Thursday, October 4, 2007

Is O.C. parks debate a power play?

Supervisors will examine a plan to change how the county’s parks are managed. The Irvine Co.’s influence may be a factor.
By Christian Berthelsen, Los Angeles Times Staff Writer October 2, 2007
When Orange County officials first reviewed a plan by the Irvine Co. to drain runoff from its massive Santiago Hills housing development into county-owned Irvine Regional Park, they were deeply troubled.

Parks administrators thought the arrangement amounted to a “gift of public funds” because it granted the development firm exclusive use of public property that would benefit its private 1,750-home development, according to documents and correspondence provided to The Times. At a minimum, they reasoned, the Irvine Co. should pay for the land, and they drafted a letter to the company saying as much in April 2005.

But after a series of hand-written changes by senior directors at the county’s Resources and Development Management Department, the county’s position changed diametrically.

A large “X” was drawn through the paragraph demanding the company provide “overriding public benefits” in exchange for the land. The final version said the county found the drainage system was in the public interest and made no mention of compensation. Supervisors unanimously gave final approval earlier this year, over the objections of environmentalists, homeowners and some of the county’s staff.

Now, that episode is serving as a backdrop to a debate over a plan for future management of the county’s parks.

One option calls for turning over management of some of the county’s parkland to a private trust established by Irvine Co. Chairman Donald L. Bren and overseen by executives of the development firm.

In August, the county’s Harbors, Beaches & Parks Commission narrowly voted against endorsing the parks plan, in part because it did not grant the parks agency autonomy from the more business-friendly resources department. The resources department oversees county facilities and ultimately signed off on the drainage deal. Supervisors are scheduled to take up the parks management proposal today.

The debate comes at a critical time for Orange County’s park system, which has suffered in recent years as officials diverted nearly $150 million from parks in the last decade to cover other costs, such as the county’s bankruptcy debt. In 2005, an Orange County Grand Jury report found the park system underfunded and understaffed, and recommended it be afforded higher status in the county bureaucracy.

More than anyone else, the Irvine Co. and Bren are the architects of the image of modern Orange County, with its meticulously planned communities and tidy, tree-lined streets.

To the Santiago Hills drainage plan’s opponents, the county’s acquiescence demonstrates that the firm wields quiet but powerful influence over county affairs.

“I don’t think the public interest was served here,” said Kevin Thomas, the county’s former parks director who was a critic of the proposal and was fired last year.

“I was not an obstructionist. I did not object to the development. I believed the Irvine Co. had every right to develop the property,” he said. “I just didn’t believe it had the right to put something on the backs of the public without paying for it.”

County officials defend their handling of the matter. Bryan Speegle, head of the Resources and Development Management Department, said the county had never required developers to compensate the county for the use of public property to handle runoff, and that county lawyers rejected the notion that it was a gift of public assets.

Supervisor Bill Campbell, whose district includes the project and the park, said the Irvine Co. had rights under a 110-year-old land deed that could have allowed it to build its drainage system through more popular areas of the park. Other officials note the final proposal was approved by state and federal wildlife officials, and that Orange’s approval of the project has been upheld thus far by the courts despite a legal challenge.

For its part, the Irvine Co. said its project did not constitute a taking of public land and was a product of compromises after much community discussion. The company also notes the environmental group Coastkeepers endorsed the ultimate plan.

“We are not taking public land,” said John Christensen, an Irvine Co. vice president.

The 114-acre parcel where the drainage facility is planned was bought by the county in 1972 — from the Irvine Co. — for nearly $400,000. Roughly 30 years later, the company decided it wanted some of it back.

As the developer pursued approval from Orange to build the second phase of Santiago Hills, it filed a runoff management plan with the county. Almost immediately, its central premise — to divert runoff from the development into the county park — raised hackles in the bureaucracy.

The first draft would have used acreage thick with California coastal sage-scrub, the habitat of the federally threatened California gnatcatcher, according to an Aug. 26, 2004, memo from Thomas. Five gnatcatchers had been observed there just weeks earlier. There were also concerns that heavy rains could wash out park trails.

In a March 4, 2005, memo, Cathy Nowak, a parks official, noted the company had accepted some changes to minimize effects on the natural habitat and the views of neighboring homeowners, but that it was resisting paying for the property.

Then came the series of letters in which the county first insisted it receive compensation for the land, only to ultimately approve the proposal without that condition. Speegle said he did not know who edited the letters, but acknowledged he signed the final version.

Earlier drafts also said the proposal would have to be vetted through public hearings, but the final one said no hearings were necessary. That rankled nearby homeowners, who said they never even knew of the plan until it was practically a done deal.

“We had no notice whatsoever of anything,” said Cynthia Burns, the president of the Hillsdale Community Assn., which represents homeowners in a development where several views look out directly onto the park where the drainage facility will be built.

Speegle said the parks officials were overruled because their sentiments were not consistent with the law or the county’s historical practice.

Orange gave final approval to the development plans in November 2005, but the Irvine Co. still needed a series of approvals from the county after that.

As the process dragged on, documents show, county resource managers repeatedly complained they were not receiving proper documentation from the company for its plans.

They also said the company had agreed to changes in the drainage plan, only to submit new designs that did not reflect the compromises. In one Feb. 28, 2006, exchange, a county engineering specialist complained to an Irvine Co. consultant that the county had not received approved tract and topography maps it requested, only to be told that Speegle — her ultimate boss — had told the company it didn’t have to comply with the request.

In an interview, Speegle acknowledged he may have done that, but only because Orange had agreed to assume responsibility for the facility, thus relieving the county of oversight for it.

As the Irvine Co. sought final county approval of its permit and plans, county parks officials continued to press for compensation for the land. If the shoe was on the other foot, Thomas said he asked Irvine Co. officials during a meeting in the fall of 2006, would the company ever give land to the county for free?

Within seconds, according to Thomas’ account, the executives, and Speegle, stood and left the room, ending the meeting. He was fired in December and believes the dispute played a role in his dismissal. Speegle says he does not recall the meeting or the comment and declined to comment, citing personnel matters.

The final plans, approved in March, moved the drainage facility and shrank its size to about 1 1/3 acres, to address concerns about the gnatcatcher habitat, and added trees and shrubbery to cover fencing and piping from neighbors’ views.

The runoff from the development would empty into to the park through a 6 1/2 -foot-wide pipe.

christian.berthelsen@ latimes.com
 

Posted by M at 17:38:35 | Permalink | No Comments »

Monday, September 24, 2007

Risky Loans Help Build Ghost Town of New Homes

Damon Winter/The New York Times
City Councilman James Sanders Jr., with empty new town houses.
By DAVID GONZALEZ Published: September 24, 2007

Along the streets of Far Rockaway, many recently built two- and three-family town houses sit waiting for even one family to move in. Some have boarded-up windows, while others have clumps of garbage in driveways that have never seen a car. Desperate developers hoping to cover their bets — and stem their losses — tape up both For Rent and For Sale signs inside windows that face nearly deserted streets.

Damon Winter/The New York Times
City Councilman James Sanders Jr. talking with constituents in southeast Queens. Mr. Sanders said his district has been hit hard by a credit and foreclosure crisis.

The same blocks were once home to sprawling single-family houses with wraparound porches. But during the superheated real estate market of just a few years ago, longtime residents sold out to developers who rapidly demolished the old to build rows of plain vanilla town houses sold, it seemed, to anyone who could sign a mortgage application.

