal district court ruling in Fresno last week opened the door to more pumping at some point.
Radanovich, along with Cardoza, Costa and Nunes, boycotted First Lady Michelle Obama's visit to UC Merced last weekend.
Now, Radinovich is griping that because Obama and Pelosi, "beholden to the environmental community," a small number of large landowners on the west side will not get much surface water this year so will have to pump polluted groundwater on their crops or else fallow land. His own district, which includes the headwaters of four large Sierra rivers that support numerous east side irrigation districts, has one little gerimandered tennis shoe in a part of the west side where growers are getting at least a part of their irrigation water from the Delta, despite the drought. The amount of influence a handful of very wealthy west side agribusiness special interests regularly buy from the Valley congressmen makes an ordinary citizen go cross-eyed with perplexity. Although you wouldn't believe it from his letter below, George Radanovich is not a stupid man. But crop production and basic processing top his list of contributing industries, double its nearest competitor. Radanovich's contributors are making an idiot out of him.
Another side of this nonsense is that Hughson, in Radanovich's district, got $23 million in federal water-project stimulus funds. What is this man babbling on about?
Let's get this right: he votes against the stimulus package; insults the president and the speaker for being stooges of the environmentalists (a laughable claim from an environmental point of view); boycotts the president's wife; misspeaks about the west side water situation; and now cries huge tears because the stimulus package funding did not include $25 million for more Delta "fixing" to preserve thousands of seasonal farm labor jobs and undoubtedly agribusiness bankruptcies. 
This is leadership?
You can't make it up. We suspect there has actually been a mental breakdown in the Valley congressional delegation. They've got water on the brain. Just speaking as simple citizens of the San Joaquin Valley, we are finding it more confusing every day to be represented in Congress by a group of headless chickens. We can't even figure out who decapitated them but we're putting our money on their agribusiness contributors who, after beheading their congressmen, cut off their own noses just for spite.
The problem is that agribusiness believes its own propaganda and so do its representatives. It's pride of ownership in grade-A prime flak. In fact, the cumulative adverse environmental impacts from San Joaquin Valley agribusiness are growing and more of them are becoming clearly illegal despite the horrors of upholding the law expressed in a recent water debate in Fresno by Judge Oliver Wanger of US. District Court, Eastern District of California. His advice to several hundred farmers gathered for the debate that night was: Talk to your congressmen and get them to change the law.
OK. Let's start by insulting the president's political party, insult his wife by boycotting her commencement speech at UC Merced, and continue right along with the terribly effective political technique of whining about poverty among people paid the lowest wages in America working for agribusiness, which hauls down billions of dollars in farm subsidies alone ($319 million between 1995-2006 just in Radanovich's district), forgetting the huge, on-going federal water subsidy.
What agribusiness must absolutely deny is any connection between agriculture and nature. Ordinary people, on the other hand, have the vague impression that agriculture is totally dependent on nature. This impression is even held by ordinary Valley residents. Agribusiness spends an enormous amount of money on propaganda and on buying political influence to persuade the public that it is in error and that, in fact, agribusiness and only agribusiness produces food and fiber and if it cannot continue to plunder the environment for all it wants of these vague "inputs" like water, land, illegal aliens, etc., we will forfeit our "food security" and starve to death. 
It is pure sorcery. Below find Radanovich's incantations mingled among some serious journalism on water.
Badlands Journal editorial board
5-25-09
Modesto Bee
Opinion - Community Voices
Support Two Gates and valley's farmers...George Radanovich
http://www.modbee.com/opinion/community/v-print/story/716791.html
Speaker Nancy Pelosi and the Obama administration are beholden to the environmental community and will fight HR 856 every step of the way. Because of their indifference, the West Side water districts could face a 0 percent
There is a temporary solution, though, that will allow the delta pumps to deliver water to agriculture very quickly. This project would involve installation of two gates near the delta pumps that would keep the hallowed delta smelt safe while simultaneously pushing the lifeblood of the valley to our farmers. The project is permit-ready and, once approved, could be installed as quickly as 90 days.
The Two Gates project was submitted to the Department of Interior as part of a list of shovel-ready projects to be considered for American Recovery and Reinvestment Act funds. Shockingly, Two Gates was not included in the ultimate list of water projects.
President Barack Obama sold this massive spending plan under the pretense of stimulating the economy by creating or saving American jobs. While I did not support this legislation, the stimulus funds can and should be used to solve our water crisis. Instead, most of the "job-creating" stimulus funds are going to projects that improve the environment.
The Two Gates project would cost a modest $25 million, a minuscule portion of the $800 billion stimulus bill. It could save up to 40,000 jobs in the San Joaquin Valley -- one of the regions most severely impacted by the economic downturn.
To most, this makes obvious sense, but apparently the Obama administration has other priorities than the well-being of one of America's most productive industries.
We cannot let the agriculture industry become collateral damage in California's water wars. A temporary solution such as the Two Gates project will provide farmers the lifeline they need until a permanent solution is approved and installed. At this point, the only thing keeping Two Gates from becoming a reality is a mountain of red tape at the California Department of Water Resources and the U.S. Department of Interior.
Citizens of California should rally around the Two Gates project and demand that the permitting process be expedited and that our government installs this project immediately.
