Merced Sun-Star
Merced County, cities finally getting U.S. aid
A year after Congress approved funding, $9.3 million will be divvied up in the Valley...SCOTT JASON
Merced County and its cities will receive their piece of the $4 billion federal foreclosure aid almost a year after it was approved by Congress.
Many large cities received the funding directly from Washington, D.C., and have begun putting the money to use. Modesto, which was awarded $8.1 million, has already established its programs.
Merced County cities and others were required to apply through the California Department of Housing and Community Development, which was given $145 million to dole out.
The delay angered local officials who felt that one of the hardest-hit areas had been slighted.
Local governments are set to receive a combined $9,339,855 from the Neighborhood Stabilization Program. The money will help first-time home buyers with down payments and closing costs. Cities can also spend it on buying and fixing up foreclosed homes.
Merced city sent its application Monday and, if all goes to plan, should receive the money next month.
"Our problem is far worse than the money available," city Housing Program manager Masoud Niroumand said, "but this grant will help a little."
The city's set to receive $2,046,968, with most of the money going toward its first-time home buyer's program. The funding will help turn about 50 residents into homeowners with a 3 percent loan for a down payment. About $500,000 will go toward buying and rehabilitating about five homes, he said.
Residents can't make more than 120 percent of the median income to qualify for the first-time home buyer's programs.
For a one-person household, that's no more than $46,850. A family of four can't make more than $66,950.
Merced County will use its $3,144,403 to help people buy homes in Hilmar, Delhi, Winton, Franklin-Beachwood, Le Grand and Santa Nella.
Board of Supervisors Chairwoman Deidre Kelsey will ask the board next week to form a committee to oversee how the money is spent and look at ways to increase affordable housing. It would be comprised of local affordable housing officials and an appointment from each board member.
Kelsey wants to establish a revolving fund to help people afford homes.
"It's a delayed response to the boom," she said. "We want to be ready for the next time."
The federal money is set to arrive when the housing market has been flooded with buyers -- both local and out-of-town -- looking for good deals, local real estate agent Andy Krotik said.
"For a decent home, it's a feeding frenzy," he said. "Every Realtor I know has clients who can't find a house."
A 1,700-square-foot house on Juniper Avenue in Atwater listed for $108,900 received 13 offers in a day, he said. Other houses have been selling for $20,000 over the asking price.
There's about a month-and-a-half's worth of houses on the market, Krotik said. A buyer's market has a six-month supply. A good market is a three-month supply, Krotik explained.
The state's 90-day foreclosure moratorium ended last month, so Krotik expects another wave of foreclosures to crash soon.
It's frustrating to see local residents unable to find a good home, he said, but added that all the interested buyers will help the area housing prices stabilize and rebound.
Homes cost what they did when Krotik began working in real estate in 1989.
"The faster we pore through the foreclosure stuff," he said, "the sooner we get back to a normal market."
Merced County $3,144,403
Merced $2,046,968
Los Banos $2,407,876
Atwater $1,040,331
Dos Palos $225,968
Gustine $184,318
Livingston $289,991
Source: California Department of Housing and Community Development
Our View: State budget helps middle class, too
We're all in this budget mess together, and we will all have to make sacrifices to get through it.
State Finance Director Mike Genest has a unique perspective on government.
"Government doesn't provide services to rich people," he said recently. "It doesn't even really provide services to the middle class."
On the Schwarzenegger administration's proposed cuts to programs that disproportionately affect the poor, he added: "You have to cut where the money is."
If he really believes what he said, and didn't simply misspeak, you have to wonder how closely Genest has looked at the state budget.
Here's the reality: The largest portion of the state's general fund budget (more than half, or $51.7 billion) goes toward education. Do no rich and middle-class folks send their children to public schools or to California's public universities? Do UC Berkeley or UCLA or UC Davis have no rich or middle-class kids?
The next-largest portion of the budget goes toward health and human services (about one-third, $31.6 billion). Do middle-class folks have elderly parents who need nursing home care? Costs average $4,500 a month. While some people can afford to pay this bill on their own, most seniors quickly exhaust their savings and assets.
In fact, a majority of all the people in nursing homes in California have their care paid for by Medi-Cal.