But as the market cooled and credit got tighter, many of the new homes sat empty. On a few blocks, developers have built nothing but plywood walls to hide the weed-choked lots after the old houses were torn down.

 

“Folks just went crazy and got into the feeding frenzy,” said City Councilman James Sanders Jr., whose Far Rockaway office is wedged between undeveloped lots and mostly vacant town houses. “They thought money was going to come to everybody left, right and center. Irrational exuberance is what I call this.”

The empty homes and undeveloped lots, he said, are part of the unacknowledged effects of the larger credit and foreclosure crisis in minority neighborhoods, where subprime and predatory loans were common. Real estate values rose steadily, as did the optimism of aspiring first-time buyers, who entered into mortgages without fully understanding the terms of the loan or the responsibilities of ownership. When budgets got tight, they could always refinance, they were told.

Not anymore. Now, in large swaths of Mr. Sanders’s district in southeastern Queens, For Sale signs are as common as trees, as people try to bail out before losing what little equity remains in their homes. Similar scenes are found in central Brooklyn and the northeast Bronx, strongholds of minority homeowners whose fortunes have declined. While regulators have long been reluctant to rescue individuals they considered victims of their own greed or bad decisions, entire communities are now facing the consequences.

“Whole neighborhoods are wiped out, crime increases, the neighborhood’s reputation goes down, quality of life is undermined, and people can’t sell their houses,” said Susan Saegert, a professor at the Graduate Center of the City University of New York, who recently completed a study of homeowners facing foreclosure. “That has already happened in Ohio and the Rust Belt. And it is starting to happen in New York.”

This has not come as a surprise to housing policy analysts and advocates who have been warning about the disastrous consequences of the freewheeling subprime market. At least five years ago, they sounded alarms over the spike in foreclosures among elderly homeowners who had been persuaded to take out costly refinancing loans to do repairs or raise money for emergencies. More recently, they saw a surge of first-time buyers taking out $500,000 mortgages at unfavorable terms even though they earned only $50,000 or less annually.

Sarah Ludwig, the executive director of the Neighborhood Economic Development Advocacy Project, said many people — first-time buyers who relied upon one-stop shops that provided a mortgage broker, appraiser and lawyer, and homeowners who refinanced their existing mortgages — were lured by offers of low monthly payments on adjustable rate loans. But those loans could become unaffordable once the interest rates reset, as is expected to happen in the coming months for many mortgages that began in 2005.

Ms. Ludwig’s group estimates that by year’s end, at least 14,700 homeowners in the city could be in default, mostly in minority neighborhoods, which she said were singled out for these loans.

“We have seen for the last 10 years a very serious problem with the concentration of high-cost loans, foreclosures and people losing their homes,” she said. “What is the toll of these loans?”

In many cases, when the true costs are revealed, the brokers who arranged the mortgages at unfavorable terms have long moved on with their fees, while the original lenders have already sold the loans on the secondary market to banks that used them to back securities. Increasingly, housing advocates have taken to task the big banks that scooped up these high-risk loans.

“The mortgage broker and the lender know this would not work if Wall Street had not been willing to buy these loans,” said Oda Friedheim, a Legal Aid Society lawyer in Queens who deals with many homeowners. “I look at this as a civil rights issue in those neighborhoods where people thought having a home was key to building individual wealth. But what happened is the wealth people built through their hard work has been transferred to Wall Street.”

Predatory lending was just part of a larger problem facing people whose budgets were already stretched thin, Dr. Saegert found in her study. In many cases, she said, family responsibilities pushed stressed homeowners over the edge. “We saw people who had relatives move into an apartment in the house and not pay anything,” she said. “They use resources but don’t contribute, and that just stretches you out more. We had one older couple who took in grandchildren when their daughter died, but they were on a fixed budget and had no way to take on the extra jobs to support them.”

She noted that while people often felt shame at their financial predicament, their efforts to get help were often rebuffed by companies who handled the payments. Unaware of local housing groups that could counsel them, many homeowners skipped paying other debts, ran up huge credit card bills or fell victim to so-called foreclosure rescue scams that tricked them into signing over their deeds.

“Their state of mind is the worst,” Dr. Saegert said. “The people who can legitimately help them are already overwhelmed and not looking for new clients. The people who are not legit are looking for them and they treat them nice. That is why people end up signing papers now not even thinking about it.”

When Carolene Brown and her husband, Patrick, faced foreclosure on their two-bedroom home in the Bronx, hardly a week went by that they were not visited by a friendly stranger offering to help. Five times, she said, they paid $500 in cash to swindlers, who claimed they could stop the foreclosure. In time, a friend of her husband’s offered to help them save the house. Instead, she said, they wound up signing over the deed to him and had the house sold out from under them.

“People always came to us to help,” said Ms. Brown, who said she has contacted prosecutors to help her reclaim her home. “I’m a strong person, and I do not like to talk about certain things. My family is big, and they could have helped me out. But I do not like to complain and ask for stuff. I always said I’d try to make this on my own.”

Councilman Sanders has heard that often.

“People always believe they can turn it around,” he said. “But in the end, they’re out of here and go to live with one of their children or wherever people go when they’re dying of shame.”

Along the many side streets of Arverne, where low-flying planes approaching Kennedy Airport regularly drown out conversation, Mr. Sanders pointed to block after block where homes were for sale or where failed developments turned into rushed rentals. Even closer to his office in Far Rockaway, unsold town houses have been rented to people he said are receiving government subsidies.

“That creates a different problem of changing the composition of the community,” he said. “They tip it from working class and middle class and into a concentration of poverty. You put people into homes who never learned how to manage living in one.”

Down one block of such homes, young men darted inside at the sight of strangers. Outside another drab development, overflowing garbage cans sat atop dusty patches of weeds and gravel.

“There always seemed to be an endless supply of people willing to buy these,” Mr. Sanders said. “Now the chickens have come home to roost. And the community is the one that’s hurt.”

Posted by M at 12:04:15 | Permalink | No Comments »

Friday, September 14, 2007

Vacant Houses, Scourge of a Beaten-Down Buffalo

Doug Benz for The New York Times

Buffalo’s mayor has a plan to demolish about half of the city’s vacant houses, like these two on Lombard Street.

By KEN BELSON Published: September 13, 2007

BUFFALO — In this city beaten down by decades of factory closings and residential exodus, the razing of thousands of vacant houses is being touted as a sign of progress.

An Abundance of Vacant Homes


Gangs, squatters and teenagers have been burning down hundreds of houses a year, straining the meager resources of the Police and Fire Departments. Some of the properties have been turned into crack dens and places to stash guns and drugs. A few have been booby-trapped or had their floors ripped out by scavengers looking for pipes they can sell to metal dealers.

The burned-out and boarded-up buildings, which are visible on nearly every street in east Buffalo, have deterred even the most pioneering investors from moving in.

So Mayor Byron W. Brown recently unveiled a $100 million five-year plan to rip down 5,000 houses, about half of all the vacant houses in the city, which ranks second only to St. Louis in the percentage of vacant properties per capita nationwide.

The best way to save Buffalo, he reasons, is to mow down the buildings on these properties — starting with the ones deemed the worst fire hazards or those near schools — and encourage church groups, entrepreneurs and neighbors to build homes in their place.