Radanovich, R-Mariposa, represents the 19th Congressional District, which stretches from Modesto to Fresno.
5-24-09
Contra Costa Times
Pumping water and cash from Delta...Mike Taugher
http://www.contracostatimes.com/environment/ci_12439808
As the West Coast's largest estuary plunged to the brink of collapse from 2000 to 2007, state water officials pumped unprecedented amounts of water out of the Delta only to effectively buy some of it back at taxpayer expense for a failed environmental protection plan, a MediaNews investigation has found...
Paper shuffle allows for vast supply of easy money...Mike Taugher
http://www.contracostatimes.com/environment/ci_12437335
It must have seemed like easy money.
The state was delivering more water than ever to its customers, and in Kern County some of those customers sold some of it back, through a simple trade, at a higher price...
Water ownership murky, complicated...Mike Taugher
http://www.contracostatimes.com/environment/ci_12437097
Kern County water users who sold millions of dollars worth of water to a program meant to help the environment said the arrangement made sense because the water was rightfully theirs...
The Resnicks: farming's power couple...Mike Taugher
http://www.contracostatimes.com/news/ci_12437262
Stewart Resnick is not your typical dirt-under-the-fingernails farmer.
The Beverly Hills billionaire's companies, according to tax records, appear to own more than 115,000 acres in Kern County, about the size of four San Franciscos and more than all of the East Bay Regional Park District's parks combined...
5-23-09
Fresno Bee
Ruling: Humans, not just fish, to factor in divvying delta water...John Ellis
http://www.fresnobee.com/local/v-print/story/1422966.html
A federal judge stunned and delighted west-side farmers on Friday, ruling that the federal government must consider the effect on humans -- not just fish -- when allocating delta water...
5-22-09
SFGate
Cities, counties receiving water stimulus funds...The Associated Press
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/21/state/n161427D05.DTL&type=printable
Cities and agencies poised to sign contracts for water project stimulus money (Information on specific projects for most counties not immediately available):..
6. City of Hughson, Stanislaus $23 million
5-21-09
Fresno Bee
Suit questions fed's smelt protection...John Ellis...5-21-09
http://www.fresnobee.com/updates/v-print/story/1420032.html
A conservative legal organization today waded into the delta smelt controversy, claiming in a lawsuit that the federal government has no constitutional authority to oversee the endangered fish...
Valley Voice
Time to Throw in Towel on Temperance Flat?...John Lindt
http://www.valleyvoicenewspaper.com/vv/stories/2009/vv_
temperanceflat_0060.htm
California - Despite the fact he introduced the legislation in 2003 to build a new storage reservoir above Fresno at Temperance Flat, Congressman Devin Nunes says the San Joaquin River Settlement kills any construction of that dam...
Los Angeles Times
State water deliveries up...Bettina Boxall, Greenspace
http://latimesblogs.latimes.com/greenspace/2009/05/water-deliveries.html
State water deliveries are going up again.
The Department of Water Resources announced today that it will give State Water Project contractors 40% of what they requested this year. While that figure remains low, it is far more than earlier delivery forecasts, which started at 15% and then rose to 20% and 30%...
5-20-09
Fresno Bee
GEORGE RADANOVICH: Two Gates project can help agriculture survive water wars...George Radanovich
http://www.fresnobee.com/opinion/wo/v-print/story/1416551.html
For years, those of us living and working in the San Joaquin Valley have known that the answer to California's chronic water shortages is a peripheral canal, around the San Joaquin-Sacramento Delta, and additional storage south of the Delta such as a Temperance Flat dam.
While we have heard every plan, promise, proposal and pledge to fix our state's water woes, we are left with little action and even less water. It appears that the political will to make these changes won't happen until water delivery to all Californians, including urban water users, grinds to a halt.
California's drought is largely man made, as the water supply is being held hostage by the Endangered Species Act. These water restrictions are the reason California will lose 40,000 jobs this year and more than $2 billion of income. Today, many Valley fields are bone dry and empty as 0% to 15% water allocation from the Delta threatens the $90 billion industry that is California agriculture...
5-17-09
Mercury News
California's broken system for water delivery...Mike Taugher, Contra Costa Times
http://www.mercurynews.com/breakingnews/ci_12267223
Near the end of a 117-mile canal that takes delta water to the heart of one of California's richest agricultural regions, thousands of farmworkers and their supporters gathered in mid-April to demand more water...
In the Westlands Water District, the nation's largest irrigation district, things are bleak. It is heavily dependent on delta pumps, lacks its own storage and is a relative newcomer in its demand for water. The district is likely to get just 10 percent to 15 percent of the water in its contract amount this year, the worst supply in its history...
The largest estuary on the West Coast of North or South America is in a state of ecological collapse in which several fish species are in a nose-dive...
Sacramento Bee
Effort to save smelt may worsen water shortages...Matt Weiser
http://www.sacbee.com/ourregion/v-print/story/1891074.html
SACRAMENTO -- A water flow limit set by federal wildlife officials in the Delta is likely to temporarily worsen water shortages for some areas of the state.
The U.S. Fish and Wildlife Service on Friday set the limit to protect threatened Delta smelt, a small fish sensitive to water diversions. It did so after a team of biologists early last week reported that the number of smelt killed in state and federal water diversion pumps is growing.
