7-2-09

 
7-2-09
Badlands Journal
And once again we approach the topic of leadership...Badlands Journal editorial board
http://www.badlandsjournal.com/2009-07-01/007301
In May, Merced County official unemployment rate fell to 17.3 percent. -- Badlands
Dated
Merced County Economic Development Corporation
The New California      
The Merced Region
http://www.mcedco.com/
Central California is increasingly viewed as a new location option for investors that wish to prosper in the state, but who are deterred by expensive coastal locations and large cities. Merced County typifies opportunities for growth and development in this "New California", offering an affordable alternative without compromising the advantages of a vast state economy, ranked fifth in the world. 
Wealth generation opportunities are fueled by a state population in excess of 35 million, tremendous business diversity, extensive foreign trade, and unsurpassed productivity and innovation. The dynamic market and purchasing power, creativity and superb lifestyle combine to make California one of the most desirable places to live.
The cities and county of Merced collaborative Economic Development Strategy reflects a strong team approach. The region’s young and dynamic population of 251,000 is one of the fastest growing in the nation. 
The economic base of the Merced region reflects the $2 billion annual agricultural output, yet Merced Region’s manufacturing operations also include commercial printing, automotive parts, construction suppliers and materials, and the world’s finest competition watercraft.
Merced is home to the newest campus of the University of California system. UC Merced opened in the fall of 2005 with a curriculum focused on research, engineering and the environment. The influence of improved education facilities is already impacting Merced as students scores continue to improve.  
Castle Airport and Aviation Development Center, with one of the longest unimpeded runways on the west coast is ideal for cargo, couriers and aviation businesses. The former home of a squadron of B-52’s, Castle can accommodate any craft with non-stop access to and from Asian markets.
Governor Schwarzenegger has proclaimed that California is again open for business. On behalf of the Merced Region we invite you to visit "New California" and explore countless opportunities that our community offers.
6-18-09
BusinessWeek
Merced: Ghost Town, USA
http://www.businessweek.com/magazine/content/09_26/
b4137038265539.htm
Some cities, such as Merced, Calif., are struggling more with the housing crisis than others. The housing crisis is creating ghost towns of once-bustling communities like Merced. In largely abandoned neighborhoods, paved sidewalks and driveways lead to empty lots strewn with utility coils. Unfinished frames with rotting rafters and rusted hinges sit alongside occupied homes. Roughly 40% of the homes in Merced are considered distressed, meaning owners are behind on their mortgage payments or can't make them at all. The toll is expected to rise, even though California extended its moratorium on foreclosures for another 90 days.
Merced, situated in Central California's San Joaquin Valley, is an extreme example of what's happening across the country. As the economy tanks, foreclosures are soaring. Roughly one out of four subprime mortgages nationally is in trouble. Even so-called prime borrowers, who had good credit when they got their loans, now are having trouble keeping up; about 5% of these loans are in foreclosure, up from less than 1% in 2007, according to the Mortgage Bankers Assn. Rates are even higher in cities like Merced, Fort Myers, Fla., and Bakersfield, Calif., where the bust has been brutal.
Such markets will continue to suffer as they work through the inventory of foreclosed properties. In Merced, property values have dropped 70% in some cases. With banks and borrowers dumping distressed homes, prices could fall by 12.7% more, according to Karen Weaver, a Deutsche Bank (DB) analyst. Merced, say analysts, will hit bottom by mid- to late 2010—after the rest of the country. In places like Bloomington, Ind., and Fayetteville, N.C., where homeowners are in better shape, the markets should be more resilient.
Foreclosure does present opportunities: Buyers and investors are scooping up distressed properties at cut-rate prices. Those purchases are helping jump-start sales in hard-hit states like California, Nevada, and Florida—the first signs of life in otherwise moribund markets. Jillian Mendoza, a high school teacher in Merced, bought her first home out of foreclosure in September. She paid $143,000 for the three-bedroom home, which the previous owner had bought for $325,000 several years ago. "I never thought I'd be able to buy a house at 25," says Mendoza. "I got such a deal on it that I'm not that worried about it losing value."
Like many former boom towns, Merced is paying the price for unsustainable growth. The University of California announced in 2001 that it would open its first new campus in more than 40 years on 84 acres in northern Merced. In anticipation of the potential demand, builders flocked to the area, and real estate investors bid up prices.
But they were overly optimistic. The school projected only modest admission rates and faculty hires—and housing supply far exceeded demand. Now the market lies in ruins, as unemployment tops 20%. Says Janet Young, assistant chancellor at UC Merced, which opened in 2005: "The housing boom was a huge surprise to us."
6-19-09
News From…
Congressman Dennis Cardoza
18th Congressional District of California
 Financial Services Committee commits to assist with Valley economic devastation   
 FOR IMMEDIATE RELEASE
CONTACT:  Mike Jensen
(202) 225-6131
http://www.house.gov/list/press/ca18_cardoza/
PRFINCOMIT.html
WASHINGTON, D.C. — Today, Financial Services Committee Chairman Barney Frank and several other Committee members pledged their support to work with Congressman Cardoza to address the economic devastation facing the San Joaquin Valley.
“I could not be more appreciative of Chairman Frank’s support. We have overcome a significant hurdle,” said Congressman Cardoza.
Congressman Cardoza has proposed legislation that would establish Economic Disaster Areas as a means of directing federal aid to areas that have been hardest hit by the recession.
On Friday, the Financial Services Committee heard testimony from Congressman Cardoza, as well as Los Banos Mayor Tommy Jones, about the cumulative impact of record-high foreclosure and unemployment rates, drought, and crashing dairy prices. Following the testimony, several members of the committee acknowledged the extreme difficulties faced by San Joaquin Valley residents. Chairman Frank expressed his commitment to working with Congressman Cardoza to find a means of directing funding to the region.
“We are going to make a serious effort to do this,” Chairman Frank announced.
Congressman Cardoza hopes to submit formal legislation within the coming weeks.
“We have much work to do,” said Congressman Cardoza. “However, today we made significant progress in educating Congress about our Valley, and our unique challenges.”
Modesto Bee
Water pumping restrictions to protect Delta smelt end...Matt Weiser
http://www.modbee.com/region/v-print/story/766568.html
Federal officials on Tuesday ended seasonal water pumping restrictions intended to protect the threatened Delta smelt.
The end of the water flow limits came in accordance with a biological opinion that governs Delta water export pumping only through June 30. Tuesday's action means water exports this summer no longer will be restricted specifically to protect smelt. The pumping rules don't resume again until winter.
The U.S. Fish and Wildlife Service rules aim to protect the fingerling smelt when the fish migrate deeper into the Delta in winter to spawn, and then remain in the region as juveniles to feed. This natural migration makes the fish vulnerable to the massive state and federal water export pumps near Tracy, which reverse natural river flows and suck millions of fish to their deaths every year.
The Delta smelt population has declined steeply since 2000 and may be near extinction. Water agencies say the pumping limits have aggravated California's three-year drought, causing crop fallowing and economic woe in the San Joaquin Valley.
The rules are intended to restore the species and prevent the need for additional restrictions in the future.
Fresno Bee
GOP ads link Dems to Valley water crisis
Radio spots attack Dennis Cardoza and Jim Costa...Michael Doyle
http://www.fresnobee.com/1072/v-print/story/1511134.html
WASHINGTON -- Republican strategists are now roughing up San Joaquin Valley congressional Democrats with radio ads linking them to the region's water woes.