“We have a real sense of urgency,” said the mayor, who was elected in November 2005 but has grappled with vacant houses as a city councilman and a state senator. “If we do not address the decline in these neighborhoods, we will see more people losing hope and faith in the city’s ability to fix the problem, and more people leaving.”

Demolitions are nothing new in Buffalo — buildings on more than 2,000 vacant properties have been destroyed since 2000 — but Mayor Brown has determined that more must be done, because the city can no longer afford to prop up eyesores and death traps.

His office estimates that each abandoned house costs the city an average of $20,060 over five years in lost taxes, debris removal, inspections and policing. So far this year, 41 percent of all fires in Buffalo were in vacant buildings, and more than 90 percent of all arson cases involved abandoned houses.

Making matters worse, the price to demolish a house has been rising because of stiffer regulations on the handling of asbestos. The city spends an average of $16,040 to take down a house with asbestos inside, 31 percent more than two years ago. Last year, Buffalo tore down 200 homes with $3 million in state aid it received for demolitions.

Buffalo officials plan to submit an application by the end of the month seeking $20 million from a state program called, paradoxically, Restore NY. And the city plans to match any donations earmarked for demolition from businesses and philanthropists.

For years, Buffalo took an ad hoc approach to demolitions, sometimes knocking down houses when it received block grants for redevelopment or when the houses were clearly fire hazards. Many residents — especially those who live near dilapidated houses — said they were encouraged by the mayor’s efforts.

Luan Nguyen, who has lived in the Broadway-Fillmore neighborhood for seven years, said he was relieved to see a 22-ton excavator demolish two rundown houses on the corner of Lombard and Peckham Streets.

“I’m so happy to see it done,” said Mr. Nguyen, who stood with his back to a weed-filled lot where several other houses once stood. “No one has lived there for five years, and my kids play around here. I worry about that.”

The two houses recently torn down were of no particular architectural or historic value. But preservationists, planners and community activists worry that the city, in its rush to pull down so many others, is destroying buildings that could be rehabilitated and attract other development.

“One of the primary critiques of this bingo-scorecard approach to demolitions is that there’s no integrated plan why certain properties should be knocked down or not,” said David Torke, who runs Fix Buffalo Today, a blog devoted to preserving the city’s east side (fixbuffalo.blogspot.com). “We should operate like a medical doctor on the battlefield, and save what can be saved.”

Buffalo is not alone in wrestling with how to save itself through selective destruction. Philadelphia’s efforts led to a mini-renaissance in recent years; Detroit has had more mixed results. Youngstown, Ohio, is debating whether to bulldoze entire neighborhoods and turn them into parks.

But in many ways, Buffalo faces higher hurdles than other cities. According to census figures released last month, nearly 30 percent of Buffalo’s residents live in poverty, a rate surpassed only by Detroit among the nation’s largest cities. As a result, large numbers of homes continue to be abandoned, and there is not enough money around to build new ones in their place.

“We see a direct correlation between Buffalo’s poverty rate and physical blight,” said Aaron Bartley, the director of PUSH Buffalo, a nonprofit group focused on vacant housing. Nearly 80 percent of the city’s neighborhoods, he said, have at least some vacant homes. “Abandoned housing reinforces crime,” he added.

Buffalo also has had a relatively hard time attracting the high-paying jobs that draw newcomers or provide current residents with the extra cash to fix up rundown homes.

“Buffalo can’t be a Philly right now,” said Joe Schilling, the associate director of the Green Regions Initiative in the Metropolitan Institute at Virginia Tech University. The city, he said, “is a lot more isolated.”

Over the past two years, private companies have spent or announced plans to invest $1.5 billion on offices, stores and homes in Buffalo, said Richard M. Tobe, the city’s commissioner of economic development, permit and inspection services. An additional $2.1 billion in public works projects are on the table, too.

But it is unclear how much of that money is trickling into hard-hit neighborhoods. On some corners, pocket parks serve as lonely place holders until money can be found for an alternative use. On many streets, occupied homes are sprinkled among dilapidated ones and empty lots.

The city has set up programs to provide low-interest loans and to help with closing costs. And several community development corporations are building subsidized housing, including a handful of two-story houses near the corner of Elsie Place and Ada Place that cost $130,000 to build but sold for $70,000.

“Two years ago, this place looked entirely different,” said the Rev. Richard A. Stenhouse, pastor at the Bethel African Methodist Episcopal Church and director of the Bethel community development corporation, which has built more than a dozen homes. “We’re not trying to do everything ourselves, but neighborhood by neighborhood, it will be a better city.”

Other homes are being refurbished on Coe Place, around the corner from Artspace Buffalo, a factory that has been transformed into affordable housing for artists. Jennifer Russo and her partner, Roy Cunningham, bought a Queen Anne-style home on Coe Place and fixed its roof three years ago, and they spent $6,000 more to buy the house next door.

“It’s so inexpensive to live here,” said Ms. Russo, who went to school in Buffalo and returned after several years of teaching in Rockland County.

But in many cases, the cost of fixing foundations, roofs and interiors can exceed the value of the houses, even those bought at auction from the city for $1; this makes it difficult for would-be buyers to obtain bank loans. The median assessed value of housing in the Broadway-Fillmore neighborhood was $14,000 last year, according to the Federal Reserve Bank in Buffalo.

“Half of Buffalo looks like New Orleans after the storm,” said Mark Goldman, author of “City on the Edge,” a history of Buffalo. “The city needs to turn the whole area into a great forest. We can’t afford to keep the infrastructure.”

Mayor Brown bristled at suggestions that he might have to shut down blocks that have little hope of being revitalized. But his commissioner of administration, finance, policy and urban affairs, Janet Penksa, acknowledged that “the reality of this development is it’s slow.”

“There is no silver bullet in this kind of work,” she said.

In the meantime, the city is trying to speed the pace of boarding up vacant houses and finding candidates for demolitions through housing court. It now takes about four days to get a house boarded up, down from two weeks a couple of years ago.

But drug dealers, gang members and squatters sometimes try to hold their ground, so Mike Cacciatore and his “clean and seal” crew of city employees travel with Lisa Holloway, a police officer, for protection.

On a recent day, the team zeroed in on Houghton Street, where they boarded up five houses, several of which sat next to empty lots. Inside No. 62, which had been vacant for several months, doors were torn off their hinges and drawers were pulled out of cabinets. The floor was covered with clothing, mattresses, broken glass, a weed cutter and a phone book, opened to a page with instructions on calling 911.

Posted by M at 13:59:41 | Permalink | No Comments »

Thursday, September 13, 2007

Garden Grove council rejects casino plan

Unanimous vote followed emotional public comments, especially from Vietnamese, against the proposal. A hotel complex is OKd for the land instead.
By Dave McKibben, Los Angeles Times Staff Writer September 13, 2007
The Garden Grove City Council voted unanimously late Tuesday to kill a casino proposal that promised $70 million in annual tax revenue and college scholarships to every high school graduate, forcefully ending the central Orange County city’s three-year dance with casino backers.

“We made a very strong statement with that 5-0 vote,” said Councilwoman Dina Nguyen. “It will give the casino developers a hint that it will not be that easy to get into Garden Grove again.”