Then there's the state prison system (more than 10 percent, $10 billion). Who benefits when convicted criminals are taken off the street and sent to prison -- only the poor? C'mon.
The state also spends money on transportation and economic development (nearly 3 percent, $2.6 billion). Do the rich and middle class use roads, bridges, trains, airports and ports?
Then there's state spending on California's natural resources (2 percent, $1.9 billion). Do the rich and middle class enjoy the state park system? Do they get protection from wildfires? Do they get clean water supplies from the state's waters? Do they benefit from flood protection levees?
In the current economic downturn, are middle-class folks affected by job cuts? Might they need health insurance coverage or food stamps or unemployment checks while they search for a job?
Genest's comments simply feed the myth accepted by far too many Californians -- that only poor people get government services.
And they reveal a major blind spot in the Schwarzenegger administration's approach to the current budget crisis. Genest's statement really is less about making cuts where the money is than about avoiding massive cuts where the political power is.
All Californians are in this budget mess together.
Next time somebody suggests otherwise, just say it: We all benefit from state government services -- and we will all have to make sacrifices to get through the crisis.
Sacramento Bee
Feds restore recognition to Calif. Indian tribe...STEVE LAWRENCE, Associated Press Writer
SACRAMENTO, Calif. -- A small band of Indians whose ancestors settled in Northern California thousands of years ago is an official tribe again, a half century after Washington took away the group's federal recognition.
U.S. District Court Judge Jeremy Fogel on Monday announced his approval of a settlement that restores federal recognition to the Wilton Rancheria, one of 41 California tribes that lost official status as a result of federal legislation passed in 1958.
"This has been a long, drawn-out journey, but another one begins," said Mary Tarango, co-chair of the Wilton Miwok Indian Community, one of two groups of Native Americans that filed lawsuits in 2007 seeking to restore federal recognition.
The settlement acknowledges that the federal government's actions were illegal in dropping the rancheria's tribal status. It clears the way for Tarango's group and one headed by Henry Sangmaster, the Me-Wuk Indian Community of Wilton Rancheria, to form a tribal government and write a constitution.
"This is a time of joy and satisfaction for our people," Sangmaster said in a statement. "It is an incredible feeling to know that our tribe is now officially unified and federally recognized."
The nearly 40-acre rancheria, about 24 miles southeast of Sacramento, was broken up in 1959 and its land split among 13 tribal families. Tarango said about a half dozen families still live there.
She said federal recognition would allow the rancheria's approximately 600 members to qualify for federal benefits available to other tribes, including college grants and health care.
"It makes a big difference for us," Tarango said. "We are back in the position where we are a sovereign nation."
She said the Miwoks were focused on setting up their tribal government and working with the U.S. Bureau of Indian Affairs to confirm tribal membership, not on building a casino.
"There are quite a few recognized tribes that aren't in a gaming situation, and they've been able to do very well," she said. "There's much more we need to focus on without even thinking about being out there with the big dogs, so to speak."
My View: Cal Grants' exit would put state on crash course...Steven C. Morgan. Stephen C. Morgan is the president of the University of La Verne.
It doesn't take a college education to realize that the budget crisis facing California is potentially more devastating than any natural disaster this state has ever experienced.
But while this fiscal emergency now requires renewed commitment in Sacramento, the desire to make quick decisions without cautious assessment threatens to have a ruinous long-term effect on California's economy.
Among the governor's recent proposals to balance the state budget is a recommendation to eliminate the Cal Grant program.
For more than half a century, Cal Grants have enabled academically qualified, financially challenged California students to earn a college degree, providing men and women from a wide range of socioeconomic backgrounds access to higher education.
Having spent the past 24 years as president of the University of La Verne, I know the Cal Grant program is a fundamental reason California is recognized as a worldwide leader in business, technology and innovation. These grants are sound investments in the future.
Recent public discussion involving Cal Grants has focused on the impact they have on students attending public institutions – UC, Cal State and community colleges. Often overlooked is the role California's independent colleges and universities, including La Verne, play and the consequences dropping the program would have on these institutions.