In an aggressive new tack, the National Republican Congressional Committee on Wednesday began running a 60-second radio ad attacking Reps. Dennis Cardoza, D-Merced, and Jim Costa, D-Fresno. The ad running throughout the week links the two Democrats to systemic irrigation-water shortages.
"Cardoza and Costa can't persuade Democrat leaders to change radical environmental laws," the ad intones. "So while the congressmen fail ... the Valley goes dry."
The Republican Congressional Committee did not offer further explanation for this particular ad or the targeting. The campaign committee is, however, running a number of ads against Democrats. For instance, this week, the committee also initiated ads attacking 14 other Democrats on energy issues.
The ad's consequences may be hard to track, as the next election is still 17 months away. Both incumbents represent Democratic-leaning districts and neither has attracted a strong Republican challenger in the past.
Factually, the ad omits some crucial context.
The primary law being referred to is the Endangered Species Act. Federal judges including U.S. District Court Judge Oliver Wanger in Fresno, who was appointed by President George H.W. Bush, have ordered water diversions for species protected by the law.
Representing rural districts, with farmers and developers among their regular campaign contributors, Costa and Cardoza have been consistently critical of the current Endangered Species Act.
The two Valley Democrats have also aligned themselves with Valley Republicans on water-related votes and championed myriad water projects.
"I don't believe anyone has done more to advocate the water issue than I have for the past 25 years," Costa said Wednesday.
Cardoza added that the ad was "unmitigated baloney" and said, "We need cool heads to prevail and a whole lot less partisan rhetoric."
Among political strategists, though, attack ads are sometimes employed not to defeat an incumbent or push a policy but primarily to keep the lawmaker on the defensive.
Two weeks ago, Costa and Cardoza were among 37 House Democrats voting for an unsuccessful amendment that would have blocked a federal decision steering more irrigation water toward animal protection.
The decision issued last month by the National Marine Fisheries Service will cut urban and irrigation water deliveries by between 5% and 7% to protect salmon. Wanger had ordered the agency to prepare its revised "biological opinion" after concluding that a 2004 decision was inadequate.
"When will this stop? When our valley has no more water left for its farmers and its farmworkers?" Costa asked during the June 17 House debate, adding that "this is not a Republican or a Democratic issue."
The author of the California water amendment, Rep. Devin Nunes, R-Visalia, blasted House Democratic leaders for "destroying the economy of the San Joaquin Valley." Nunes, nonetheless, stressed that Costa and Cardoza are "trying their best to deal with their leadership to try to bring some attention to this problem."
Rally for water rights hits downtown Fresno...Robert Rodriguez
http://www.fresnobee.com/updates/v-print/story/1510498.html
Ron Schafer and Alice Powlick aren't farmers or farmworkers. They are middle-school teachers who came to Wednesday's water rally in downtown Fresno on behalf of their students.
The teachers joined several thousand who jammed the front of City Hall to plead with the state and federal governments to provide the Valley with more irrigation water. Mike Lukens, city of Fresno spokesman, estimated the crowd at between 3,500 to 4,000 at its peak.
More than a dozen speakers, including Congressmen Devin Nunes, R-Visalia, and George Radanovich, R-Mariposa, blamed environmental protections along with a third dry year for the shortage of water for Valley farmers.
Schafer and Powlick say they see the ripple effects of the drought in their southeast Fresno classrooms.
"We hear the students talk about their parents being out work because of the drought," Schafer said. "And it is hard for them."
Powlick, a self-described "bleeding-heart liberal," said she doesn't agree with federal protections for smelt, a tiny fish in the Sacramento-San Joaquin Delta, a major artery for Valley irrigation water.
The massive water pumps at the southern end of the delta have been slowed and sometimes stopped so the fish wouldn't be sucked in and killed.
"I believe in the Endangered Species Act," Powlick said, "but when it comes to having food and keeping our kids in school, that easily wins over a fish."
After the noon rally, the diverse crowd of demonstrators marched for several blocks around downtown. Many carried signs that said: "If you like foreign oil, you'll like foreign food" and "Farm + Water = Jobs."
"We are marching because we need people to understand that without water, we don't have jobs," said farmworker Rosa Hernandez, of Firebaugh, who said she worked four days last month.
Other workers -- including Rigoberto Ybarra, an irrigator from the Five Points area -- are working fewer days a week. He said he was lucky his boss paid him to attend Wednesday's rally.
"Right now, we are all using money we have saved so we can pay our bills," Ybarra said. "Nobody has money to save this year."
The rally is the latest in a series of demonstrations that included a four-day march in April that began in Mendota and ended at the base of the San Luis Reservoir.
This year, farmers in the Westlands Water District, one of the largest farming regions in the state, received 10% of their federal water allocation. Many farmers said they were forced to fallow thousands of acres and lay off hundreds of workers.
Tim Riley, operations manager for Midland Tractor in Madera, sees the fallout of the drought at his store. Sales are down because farmers don't have the income to buy new equipment.
"I don't think people understand that this isn't just a problem for farmers. This affects a lot of different people," Riley said.
Among those in the audience was west side farmer Mark Borba, who said it is important to keep pressure on federal and state officials to make changes that balance the needs of all California water users.
"Some of these things are in place and can be done, but what is lacking is the political will," Borba said.
Among the short-term solutions Borba supports is a proposal to submerge massive barriers in the channels of the delta to protect threatened fish, such as smelt.
A.G. Kawamura, secretary of the California Department of Food and Agriculture and a speaker at the rally, empathized with Valley farmworkers, saying the region has become the home of the frustrated and angry.
Rally organizers, including members of the California Latino Water Coalition, vow to take their battle for water to the streets of Los Angeles and the Bay Area.
Actor and comedian Paul Rodriguez, who chairs the coalition, said he will continue to fight on the region's behalf until they get the water they need.
"Unity is our strength," Rodriguez said. "And that's why I know we are going to win this."
Obama plan expanded to help more in Valley...Sandy Nax, News Blog
http://fresnobeehive.com/news/2009/07/obama_plan_expanded_
to_help_mo.html
Mortgage counselors in the central San Joaquin Valley say many more at-risk homeowners in the Fresno area could get help through an expansion of President Obama's Home Affordable Refinance Program, which was announced today.
The Obama plan can no help borrowers who are up to 125% underwater. That percentage is up from 105%.
For example, if the house is worth $100,000, the borrower must owe $125,000 or less and be current on payments to qualify. Previously, the limit was was $105,000.
That could boost the number of borrowers who can qualify for refinancing through Obama's program, said Elias Del Gado of ClearPoint Credit Counseling Solution in Fresno.
Still, refinances and loan modifications can be particularly challenging in the Valley because values have fallen up to 50% in some areas. Many borrowers still exceed the 125% ratio or, as interest and unemployment rates increase, fall behind on payments.
Fresno's foreclosure rate is 14th in the nation.
Despite that, the percentages of homeowners in the Valley with a Fannie Mae or Freddie Mac loan - FHA loans are among them - loans who could qualify for a refinancing under the expanded program could jump from 2% to 20%, he said.
U.S. Housing and Urban Development Secretary Shaun Donovan announced the expansion in Las Vegas, the foreclosure capital of the world, a day before he tours neighborhoods in Merced, which has the nation's fifth-highest rate.
467K jobs cut in June; jobless rate at 9.5 percent...JEANNINE AVERSA, AP Economics Writer
http://www.fresnobee.com/559/v-print/story/1511774.html
WASHINGTON Employers cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high of 9.5 percent. Workers also saw weekly wages fall, suggesting Americans will have little appetite to spend and the economy's road to recovery will be bumpy.