Since then, more fish have died in the pumps near Tracy, threatening to reach a yearly regulatory threshold before the end of May.
The new limit set Friday effectively requires the pumps to export less Delta water to customers in the Bay Area, San Joaquin Valley and Southern California.
The limit will remain until the smelt migrate out of areas affected by the pumps.
Environmentalists fear for Tahoe amid logging in burned Angora area...Matt Weiser
http://www.sacbee.com/378/v-print/story/1890877.html
SOUTH LAKE TAHOE – A forest after a fire can be like a heart-attack victim: Sometimes the recovering patient looks worse after life-saving surgery.
So it is with the forest burned by the June 2007 Angora fire in South Lake Tahoe.
After a first season of intensive logging around Seneca Pond – ignition point for the fire that destroyed 254 homes – the burn area looks like that patient in post-op: Attached to machines, disfigured by ugly stitches and leaking fluids.
Environmental groups are crying foul over a U.S. Forest Service project to remove burned trees along roads and trails in the 3,100-acre fire area.
The Forest Service says the trees were a threat because they could topple on unwary hikers. Backers of the logging say the former burn zone will be better for all the work.
Critics fear the project bodes ill for a bigger plan to thin 68,000 acres of overgrown forest surrounding Lake Tahoe in order to avoid future severe fires.
Logging rules were streamlined to ease this work, even as officials acknowledged that if it's not done carefully, Tahoe's famous water clarity could be at risk.
This conflict looms larger as another fire season begins.
On a recent visit to the Angora burn area, The Bee saw fragile stream zones strewn with logging debris. Logged slopes and stream crossings leaked sediment into Angora Creek, which flows into Lake Tahoe.
Wildflowers, manzanita, songbirds and woodpeckers have returned vigorously in the burn area. But few trees were left in the logged areas to serve as habitat.
"It totally stuns even me, and I've been looking at bad logging for 25 years," said Craig Thomas, executive director of Sierra Forest Legacy, a coalition of conservation groups. "And we're supposed to be in some environmental wonderland here at Tahoe."
Thomas crouched beside a tributary to Angora Creek lined with algae and baked by the sun on a recently clear-cut slope along the Gunmount Trail. Snowmelt ran in sheets off the slope, threatening to flush sediment into Tahoe's headwaters.
Officials at the various agencies that police Tahoe's water quality say this logging project followed the rules and does not threaten the lake.
"There are no water quality issues. The water is clean," said Douglas Cushman, a senior water resources control engineer at the Lahontan Regional Water Quality Control Board. He added, however, that no one from his staff has visited the site since the end of winter.
"There is, indeed, a lot of (logging) material on the ground," he acknowledged.
The Forest Service says work isn't finished in some logged areas, including the one lamented by Thomas. The logging contractor, Smith Crane & Rigging Inc., based in Reno, must return to remove and scatter logging debris and rehabilitate trails, said Cheva Heck, spokeswoman for the Forest Service Lake Tahoe Basin Management Unit.
In other words, treatment isn't done, and the patient is expected to look better eventually.
The logging here was done during winter, atop the snowpack, to minimize erosion.
But logging vehicles were not excluded from stream zones at trail crossings, contrary to water-quality rules in the Tahoe basin. In fact, some trees were cut out of the waters of Angora Creek itself.
Additional logging starts soon in other parts of the burn area, notably at the north end, near Highway 89.
"Our watershed hydrologist went out to the project a couple of times each week to ensure that snow conditions were adequate and (stream) crossings maintained," Heck said via e-mail. "The contractor was fully in compliance."
The project was approved by the Forest Service last year under an exclusion from normal timber harvest rules designed to expedite recovery after a fire. Those rules allowed logging machines to work in stream zones as long as they stayed on the trail.
The project was reviewed by Lahontan and the Tahoe Regional Planning Agency under their "timber waiver" program. Both agencies reviewed the project before and during logging.
The timber waiver is designed to streamline rules to speed up hazardous tree removal. One way this happens: The Forest Service is allowed to self-report compliance with water-quality rules before and during the project. No independent field reporting is required by Lahontan or TRPA.
The Forest Service hasn't filed a progress report since the end of winter, and another isn't due until July 15.
On March 13, the three agencies jointly decided to stop logging after a visit to the same stretch of the Gunmount Trail, south of Seneca Pond. They found the snowpack in a shrunken and melting state, raising the risk of erosion.
The contractor has not returned to that area since, and probably won't until late summer, after the soil dries, Cushman said. That's why the work appears unfinished.
"The snow and soil conditions, they just weren't right to bring equipment in," said Dennis Oliver, a TRPA spokesman.
A different set of rules will govern the larger project that looms in the years ahead: thinning trees on 68,000 acres of overgrown forest throughout the Tahoe basin.
After the Angora fire, a commission established by the governors of California and Nevada recommended further regulatory streamlining to accelerate this larger project.
In May 2008, Gov. Arnold Schwarzenegger issued an emergency proclamation pressing TRPA and Lahontan to redistribute authority over tree-thinning.
In the deal they signed in December, the water police – Lahontan – retained enforcement power but ceded authority to approve and monitor timber harvest plans to TRPA. This process will govern most of the basin-wide tree thinning in the years ahead.