In bypassing the Gabrielino-Tongva Indian tribe’s proposal for a 40-acre Harbor Boulevard parcel near Disneyland, the council instead will offer most of the land to a Colorado-based developer. The project would include an upscale hotel with an indoor-outdoor water park, meeting space, two parking garages, shops and restaurants.
“I am still intrigued by the casino, but it is a long way off,” said Councilman Mark Rosen. “We needed to start producing revenue on that land now. The hotel project is not going to get off immediately either, but at least we can start moving on it.”

The McWhinney Enterprises project was approved for 25 acres, leaving the door ajar for a casino in the future.

“I think there’s still room for other things, including a casino if they can get over all their hurdles,” Rosen said.

Much of the emotional and critical testimony during the three-hour hearing came from Vietnamese Americans. Many warned of potential dire social effects of a casino, such as increased crime, more traffic and even more suicides. There were also some subtle — and some not so subtle — reminders of the potential voting power of the Vietnamese community.

“The Vietnamese community realized they can vote, and now they’re simply going onto the next level,” Nguyen said. “They are understanding their constitutional rights and the responsibility that goes with that. I think the result last night gave the Vietnamese community a lot of faith in the democratic process.”

Councilman Bruce Broadwater said he believed the strong showing by the Vietnamese community was a factor in the 5-0 vote.

“You have 200 or 300 Vietnamese people screaming at you,” he said. “You can only take that heat for so long.”

Broadwater said he was convinced the casino was unrealistic because the Gabrielinos had too many obstacles to overcome. There are about 2,000 Gabrielinos in the state, but the tribe is not federally recognized and is split into at least five factions, complicating and possibly dooming efforts to build a casino. Because the Gabrielinos have no land, the tribe would have to have a statewide ballot measure passed allowing state-recognized tribes to build casinos.

“There was nothing there, nothing tangible to touch,” Broadwater said. “They had a dream, but there was nothing to go with it.”

Jonathan Stein, chief executive of the Gabrielino faction pushing the casino, argued that the tribe could open a casino in Garden Grove with proper legislation and a negotiated compact with Gov. Arnold Schwarzenegger.

This is the second time Garden Grove has considered a casino. Three years ago, city officials met with a different tribe and Las Vegas casino mogul Steve Wynn about building a casino-hotel, but the plan quickly fell apart.

Garden Grove Mayor William Dalton said he had considered the Gabrielino proposal, but he ultimately decided the economics of the project were “too pie-in-the-sky.” Dalton said he believed a casino would never be built in Garden Grove.

“I don’t think you’ll ever get the majority of the residents to go along with it,” he said.

Councilman Steve Jones said he was bothered that the casino proposal overshadowed the hotel-water park plan.

“We’re getting a 1,200-room, high-end themed hotel around a water park; this project alone could put Garden Grove on the map,” he said. “It’s an awesome deal and hardly a consolation prize. I think parents are going to have a hard time pulling their kids out of this water park to go to Disneyland.”

Posted by M at 13:22:45 | Permalink | No Comments »

Wednesday, September 12, 2007

Caltrans is being pushed to unblock carpool lanes

Faced with the prospect of losing federal funding, the agency considers increased fines for unauthorized use, going after cheaters or even requiring more passengers in a car.
By Rong-Gong Lin II, Los Angeles Times Staff Writer September 12, 2007
Caltrans must figure out how to reduce growing congestion in California’s carpool lanes or face a possible cut in federal funding. But as is so often the case with freeway planning, there are no easy solutions for getting traffic flowing better.
The stakes are high for all freeway drivers, including owners of hybrid cars who can now use carpool lanes solo, and even for those who never carpool but might end up seeing more traffic in their lanes.

For starters, officials want to raise the $341 minimum fine for carpool lane violators and step up patrols to catch cheaters. About 5% of motorists riding in the carpool lanes are believed to be cheaters, and cutting that violation rate even slightly could help reduce congestion, officials and experts said.

“Even if we could . . . cut in half that violation rate, we would see some significant improvement,” said Caltrans Director Will Kempton.

But the California Highway Patrol is still trying to figure out how to fund additional officers for special patrols tasked with catching speeders and responding to accidents.

“We are obviously stretched thin as far as our officers are concerned,” said Tom Marshall, a spokesman for the CHP. “If we’re going to do specifically targeted patrols, yes, we’re going to have to find a way to fund either overtime or extra officers.”

Moreover, several transportation experts are skeptical that higher fines alone would solve the problem.

The push comes three months after the Federal Highway Administration declared California’s carpool lanes out of compliance with federal regulations, which require the lanes to flow at speeds of 45 mph or faster at rush hour.

The speeds are far lower in the diamond lanes on some major Southern California routes, including portions of the 405 freeway from the South Bay through Orange County, as well as parts of the 5 and 210 freeways.

Carpool lanes have slowed down so much in some areas that even bus operators are complaining.

According to Caltrans, nearly half of the state’s 1,350-mile carpool lane system is operating below acceptable speeds.

In a conference call with reporters last week, Kempton made other promises, including completing gaps in the state’s carpool lane system and clearing accidents from freeways more quickly.

Those two ideas are not new. Building costly new carpool lanes throughout the region has long been a Caltrans priority, and in April Kempton committed to clearing all accidents within 90 minutes; last year, it took an average of three hours to clear accident scenes.

Kempton said more ideas will come in October, after his agency completes a freeway-by-freeway analysis of the slowest carpool lanes, which are primarily in Southern California.

Transportation experts say there are several obvious solutions that would speed up the lanes.

But none are politically popular:

* Prohibit single-occupant hybrid vehicles in carpool lanes. From 2005 to February 2007, California issued permits to allow solo drivers in the most fuel-efficient cars to use the lanes. The program was so popular state lawmakers increased the program cap from 75,000 to 85,000 even though Caltrans recommended against it.

Ending the privilege, from a practical standpoint, “would be a no-brainer,” said Genevieve Giuliano, director of the National Center for Metropolitan Transportation Research at USC. Hybrid vehicles, she said, “are actually more fuel-efficient if they are going slow.”

Kempton said Caltrans would bar hybrids from using the most congested carpool lanes only as a last resort. The program is set to end in 2011.

* Increase the number of people needed to form a carpool from two occupants to three . Virtually all freeways in Southern California require only two, except for the El Monte Busway on the 10 freeway, which requires three during peak hours.

“That would allow for a higher speed on the HOV lanes, but it would again result in a large constituency of drivers” upset — namely, two-person carpools, said Martin Wachs, director of transportation and technology at the Rand Corp.

Diverting two-person carpools into regular lanes could also worsen congestion for regular commuters, according to some Caltrans officials.

* Convert regular freeway lanes into carpool lanes. Caltrans tried that on the Santa Monica Freeway in the 1970s, prompting a motorist revolt, and since then it pledged to introduce carpool lanes only by adding more road space. As a result, this scenario is highly unlikely.

* Charge to use the carpool lane. This is done on the 91 Express Lanes connecting Orange County and Riverside County. Carpools with three or more occupants are charged when traveling eastbound from 4 to 6 p.m ., although they receive a 50% discount off the regular toll.

That would probably prompt immediate objections from carpoolers who currently use the lanes elsewhere in the region for free.

“There’s no obvious solution that would satisfy everybody,” Wachs said, adding that he is not advocating any particular approach.

Kempton said the best long-term solution would be to increase capacity — by expanding the system to other freeways, and constructing a second carpool lane next to an existing one.