The Labor Department report, released Thursday, showed that even as the recession flashes signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain the economy is on solid ground.
June's payroll reductions were deeper than the 363,000 that economists expected and average weekly earnings dropped to the lowest level in nearly a year.
However, the rise in the unemployment rate from 9.4 percent in May wasn't as sharp as the expected 9.6 percent. Still, many economists predict the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.
All told, 14.7 million people were unemployed in June.
If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.5 percent in June, the highest on records dating to 1994.
"We were on the road of things getting less bad in the jobs market, and that has been temporarily waylaid," said economist Ken Mayland, president of ClearView Economics. "But this doesn't change my view that the recession will end later this year. We're probably two months away."
On Wall Street, the employment news pulled stocks lower. The Dow Jones industrials lost about 165 points in midday trading, and broader indices also fell. Overseas markets dropped after a report showed unemployment in Europe rose to a 10-year high in May.
Since the recession began in December 2007, the economy has lost a net total of 6.5 million jobs.
As the downturn bites into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive. Those include holding down workers' hours and freezing or cutting pay.
The average work week in June fell to 33 hours, the lowest on records dating to 1964.
"We are in some very hard and severe economic times," Labor Secretary Hilda Solis said in an interview. "The president and I are both not happy."
Still, Solis thought it was too early to consider a second government stimulus, saying more time is needed for the current one to take hold. "I do think the public needs to be patient," she said. "We know they are hurting."
Layoffs in May turned out to smaller, 322,000, versus the 345,000 first reported. But job cuts in April were a bit deeper - 519,000 versus 504,000, according to government data.
Even with higher pace of job cuts in June, the report indicates that the worst of the layoffs have passed. The deepest job cuts of the recession came in January, when 741,000 jobs vanished, the most in any month since 1949.
For the second quarter, job losses averaged 436,000 a month. That was down from a monthly average of 691,000 in the first quarter. Economists predict the economy will continue to lose jobs through the rest of this year, although they hope at a slower pace.
And there was some other encouraging job news Thursday.
In a separate report, the department said the number of newly laid-off workers filing applications for unemployment benefits fell last week to 614,000, in line with economists' predictions. The number of people continuing to draw benefits unexpectedly dropped to 6.7 million.
Meanwhile, the Commerce Department said orders placed with U.S. factories rose 1.2 percent in May, the most in 11 months. The increase also was better than economists expected.
Still, job losses last month were widespread.
Professional and business services slashed 118,000 jobs, more than double the 48,000 cut in May. Manufacturers cut 136,000, down from 156,000. Construction companies got rid of 79,000 jobs, up from 48,000 the previous month. Retailers eliminated 21,000, up from 17,600. Financial activities cut 27,000, following 30,000 in May. The government cut 52,000 jobs, up from 10,000 the previous month. Leisure and hospitality cut 18,000 jobs, erasing a gain of the same size in May.
One of the few industries adding jobs: education and health services, which added 34,000 positions last month and 47,000 in May.
Mayland and other economists said a good chunk of June's job losses likely were affected by shutdowns at General Motors Corp. and fallout from the troubled auto industry, which should let up later this summer. The government said employment at factories making autos and parts fell by 27,000 last month.
Payroll losses and the unemployment rate are derived from two separate statistical surveys. The jobless rate probably would have moved higher if not for people dropping out of the labor force.
With the weakness in the job market, workers saw wages drop in June.
Average weekly earnings fell from $613.34 in May, to $611.49 in June, the lowest level in nearly a year and the first drop since March. That raises fresh questions about consumers' willingness to spend in the months ahead.
The worst crises in the housing, credit and financial markets since the 1930s have plunged the country into the longest recession since World War II.
Many think the jobless rate could rise as high as 10.7 percent by the second quarter of next year before it starts to make a slow descent. Some think the rate will top out at 11 percent. The post-World War II high was 10.8 percent at the end of 1982, when the country had suffered through a severe recession.
Federal Reserve Chairman Ben Bernanke predicts the recession will end this year, with many economists forecasting that the economy will start to grow again as soon as the current July-September quarter.
But recoveries after financial crises tend to be slow, which is why economists predict it will take years for the job market to return to normal. Some predict the nation's unemployment rate won't drop to 5 percent until 2013.
An elevated unemployment rate could become a political liability for President Barack Obama when congressional elections are held next year. The last time the unemployment rate topped 10 percent, the party of the president - then Ronald Reagan's GOP - lost 26 House seats in midterm elections in 1982.
So far, many people are saving - rather than spending - the extra money in their paychecks from Obama's tax cut, blunting its help in bracing the economy. Much of the economic benefit of Obama's increased government spending on big public works projects won't kick in until 2010, analysts say.
The White House last week said federal money was being shoveled out of Washington quickly, but states aren't steering the cash to counties that need jobs the most.
Large job cuts have continued this week. Newspaper publisher Gannett Co. said it plans to cut 1,400 jobs in the next few weeks, about 3 percent of the work force, as it faces a prolonged slump in advertising revenue. Farm machinery company Deere & Co. said 800 salaried employees, or 3 percent of its salaried work force, took a voluntary buyout offer.
Valley Voice
Council Delays Racetrack Agreement...Julie Fernandez
http://www.valleyvoicenewspaper.com/tv/stories/2009/tv_
racetrackbudlong_0123.htm
Tulare - Developer Bud Long failed to get City Council approval for a much-needed agreement Tuesday after he told Councilman Richard Ortega that the Tulare Motor Sports Complex limited partnership “cannot or will not” repay within two weeks the $1 million it owns the city.
Ortega was the deciding vote in the 2-3 action, which saw a motion by Vice Mayor Phil Vandegrift to approve a 20-year development agreement go down to defeat. Mayor Craig Vejvoda had seconded the motion.
Immediately after that vote, the council – upon Ortega's motion – voted 5-0 to bring the matter back in three weeks...
Long's group needs the development agreement – which addresses issues such as impact fees – to move forward with the project, but the council wants assurance the $1 million it spent on an environmental impact report will be repaid.
Concern over the repayment was heightened after City Attorney Steve Kabot told the council the developer had transferred an account he had set up at Citizens Business Bank to guarantee repayment without transferring an agreement that said the money could not be disbursed without the city's approve.
The city agreed to allow the transfer only on condition that agreement went along with it, Kabot said.
TMSC attorney Myron Smith had drawn up a new document that included the terms of the earlier agreement and brought it to the Fresno airport for Mayor Craig Vejvoda's signature on Feb. 6, Kabot said.
City officials were told the agreement would be taken to Long for his signature and then to the bank, but that did not happen, he said.
That happened on a Friday, the money was transferred on Monday and on Tuesday he got a call from the Fresno bank asking if the money could be used as a pledge of security on another loan, Kabot said, adding he said “no.”...
Attorney Michael Lampe, who represents opponents of the lawsuit, read several excerpts from correspondence between Kabot and TMSC representations – which he had obtained under the Public Records Act -- that indicated the city attorney's concern about the willingness of TMSC to reimburse the city.
Racetrack Developer Faces New Lawsuit...Julie Fernandez
http://www.valleyvoicenewspaper.com/tv/stories/2009/tv_
racetracklawsuit_0119.htm
Tulare - Although filed in late April, a second lawsuit against Tulare Motor Sports Complex developers related to financing was an apparent surprise to City Council members who said they learned of the legal action only last week.
