The boom town that was the Inland Empire has been undergoing a "boom" of another sort, and Claremont isn't excepted from from the experience:
BROTHER CAN YOU SPARE $460 MILLION?
PFF Bancorp (NYSE: PFB) was back in the news Friday. The Daily Bulletin's business reporter Matt Wrye had a brief article noting that PFF Bancorp was looking to generate $460 million. The Rancho Cucamonga-based banking company had to ask for an extension on a $44 million overdue loan at the end of May and is looking to pay that off.
Wrye's article stated that PFF hadn't disclosed any details about the $460 million deal and said that it would require shareholder approval. The article also said the deal would involve a stock offering. The piece gave some background on PFF's problems:
The bank has written off millions of dollars in losses over the last couple of quarters.
In the midst of a booming, inflated housing market, CEO Kevin McCarthy signed off on loans to housing developers who can't repay what they borrowed.
Some experts speculate PFF is on the verge of government receivership if private equity doesn't come to its rescue, or if the bank isn't bought out.
The bank's stock closed Thursday at $1.33, a mere fraction of its $39 value just two years ago.
PFF's board of directors had no problems with CEO McCarthy's management of the company when it was flying high, and several of them, including San Dimas Mayor Curt Morris and former Claremont McKenna College Athenaeum director Jil Stark made out pretty well with their stock options prior to PFF's collapse.
Now that the party's over, the PFF board has kept a pretty low profile. We'll see how long they can keep that up.
HOUSING MARKET WOES
As Matt Wrye's article observed, PFF's problems had their roots in the housing market downturn. Loans to builders and developers turned bad, and share value eroded as a result. The Inland Empire has been hit particularly hard by the problems in the housing market.
Wrye had another article yesterday that posed the question, "When will it end?" to several real estate experts. One of them, Rancho Cucamonga developer Jeffrey Burum, thought the market might not fully recover until 2012.
Burum, coincidentally, helped PFF Bancorp out a couple months back when he bought a portfolio of problem loans from PFF. The loans had originally been valued at around $100 million, but by the time Burum bought them off PFF, they were worth only $60 million. Burum paid $22.5 cents on the dollar for those loans, the Daily Bulletin reported.
CITIES HELPING BUILDERS CLOG THE ROADWAYS
People who've grown up in the area can tell you that traffic has worsened over the years. Builders and their lobbying groups such as the Building Industry Association, funnel large amounts of money to elected officials (see our piece on Pomona Mayor Norma Torres' contributors for her State Assembly run), and that gets translated into poorly planned residential and business developments getting easy approval by those same officials.
At the same time, state officials have been siphoning off transportation funds to try to balance the state budget. Consequently, much-need transportation infrastructure repairs and improvements have been neglected. The added traffic created by all those building projects over the years hasn't been matched by new freeway and public transit projects and simply gets dumped onto our already crowded roads.
The LA Times is running a series on traffic issues and the failure of state and local governments to address these issues, despite voters approving billions in financing for transportation funds. Today's installment in the Times' series charges local officials with bypassing laws requiring builders to help pay for transportation projects to carry the traffic their projects generate:
* State and local officials have not expanded the region's highways and mass transit systems enough to keep up with population growth.
The population of the five-county Southern California region grew 22% from 1990 to 2006, and the total miles driven by motorists has increased about 42%. But the number of miles of highway in the region has increased by only 7.5%.
Since 2001, Govs. Gray Davis and Arnold Schwarzenegger, along with state legislators, repeatedly have diverted money from the state's taxes on gasoline to pay for non-transportation programs. Schwarzenegger plans to do so again in the budget for the coming year. Roughly $5.8 billion in highway and mass-transit funds that were diverted during the state's repeated budget crises this decade have not yet been repaid.
While the region's highway capacity has lagged behind population growth, mass transit has not made up the difference. Los Angeles County for the last 25 years has put three-quarters of its voter-approved transportation money into rail and bus systems. Even with the investment of about $7 billion, 85% of commuters still drive.
* At the same time, local officials repeatedly have sidestepped state laws that were supposed to require developers to lessen the traffic-snarling effects of projects.
For years, elected county and city officials across Southern California have put economic development and jobs ahead of mobility, approving major commercial and residential developments without requiring builders to pay enough for improvements needed to handle extra traffic.
All that development contributes to congestion that for the average motorist in L.A. and Orange counties adds up to almost two workweeks of delay each year, according to the Texas Transportation Institute, a think tank at Texas A&M University that compiles annual assessments of congestion nationwide. That's almost double what it was in the 1980s. In Ventura County , congestion-related delays each year consume roughly a workweek of the average motorist's life. The delay in the Inland Empire equals about six workdays.
Keep all of that in mind if in the future you see Claremont councilpeople greenlighting a new condo project or if you see a local State Assemblyperson voting for legislation affecting the building industry.
If traffic keeps going the way it has the past 20 years, the next boom we observe just may be one lowered on irresponsible state and local elected officials.
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