"I'm absolutely sure there is a diligent job being done by the Forest Service to take all measures necessary to protect water quality," said John Upton, a fire commission member who lost a rental property in the Angora fire. "I think that risk is far outweighed by the risk of a serious fire."
The agreement between the agencies did not specify how TRPA would monitor water quality during logging. As a result, environmental groups in January appealed the decision to the State Water Resources Control Board.
On Thursday, the board rejected their petition.
"There's no reason the water quality regulators need to be shoved aside when you're trying to protect the rarest water body on Earth," said Thomas of Sierra Forest Legacy.
Letters to the editor
http://www.sacbee.com/opinion/v-print/story/1890529.html
Personal attacks misguided
Re "Drought is the cause of economic suffering" (Viewpoints, May 17): Mayors Amarpreet Dhaliwal and Robert Silva have much to deal with, given the economic hardships their communities face. But their op-ed suffered from errors of fact as well as unnecessary and grossly inappropriate personal attacks on a professor at the University of the Pacific. This professor had previously, in The Bee, observed that serious unemployment in the Central Valley is not solely the result of drought, but a consequence of the nation's serious economic crisis.
There have been droughts before – far more serious droughts – with less unemployment. Current unemployment is not the result of returning a small amount of water to the environment to prevent the collapse of Central Valley ecosystems; it is a consequence of the crippling of the nation's economy by the Bush administration and the greed of some financial giants.
Would there be more farm employment if more water were available? No doubt. But don't look to simplistic solutions – look to the fact that more water has been given away in allocations than nature can reliably provide. Let's figure out how to use what's available as efficiently and equitably as possible.
– Peter H. Gleick, Oakland, Pacific Institute
Re-examine water policies
The mayors of San Joaquin and Mendota have painted a compelling picture of the suffering of their residents. Those who are economically vulnerable are the first to suffer the effects of poor management decisions. But it is wrong to accuse Jeffrey Michael of racism for questioning claims that this suffering results only from reductions in water deliveries. What Michael has done is to analyze facts and statistics, then suggest that the facts do not justify the solutions that are being proposed.
The Department of Water Resources admits that water in the Sacramento and San Joaquin watersheds has been over-allocated by as much as eight times. Recent agricultural development in the southern Central Valley has been based on a level of water deliveries that cannot be sustained. Continuing unsustainable water transfers will only shift the economic distress to other parts of the state.
It is Michael's job to make economic forecasts, and the forecast based on current unsustainable water policies is not good. Michael is not the only one making that point. We need to re-examine the policies rather than attack the people who question them.
– Jane Wagner-Tyack, Lodi
Why is UC executive pay so high?
Re "UCSF chancellor took a pay cut" (Letters, May 18): Unbelievable. As a UC student, I've had a rough time the last few years, as have my peers. As tuition continues to spike, I am forced deeper into debt in order to receive the diploma that I need to enter the ground floor of our economy. It is interesting that there is even a comparison made between what Susan Desmond-Hellmann would be making at Genentech and what she is making as the chancellor, as one is a private institution and one is a public university.
What should drive people to work for the University of California is not the money but the desire for public service. No one believes that being a chancellor at a major university is an easy job, but is there any reason that the chancellor of UC Davis is paid the same amount as the president of the United States? If we want to discuss what is fair in terms of compensation, then let's talk about the low-wage workers employed by the university who earn so little they cannot pay for basic necessities. Sacrificing a large salary for entering into public service is nothing new and Sen. Leland Yee's efforts to highlight this issue are commendable.
– Talia MacMath, Davis
San Francisco Chronicle
Drought leaves cattle ranchers short of grass...Record Searchlight, http://redding.com
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/26/state/n095857D97.DTL&type=printable
Redding, Calif. (AP) -- Three years of dry weather have affected California grazing land.
That has cost ranchers tens of thousands of dollars to feed cattle that would normally graze over the winter months.
A spokesman for the Shasta Livestock Auction Yard says some ranchers are selling cattle a year early because they can't afford the cost of feed. At least one rancher has spent about $30,000 to buy hay for his 1,500-head herd.
Others are moving cattle from the Central Valley to mountain pastures typically used during the middle of summer.
Signs of more trouble ahead for housing market...Carolyn Said
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/26/MNRB17JFHB.DTL&type=printable
Warren Buffett and Alan Greenspan say the housing market is near bottom.
Peppy real estate agents and gloomy stock-market traders alike eagerly embrace that supposition. Wall Street is so hungry for good news that stocks rallied at the barest hint of upbeat indicators several times this month.
But an array of serious pending issues undercuts the turnaround theorists.
To be sure, an end to the precipitous collapse that triggered a foreclosure avalanche and wiped out more than $6 trillion of home equity nationwide, not to mention setting off a worldwide economic collapse, would be something to celebrate. And several recent market barometers - diminishing inventory, increasing buyer competition, slowing price depreciation, rising builder confidence - lend credence to the idea that real estate could soon rebound.
A healthy housing market has a decent balance between supply and demand. While at a quick glance those components appear to be stabilizing, on closer look there are numerous factors that are likely to weaken demand and deluge the market with supply in coming months.
On the demand side, the surge in joblessness, still-high home prices, the credit crunch and a dearth of move-up buyers cut into the pool of potential home buyers.