In the lawsuit, filed April 20 in Tulare County Superior Court, Noxxon Capital Inc. claims it lost at least $14 million in commissions in dealings with the Tulare Motor Sports Complex (TMSC) limited partnership and asks for an unspecified amount of money from it and United Security Bank (USB) of Fresno.
Noxxon contends the bank and developer failed to pay the promised fees and costs after it secured a $70 million standby letter of credit from a Korean investor on the developer's behalf in February 2008.
Fresno attorney James B. Betts, who represents TMSC in the case, said his client has filed a cross-complaint against United Security Bank...
The lawsuit appears related to an earlier claim that USB filed against TMSC, Bud Long Inc., Bud Long and James A. Bratton in Fresno County Superior Court in August 2008. The bank alleged they owed the bank more than $1.5 million in loans that had come due.
Betts characterized the dispute – which appears related to the more recent action – “a good faith dispute” involving the purchase of three letters of credit.
The case against Long and Bratton, as individuals, was dismissed April 10, 2009, as was a single cause of action against TMSC that involved more than $300,000. The remainder of the case, which involves TMSC and Bud Long Inc., is scheduled for trial in mid-November.
After learning about the new lawsuit, Pyle said last week he had contacted TCMS' attorney, who was going to put together a summary of the case for him.
Mike Lampe, a Visalia attorney who has represented opponents of the racetrack project, said the new legal action supports his concern about “the [financial] ability of these promoters to actually pull this project off,” especially if they entered into an agreement to pay a company $14 million to get them $70 million in financing.
Betts said the legal disputes involving TMSC have “nothing to do with the substance or efficacy of this project, which is proceeding to fruition and will benefit this community in a number of ways, including the generation of badly needed jobs and substantial potential tax revenues.”
Vice Mayor Phil Vandegrift, who said late last week he had only heard rumor of the lawsuit, said “anybody can sue anybody for anything” and continued to express optimism the project can move forward “if we don't talk it to death.”
He is particularly encouraged, he said, because the developer has made a $500,000 non-refundable payment to the International Agri-Center in connection with an escrow to purchase 350 acres for the project.
Dave Swindell, a TMSC partner, also told the Tulare Voice in early June that financing has been secured for the public improvement portion of the project. A week later, James Bancroft, a limited partner, was optimistic but wouldn't go that far and said the lender wants assurances a community facilities district will be created – a matter addressed in a pending development agreement.
Money Owed
News of the latest lawsuit came as the city and TMSC continued to negotiate terms of a development agreement that are related to the more than $1 million the city paid for the project's environmental impact report.
A proposed agreement that would have required the developer to reimburse the city when a building permit is issued was presented in closed session to the City Council on June 16.
But it became apparent those terms were unacceptable when the council pulled the item off the public agenda, where it had been set for adoption, and sent staff back to the negotiation table.
“This [the lawsuit] gives us more reason to make our money secured and we're working on that right now,” Councilman Richard Ortega said. “We should get a report back [on development agreement negotiations] on June 30 … then we'll have to take action.”
(The Tulare Voice was published before Tuesday's meeting. Visit www.valleyvoicenewspaper.com to learn what action, if any, the City Council took.).
While in favor of the racetrack project, Ortega said his support is tempered by his desire to protect the city's financial interests.
“The last thing I want to see is this thing go south and we've lost our money too,” he said...
Cash First
Lampe said he would advise the city to insist on reimbursement before any other discussions take place and to consider the development agreement only after the money is in the general fund...
Concern about the $1 million owed the city became heightened at the June 2 council meeting when City Attorney Steve Kabot was asked if a Dec. 29, 2008 agreement was still in place requiring the developer to get city approval to move money from the security account...
'A Quagmire'
In a telephone interview Monday, Brady McGuinness, a Fresno attorney working for TMSC, repeatedly called the situation a “quagmire” and said “that same handwritten agreement agreed to in December still pertains to the account.”...
'Double Cross'
Lampe has referred to what happened at the airport as a “double cross” and said he has trouble understanding why the city would continue doing business with TMSC.
“The city got double-crossed, there's no other reason for this,” he said.
McGuinniss disagreed.
He said his firm did not handle the transfer and did not know why an agreement was brought to the airport for Vejvoda to sign.
He contended the initial agreement and amendment were offered to the city as protection until the EIR was certified, which it was on Dec. 29.
Before certification, the EIR has no value, but afterwards it has value not only to the developer but to the city and the value to the city remains even if the developer goes away, he said.
He stressed the EIR costs will be reimbursed through the process of constructing public improvements.
He also said government agencies often pay for EIRs without requiring reimbursement from the developer because of the benefit to their cities.
Sacramento Bee
SMUD drops power line plan...Ed Fletcher
http://www.sacbee.com/ourregion/v-print/story/1994698.html
Sacramento's energy provider has decided to pull out of a plan to join forces with a collection of other municipal power providers to build a $1.5 billion high-voltage power line from the Valley to Lassen County.
"We feel the overall project isn't strong enough to justify spending additional money on scoping and planning," said Elisabeth Brinton, a Sacramento Municipal Utility District spokeswoman.
To date, SMUD has spent $2 million of the $13 million it was expecting to spend investigating the project.
SMUD's withdrawal leaves a gaping hole in the project's budget. As the largest player, the publicly owned Sacramento utility was expected to pay for 35 percent of the project's cost.
It was not immediately clear whether the 15-member consortium of municipal power providers can make the project financially feasible without SMUD. Some of the other consortium members include the cities of Roseville and Redding and the Modesto Irrigation District.
The project's stated aim is to increase the region's power-grid capacity, improve reliability and help move power generated by future clean energy projects in the remote northeast corner of the state to power-thirsty urban areas.
The 600 miles of high-voltage lines would run from the northeast corner of the state to the San Francisco Bay Area, Sacramento and Modesto. Officials hoped to finish the project in 2014.
The study phase was expected to stretch into 2012, but the project quickly earned the scorn of property owners and local environmentalists.
Brinton said SMUD said studies suggested the utility should search elsewhere for the green energy it will need to meet future renewable energy requirements expected to reach 33 percent by 2020.
"We have concluded it might not be in the best interests of our customers," Brinton said. "We want to step back and analyze all the options."
Nora Shimoda, a Davis resident who helped galvanize opposition to the project, said she was glad SMUD showed some "good judgment."
"They seem to be a reasonable board," Shimoda said. "We do support green energy. We just did not think that (this project) made sense."
While it was unclear how the Transmission Agency of Northern California would pay for the project without its biggest partner, officials said the project is not dead.
"We just got this notification, and we are going to be meeting with our partners to assess our next steps," said TANC spokesman Brendan Wonnacott. In the meantime, all public outreach meetings have been postponed, Wonnacott said.
Rockney Compton, a Round Mountain resident who might have a set of power lines over his backyard, responded to the news with guarded optimism.
"I'm not going to hang up my hat until it's certain it's history," Compton said.
Capital Press
Pumps bring water, but for how long?
Efforts to protect Delta smelt cut water by 660,000 acre feet last year...Cecilia Parsons
http://www.capitalpress.info/main.asp?SectionID=67&SubSectionID=616&ArticleID=52548&TM=49906.38
FRESNO - Federal government pumps in the Sacramento-San Joaquin Delta started moving much-needed irrigation water to farms Wednesday, July 1, but questions remain about how long those pumps will continue running.
U.S. Interior Secretary Ken Salazar told the audience of a town hall meeting in Fresno Sunday, June 28, that the Central Valley Project pumps would run through the end of the year, facilitating 70 approved water transfers totaling 245,000 acre feet. Bureau of Reclamation Commissioner Mike Connor, who also spoke at the town hall meeting, said the agency is working to make the most of this year's water supplies.
