Monday, March 30, 2009

The City should implement Lake Whatcom Watershed Land Use Restrictions throughout the City

Your familiar with the proposed Silver Beach Ordinance -- and the City's Ordinance 16.80.120 restricting land clearing in the Silver Beach neighborhood. Chances are -- you probably supported it. So, why doesn't it apply to the entire city?

After all, the City of Bellingham is built right next to Bellingham Bay, and bays have tremendous economic, recreational, and aesthetic value to the economy.

Residents are attracted to the water and tourists visit the bay to boat, fish, swim, fly a kite or just enjoy a sunset. There was even a time when people dug clams there.

Yes indeed, the economies of many coastal communities depend on the natural beauty and bounty of their bays and estuaries.

In fact, I'm going to play devil's advocate and recommend that the proposed Silver Beach Ordinance be re-written and re-introduced so that it provides protection to all of our precious water resources.

After all, Bellingham Bay is a seriously impaired water body due to excessive discharges of chemicals and other contaminants. Never mind that the GMA requires cities and county's to protect public waters, like the bay. And, Whatcom Creek transports phosphorus and other contaminants to the bay from the Lake.

Let's set an example for the rest of the state and clean up the bay and the lake at the same time. After all, we all live, work and play in a watershed!

Like the proposed Silver Beach Ordinance, the new city wide Water Resources Protection Ordinance will place an emphasis on "prevention" rather than "treatment" of the problem - Of course, this may require a revamp of growth projections and development priorities, but I am certain that it will be worth it in the end!

P.S. in 1995, we lost a beautiful 40' Douglas Fir tree after the city cut its roots supplying utilities to the housing development behind us. Do you think its unreasonable to ask to have it replaced? (Ill take a 20 ft tree). After all, it absorbed quite a bit of water before it was killed.

Oh, and what about the entire forest that was bulldozed down behind us? If it was still in place, the city wouldn't be asking me to shell out big bucks to pay for stormwater runoff treatment for the people who live behind me.

In fact, there was a time when development around the lake was actually "in balance" with the lake. For instance, when we built our house, there were four houses across the street on the water, and there were four houses on the hill behind them. That was it!

But the city got greedy - heck, they even sold the street easements that abut the lake to developers as building lots. (A balanced neighborhood could have used the street easements to treat stormwater and provide access to the lake. Today, many of the homes built on those easements have flood problems, thanks to runoff from the streets above them.

Now, remind me, who was it who issued all those building permits without requiring protective stormwater management? (and how long have local government's known that they have an obligation to protect existing development from future development)? The Clean water Act was signed into law back in 1972 folks.

So,how does a community go about determining who owes what in regards to protecting the lake? Does someone have a mathematical model that actually discloses when "we" crossed the line? If so, some of us dumb property owners would like to see it.

Links to existing and proposed code follows:

City of Bellingham Municipal Code

Title 16



A. No earthwork, including clearing of vegetation, grading, filling, excavating or trenching of soil or earth materials that will result in an exposed soil or earth area that exceeds 500 square feet shall be permitted from October 1st through April 30th within the Silver Beach Neighborhood, except subareas 11 and 15.

B. The 500 square feet threshold in BMC 16.80.120A. shall apply to each individual lot, parcel, uncompleted short plat, preliminary plat, trail, road, utility or maintenance project.

C. The seasonal restriction on clearing and earthwork is intended to prevent the start of any earthwork project that will exceed the 500 square feet limit and reduce open soil/earth surfaces to less than 500 square feet per project during the above listed months.

D. All bare soil and earth areas in excess of 500 square feet shall be required to be covered during the above listed months with any of the following:

1. Well established grass, sod or a vegetated surface sufficient to prevent the erosion or transport of soil, sediment and silt laden water. No soil or earth may be visible.

2. A minimum of 3: cover of shredded wood chip/fiber, vegetative mulch, hay or straw.

3. Crushed rock or gravel, not less than 3/4" in aggregate size and 4" deep.

E. The City may approve emergency exemptions to the seasonal restrictions as may be necessary to protect public health, safety, welfare, the environment and private or public property. Exemptions shall be construed narrowly and may be granted by the Planning or Public Works Directors.

[Ord. 2001-01-001]

Proposed Silver Beach Ordinance:$FILE/SBO%20Materials.pdf

Sunday, March 29, 2009

Pollution from stormwater runoff is a Property-Rights issue

Whatcom County is blessed with abundant water resources but many of our beaches and tide lands have been closed to shellfish harvesting. What is the cause of these closures? Pollution.

In fact, Bellingham Bay was featured on the cover of "Time Magazine" as the most polluted bay in the nation in the late 60's. At one time, Bellingham Bay was filled with returning salmon, abundant shellfish and other marine life. Local tribes and early settlers depended on the bay as a source of food.

And in today's crass world of money, bays and estuaries are worth a king's ransom. Nevertheless, mankind is systematically killing them one by one by refusing to stop pollution or clean up chemical discharges.