On the supply side, an assortment of factors seems poised to trigger new waves of foreclosures that will continue to bloat inventory. They include the expiration of foreclosure moratoriums, more underwater "walk-away" homeowners, pending recasts of option ARM loans, rising delinquencies in prime and Alt-A loans, and soft sales of high-end homes.
Here is a rundown of key problems that could continue to undercut real estate.
Demand still softens
-- Rising unemployment.It doesn't take an economist to realize people will not buy homes if they're worried they might lose their jobs.
"Employment is crucially important," said Peter Morici, a professor at the University of Maryland business school. "We lost more than 600,000 private-sector jobs last month. That means the housing market is not going to turn up yet for a while."
Unemployment also will spur supply. While the first wave of foreclosed-upon homeowners comprised people who could not afford their homes from the get-go, as more people lose their jobs, they are likely to lose their homes because they no longer have enough income to make the payments.
-- No "move-up" buyers.In a normal real estate market, about 80 percent of buyers are "moving up" or "moving across" - people who sell one home before buying another, said Mark Hanson, principal of Walnut Creek's the Field Check Group, a mortgage consultant. Remaining purchasers are split between first-time buyers and investors.
In today's market, about half of buyers are first-timers and a third are investors, leaving just 15 percent of what he calls "organic" buyers. Those first-timers and investors all troll for bargain-basement foreclosures - leaving few buyers who are interested in the homes being sold by "Ma and Pa Homeowner." That, in turn, leaves Ma and Pa unable to move up to a nicer home. "The organic seller is left out in the cold," he said.
It also could impact supply down the road, when all those pent-up sellers finally decide to put their homes on the market.
-- Tight credit.Even people who do want to buy a home can't necessarily find someone willing to give them a mortgage. The standards of 20 percent down payment; solid, provable income; and good credit are back in force. While that more-stringent underwriting represents a return to classic values that should avoid future delinquencies, it leaves quite a few potential borrowers out in the cold. Most notably, self-employed workers - even ones with high income, such as doctors - are finding a less-cordial reception from lenders.
-- Homes still overpriced.Home values have plunged nationwide. The authoritative Case-Shiller index shows prices nationwide at 158, down from a spring 2006 peak of 226. (That compares to a base value of 100 in January 2000.)
So that means homes are now affordable, right? Not so, say many analysts who believe prices are still wildly inflated compared to historic appreciation rates. From 1950 to 2000, home prices grew 4.4 percent a year, modestly outpacing inflation, said Andrew Schiff, a spokesman for Euro Pacific Capital in Connecticut. Following that metric, the Case-Shiller index should be at 132. "We're still way above where we should be in a normal market," he said.
Supply likely to surge
-- Foreclosure moratoriums end.Major lenders temporarily halted foreclosures late last year and early this year in anticipation of President Obama's housing rescue plan. In addition, California enacted a new law this fall that slowed down foreclosures. That means the foreclosure rate was artificially depressed over the past several months. The moratoriums have now expired.
The net result is likely to be fresh batches of foreclosures from all those deferred troubled loans. California statistics illustrate the problem. According to research firm MDA DataQuick, mortgage default notices - the first step in the foreclosure process - hit record highs in the first quarter, implying that, within months, foreclosures will resurge.
-- Shadow inventory.Banks appear to be sitting on a vast inventory of homes that they have repossessed but not yet listed for sale. As previously reported in The Chronicle, this shadow foreclosure inventory could number in the hundreds of thousands nationwide. In addition, observers say banks appear to be deliberately delaying foreclosures, for example, not yet sending notices of default to homeowners who are months behind on their mortgages. All those properties eventually will have to hit the market, and, like all foreclosures, are likely to sell at cut-rate prices, driving down home values.
-- Walk-away underwater homeowners.The number of people who owe more than their home is worth continues to rise. Almost 22 percent of all mortgage holders were underwater by March, according to real estate site Zillow.com. That's spurring a phenomenon of "walk-away" homeowners - people who choose foreclosure because they don't want to pay off an upside-down asset.
Matt Bording and Mangala Abeysinghe are an example. They have poured love and energy into their three-bedroom Richmond home; the garden alone is a work of art. Bording has a steady job as an ICU nurse, Abeysinghe, a nurse in her native Sri Lanka, should readily find work once she passes the U.S. licensing exam. They made a down payment and can afford their monthly payments.
On paper, they sound like ideal borrowers. But as their home value plummeted, leaving them underwater by more than $200,000, they decided to walk away. They stopped paying their mortgage in October, and are still living in the home, although the lender sold it at a foreclosure auction last week.
Bording described the decision as "a bit of brinkmanship and bravado, along with fear of being financially trapped. I'm wondering about the possibility of many more prime borrowers doing the same thing, causing some kind of ripple in the economy."
-- Loan modification shortfalls. Modifying borrower's mortgages to make them more affordable is a cornerstone of foreclosure prevention. But to date, most such efforts have simply deferred foreclosure, rather than providing a permanent fix. An authoritative study by the Comptroller of the Currency found that more than half of modified loans end up delinquent again within months. However, the study was done before the Obama administration's mortgage mod plan came into play. The jury is still out on how effective it will be at preventing foreclosures.