However, there was some skepticism.
West side farmer Bob Diedrich said growers already knew the pumps would resume moving water south on July 1, but questioned how long they would remain on considering the latest National Oceanic and Atmospheric Agency biological opinion on salmon recovery.
That biological opinion has focused all fish recovery efforts on reducing the amount of pumping from the Delta.
It is unknown how much the opinion would affect pumping, said Sarah Woolf of Westlands Water District. The Bureau of Reclamation told the district they would phase in the restrictions, Woolf said, but there is no guarantee the pumps will remain on.
Efforts to protect the Delta smelt resulted in water delivery cutbacks of 660,000 acre feet in 2008, and another 480,000 acre feet so far this year. It is feared the federal plan to protect salmon could take another 500,000 acre feet.
Water deliveries from the Delta are normally increased starting July 1 because there is less concern with effects on Delta smelt from July through December, said Paul Fujitani, chief of water operations for the Bureau of Reclamation.
Pumping can continue through the end of the year unless water volume is affected by smaller releases from Shasta and Folsom reservoirs, he explained. Those upstream operations have to manage water temperatures for migrating salmon and if not enough water is flowing into the Delta that could affect exports.
Fujitani said the exported water would go directly to agriculture users. In August some would be diverted to the San Luis Reservoir.
Two short-term actions are expediting a project that would construct gates in front of the Delta pumps to keep the protected Delta smelt from being sucked in and a canal inter-tie project to facilitate water movement.
The "two gates" project is gaining momentum, but still lacks federal funding for its estimated $25 million cost. There is no estimate how much more water would flow to water users south of the Delta with the gates in place.
It is possible, Salazar said at the town hall meeting, that environmental restrictions could curtail Delta water deliveries again next year.
"That's why we need to speed up these projects," he said.
Salazar said such projects, would keep farms and communities viable until longer-term Delta solutions can be achieved.
Still, Salazar's visit to the valley was a positive note for agriculture, Woolf said. "It was critical that he was there and understands the problem."
Salazar didn't deliver on a request from Rep. George Radanovich, R-Mariposa, and Pacific Legal Foundation that he invoke a federal "god squad' with authority to ease federal environmental restrictions. Taking that route, Salazar said, would be an "easy political solution and it would be admitting failure."
Instead, he promised that significant progress would be made on the most contentious water supply and environmental issues by the end of 2009.
Radanovich drew cheers from the crowd when he told Salazar "the time for talk is over. We need action now."
"He didn't really say anything we didn't already know," said Woolf of Salazar's announcements at the town hall meeting on the Fresno State campus. The district was also disappointed there was no announcement of the amount of additional water it would expect later in the season. Woolf said they were told it would be August before the announcement.
"That is a setback for us in our planning effort," she said.
The latest biological opinion released by the National Oceanic and Atmospheric Agency recently laid more blame on state and federal pumps for declines in salmon and steelhead. An average annual cutback of 330,000 acre feet of was ordered.
Farm interests were incensed that pumps were blamed for declines in fish populations and let Salazar know.
Tom Nassif, president of Western Growers, told Salazar that confidence in the federal agencies and their species protection rules could not be restored without a science-based and fact based review of the biological opinions.
Tom Birmingham, general manager for Westlands Water District claimed that neither biological opinion used to restrict water deliveries is in full compliance with the Endangered Species Act. Westlands joined recently with 29 other public water agencies in arguing that the National Marine Fisheries Service should have prepared an environmental impact report before adopting a salmon recovery plan that would send thousands of acre feet of Delta water out to the ocean.
Birmingham asked Salazar that the Obama administration fully enforce the ESA noting, "science doesn't always mean the environmental side wins."
San Francisco Chronicle
EPA ready to settle Bay Area pesticide suit...Jane Kay
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/02/BAO518HNC9.DTL&type=printable
The U.S. Environmental Protection Agency announced Wednesday a proposed settlement of a lawsuit that could result in scrutiny of how dozens of dangerous pesticides affect threatened and endangered species living around San Francisco Bay.
If the EPA decides to settle the suit filed by the Center for Biological Diversity, it would require reviewing the health effects of 74 pesticides on 11 imperiled species by June 2014.
The pesticides can endanger wildlife by direct contact or by destroying the animals' habitat or food supply.
Some of the problem pesticides, the suit said, are malathion, an insecticide suspected of harming the delta smelt and the California tiger salamander, and sodium nitrate, a hazard to the San Joaquin kit fox, the Alameda whipsnake and San Francisco garter snake.
Other species that would receive review under the proposed settlement are the salt marsh harvest mouse, California clapper rail and California freshwater shrimp. Insects are the bay checkerspot butterfly and the valley elderberry longhorn beetle. A fish is the tidewater goby.
Scientists say methyl bromide, an agricultural fumigant used on strawberries and tomatoes, can poison small mammals and reptiles. Permethrin, a common insecticide used in homes and croplands, can run into waterways and hurt crustaceans and insects at the base of the aquatic food chain, they say. Chlorpyrifos, an insecticide banned in households but available to apple and grape growers, threatens a broad range of species.
The environmental group filed the lawsuit in 2007 in U.S. District Court in San Francisco, where the group has offices.
The suit alleges that the EPA failed to comply with the Endangered Species Act. The act requires federal agencies to ensure that their decisions don't hurt imperiled species by consulting with scientists at government wildlife agencies such as U.S. Fish and Wildlife Service.
Yet, according to the suit, the EPA hadn't sought review of the pesticides that it registers, and some of the pesticides already registered by the EPA did, indeed, damage 11 species of mammals, birds, reptiles, fish and insects in the Bay Area.
The EPA made the announcement Wednesday through publication in the Federal Register. The EPA's public affairs office in San Francisco referred comments on the matter to the headquarters in Washington, where no one was available for comment.
The EPA is accepting comments on the proposed settlement agreement for 15 days, and then will make a decision whether to agree. To become final, the settlement must be signed by a judge in the court where the suit was filed.
Environmental groups are expected to favor the agreement while chemical manufacturers are expected to oppose it.
The Bush administration had eliminated the section of the Endangered Species Act that requires that federal government agencies consult with wildlife scientists on pertinent decisions. But the Obama administration reinstated the rule.
Settlement to require animal labs to post data...MARY CLARE JALONICK, Associated Press Writer...7-1-09
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/07/01/national/w150235D01.DTL&type=printable
WASHINGTON (AP) -- Animal research facilities will be required to disclosee more information online about their experiments under a court settlement signed Wednesday by the Humane Society of the United States and the Agriculture Department.
According to the Humane Society, the settlement will require the Agriculture Department to post annual reports from those facilities, including what they call "pain and distress information," on its Web site. The two parties settled in a lawsuit filed by the advocacy group four years ago after the group were unable to obtain information they requested.
The settlement will now be submitted to the federal district court for the District of Columbia for final approval.
"While it became apparent during the suit that the USDA might be acting to shield animal research facilities from public scrutiny, we are pleased that the settlement will ensure public access to animal research information, and shed light on whether USDA is doing its job," said Kathleen Conlee of the Humane Society.
The Bush administration stopped posting some animal testing information in 2002, according to the group, and then began posting the annual reports in 2005 in response to the lawsuit. Conlee said the court-approved settlement is important so future administrations don't further abuse the policy.
Caleb Weaver, a spokesman for Agriculture Secretary Tom Vilsack, confirmed the settlement.