Such expansions could be financed by allowing solo drivers to use carpool lanes if they pay a toll, he said.

But widening roads takes time and money, and experts said it is critical that officials ensure that carpool lanes move faster than regular traffic.

“Unless that time savings is consistent and reliable, the motivation to form a carpool is lost,” said Brian Taylor, head of the Institute of Transportation Studies at UCLA.

ron.lin@latimes.com

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Mall could revive once-vibrant Mid-City area

A $70-million mall is another indication that L.A.’s Pico-San Vicente area, once mired in economic decay, is resurgent.
By Ari B. Bloomekatz, Los Angeles Times Staff Writer September 12, 2007
Back in the days when Los Angeles had streetcars, the crossing of Pico and San Vicente boulevards in Mid-City was a hub of activity.

The streets were lined with shops, restaurants and movie theaters. A hilltop Sears department store drew customers from far and wide, some taking the Pico line of the Los Angeles Railway Co. trolley car system.

Then came the Watts riots in 1965, followed by years of economic decay and the 1992 riots. Crime rose, storefronts shuttered and the landmark Sears closed its doors.

But Mid-City is now in the midst of a revival, part of a wave of gentrification that has swept over many of L.A.’s once-neglected neighborhoods. The boarded-up Sears, for years a symbol of decay, is being replaced by a 500,000-square-foot mall, anchored by a Lowe’s home improvement store.


The area, a mix of ethnic groups and neighborhoods that range from mansion-lined streets to rows of low-rent apartments, is benefiting from economic forces on its borders. People who can no longer afford the high prices of neighboring communities have moved in. It helps that Mid-City, as its name implies, is not far from downtown, Hollywood and the Westside. And development is following.

“This is one of the great untapped neighborhoods,” said Samuel Garrison, director of public policy at the Los Angeles Area Chamber of Commerce.

The gentrification has been embraced by some — but not all — Mid-City residents.

Barbara Julian, who has lived in a house one block south of Washington Boulevard on Dunsmuir Avenue for more than four decades, said she has to drive miles for shopping — to Beverly Center or Culver City.

“The area has been a blighted area for quite a while,” she said.

Julian, 71, said she hoped the new mall would bring a new sense of vitality to the area.

But Carlos E. Rodriguez, owner of El Salvadoran pupuseria Con Sabor that opened nearby 10 years ago, said new brand-name stores, such as Panda Express, will hurt small businesses like his. Developers “never come in with small, local businesses; they come in with brand franchises,” Rodriguez said.

Experts say Mid-City’s history and demographic shifts are emblematic of many low- and middle-income neighborhoods throughout Los Angeles. The rise in home values in neighborhoods such as Hancock Park, the Fairfax district and Miracle Mile have young professionals and first-time homeowners giving Mid-City a new look.

A single-family home in the area sells for an average of $559,000 — nearly four times more than in 2000, but about $300,000 less than in Olympic Park, according to John Karevoll of the real estate research firm DataQuick Information Systems.

Despite the influx of new homeowners, Mid-City remains a largely working-class area.

Nearly a quarter of its residents were living in poverty, according to the 2000 Census, a bit more than twice the nationwide rate of 12.4%. And according to the same census, slightly more than half of Mid-City residents 16 and older had jobs — more than 5% less than the rest of Los Angeles and about 9% less than the national average.

The developers of Midtown Crossing, set on 10 acres, are not looking to attract exclusively upscale clientele. CIM Group Inc., the company funding the project, has a history of targeting emerging areas that the developers say don’t have enough retail establishments.

The mission “is to be a catalyst for change in communities that have been underserved,” said Philip Friedl, a CIM vice president. “This area, this community, this project, and this site really presented the opportunity to do that.”

Detailed drawings of Midtown Crossing show a style similar to the much larger and more upscale Grove, a popular outdoor shopping mall a few miles away on 3rd Street and Fairfax Avenue. Midtown Crossing would have tree-lined sidewalks, brand-name but not super high-end retailers surrounding a parking area. The developers won’t confirm tenants because negotiations are not final, but stores that might open include Best Buy.

In the 1920s and ’30s, Mid-City was a suburb of downtown Los Angeles — “very dynamic, it was changing all the time,” said Matthew Roth, a historian with the Automobile Club of Southern California. Some developers at the time tried new architectural plans in the neighborhood, including an innovative rooftop parking lot at the Sears store, Roth said.

It helped that at Pico and Rimpau boulevards, a key Los Angeles Railway line had its western terminus, with a depot next to the Sears that is now a transit center for the Metropolitan Transportation Authority and the Big Blue Bus line.

Until the August 1965 riots, Mid-City and the neighboring Crenshaw district thrived, said Christopher West, history curator at the California African American Museum in Los Angeles. But Mid-City struggled for the last 40 years, taking a second hard hit when riots again rocked the city in 1992.

After the dust settled from the riots, City Councilman Herb Wesson said, retailers were wary of moving into the area. Wesson said he has set up booths at development and retail conventions around Southern California, asking retailers to come to an area he described as “barren” and “starved.”

“We’ve got enough liquor stores and auto body shops for one neighborhood,” Wesson said about Mid-City, which is in his district.

Midtown Crossing is the first major development to bring in masses of new stores to the area. But residents said they began noticing changes in 2000.

More retail has crept in as community activists and local politicians pursued business-friendly community planning.

“I’ve seen the improvements, the different businesses that have moved in, the interest from big developers looking at properties,” said Steven Vasquez, president of the Mid-City Neighborhood Council. “The street maintenance has increased. We’re getting more medians, better street lighting. It’s going to help more businesses come in, and of course, you have the people moving in that have more income.”

Two years ago, when Franco Gambino opened Gambino’s Grill and Pizza on Venice Boulevard near San Vicente, he was struggling to get customers. Now, he said, he sees customers coming from Hancock Park for “The Killer,” a monster pizza.

Gambino said he hopes the development will bring more foot traffic. A bank and a few shops have opened at the new mall, just east of La Brea Avenue. To come over the next 16 months are the home improvement store, scores of other retailers and a three-story parking garage, all at a cost of $60 million to $70 million, said architect Brad Williams, the project’s director at Studio One Eleven in Long Beach.

Darnell Hunt, director of the Ralph J. Bunche Center for African American Studies at UCLA, called the development “momentous” because retailers have been wary of building in areas touched by the 1992 riots.

But Hunt pointed to an Inglewood neighborhood where residents argued bitterly over plans by Wal-Mart to open a mega store and said that developers are often not in tune with a particular community’s needs, such as prevailing living wages and opportunities for local entrepreneurs.

Julian, the longtime Mid-City resident, said she believes the community would love the kind of shopping and pedestrian interaction her neighborhood enjoyed during its heyday.

“I hope the mall will bring in business and actually make it look much better.”

ari.bloomekatz@latimes.com

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Friday, September 7, 2007

Second-Home Showdown

By AMY GUNDERSON Published: September 7, 2007

FOR 30 years, Dena Aquilina has lived in an adobe house off a narrow dirt road in a historic area of Santa Fe, N.M. But lately, she said, the quiet neighborhood has felt a little less tranquil. Two of the homes on her block of 12 houses aren’t occupied by full-time residents or even by snowbirds spending winters in Santa Fe, she said. Instead, a steady stream of tourists have been renting the homes for stays as short as a few nights.