-- Option ARM, Alt-A time bombs. Two categories of loans used for higher-end homes are emerging as the next trouble spots, as foreclosure contagion spreads beyond subprime. Delinquencies are rising for Alt-A loans given to people with good credit who could not document their income. Meanwhile, millions of option ARMs, or adjustable rate mortgages in which borrowers can choose to start off making minimum payments that don't even cover the interest, are expected to start resetting next summer. At reset, borrowers suddenly must make sharply higher payments, which can trigger foreclosures.
The underwater issue comes into play here, too: People who owe more than their home is worth find the door slammed shut on refinancing their way out of trouble.
"Option ARM and Alt-A products will be the next big wave of foreclosures," said Jeffrey Taylor, a forensic accountant with Digital Risk LLC, which provides risk mitigation services for financial firms. "Many of those (borrowers) reached a little further than they should have. With the economy deteriorating, will those people be able to afford those houses?"
-- High end taking a hit. Until recently, most of the market activity and price drops have been among lower-cost homes. Homes under $350,000 have had the most severe price drops, while those above $750,000 have remained relatively stable. That appears to be changing, as foreclosure woes spread to the upper end. The difficulty of getting "jumbo" loans to buy pricey houses has exacerbated the situation to the point where unsold inventories of high-end homes are swelling.
"The mid- to upper-end housing market is sitting on the exact precipice that the lower-end market was sitting on in early 2008," Hanson said.
UC employees need whistle-blower protection...Editorial
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/26/ED9J17PUIM.DTL&type=printable
The University of California is lobbying against state legislation that would provide whistle-blowers within its ranks the same legal protections as other state employees.
The compelling need for such legislation became apparent last year when the California Supreme Court was forced to dismiss a lawsuit by two former computer scientists at UC's Lawrence Livermore National Laboratory. The court pointed to a gap in state law that prevents UC employees from seeking damages in court if the university conducted its own investigation of their retaliation claims in a timely manner. Three of the justices encouraged the California Legislature to change the law, suggesting that without an independent court review of whistle-blower claims, "the law's protection against retaliation is illusory."
The fairest and most straightforward solution would be to extend standard state whistle-blower protections to UC employees, which Sen. Leland Yee, D-San Francisco, proposed in SB219, awaiting a vote on the Senate floor.
Regrettably, SB219 has encountered resistance from the university, which has insisted that any claims of whistle-blower retaliation should first go through its in-house process - and only then, if the employee is unhappy with the outcome, could he or she appeal to the courts to assess the fairness of the process and whether the findings were supported by the evidence.
Whistle-blowers from other state operations have the ability to take their retaliation claims directly to court.
"The fundamental position that UC holds is that they want to continue to be judge and jury, and they want to disadvantage the claimant as much as they can," Yee said. "I think that's wrong."
UC President Mark Yudof characterized himself as a strong advocate of whistle-blower protections in a meeting with The Chronicle's editorial board last week. Yudof noted that he championed whistle-blower reforms at the University of Texas. He suggested the UC-proposed amendment to SB219 amounted to "a legal nuance."
It's obviously more than a nuance. It's a double standard that disadvantages UC employees who want to come forward with evidence of waste, fraud and abuse.
At a time when the University of California is asking families to pay higher fees and pleading with legislators to sustain state support for higher education, its leadership should be doing everything in its power to demonstrate its commitment to transparency and accountability. It should be encouraging employees to step forward to identify inefficiencies and wrongdoing, to help preserve confidence in this world-class university system that is so essential to our overall economy and the upward mobility of legions of talented, hard-working Californians.
UC's opposition to SB219 undermines a noble cause at a precarious moment when every state dollar is coming under scrutiny.
Senators who want to support and advance the UC mission should vote yes on SB219.
Contra Costa Times
Bill to rein in Oakland port emissions creates flap...Denis Cuff
http://www.contracostatimes.com/environment/ci_12446724?nclick_check=1
A dispute about reducing diesel emissions from trucks, ships and trains at the Port of Oakland to protect public health is boiling over into the California Legislature.
Assemblyman Jerry Hill, D-San Mateo, has introduced a bill aimed at pressuring the city-owned port to speed up its efforts to curb diesel emissions, which elevate the cancer risk in parts of western Alameda and Contra Costa counties — especially in West Oakland.
"It's important to hold the port accountable for the pollution that is an important public health issue," said Hill, former chairman of the Bay Area Air Quality Management District board and a former member of the California Air Resources Board.
He contends the port has dragged its feet in cleaning up the air.
Hill's Assembly Bill 431 would require the port to take pollution-reduction measures equally as "stringent" as those taken by the Long Beach and Los Angeles ports.
The bill would leave it up to the nine-county Bay Area air-quality district to say whether the port was meeting the standard.
Officials with the port, maritime and railroad industries, and the California Chamber of Commerce oppose the bill as unwise state regulation of the nation's fifth-busiest port, a landlord attracting many private trucks, ships and trains.
"We believe this would add a duplicative set of regulation that would be counterproductive to the goal of improving air quality," said Richard Sinkoff, the port's director of environmental programs. "We want to move forward in cleaning up air. This is not the way to do it."
The debate moves to Sacramento this week when the Assembly Select Committee on Ports holds a hearing at 1:30 p.m. Wednesday in room 447 of the state Capitol to examine efforts by California ports to reduce diesel emissions.