Using La Verne as an illustration, last year 729 students within our combined enrollment received more than $6 million in Cal Grant funds. Of those, 77 percent were female and more than 61 percent identified themselves as being Hispanic, African American, Asian-Pacific Islander or Native American-Alaska Native, including 359 of Hispanic heritage. And of the freshmen and transfer students confirmed to attend La Verne next fall, 127 – nearly 30 percent of the entering class – have been awarded more than $1 million in Cal Grant funds.
Under the governor's proposal, those students will need to quickly identify and obtain alternative assistance to sustain their dream of earning a college degree.
Because students attending this state's independent colleges and universities receive higher Cal Grant amounts ($9,000-plus) than those at state institutions, some argue that limiting grants to UC-Cal State-community college students makes financial sense. But that overlooks the subsidized cost of public education.
According to the Association of Independent California Colleges & Universities, based on the latest graduation rate figures the cost to the state's general fund for each Cal Grant recipient earning a bachelor's degree at an independent institution ($62,932) is dramatically less than for those earning their degree at a UC ($159,266) or Cal State ($328,662) campus.
Because AICCU schools provide facilities and subsidize the actual cost of student education without public funding, the Cal Grant assistance each of our qualifying students receives represents the state's total financial outlay. So although students attending public institutions obtain lower amounts in annual Cal Grant aid, those dollars reflect only a portion of the true cost to taxpayers.
The importance of an educated work force has long been recognized as fundamental to California's financial success. In its 1992 report "Visions: California 2010," the California Economic Development Corporation stated: "If we do not educate all our people for tomorrow's jobs, our society could become increasingly polarized between the rich and the unskilled." It went on to assert, "No issue will be more important for sharpening our competitive advantage, spurring overall growth, and for ensuring that the benefits of that growth are shared by all Californians, than investing in ourselves."
Last April a Public Policy Institute of California report warned that by 2025 this state will face a shortage of 1 million college graduates needed for the statewide work force. Having fewer college-educated adults translates to a higher percentage of low-income households, which in turn increases demands on social services. Such conditions will allow companies to continue searching elsewhere for more fertile environments and force qualified workers to follow.
Finding practical solutions and securing a prosperous economic future in the Golden State depends on higher education, the public and private sectors working together to ensure continued accessibility and affordability for all qualified students. If we miss a generation, we will never catch up.
With the assistance Cal Grants provide, La Verne graduates and those from other colleges and universities throughout this state will help point California and the nation toward recovery.
Stockton Record
Call for the blog squad...Alex Breitler's blog
The conservative Pacific Legal Foundation wants Gov. Schwarzenegger to request that the feds convene the Endangered Species Committee, also known as the "God Squad."
The God Squad has authority to throw out protections for species if it's in the public's best interest. PLF claims the new salmon biological opinion released last week will cripple San Joaquin Valley farming and the economy.
Prepared PLF statement: "If there was ever a time to invoke the God Squad, it is now when San Joaquin Valley farmers, farmworkers, rural communities and cities are already reeling from the effects of the unconstitutional pumping cutbacks for the Delta smelt and meddling by bureaucrats in management of California's water supply."
We'll see how the governor, who also blasted last week's opinion, reacts. The God Squad has convened only a few times, and over-riding the ESA requires a lack of reasonable alternatives as well as human benefits that "clearly outweigh" the benefits of species conservation. Read the text of the ESA here.
Risks and rewards in the local housing market
For those willing to put in a large amount of sweat equity, there are plenty of homes in the Stockton area available for prices not seen since the days of disco...Keith Reid
STOCKTON - Real estate bargain hunters in Stockton can buy property for less than the sticker price of a Cadillac Escalade in today's market.
San Joaquin County real estate listings contain at least two dozen homes priced less than $50,000 and at least one as low as $15,900. These are prices not seen in California since the 1970s, a decade in which home prices climbed from $23,000 to $84,000.
The median home price in the county peaked at $425,000 in the fourth quarter of 2005. The county's median home price at the start of this year had dipped below $200,000.
Most of today's Stockton bargains, all coming as part of a wave of foreclosures, will be scooped up by investors. However, a first-time home buyer who has patience, persistence and a well-equipped tool belt has new opportunities, real estate experts say.
Market newcomers be warned: These homes come with problems that can't be covered with paint.
