Bond Freeze 

Everything -- or a helluva lot -- teeters in the balance in California as our leaders dicker and dicker over what to do. By February or March, we've all been told, the state will be out of cash. By June 2010, there could be a $42 billion budget shortfall. Governor Schwarzenegger vetoed the Democrat's $18 billion budget fix, and Republicans sued the Democrats saying they'd not met the two-thirds vote requirement in passing their plan. Then the governor proposed his own fix, which includes borrowing billions, increasing sales taxes and reducing the tax credit for dependents. He's ordered state offices to shut down for two days a month starting in February; many state officials are balking. There's also talk of reducing the school year by five days.

But perhaps one of the more perplexing things to occur during this budget impasse, according to some observers, was the state's Pooled Money Investment Board's decision in mid-December to temporarily halt the loan program that delivers money to bond-funded projects. The reason given: Investors aren't buying municipal bonds, given the ailing financial markets overall and a flagging confidence in a fumbling California in particular. The halt of about $3.8 billion in funding, which translated into a stop-work order for many who wouldn't be paid if they did continue to work past the bond freeze date, could affect about 2,000 public works projects.

Locally, the bond freeze impacts everything from swimming holes to veterans to watershed restoration projects. And the irony of such a bond freeze that ends such projects, said Seth Zuckerman with the Mattole Restoration Council (MRC), who called up the Journal last week, is that the freeze goes counter to the call for an economic stimulus to drag the country out of recession.

"The thing that we most need to do is an economic stimulus," he said, "and the best way to do that is sensible spending on infrastructure that will provide lasting capital improvement to the things that we care about, be it our watersheds or our roads or our schools."

The MRC works to protect the Mattole's water quality and fishery by upgrading roads, installing culverts and other projects that help reduce the amount of sediment going into the river. A couple of those projects, funded by Props 40 and 50, have been affected by the bond freeze, Zuckerman said.

"All that rock, all those culverts and all that heavy equipment is expensive, and a lot of that money that we're owed is from that fund," he said. "One of the projects funded by Prop 40 is our work on a light-touch timber harvest permit for anyone in the watershed who wants to do light-touch forestry. It would streamline the regulatory approvals to be able to do work that isn't so drastic."

He said the state owes the MRC $400,000. "At the moment, we're all right," he said. "We've arranged financing, lines of credit, so we're not in imminent danger of bankruptcy. But it's unsettling to know you're owed $400,000 by an entity that has no visible means of paying it back. And until the state passes a budget, and somehow assuages the doubts of investors who might buy California's bonds, we expect to be out that money. For a month or so it's not a big deal. But over time we would certainly feel a crimp in our operations."

Contractors and subcontractors, however, are feeling the hit immediately. Greg Blomstrom, a forester who works in BBW Associates' Arcata office, said his firm is working on two bond-funded initiatives that have been shut down. One of them is writing the environmental impact report for the MRC's light-touch logging initiative.

"We were just beginning the actual writing of the environmental consequences of the proposed program and the alternatives when the MRC notified us that we had to stop all work on Dec. 17, 2008," Blomstrom said. That, in turn, could mean the loss of work for two or more people, he said.

In the comments section of a multi-agency online petition to the governor, Blomstrom wrote, "While we have been able to shift gears to other work, when (or perhaps if) the funding is restored, we are going to be hard pressed to immediately leap back into the work we had originally scheduled for the late fall through early spring. This is a ridiculous measure that hurts hundreds, perhaps thousands of small businesses across the state -- small business which you have personally claimed are the lifeblood of the state. Your insistence on trying to trade environmental compliance and employment oversight relief may be a good thing overall, but in the short [term] you're killing us here in the small business world."

Another entity hit hard by the bond freeze is the Redwood Community Action Agency, a number of whose social and natural resource programs rely at least in part on bonds.

"Although significant to those programs that are put to a halt right now, we don't really perceive this as a huge negative for us," said RCAA's executive director, Val Martinez. "Where we really see the true impact of all of this is on our clients and the contractors and subcontractors who work for us, because these folks rely on those dollars for their income for us. While it's just a delay for us, it's a serious impact for the community.

"Here's a very vivid illustration of this stop-work order: We're rehabilitating Safe Haven, a two-story Victorian in Eureka [that's a homeless transitional facility]," she said. "The stop-work order came shortly before Christmas, and on that day the contractor who was working for us had this gorgeous two-story Victorian up on jacks while waiting to install a perimeter foundation."

The contractor stopped work -- he wouldn't be paid for any work done after the bond freeze went into effect -- and the Vic is still up on jacks. And that, said Martinez, is a good metaphor for the state budget.

Rehabilitation work on the building selected to house a new North Coast Veterans Resource Center, a 34-bed transitional housing, office and classroom space, on Fourth Street in Eureka, also has ground to a halt. Which is frustrating, said the center's director, Ben Fewell. The thing's been in the works since 1999, with two previous locations nixed by controversy. About half of the cost of the project comes from those state bonds.

"We were at the point where we were just ready to go to work," Fewell said. "We had contractors selected, everything was ready to go. At the moment, we're just sitting and waiting."

The center was supposed to open this spring. Now, there's no knowing when it'll be ready.

Up at Humboldt State University -- which like the rest of the CSU system is facing a salary freeze for vice presidents and above, a hiring freeze, and other cutbacks -- a couple of bond-funded projects are in suspension as well, said spokesman Paul Mann.

"We are not going to be able to finish, at least temporarily, the new Kinesiology and Athletics building," he said. "The building itself is essentially done, but we had intended to put in a plaza between the stadium and Redwood Bowl. We also aren't going to be able to start work on the refurbished Forbes Complex, the old gym, but that was hanging in the balance anyway because of the budget situation."

Mann said it will cost $2.4 million to finish those projects. But to shut them down, temporarily -- that too will cost: $300,000 to shut down, and another $216,000 to start back up once the freeze ends.

"We're also suspending work on Nelson Hall, where we were redoing the electrics, the heating and ventilation system, that kind of thing," Mann said. "That suspension will not affect daily routines. The cost to finish the project is $1.3 million. And to suspend the work is going to cost $5,000, and restarting it is going to be $2,000."

However, Mann said the word from the Chancellor's office on Monday was that another major project in the works, the College Creek Apartments, would be able to go ahead. It should open, on schedule, for the Fall semester 2010, he said.

Meanwhile, the county, the cities of Arcata and Eureka, and Eureka City Schools have had projects impacted by the bond freeze. Among the more prominent county ones either dented or halted: the Salt River Restoration project, the levy rebuild on Redwood Creek in Orick -- which if not completed could impact residents' ability to get flood insurance -- and a permanent fish ladder/wheelchair ramp at Freshwater Park's seasonal dam.

Now, maybe a new fish ladder -- and an attached ADA-compliant ramp so everyone can view the water and the fish up close -- doesn't sound that important. But it could mean no swimming hole in that park, said Humboldt County Environmental Services Manager Hank Seemann.

"We need a seasonal dam, and in order to do that we need a fish ladder, because the temporary fish ladder is no longer functioning," he said. "The fish ladder's been designed. It was going out to bid, and we were planning to start construction this summer. Then we got the stop-work order. We didn't put it to bid."

He said the swimming hole has value, especially since the pools at Eureka High and College of the Redwoods are closed. Plus, Easter Seals and Campfire USA campers use the swimming hole.

"We get probably 300 people a day there," he said. "Now it'll just be a trickling creek."