The visitors, she said, sometimes disrupt the neighborhood by driving too fast or simply making too much noise. “They get this Disneyland mentality because they’re on vacation,” she said. And with new cars on the block every few days, “it feels like a motel parking lot.”

Similar tensions have arisen in other popular getaway destinations as the vacation-home market has boomed, throwing together more short-term visitors and full-time residents. The result is a real estate showdown, with communities stepping in to regulate the industry or even trying to ban short-term rentals altogether.

 

The issue has popped up in the Shenandoah Valley community of Massanutten Village, Va.; the Pacific Beach community in San Diego; Maui in Hawaii; Venice, Fla.; and Clearwater, Fla., where owners of 31 vacation-rental properties took the town to court after a ban was passed. A lawsuit over a short-term rental ban in Monroe County, which covers the Florida Keys, has been in and out of court since 1999.

The tensions can be traced in part to enterprising second-home buyers who have scooped up investment properties in tourist-friendly towns, and also in part to the rise of professional management services and Web sites like Vacation Rentals By Owner ( www.vrbo.com) and HomeAway.com, dedicated to helping owners make their vacation property work for them.

Quality-of-life complaints are a cornerstone of the push against short-term rentals. But Simon Brackley, the president of the Santa Fe Chamber of Commerce, questioned the validity of such claims in his city. “We are a pretty sophisticated town; people come here for the art and culture,” he said. “We’re not a college town. We don’t have tequila-drinking contests.”

Roxanne Connan agreed. For the past five years she has rented out her two one-bedroom casitas in Santa Fe. Her tenants don’t exactly fall into the party-animal category, she said. “They are mostly couples in their 50s, 60s and 70s. Some are here because they are looking to buy a house,” she said. “I’ve never once had a complaint or a problem.”

Mark Ray and his wife, Debbie, have visited Santa Fe for the past 10 years and typically stay in a vacation rental for their trips, which last from four days to two weeks. “I wouldn’t describe us as rowdy,” he said, though he admitted that he could see both sides of the issue. Some homes are on small lots and close to neighbors, making even a low-key evening of backyard grilling a potential nuisance, he said. “Voices can carry.”

That said, Mr. Ray hopes that vacation rentals won’t be severely restricted in Santa Fe because he and his wife plan to buy a home there one day and would like to have the option to rent it out when they are not there. “Homes in Santa Fe are expensive,” he said. “Unless you are really wealthy, you need a little bit of income.”

Although rentals of less than 30 days were made illegal in much of Santa Fe several years ago, the short-term rental business has continued to thrive. While management companies and second-home owners admit that they may not have been following the letter of the law, they say the city has continued to accept their payments of lodgers’ taxes on rentals, even ones that are technically illegal.

The Santa Fe City Council formed a task force to re-examine the issue in 2005. A 75-member vacation rental owner’s group has also been formed, and several proposals to tighten short-term rentals have been put forward. One proposal, to be voted on by the City Council in November, would limit rentals to one per seven-day period, require that the homeowner apply for a $1,000 annual rental permit and cap the number of short-term stays at 17 per property per year.

THE proposals are seen by the rental industry and some local officials as restrictive enough to shut down the business. “It would kill the industry,” said Mr. Brackley of the Chamber of Commerce. “And it is a good industry. It employs a lot of people.”

But Karen Heldmeyer, a Santa Fe city councilor who supported a proposal to limit short-term rentals to just two a year that was killed by the city’s finance committee this August, said she hoped that reining in the industry would address a bigger problem. “The purpose is to maintain the residential character of a neighborhood,” she said.

While management firms and real estate agencies say that they have only been able to confirm one official complaint to the city over short-term rentals, Ms. Heldmeyer said the true number was much larger, adding that there has been “very little good record keeping.”

How such rules will be enforced remains a question, Ms. Heldmeyer said. Even towns that have long had bans on short-term stays have difficulty enforcing them. In Pismo Beach, Calif., short-term rentals have been illegal in much of the city for more than a decade, but Mayor Mary Ann Reiss, who is also a real estate agent, said enforcing the ban was difficult. “We only enforce by complaint at this time,” she said.

In Big Bear Lake, Calif., a resort community east of Los Angeles in the San Bernardino National Forest, the issue of short-term rentals will be on the ballot in 2008. The Private Home Rental Initiative would require owners of vacation rentals to secure a permit in addition to the local business license currently required, make their properties comply with the Americans with Disabilities Act, submit to yearly inspections and have a property manager or owner on call around the clock to respond to complaints. A study commissioned by the city estimated that the passage of the initiative could cut local sales tax revenue by 12 percent, cause a 50 percent loss of jobs in the rental industry and potentially hurt real estate values.

Of course, people involved in the Big Bear vacation rental industry, which attracts visitors for skiing in the winter and boating in the summer, are worried. “Very few owners would be able to comply with this ordinance,” said Nick Lanza, the owner of Big Bear Vacations, a rental agency. “We feel that it is so restrictive it could put us out of business.” He said that much of the support for the initiative was coming from commercial lodging businesses (the ordinance was sponsored by a local bed-and-breakfast owner). “They feel that we are unfair competition,” he said.

On Maui, the owners of an estimated 800 vacation rentals operating without a permit in neighborhoods not zoned for short-term rentals are now being approached by county zoning enforcement officers. Jeffrey Hunt, the planning director for the County of Maui, said that the five zoning officers on staff were asking homeowners to roll up the short-term welcome mat.

“We are talking to them and giving them a reasonable amount of time to shut down their business,” Mr. Hunt said. The hope, he said, is that these homeowners will seek out tenants staying at least 180 days and fill the dearth of long-term rentals on the island. Alternatively, owners can halt rentals, apply for a permit to operate short-term lodging, and sit back and wait for county council approval. Mr. Hunt said the application permit process was already slow, even before the new crackdown. “Some of the applications have been sitting there for years,” he said.

WHILE fights over the future of vacation rentals can be contentious, JoAnn Yukimura, a county councilwoman on Kauai, said she had tried to write legislation that would satisfy both sides. There are designated areas on Kauai that are permitted to have short-term rentals, but an estimated 1,000 vacation rentals have popped up outside of those zones all over the island, Ms. Yukimura said.

“In some neighborhoods, it is more than 50 percent rentals,” she said. “It moves an area towards a horizontal hotel.” Her proposal would allow current short-term rentals, even those outside the designated areas, to continue accepting guests as long as the homeowner has been paying the local lodgers’ taxes, but it would restrict future rentals outside of approved areas on the island.

Ms. Yukimura said she hoped this would stop the spread of short-term lodging, which she said had been growing aggressively for understandable reasons. “This is an issue for very desirable places.”

Posted by M at 13:01:42 | Permalink | No Comments »

Tuesday, August 28, 2007

Little League baseball practice field under fire for lack of permit

Demian Bulwa, Chronicle Staff Writer Tuesday, August 28, 2007

Greg Lowe takes batting practice inside the cage at the b... The 14-foot fence around this baseball practice field has... Allie Lowe, mother Connie Lowe and brother Greg Lowe walk... The fence around the baseball field on a Danville ridgeli...

A man built a baseball field for his 11-year-old son and his son’s Little League team, but this is not some fairy tale where the ghost of Shoeless Joe Jackson emerges from a cornfield to join the game.