» Some have been stripped of all appliances and fixtures.
» Others have electrical wiring that has been tampered with.
» Still others have plumbing problems.
» And, in some cases, squatters have made the vacant properties home for months at a time.
"An investor who knows and understands real estate will walk into these homes and know what they're getting," said Jack Mossman, a Realtor with Keller Williams Realty in Stockton. "They will know what it will cost to hire contractors and will know quickly if the investment pencils out."
The city's least expensive listing is a north Stockton home on the 500 block of Cabana Way, a neighborhood that Keller Williams agent Imran Poladi calls a "challenged area."
The challenges include poverty and a high crime rate.
The 1,300-square-foot house is priced at $15,900, a 92 percent discount from what property records show as a $180,000 selling price in August 2005.
Whoever buys this property, however, will have to make an offer sight unseen. The house is completely boarded up.
"On a property like this, the buyer will make an offer pending inspection," Poladi said.
Most of the potential bargains, however, are still at least twice the price of the house on Cabana Way.
Poladi is the listing agent for 2333 W. Willow St., a three-bedroom, one-bath house west of Pershing Avenue listed at $49,900.
Externally, the home appears structurally sound and has a manicured lawn, rose bushes and a large backyard. These features helped the home's previous seller fetch $288,000 in May 2006, at the heart of the housing boom.
Step inside today, however, and prospective buyers are hit first with the smell of urine, an odor likely left by squatters with pets.
Also, take a cautious step through the front door, because there is a major slant in the living room floor. The western corner of the house dips due to poor drainage. For further evidence, the living room window is bent into the shape of a parallelogram.
"The buyer is going to have to spend some money to remodel and fix the slant in the floor," Poladi said. "But to an average FHA buyer or a skilled investor, this could be a huge deal."
There are other deals to be had.
For the price of a low-end BMW sedan, $34,900, a home buyer could snag the foreclosed home at 1727 School Ave. The two-bedroom, one-bath house is almost 1,100 square feet on a tree-lined street.
The house will need some major patchwork and paint both inside and out, but its wood and tile flooring could be seen as an enticing feature for future occupant. The house could easily be a rental.
Once it's purchased and repaired, an investor might turn to a property manager such as Norbert Huston, owner of Huston Associates Inc.
Huston said his office is seeing a spike in clients who are fixing up rental properties.
"One client of mine basically discovered Weston Ranch, where he could buy for excellent pricing, and the rents can cover his debt service," Huston said, describing an area full of foreclosed-home opportunities.
Other investors are more cautious.
"If I were a younger person, I'd go for it and see what happens," said Stockton investor Frank Vetter, who is in his 50s. "For me, though, I'm worried the (rental) market is going to be oversaturated because so many people are investing."
However, when buyers see a two-bedroom house such as 1529 S. Oro Ave. listed at $23,900 - the price of installing a backyard in-ground swimming pool - it can be difficult to pass up. The house sold for $165,000 in June 2005.
The Oro Avenue dwelling is a tiny 650 square feet. Dual-pane windows and newly installed cabinets are a good start on restoration.
"Realistically, there's a lot of opportunity to get a great return on your investment," Mossman said.
Experts say these bargain homes come with risks, but smart investors willing to make improvements and wait for a market uptick may have discovered the silver lining in San Joaquin County's foreclosure cloud.
Stockton has made national headlines as the epicenter of the national mortgage meltdown. And home values are depressed as one consequence. Most homeowners are equally depressed as they've had to reassess their equity.
But for some, the dramatically lower prices have meant unexpected opportunity in an unprecedented housing market.
San Francisco Chronicle
Cal Grants seed future innovation...Richard Blum. Richard Blum is the chairman of the UC Board of Regents.
Education, the English writer and thinker G.K. Chesterton once remarked, "is simply the soul of a society as it passes from one generation to another."
California's political leadership might want to reflect upon this piece of wisdom as it weighs what I believe has been an outrageous, unconscionable proposal: the governor's call to phase out the half-century-old student aid program known as Cal Grants.
Since 1955, this program has opened doors for hundreds of thousands of young Californians who could not otherwise afford to attend college.