The Animal Welfare Act, signed into law in 1966 and enforced by USDA, governs the care and handling of most warm-blooded animals at registered research facilities and licensed animal dealer facilities around the country. Birds, mice and rats bred for research are exempt from the law.
A 1970 amendment to the law requires those facilities to submit annual reports on its activities. According to the Humane Society, these reports should include information on how many and what kind of animals are used in research, whether pain relief was used and a justification if such relief was not provided.
The group's 2005 lawsuit charged that the Department of Agriculture violated the Freedom of Information Act by denying them access to reports and redacting large amounts of information in reports they did provide.
Thousands rally to protest water cuts in Fresno...Tracie Cone, Associated Press Writer
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/02/BAIS18HJP8.DTL&type=printable
Fresno -- Thousands of farmers, farmworkers and their supporters rallied at City Hall on Wednesday, calling on federal officials to ease regulations that have cut water supplies to the nation's most prolific growing region.
"Water makes the difference between the Garden of Eden and Death Valley," said comedian Paul Rodriguez, who acts as a spokesman for the Latino Water Coalition, a group lobbying for changes in water delivery policy regarding the Sacramento-San Joaquin River Delta.
The noon rally was organized by the grower-funded group, which also organized an April march from Mendota (Fresno County) to the San Luis Reservoir hoping to draw national attention to the issue.
On Wednesday, nearly 4,000 people carrying professionally printed signs proclaiming, "No water, no jobs, no hope, no future," marched through downtown. One man who declined to give us name said his Kettleman City (Kings County) employer had driven him and other workers there and were paying them for their time. Another woman said she came with 50 other employees of a Tulare agriculture contractor for free, to protect their jobs.
Speakers stressed the importance of San Joaquin Valley agriculture, which they said produces more than half of the domestically grown U.S. food supply.
"If you like foreign oil, you'll love foreign food," some signs read.
The rally came on the heels of a visit Sunday by Interior Secretary Ken Salazar, who assigned his chief deputy to stay in California to work full-time on solving the delta's many problems.
Growers, with the help of congressional delegates from the region, have asked officials to ease federal protections for threatened fish that have drastically reduced supplies pumped into the state's vast canal system. Federal agencies have ordered reduced pumping in the delta when the delta smelt are spawning in the area, leaving nearly empty the San Luis Reservoir that stores water for farmers and Southern California municipal users.
Farmers on the west side of Fresno County, the top-producing agriculture county in the U.S., will receive 10 percent of their federal water allocation this year as a result of cutbacks and drought that has led to idled land and layoffs.
Environmental activists and fishing groups say that without protections for the delta, the fishing industry will continue to suffer, as will the ocean species that depend on those fish for survival.
A.G. Kawamura, the director of the California Department of Food and Agriculture, said he came to march because "without a water system that has predictability," the state's agriculture infrastructure will collapse.
Farmer Joe Del Bosque, who owns 2,500 acres in western Madera County, said he had planted only half of his land this year because he doesn't have a well to supplement this year's water allocation.
"I don't know what I'm going to do," he said. "I'm completely dependent on surface water."
Schwarzenegger: Calif lawmakers protecting unions...JUDY LIN, Associated Press Writer
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/07/01/state/n123409D90.DTL&type=printable
 SACRAMENTO, (AP) -- California's Democratic-led Legislature is putting union interests over taxpayers' well-being, Gov. Arnold Schwarzenegger said Thursday as the state prepared to issue IOUs for the first time in nearly 20 years.
The Republican governor said Democrats have resisted reforms he believes must be part of solving the state's $26.3 billion shortfall.
"It steps on the turf of the people they want to protect," Schwarzenegger said during a press conference in Los Angeles. "At some point, it has to be Judgment Day. Who do we protect?"
The governor recently proposed changes to cut state employees' pensions and adopt fraud-prevention measures for in-home caregivers. Democrats have criticized Schwarzenegger for including long-term policy changes as part of budget negotiations.
He also has ordered some 235,000 state employees to take a third day off a month without pay, a move that would cut their pay by 14 percent.
Schwarzenegger says the Legislature's failure to pass a balanced budget revision sent a message that they expect Californians to make sacrifices but will not do the same.
"We have to get rid of the waste. We cannot promise things to people that we can't deliver," Schwarzenegger said.
Lawmakers passed a budget in February for the fiscal year that began Wednesday, but a sharp decline in tax revenue quickly put it out balance. The national recession has battered California's economy, leading to record-high unemployment and a 34 percent drop in personal income tax revenue during the first five months of the year.
With far less money flowing to the state, Democrats have found it difficult to protect core social programs and the jobs overseen by the public employee unions that make hefty donations to their campaigns.
At the same time, Schwarzenegger and Republican lawmakers refuse to raise taxes beyond those already increased in February. It's not clear how the sides will compromise to close budget shortfall.
The state controller is scheduled to begin printing IOUs Thursday afternoon after lawmakers failed earlier this week to address the deficit. With revenue running well short of the state's spending obligations, California does not have sufficient cash to meet all its payment obligations.
The IOUs primarily will affect the thousands of small businesses that contract with the state for a variety of services, from providing office supplies to cleaning services.
Lawmakers' failure to act before the fiscal year ended Tuesday widened the state's problem by $2 billion, in large part of because of the state's complex education funding formula.
On Wednesday, the governor declared a fiscal state of emergency and ordered most state offices to close three days a month to conserve cash.
Schwarzenegger said Thursday he would not sign any bill that comes to his desk unless it pertains to the budget. Under the fiscal emergency order, if the Legislature fails to solve the deficit within 45 days, it cannot adjourn or act on other bills until the crisis is resolved.
Indybay.org
Save the Mokelumne River from a New Dam...Dan Bacher
During a time of fish collapses and severe economic crisis, the East Bay Municipal Utility District (EBMUD) is proposing to build a new 400-foot dam on the Mokelumne River as part of its 2040 water plan. "The dam will be yet another nail in the coffin of the Delta and our crashing salmon and steelhead fisheries," according to Katherine K. Evatt, President of the Foothill Conservancy. Here is the action alert from Evatt, a tireless defender of the Mokelumne and its fish.
http://www.indybay.org/newsitems/2009/07/02/18605299.php
Urgent Action Alert:
The East Bay Municipal Utility District is proposing to build a new 400-foot dam on the Mokelumne River as part of its 2040 water plan. The dam will be yet another nail in the coffin of the Delta and our crashing salmon and steelhead fisheries. We need to increase freshwater inflow to the lower Mokelumne River for fish and the Delta, not divert more water upstream.
The New Pardee Reservoir contemplated in the plan will also flood about three miles of the upper Mokelumne River, including free-flowing river that is potential restoration habitat for salmon and steelhead. The threatened Middle Bar and Electra reaches are also home to a native rainbow trout fishery.
Since 1929, EBMUD has had its own version of the Peripheral Canal -- the twin Mokelumne Aqueducts that bring the East Bay 90 percent of its water from the Upper Mokelumne River, bypassing the lower river and the Delta. We cannot allow EBMUD to expand those diversions as the Delta and fisheries are on the brink.
CSPA is working with conservation, fish, river and recreation organizations who oppose this misguided dam plan. Our growing list of partners currently includes the Foothill Conservancy.Trout Unlimited, CalTrout, Friends of the River, American Whitewater, and Sierra Club SF Bay and Mother Lode chapters.
We need your help
We need everyone to speak up on behalf of the Mokelumne. And we need volunteers to help with a grassroots campaign in the East Bay. Can you spare a few minutes to help?