This is Danville, not Iowa. Someone did arrive to check out the Field of Dreams, but it was a city building inspector.

The story heads into the late innings tonight, when Danville’s Planning Commission is set to weigh in on an unusual property dispute. It pits David Lowe, who built the field without permits on a picturesque ridgeline, against neighbors below who say the field’s 14-foot-high fence screams prison wall and obscures million-dollar views.

Lowe, a private equity investor, spent hundreds of thousands of dollars on the field, which has artificial turf, an enclosed batting cage with a motorized pitching machine, and hookups for electricity and water.

The views give San Francisco’s AT&T Park a run for its money - Mount Diablo to the east, Las Trampas Regional Park to the west, old oaks all around.

Lowe calls it a “place for neighborhood children to play baseball.” His son, Greg, calls it “really cool.”

Opponents call it “Guantanamo Bay” because of its fences. The neighbors - many of whom are wealthy, though not build-your-own-ball-field wealthy - want it removed as soon as possible, rejecting Lowe’s proposal to hide it by planting tall trees.

Danville planners agree. Citing local rules preserving “major ridgelines,” they recommend that the commission turn down a permit application that Lowe belatedly filed. The squabble could end up before the Town Council, and in the courts after that. In theory, the town could force the field’s dismantling.

“Is the next guy going to put a football field on the ridgeline?” neighbor Teri Rousseau asked while pointing to the black fence from her backyard.

In places like Danville, every plan to build on a ridge is controversial and tightly regulated. Planners are used to dealing with monster homes being plopped on once-pristine hills, but say this is their first time dealing with a ball field on a ridge.

The Lowes’ neighbors “spent a lot of money on their houses and were counting on having a rural feel,” Vice Mayor Candace Andersen said. “My first thought when I saw (the fence) was, ‘What were they thinking?’ It’s a really nice thing to do for your kids, but you have to follow the rules.”

As Lowe and his wife, Connie, tell the story, they bought a pair of choice properties on a semirural road called El Alamo 12 years ago. They built a home on one parcel and left the adjacent 2.3-acre property alone, until this January.

That’s when young Greg Lowe and the Little League A’s needed a coach. Dad wanted the job but couldn’t make the practice times that were available at a town park. He phoned a contractor, and earth began to move.

The town posted its first stop-work order Jan. 30, then rescinded it after a meeting with Lowe’s contractor. David Crompton, the principal planner handling the matter, said the grading work being done at the time did not, in fact, require a permit. However, Crompton said, the contractor did not mention plans for a field with 14-foot fences.

The second stop-work order was posted March 15. Among other problems, Crompton said, the fence was too tall and the neighborhood wasn’t an appropriate place for a baseball field.

By then, though, the fence was up, the neighbors were up in arms, and the A’s had begun practicing on the field once or twice a week at 5 p.m.

The field is roughly 60 feet long and shaped almost like a ship. With portable bases and a pitcher’s mound, it’s outfitted for training, but not a full-on game. Home runs and foul balls alike would shoot over the fence. Hitting is done in the enclosed batting cage.

The Lowes say they invited their neighbors up to talk about their project. Some were friends whose children went to school with the Lowes’ son and two daughters. But just three people showed up.

“We didn’t know how upset people would be,” said Connie Lowe, who is PTA president at the local elementary school.

Her husband said he hoped that after he plants trees around the fence, neighbors would prefer it to the alternative - a large home on the ridge. But neighbors and city leaders say such a home would go through a strict review process that attempts to blend it with its surroundings, taking into account stature, color and landscaping.

“I’m not putting an oil well or a nuclear plant here,” said David Lowe.

But he also says he doesn’t want a “war with our neighbors.” At tonight’s Planning Commission meeting, he says, he’ll propose lowering the fences to 6 feet, though that means some balls will go bounding down the hill.

Rousseau, for one, isn’t satisfied.

“I want the fence removed - it’s really that simple,” she said. “If you want to build a field, build a field for the town. I’m sure they’d name it after him.”

E-mail Demian Bulwa at dbulwa@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/28/BAOERQ800.DTL

This article appeared on page B - 1 of the San Francisco Chronicle

Posted by M at 11:25:32 | Permalink | No Comments »

At China’s huge malls, high prices and few shoppers

Empty malls are one indicator of the country’s overheating economy.
By Simon Montlake| Correspondent of The Christian Science Monitor
from the August 28, 2007 edition - http://www.csmonitor.com/2007/0828/p01s01-woap.html
Beijing

Products in China’s malls, like the Golden Resources Shopping Mall in western Beijing, tend to be too expensive for the average consumer.
Robert Marquand/file


For a closer look at China’s sizzling economy, walk the marble floors of Beijing’s latest luxury mall. From its Japanese-style food court selling $4 chocolate éclairs to its glittering floors of branded international fashion, Shin Kong Place is a palace of conspicuous consumption.

The only thing missing, on a sizzling summer afternoon, was customers. Sales staff idled at display racks as a trickle of young visitors looped around the frigid mall. Most were content to window-shop, dreaming of the day when they could afford to drop $100 on a tassled tote bag. “These prices are too expensive. People can’t afford it,” says Xu Tao, a car repairman who was visiting with his girlfriend.

 

As investors continue to pour money into malls, analysts say the signs of a real estate bubble are growing, as are predictions that some retailers may be heading for trouble. Empty malls are just one indicator of an overheating economy – growing at its fastest clip in over a decade – that is proving hard to cool.

To curb rising inflation, led by food prices, China’s central bank raised interest rates last week for the fourth time this year. Real estate is also in the spotlight: Property companies were ordered in June not to borrow offshore. But the race to build goes on.

“The problems of overheating are already apparent,” says Wang Yao, director of the information department for the China General Chamber of Commerce, an industry umbrella group. “The commercial real estate industry is facing problems. After some buildings are finished, nobody wants to rent space.”

Too many malls in China

Since 2002, China has built hundreds of malls in towns and cities, each trying to get a slice of a retail pie worth $800 billion last year. Captivated by the promise of a vast consumer class itching to spend, foreign brands have jostled for space at the table only to find a scarcity of customers. As a result, retail vacancy rates in Beijing are currently 8 percent and rising as more malls enter a crowded market. [Editor's note: The original version misidentified the occupancy rate of Beijing's retail stores.]

Mr. Xu, who pulls in $266 a month – below Beijing’s $400 average – is typical. He socks away one-fourth of his pay packet, as does Chen Ping, his girlfriend, who makes a similar wage as a store assistant. Asked if he isn’t tempted to save less and spend more, he shakes his head.

“If we enjoy life now, what about the future? We need to think of our future,” he says.

The rising cost of living is one reason why many here are reluctant to splurge in fancy malls. Unlike US consumers, many of whom use credit liberally, Chinese workers opt to save, knowing that a feeble welfare system is unlikely to provide for them.

As a result, consumption accounts for only 37 percent of China’s economic output, about half the rate in the US.

Such stinginess bodes poorly for Beijing’s mall developers.

When it opened in 2004, Golden Resources Shopping Mall was the world’s largest shopping center, with 550,000 square meters of retail space (a new mall in southern China has since taken this title). But it has struggled to generate enough customer traffic and sales to justify an investment of nearly $500 million and is fast being overshadowed by newer, glitzier retailers. An additional 2 million square meters of new retail space will be added this year, according to Mall China Information Center, an industry association.