These are not supplicants looking for charity. These are bright, hardworking Californians who in high school earned a place in one of the state's colleges or universities. They don't need a handout. They simply need a hand up.
And Cal Grants has been that extended hand, allowing qualified but low- and middle-income students to attend college, whether in the community college system, one of the state's University of California or Cal State campuses, or private universities.
It's not a lot of money - the program tops out at less than $10,000 a year for each student - but enough to make a difference, especially in this down economy.
And how do these students pay back California?
By enriching the state's economic and cultural life after graduation.
By feeding the insatiable hunger of a prosperous society for smart workers and solid citizens, for inventors and poets and farmers and teachers.
Yes, there is a yawning gap in the state budget that must be filled. Yes, cuts must be spread all around. But killing the Cal Grants program should not be part of the conversation.
Thankfully, the Conference Committee on the Budget voted Friday to reject the governor's Cal Grants proposal, but that positive move is not likely to be the last word on the subject. Californians who care about Cal Grants, and the state's future, need to keep putting on the pressure.
Because budget crisis or no, the ancient wisdom still applies: In a famine, you do not eat your seed corn. It might fill your belly for a day, but it will ensure a horizon of barren harvests.
It is not coincidental that Cal Grants were born just as California was lifting off on a trajectory that would make it the world's eighth-largest economy and a cradle of innovation.
The program was woven into the tapestry that made California a place apart - the Master Plan for Higher Education, the water projects, the freeways, cultural movements and all the rest of the golden emblems of the state's unmatched advance forward.
And so, for starters, there is an economic argument to be made for preserving, in some fashion or another, the Cal Grants program.
If California is to climb out of its current economic rut, we must reject any panicky impulse to walk away from the task of filling our college campuses with the best and brightest Californians - regardless of family income or background.
On these campuses the next waves of innovation and inspiration will be formed, the next big thing found. California was given one great Gold Rush. After that, we climbed our way to the top by outthinking and out-creating and out-innovating the world. And that required - and still requires - a willing investment in education like nowhere else.
In this context, to eliminate Cal Grants would be to cave in to the notion that California can no longer afford greatness, that going forward it must settle for second best, or worse.
But there is more than a fiscal imperative to be considered. As Chesterton suggested, there is a moral consideration as well. The soul of our society is in play here. Do we want it said of California that, when times turned tough in 2009, it decided to save itself by slamming the door on tens of thousands of promising young minds?
Economic downturn stifles dream colleges...Justin Pope, Associated Press
The wretched economy has taught many of the nation's college-bound seniors a hard lesson: You can't always get what you want.
In a survey to be released today, 71 percent of high schools reported that more of their students are forgoing their "dream schools" this year than in previous years. And there is little doubt money is a big reason.
"With the exception of one or two students, it was THE determining factor in their decision," one high school official wrote. Said another: "Parents were willing to pay for prestige in the past. This year they wanted prestigious schools IF the financial aid packages would work for them."
The survey of 658 high schools was conducted by the National Association for College Admission Counseling, made up of high school and college admissions and financial aid professionals. This is the first time the organization has done such a survey; it set out to study students' picks in light of the economic downturn.
Laura Mueller-Soppart, graduating Thursday from Walter Payton College Prep in Chicago, knew Georgetown University's School of Foreign Service was her dream school when she visited last year.
She got accepted, but when the financial aid award letters arrived, her family's expected contribution was way beyond what they felt they could afford.
So when Northeastern University in Boston offered her a nearly full ride, she asked herself: "Do I go $200,000 in the hole because so many told me Georgetown was indispensable, or do I take the full ride?"
She is taking the full ride.
It is still not entirely clear how the recession will affect the college outlook for most of the nation's 3.3 million 2009 high school graduates.
Sixty percent of high schools surveyed said they were seeing more students enroll in public instead of private universities, and more than 70 percent of public universities said applications were up. But more than half of private colleges also saw applications rise, indicating students are trying to give themselves more options.
Public universities stand to gain as students stay closer to home but may also lose students to even less expensive community colleges; 37 percent of high schools reported more students attending two-year schools.
New York Times
Water Scarcity and the Western Oil Shales...Jeremy Miller, Green Inc.