"While the recession is putting new pressures on our ports, we still have to prepare for a future of greener ports," said Assemblywoman Bonnie Lowenthal, D-Long Beach, head of the select committee on ports.
The California Air Resources Board has passed a series of vehicle and fuel rules to cut port diesel emissions. One rule bars old diesel trucks from visiting ports after Jan. 1, 2010, unless they install diesel filters.
Bay Area air-quality regulators, environmentalists and some neighbors say the Port of Oakland should do more to improve air quality ahead of the regulatory deadlines.
The critics said the Oakland port has lagged behind the two Southern California ports, which have adopted freight container fees to fund clean-air measures, and adopted a ban ahead of the state deadline on old diesel trucks using ports.
"Instead of investing more in filters and other measures to reduce the toxic threat of diesel, the port is allowing the lungs of West Oakland residents be used as particulate filters," said Mark Ross, a Bay Area air board member on the Martinez City Council.
Sinkoff, the port's environmental director, said the port is committed to clean air, but the Los Angeles and Long Beach ports have more resources to fight pollution problems because those two ports, combined, handle seven times the volume of cargo that Oakland handles.
Plus, Oakland port container volumes this year are down about 15 percent from last year, he said.
Two other members of the Bay Area air board — Alameda County Supervisors Scott Haggerty, of Dublin, and Nate Miley, of Oakland, — said they oppose Hill's bill. They said they worry about the potential economic harm to the port, and they believe the port has made progress toward cleaning up diesel. "It's too early to use the sledgehammer approach," Haggerty said.
As a sign of progress toward cleaner air, port officials point to their adoption last month of a clean-air plan setting the framework for some $650 million in pollution-reduction measures through 2020.
Port commissioners also agreed last month to restore $5 million for diesel filter grants for truckers.
But many port critics, including the California Air Resources Board and federal Environmental Protection Agency, said the port's pollution plan is skimpy on detailed commitments.
"The port sets wonderful cleanup goals," said Doug Bloch, director of the Oakland Coalition for Clean and Safe Ports, "but then they have done almost nothing to follow through with details and commitments." 
San Diego Union-Tribune
Sacramento pursuing water bond despite hard times...Michael Gardner, U-T Sacramento Bureau
http://www3.signonsandiego.com/stories/2009/may/26/
1n26water235814-sacramento-pursuing-water-bond-des/
SACRAMENTO — Water bonds have always been a tough sell even in the best of fiscal times.
Now a cash drought and a public sour on politicians make that job all that much more difficult.
Nevertheless, Gov. Arnold Schwarzenegger and lawmakers still plan deep budget cuts – perhaps totaling $24 billion – while pursuing a costly water bond at the same time.
The governor's tone did not reflect brimming confidence going into the eventual crushing defeat of his budget propositions in last week's special election.
“As soon as you see . . . those propositions fail, we will be consumed by budget talks and figuring out where to make the cuts,” he said just before the vote.
Schwarzenegger has endorsed raising more than $10 billion through a water bond that could go before voters next year. Of that, $3 billion would be set aside for reservoirs. Environmental restoration, water quality and conservation programs also would be in line for funding. Four competing bond proposals have been introduced.
Moreover, Schwarzenegger will insist that all major elements of legislative action on water come to his desk as a package before he signs any bond, his aides said.
In addition to the bond, the governor wants the package to include plans for a canal to deliver water north-to-south and set policy for statewide conservation by cities and farms, his aides said. Also, the governor is looking to create an oversight council that would enforce a blueprint for how the state plans to restore the troubled Sacramento delta, the hub of California's drinking water supply.
Meanwhile, lawmakers have been privately meeting to draft a bond proposal. They are inching closer, but differences remain over the key issues of cost-sharing, who should be in charge of delta restoration, and building reservoirs and a canal.
“The state's fiscal situation is a consideration and, yet, I believe the public wants us to secure their water future,” said Senate President Pro Tempore Darrell Steinberg, D-Sacramento.
Sen. Dave Cogdill of Modesto, the lead Republican on water issues, agreed. “It's obviously a tough time to bring it forward, but we can't wait,” he said.
Pressure is mounting. Court rulings and environmental regulations to protect a range of fish have siphoned water away from cities and agriculture. The drought has only compounded the damage. Farmland is being left idle, tossing thousands out of work in the San Joaquin Valley. Home builders and businesses worry that a lack of water will slow the state's climb out of recession.
“We have to link the imperative of an improved water infrastructure for California to economic recovery for California,” said Dave Puglia, a vice president of the Western Growers Association, a farm trade group.
But can the state afford the investment? At the $10 billion target, the new bond would nearly double the size of the current water record-holder, the $5.4 billion Proposition 84 approved in 2006.
However, $3 billion of the proposed bond set aside for storage would probably not be sold for several years. The estimated annual interest on that piece alone would be about $100 million. If the entire $10 billion was sold together, the interest payment could be in the neighborhood of $660 million annually – an eye-popping amount in these days of slashing budgets for schools, parks and health care.
Also, at least $3 billion dedicated to water programs remains left over from previous bonds, according to the nonpartisan Legislative Analyst.