“The question is not whether people can afford [luxury] products, but how many big malls that a city like Beijing should have. That’s the issue. If there’s too many malls, some will fail,” says Mr. Wang.

It’s a common problem that points up the inexperience of mall operators and the readiness of China’s state-run banks to lend to prestige projects with political backing, say analysts and industry sources.

“I think that the issue is not that we’ve misjudged consumption. It’s just been too easy to borrow money and build these things,” says Michael Pettis, a finance professor at Tsinghua University in Beijing.

Just as US home loan woes have left a nasty aftertaste, Mr. Pettis warns that a real estate downturn in China would saddle banks with dud loans to empty malls. In recent years, policymakers have cautioned banks against excessive lending to malls, to little avail.

Exports still rule China’s roost

At the same time, authorities have long sought to lessen China’s dependence on exports by stimulating domestic spending. But private consumption still lags far behind investment in real estate and factories, fueled by a hoard of savings in state-run banks.

New bank loans reached $364 billion in the first seven months of this year, exceeding last year’s total lending, state media reported. Property remains a favorite bet: housing in Beijing is fetching 10 percent more than last year.

However, industry sources say that many first-time mall operators aren’t borrowing money but reinvesting profits from their other businesses. That’s one reason why they don’t always make the smartest decisions, says Victor Guo, president of the Mall China Information Center.

“The developers aren’t so professional in China; they don’t know how to develop and market their product. The industry is at an early stage,” he says.

Golden Resources has adjusted its mix of stores to increase sales turnover, says Fu Yuehong, general manager of New Yansha Group, which operates part of the mall. Weekend crowds swell to 100,000, she says, though it’s much quieter on weekdays.

One blind spot in China’s real estate sector is the focus on well-heeled elites who can afford to pay top dollar for imported luxuries, such as the $6,000 fur-trimmed leather jacket on sale last week at Shin Kong Place. Developers are neglecting the vast ranks of middle-income families in Beijing and provincial cities that aspire to a better lifestyle.

The reason may be less economics than vanity. “Every developer wants Louis Vuitton and Prada in their retail space. They don’t want a mid-market project,” says Anna Kalifa, head of research in Beijing for Jones Lang LaSalle, a real estate company.

Posted by M at 11:19:47 | Permalink | No Comments »

Monday, August 27, 2007

Rail Projects at the Mercy of U.S. Agency

Federal Guidelines, and Funds, Direct Plans for Dulles, Purple Lines at Every Step

By Katherine Shaver and Amy Gardner Washington Post Staff Writers
Monday, August 27, 2007; B01

The key decisions about Maryland’s proposed Purple Line — the route it takes, the type of rail cars it uses, the possibility of tunneling underground — will be determined not by public opinion or political pressure.

Rather, a single agency that controls the limited federal money set aside for transit projects will shape the rail or bus line that could eventually link Bethesda and New Carrollton.

The Federal Transit Administration, which helped sink plans for a tunnel through Tysons Corner and is demanding further cost accounting for the proposed Metro line through Dulles International Airport , will likewise dictate what any new transit line through suburban Maryland would look like and when — or whether — there will be money to build it.

“It’s the driving force behind the planning process,” Maryland Transportation Secretary John D. Porcari said of the competition for federal money. “You can have the best conceived transit project in the world, and it’s not going forward if it doesn’t qualify for federal funding.”

Toward that end, Porcari delayed consideration of the Purple Line for another year after deciding that the rider estimates were too crude to impress the federal officials in charge of doling out critical funding. Analysts are now recalculating ridership predictions using more sophisticated forecasting models.

Concerns about federal guidelines also led local officials to quickly rule out heavy rail — the type of trains used on Metro — in favor of slower, but far cheaper, light-rail trains or express buses. State officials have also rejected calls to run the line under the popular Capital Crescent Trail, saying it would be too expensive without saving travel time — another effort to satisfy federal criteria.

The concessions show just how focused planners are on pleasing officials at the federal agency. The Purple Line is estimated to cost as much as $1.6 billion, an amount state officials say they can’t afford without federal help.

Unlike federal highway funds, which states receive based on a formula and may spend as they wish, money for new transit projects is awarded at the discretion of the FTA. The agency doesn’t have much to dole out. The FTA has proposed spending about $1.4 billion on new transit projects next fiscal year, compared with $42 billion that states will receive for highway maintenance and construction, according to federal figures. More than 100 transit projects across the country are expected to compete for federal money in coming years, according to a federal report.

In deciding which projects deserve funds, FTA officials consider primarily which would attract enough riders and save them enough time to be worth the investment. They also consider the state and local governments’ ability to help pay for construction, maintenance and operating costs. Other considerations include impact on air quality, development around stations and the ability to move lower-income workers to jobs.

FTA evaluations can take years, because it rates a project — and grants permission for it to move forward — at several different points, controlling it from preliminary engineering through construction. The process has grown so complicated and time-consuming that, across the country, many local officials have begun to forgo federal money if they can secure enough local or private funds to build a project, according to a recent U.S. Government Accountability Office report.

“There’s less money, there’s tighter standards, and it’s a long, long haul,” said U.S. Rep. Frank R. Wolf (R-Va.) , one of the key leaders in securing federal money for the Dulles rail project.

Fearing they would jeopardize their $900 million in federal dollars, Virginia officials reluctantly dropped plans for a train tunnel beneath Tysons Corner this year. And although contractors expect to move dirt this fall on what would become Metro’s 23-mile Silver Line, transportation planners are scrambling to trim $275 million out of the budget to satisfy federal funding standards.

Transportation experts say the disparities between highway and transit-system funds — and how money is awarded — are rooted in outdated thinking. Highways have traditionally received more federal money because they have been viewed as connecting the country, while transit systems have been seen as serving individual cities.

“There’s still a lack of understanding of how fundamentally broken the transit program is,” said Robert Puentes, a Brookings Institution fellow.

Meanwhile, competition for that money is increasing rapidly. Many booming areas — including such traditional highway-loving cities as Phoenix, Denver and Houston — are turning to transit to curb air pollution and control their car-dependent sprawl.

“The demand for transit has never been higher,” Puentes said. “At the same time, the federal government substantially underfunds transit, so it’s very competitive to get those funds.”

To win, said Porcari, the transportation secretary, Maryland’s biggest challenge will be proving that a Purple Line would attract enough riders. He said he thinks it would beat out other proposals in its ability to serve a heavily transit-dependent population and blend into communities while “stabilizing and enhancing” them.

The 16-mile Purple Line, which could open by 2015, is designed to revitalize older communities, including such areas as Langley Park, where many lower-income residents rely on buses because the Metrorail system doesn’t take them east or west.

Unlike the Dulles project, which had little opposition beyond the Tysons Corner tunnel supporters, the Purple Line has met organized and vocal protest. Some residents in East Bethesda and Chevy Chase have complained that trains or buses would rumble past their back fences.

Efforts to save money by building most of the line aboveground also have drawn complaints. Trains or buses would pass through the Columbia Country Club’s golf course, and Capital Crescent Trail fans say the line would destroy the trail’s tranquillity while requiring thousands of trees to be cut between Bethesda and Silver Spring. Some University of Maryland officials have also argued that running trains or buses through the College Park campus would be unsafe for pedestrians.

Posted by M at 13:20:21 | Permalink | No Comments »