Come to EBMUD meetings or make calls: If you can come to upcoming EBMUD meetings in Oakland on July 14, July 28, or August 11, or make calls to help recruit others to the cause, please contact campaign field organizer Tim Robertson: tim [at] savethemoke.com or 510-712-8620 .
Write your EBMUD director: If you're an EBMUD ratepayer, please write a letter (snail mail) in your own words to your EBMUD director. Don't let them destroy more of the Mokelumne, the Delta and our fisheries in your name. For director names, ward information and mailing address, see EBMUD's website.
Send an e-mail to EBMUD: At the very least, please take time to send an e-mail to EBMUD expressing your outrage at this proposal and urging them to:
** Drop the Pardee expansion from the 2040 water management plan
** Endorse National Wild and Scenic River designation for the Mokelumne River from Salt Springs to the high pool of the existing Pardee Reservoir. Wild and Scenic River designation would protect the Mokelumne from new dams or diversions.
E-mails should be directed to llewis [at] ebmud.com, Lynelle Lewis, the EBMUD board clerk.
If mailing a physical letter:
President Doug Linney
East Bay Municipal Utility District
375 11th St.
Oakland, CA 94607-4240
You can also send E-mail using the form fill pages on the websites of the Foothill Conservancy or Friends of the River.
Revise the form text as you see fit but be sure to tell EBMUD it needs to restore, not further destroy, the Mokelumne, the Delta and our fisheries. And if you're an EBMUD customer, be sure to let EBMUD know.
For more information go to the websites of the Foothill Conservancy, Friends of the River or the California Sportfishing Protection Alliance.
Thanks for supporting California's fisheries!
Katherine K. Evatt, President
Foothill Conservancy
P.O. Box 1255
Pine Grove, CA 95665
kke [at] foothillconservancy.org
209.296-5734
Contra Costa Times
Editorial: Reining in overly generous public employee pensions...MediaNews editorial
http://www.contracostatimes.com/opinion/ci_12733676?nclick_check=1
AFTER YEARS of extravagant increases in pensions for public employees in state, county, local and special districts, at least some government leaders have come to understand such generosity with taxpayer money is unsustainable.
At the state level, Gov. Arnold Schwarzenegger is making another bid to cut back on retirement benefits that could save California taxpayers tens of billions of dollars over the long run.
He would create a two-tier system in which newly hired employees would have to wait until age 60 to collect, five years later than the current age.
They would receive 2 percent of their peak salary for each year they worked but would have to work 25 years before getting lifetime health benefits, up from the current 20 years. Also, retirees would have to pay some of their HMO premiums.
These changes would still leave state employees with pension and health benefits considerably in excess of those offered my most of the private sector, but they would be a significant step in reducing the huge unfunded liability now facing California.
Several counties in California also have moved to reduce pensions for their employees. Last November, Orange County voters passed a measure by better than a 3-1 margin to require public approval for pension increases.
Ventura County is considering a similar ballot measure for next year, following in the footsteps of the city of San Diego, which faced bankruptcy a few years ago in part because of huge pension obligations.
Contra Costa County and BART also have overly generous pension and other retirement benefits that need to be reined in.
That is especially true of BART, whose workers do not contribute anything to their pensions.
For too long state, county and local government officials have acceded to union demands for ever higher retirement and other benefits, far in excess of anything offered by the vast majority of private firms.
At one time, generous pensions were offered to public employees to compensate for more modest salaries that used to be less than those in the private sector. That situation is outdated today.
According to the Bureau of Labor Statistics, as of December 2008, the average yearly pay for state and local government employees was $53,800. That's $13,500 more than the average private-sector employee.
There also is a huge gap between public and private employees in benefit packages. The average annual benefits for government workers is $27,800. It's only $16,600 for private-sector workers.
Total compensation (salary, pensions and other benefits) for the average public worker is $81,600, far above the $56,900 for private-sector employees. That's difference of $24,700.
The argument that ever higher pay and benefits are needed to retain public employees is bogus in most instances other than law enforcement.
There is little market demand for public employees, who generally are not seeking to leave their jobs, according to the Bureau of Labor Statistics, which says job turnover is tiny in the public sector compared with the private sector.
The fact is that especially during a weak economy, public employees could be retained and well-compensated with salary freezes and a two-tier pay and benefit system in which new hires would receive 401(k) plans or contribute substantially to their retirement benefits.
We do not intend to demean state and local public employees. They offer valuable services that are essential to the well-being of society. But their total compensation has risen faster than the average private-sector taxpayer's ability to fund.
Even with substantial reductions in benefits and/or increases in contribution toward pensions, public employees would still fare better than their counterparts in private business.
What is needed is a better sense of balance by state and local government officials regarding fair compensation for public employees and fairness toward taxpayers. It is not an easy task, but it is an essential one to prevent future fiscal crises and even bankruptcies.
CNN Money
Money train: The cost of high-speed rail
The president is pledging $13 billion for a high speed rail system, but some experts fear it will never cover its own costs...Aaron Smith
http://money.cnn.com/2009/06/10/news/economy/high_speed_rail/
index.htm?postversion=2009070212
NEW YORK (CNNMoney.com) -- President Obama is pouring $13 billion into an ambitious high-speed rail project. Some say it will never make money. Some say it will. And still others say profit is not even the point.
Obama's plan is "to jump-start a potential world-class passenger rail" in 10 major corridors, linking cities within the Northeast, California, Florida and other regions with "bullet trains" that exceed 110 miles per hour. State governments are in the process of applying for the federal funds.
Sam Staley, director of urban growth and land-use policy at the Reason Foundation, a libertarian think-tank, said the project is risky, and that forecasts used to promote high-speed rail are "notoriously unreliable" because they "overestimate ridership and underestimate cost."
California, the nation's most heavily populated state, is undergoing the most ambitious project: high-speed rail system that would link San Diego to San Francisco and Sacramento.
Mehdi Morshed, executive director of the California High Speed Rail Authority, estimated that the San Francisco-to-Anaheim leg will cost $34 billion, nearly half of which would come from the federal government.
Morshed believes it's worth every penny. In addition to creating hundreds of thousands of jobs, he says the high-speed rail will make money.
"Once completed, revenues will exceed operating maintenance costs by over $1 billion per year," he forecasted. "It will make a profit."
Nazih Haddad, staff director of the Florida Department of Transportation, also believes profitability is a possibility for a high-speed rail link between Miami, Tampa and Orlando. The Orlando-Tampa leg is expected to cost up to $2.4 billion, according to the state's estimates.
"We're probably one of the only states around where we have conducted an investment grade ridership study," said Haddad. "Ridership proceeds would exceed operating maintenance cost."
But Ron Utt, a railroad expert at the Heritage Foundation, a conservative think-tank, does not believe the incentive is enough for travelers to leave their cars at home.
"It's not realistic at all because it's not competitive on price and it's not competitive on convenience," said Utt, referring to the Florida plan as an example of why high-speed rail wouldn't work financially. "I don't think it's got much to do with car culture. I think it's got to do with people making rational decisions with their money."
A working example
Morshed believes detractors are confusing high-speed rail with traditional lines, which are slow and infrequent.
"High-speed train services around the world make a profit while their transit and conventional services lose money, just like ours.."
Morshed points to Amtrak's Acela Express in the Northeast as a success story.
The Northeast corridor, linking Washington, D.C. to Boston, is the nation's most highly developed high-speed rail service, according to the U.S. Department of Transportation. Most of it is controlled by Amtrak, a federally-funded railroad company that relies on government help, receiving more than $5 billion in federal appropriations and stimulus funds over the past three years, according to Amtrak spokesman Clifford Cole.