Steinberg said lawmakers are exploring a range of financing options to limit the size of the bond and taxpayer cost. Among those is a revenue bond that would require water users to repay some of the debt.
Allan Zaremberg, president of the California Chamber of Commerce, who is active in bond talks, argues that the expense can be justified. “The water supply system is the blood that feeds the state,” he said. “The delta is the heart of that system. The (improved) economy will pay it back.”
Cogdill said it will take at least $10 billion to make the demanded improvements.
“I don't think we can go much lower and still accomplish what needs to be accomplished,” he said. “Let's be honest with the people and say this is what it's going to cost.”
Cogdill noted that voters approved a $10 billion high-speed rail bond even as economic gloom settled in.
Debate over a water connection fee or dedicated water rate increase is likely to resurface.
One municipal official representing water users east of San Francisco is wary. “We need to see it applied fairly to everyone,” said Doug Linney, president of the East Bay Municipal Water District. “The ag users have gotten off either entirely or pay much less.”
Zaremberg said a connection fee “is not out of the question.” But, he added, “taxpayers and ratepayers are one and the same people.”
One idea emerging out of the Legislature involves dedicating to fish most of the water that would be stored in a proposed off-stream reservoir at Sites, 60 miles northwest of Sacramento. That would free other supplies flowing out of the Sacramento River for people and farms.
Don Glaser, federal Bureau of Reclamation regional director, said moving water south at a time of pumping restrictions to protect fish is problematic. As it stands now, unless the delivery system is improved somehow, the cost of the reservoir would outstrip income from water sales to farmers.
Under most bond proposals for Sites Reservoir and other dams, taxpayers would pick up a large share of the costs – about half by some estimates – to account for public benefits such as fish and flood protection. The rest would be paid upfront by water agencies.
The topic of reservoirs has been a constant battle in the state, on par with the lengthy divisions over building a canal through the Sacramento delta. Voters rejected the Peripheral Canal in 1982, but a smaller delivery project is slowly attracting support.
Big water purveyors, such as the Los Angeles-based Metropolitan Water District, have agreed in principle to pay for a canal. But whether the state can build it without voter approval remains murky. Some canal supporters are lobbying for clarifying legislation.
Another hurdle involves how to govern delta programs. Twenty-seven cities and five counties, plus about 200 different types of local agencies, have some say over the delta.
“The delta needs a steward. No one speaks for the delta,” said Sen. Lois Wolk, D-Davis, pushing for a powerful oversight commission.
Wolk also proposes creating a special water master position given “real enforcement powers” to make sure state agencies follow water quality laws and restoration goals.
Republicans bristle, worried that a czar could usurp local control and use water as a weapon against development. Schwarzenegger is leaning toward creating a council that would set a plan for the delta and ensure that agencies follow its guidelines.
Meanwhile, as the debate drags on in Sacramento well into a second year, hardship continues to plague Central Valley towns.
Robert Silva, mayor of the tiny farming community of Mendota, where nearly one out of every two adults are unemployed and the outlook remains bleak, said it's time to stop talking.
“If we don't solve these problems, it's goodbye,” he said.
CNN Money
Homes: Almost 20% cheaper
S&P/Case-Shiller index reports huge decline of 19.1% for the first quarter...Les Christie
http://money.cnn.com/2009/05/26/real_estate/CaseShiller_home_
prices_Q1/index.htm?postversion=2009052611
NEW YORK (CNNMoney.com) -- The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday.
The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter.
The Case-Shiller 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.
The national index covers almost all homes sold throughout the United States and is reported quarterly, while the 20-city index reports sales in 20 major metro areas and represents a cross section of the national market. The 20-city index comes out every month.
"Declines in residential real estate continued at a steady pace into March," said David Blitzer, chairman of the Index Committee at Standard & Poor's in a prepared statement. "All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."
The ugly report was somewhat unexpected, according to Mike Larson, a real estate analyst for Weiss Research.
"The market was anticipating better results," he said. "There had been some signs of increased sales in post-bubble markets."
But that sales increase has not translated into higher prices. Bargain hunting - bottom fishing really - for foreclosures and other distressed properties has driven sales volume up while further depressing prices.
The foreclosure sales, which many appraisers used to ignore when they evaluated home prices because they represented outliers rather than typical sales, now have to be accounted for.
"These used to be anomalies," said Larson. "Now, when sales are dominated by foreclosures, where they represent 50% or more of [transactions], they are the market."
The market plague has burst far beyond its Sun Belt epicenter, as the latest month's data reveals. In March, Minneapolis recorded the largest monthly price loss of any metro area in the 20-city index, losing 6.1% compared with February. That is the biggest single-month decline for a city in index history.
Sun-Belt cities still had the largest year-over-year declines in March, with Phoenix prices down 36%, Las Vegas off 31.2% and San Francisco dropping 30.1%.
Two cities have now have fallen more than 50% from their peak prices: Phoenix is down 53% since June 2006 and Las Vegas is off 50.4% from its August 2006 high. Dallas prices suffered the smallest loss from peak, just 11.1% since June 2007.
Economist Mark Zandi, the founder of Moody's Economy.com, is optimistic that the market will stop falling sometime this summer or fall. "We need to focus on the mortgage-modification program," he said. "If that plan doesn't work or only works as well as the other modification programs have, we've got a problem."