Nathan Bilow for The New York Times The West has lots of oil, but getting out of the shale where it rests requires a lot of water — which the West doesn’t have.
Vast technical and environmental challenges have long stood in the way of commercial oil shale production.
But it is water – or more specifically, its scarcity – that is likely to be shale oil’s greatest stumbling block in the arid West.
The United States Geological Survey recently estimated that there may be as many as 1.525 trillion barrels of oil trapped in the rock of Colorado’s Piceance Basin, the region’s richest shale field. And a report released in March by the non-profit Western Resource Advocates, an environmental group based in Boulder, Colo., suggested that oil companies have acquired water rights at hundreds of locations in the upper Colorado River basin, which could be used for future oil shale production.
“There is this theoretical idea that if you could somehow extract all of the oil” from the Piceance Basin, said David Abelson, an author of the report, “you would have more oil than Saudi Arabia.”
The W.R.A. report, citing figures from the Bureau of Land Management and the RAND Corporation, argued that increased water use for oil shale development could hamper urban growth in the Rocky Mountain Front Range, threaten agriculture and critical habitat for endangered fish and increase the likelihood that Lower Basin states like Nevada, Arizona and California would issue a “call” — a legal decree that forces junior upstream water rights holders to reduce, or eliminate altogether, water use until senior downstream rights are met.
Mr. Abelson said the group’s findings are based on a “full production” model — a scenario that by even the most optimistic of projections is more than 15 years off.
Glenn Vawter, executive director of the National Oil Shale Association, a group that represents the industry, said that the study’s findings are overstated and play on tensions surrounding a regional water war that long predates the oil shale industry.
“Many people that we have encountered who are involved in the oil shale water issue represent Front Range concerns,” said Mr. Vawter. “It doesn’t take oil shale to touch off that battle.”
Mr. Vawter said that water produced during shale-processing and from local oil and gas wells could potentially reduce the amount of water taken from Colorado River tributaries. “Of course, you’d have to clean it up before using it,” he said. “There is a cost involved there, but it would provide water to the industry not linked to streams and rivers.”
CNN Money
U.S. regulator: Be wary of reverse mortgages
OCC's John Dugan says the loans aimed at older homeowners could target a vulnerable segment...Special Report
WASHINGTON (Reuters) -- Reverse mortgages could be the next subprime mortgage product to experience rapid growth while taking advantage of a vulnerable segment of the population, top U.S. bank regulator John Dugan said Monday.
Dugan, who heads the Office of the Comptroller of the Currency and supervises some of the nation's largest banks, said regulators are crafting guidelines to ensure that robust consumer protections are in place for reverse mortgages.
"While reverse mortgages can provide real benefits, they also have some of the same characteristics as the riskiest types of subprime mortgages -- and that should set off alarm bells," Dugan said in prepared remarks to an American Bankers Association conference.
Reverse mortgages are complicated loans targeted at homeowners who are at least 62 years old, and allow older Americans to live off the equity in their homes as they age.
In a reverse mortgage, the homeowner receives money from the lender, which does not have to be repaid as long as the borrower lives in the home.
Fannie Mae (FNM, Fortune 500), the largest provider of U.S. home mortgage funding, had about a 90% share of the reverse mortgage market at the end of 2008. Many large banks such as Bank of America (BAC, Fortune 500) and Wells Fargo (WFC, Fortune 500) are big providers of reverse mortgages.
The great majority of reverse mortgages are insured by the Federal Housing Administration and pose limited credit risk. But Dugan said a different class of reverse mortgages -- "proprietary" products -- offer less consumer protections.
Dugan said that as the elderly American population grows, there could be a significant pickup in demand for proprietary reverse mortgages, which he said bear significant similarities to the type of subprime products that helped fuel the housing boom and bust, resulting in a widespread credit crisis and recession.
"I believe the critical lesson here is the need to act early, before problems escalate," Dugan said.
He said regulators need to set more standards for proprietary reverse mortgages. Regulators also need to be vigilant about misleading marketing and need to crack down on any lenders who try to bundle a reverse mortgage with other financial products, such as an annuity or life insurance product, Dugan said.
If those actions are not enough, Dugan said "more definitive regulatory standards may need to be adopted, and the OCC is prepared to do that."