Amtrak's high-speed rail, the Acela Express, is its strongest link: Ridership rose 6.5% to 3.3 million passengers during its 2008 fiscal year, according to Amtrak, while Acela revenue jumped 16% to $468 million during that time.
Cole confirmed that the Acela unit is profitable, even though Amtrak as a whole is not.
The elephant on the tracks
But when measuring Acela's profit, one has to take a new look at the old adage -- it takes money to make money.
"It is a fact that no nationwide passenger rail system anywhere in the world is considered profitable when all costs -- including capital -- are accounted for," wrote Cole, in an e-mail to CNNMoney.com. "Like all national rail systems worldwide, Amtrak requires annual funding to support both its capital and operational needs."
High-speed rail backers, including the White House, look overseas for success stories. But Amtrak released a study in April to demonstrate that Europe's system is heavily subsidized. Germany's high-speed rail network, the most expensive in Europe, required average annual subsidies of $11.6 billion during the 10-year span that ended in 2006, according to the Amtrak study.
Japan's system is often cited as the most financially successful high-speed rail in the world, according to Ron Utt, but "that's because in the 1980s they wrote down all the debt to zero," he noted. "We're talking about several hundred billion dollars in debt."
Sam Staley said it's possible for a well-designed high-speed rail to cover its operating costs, but even the best-run rail system won't be able to cover the capital costs stemming from its development.
"I would really like to see high-speed rail work because I really like trains," he said. "I just have trouble getting over the fundamentals. These things shouldn't even move forward unless they can cover their operating costs."
Otherwise, said Staley, high-speed rail could become "a black hole for government finance."
But profit and loss are hardly the point, according to Vukan Vuchic, transportation professor at the University of Pennsylvania, who believes that high-speed rail -- like other transportation networks -- offers quality of life and is therefore worth the price.
"Why do you build high-speed rail?" he asked. "Is it to make money? No. It is to provide public service. Cities that offer you decent choices in high-speed rail are better than those who only offer you highway."
Job market takes turn for worse
Employers cut more jobs than expected in June and unemployment rate climbed for the ninth straight month, hitting 9.5%...Chris Isidore
http://money.cnn.com/2009/07/02/news/companies/jobs_june/
index.htm?postversion=2009070211
NEW YORK (CNNMoney.com) -- The battered U.S. labor market took a step backwards last month as employers trimmed more jobs from their payrolls in June, according to a government report Thursday.
There was a net loss of 467,000 jobs in June, compared with a revised loss of 322,000 jobs in May. This was the first time in four months that the number of jobs lost rose from the prior month.
The June job losses were also far worse than the forecast of a loss of 365,000 jobs by economists surveyed by Briefing.com.
The unemployment rate rose for the ninth straight month, climbing to 9.5% from 9.4%, and hitting another 26-year high. Economists had been expecting that the unemployment rate would hit 9.6%.
Nearly 3.4 million jobs have been lost during the first half of 2009, more than the 3.1 million lost in all of 2008.
"It's not the catastrophic numbers we saw earlier this year, but they're still pretty damn lousy," said Keith Hembre, chief economist with First American Funds.
The job losses don't tell the full picture of the pain the labor market either. The average hourly work week fell to 33 hours from 33.1 hours in May, a record low in readings that go back to 1964. Average hourly wages were unchanged, so the shorter week shaved $1.85, or 0.3%, off of the average weekly paycheck.
The so-called underemployment rate, which counts those who are working part-time jobs because they couldn't find a full-time position as well as discouraged job seekers who have stopped looking for work, rose to a record high 16.5%.
Those who have been out of work for six months or more, many who have run out of unemployment benefits, climbed to nearly 4.4 million, also a record high.
Jared Bernstein, the chief economic advisor to Vice President Biden, said the latest figures are disappointing to the administration.
"Less bad is not what we're shooting for," he told CNNMoney.com.
But Bernstein added that the $787 billion economic stimulus package passed by Congress earlier this year has yet to have its full impact on the labor market.
"There's a lot more to go," he said. "We have to let this medicine get into the patient, let this economic activity have the job creation effects we know [are] coming."
Tig Gilliam, CEO of Adecco Group North America, a unit of the world's largest employment staffing firm, said he's concerned about continued sluggish spending by consumers, which will delay any hopes for an economic recovery.
"The 90.5% who have jobs aren't spending," said Gilliam.
But Robert Brusca of FAO Economics said the hopes for a turnaround that accompanied the previous jobs report should not be completely wiped out by the weak June report.
"It's a disappointing month but the trends are still quite positive on the whole," he said, pointing to the smaller rise in unemployment and a three-month average of job losses that continues to slow.
How high will the unemployment rate go?
Others said they see little hope for a quick turnaround in hiring or unemployment.
"The green shoots in the job market are hard to find," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "Businesses are determined to trim costs by cutting payrolls. Employers want to make sure that a sustained economic recovery is here before hiring. The job market will become the Achilles' heel of the coming recovery."
Gilliam, Hembre and Sohn all predicted that the unemployment rate will be above 10% by the end of this year. Brusca thinks it could top out at 9.8%, but wouldn't rule out a 10% reading.
In addition to the continued job losses driving the rate higher, any signs of improvement in the economy can actually boost the unemployment rate. That's because discouraged job seekers no longer counted as unemployed return to the labor force looking for work.
"Some of the rise in unemployment towards the end of the cycle is good news," said Brusca.
The only good news reported by the Labor Department Thursday was that the number of workers filing initial jobless claims fell to 614,000 last week from 630,000 the week before. That was roughly in line with forecasts
 
7-2-09
Meetings
7-6-09 Merced City Council/Redevelopment Agency agenda...7:00 p.m.
http://www.cityofmerced.org/civica/filebank/blobdload.asp?BlobID=7586
CALENDAR OF MEETINGS AND EVENTS
July  08 PLANNING COMMISSION, 7:00 PM
       16 MERCED COUNTY ASSOCIATION OF GOVERNMENTS, 
           3:00 PM
       20 CITY COUNCIL/REDEVELOPMENT AGENCY, 7:00 PM
       21 PLANNING COMMISSION, 7:00 PM
       23 LOCAL AGENCY FORMATION COMMISSION, 10:00 AM
 
Merced County...News and Announcements
http://www.co.merced.ca.us/
County Offices Closed Friday, July 3, 2009
Merced County offices will be closed on Friday, July 3, 2009 in honor of the Independence Day holiday. County offices will reopen on Monday, July 6, 2009.
 
7-7-09 Merced County Board of Supervisers meeting...10:00 a.m.
http://www.co.merced.ca.us/CurrentEvents.asp?EID=319
View Current Agenda (Posted 72 Hours Prior To Meeting)
 
7-8-09 Merced County Planning Commission meeting...Canceled
http://www.co.merced.ca.us/CurrentEvents.asp?EID=357
 
7-8-09 Merced City Planning Commission meeting...7:00 p.m.
http://www.cityofmerced.org/depts/cityclerk/boards_n_commissions/
planning_commission/2009_planning_commission/2009_planning_
commission_agendas.asp
Agendas are posted the Monday before a Wednesday Planning Commission Meeting.
 
MCAG Meetings
7-8-09 Technical Review Board meeting...12:00 p.m.
http://www.mcagov.org/trb.html
7-10-09 Citizens Advisory Committee meeting...8:30 a.m.
http://www.mcagov.org/cac.html