Lake Whatcom has been listed on the 303 d list Water Quality Assessments (303[d]) and the Washington State Department of Ecology has recently published a TMDL report Lake Whatcom Watershed Total Phosphorus and Bacteria Total Maximum ... that requires Whatcom County and the City of Bellingham to reduce phosphorus loading by 70% in the lake.

Studies by Western Washington University and the Department of Ecology have documented that the primary source for pollution in Lake Whatcom is runoff from pavement, land clearing, development and inadequate stormwater management by local governments.

There are numerous other studies across the state and nation that document the effects of stormwater runoff, including articles about pathogens and chemical contaminants found in sediment and mud of bays, lakes, rivers and streams.

Flood warnings routinely advise downstream property owners not to come into contact with contaminated stormwater after a flood episode.

Who is responsible? We all are. But only government has the power and financial resources to stop or clean up contamination.

Locally, the City has imposed strict land use restrictions on downstream property owners while upstream property owners in the county (who contribute significantly to runoff and pollution in the lake) continue to pollute.

In fact, the public routinely provides a hidden subsidy to anyone who avoids the cost of treating or containing stormwater by dumping it on someone else's property, or into a publicly owned body of water.

The result? Other property owners and taxpayers are forced to bear the short and long term costs of pollution and poor land use decisions by local governments.

In some parts of the country, property owners are being forced to sue local governments to stop pollution. Citizen suit under Clean Water Act (CWA) for stormwater runoff ...

Some property-rights advocates claim that they have the right to do whatever they want on their own properties; then, they also claim the right to add their pollution to surrounding properties and public waters.

The Clean Water Act requires the states to establish water quality standards, which EPA must then approve, that designate the waters within each state for particular uses.

Waters that become degraded by point and non-point sources to the point that they do not support the designated use are listed as impaired.

The state and/or EPA then is required to establish total maximum daily loads (TMDLs) that limit the total quantity of pollutants that the water body can receive

The Clean Water Act declared that all sources of pollution to surface waters should be eliminated by 1985. (We missed that deadline by over twenty years).

Today, state and local government are attempting to learn as much as they can about effectively managing stormwater runoff, which is proving to be a challenge after they permitted urban development around bays, rivers and lakes.

The City of Bellingham is proposing a Lake Whatcom Infiltration Pilot Project for the city's portion of the watershed. I applaud the goals put forward by the city in the draft, but I have to ask, who is ultimately responsible for the contamination on private property from on-site infiltration programs?

Is contaminated stormwater a good source of water for gardens and wildlife enhancement pools? Or, will it transfer pathogens and chemicals to animals and humans?

Stormwater is the prime suspect in the declining health of Puget Sound. Consequently, stormwater regulation is about to enter a new era; and all signs point towards treatment and compliance with strict numeric standards.

Compliance will be difficult for many businesses and there will be particular challenges for local governments, who are now required to control the uncontrollable.

There is abundant case law that hold polluters responsible for trespass - even if stormwater runoff rules do not. It is an established fact that generator properties transfer chemicals, bio-waste and contaminated sediment to receptors downstream, such as private property owners and public waters.

Today, large law firms, like Perkins and Coie
Perkins Coie - News / Publications - Updates DetailIndustry Targeted ... provide legal services to companies that have been targeted by citizen action suits. (If I may be so bold as to point out to Perkins and Coie, its not just environmental groups that are filing citizen action suits. Downstream private property owners are about to get on the band wagon, before state agencies and local government start forcing us to clean up pollution and sediment generated by upstream property owners, including local government).

There are numerous Supreme Court cases (state and federal) that hold that if government permits a nuisance or trespass to private property, an easement is created over the receptor properties that may be a "taking" of the receptor property in violation of the State and Federal Constitutions.

The ultimate goal of land use regulations is to separate conflicting uses, facilitate fire fighting, creating livable arrangements of space and to protect private and public property from trespass and pollution.

Government is also obligated to make sure that any pollution on any given tract of property is contained, so the public and other property owners are not forced to pay for it later.

In fact, a true free-market economy requires that costs of preventing pollution should be paid by the consumers of the product or service, not by the public or the downstream property owners.

Why should downstream property owners and the public suffer and be forced to pay for any off-site pollution? Where is the case law that allows upstream property owners to pollute the property of downstream property owners?

I propose a shift in focus from the cost to the upstream land owner to the real costs imposed on downstream property owners, including public waters.

After all, that has been the primary function of property rights law for centuries.

Saturday, March 28, 2009

A Citizen's Guide to the Clean Water Act

In 2006, the City of Bellingham spent a $120,000 on a stormwater project at the base of E. Academy Road. I'm sure the new underground facility is providing some relief. But it does not begin to address the majority of stormwater runoff from the Academy Road Drainage Basin, which is comprised of steep slopes, clearcuts, hobby farms and ranches, rapidly growing county housing developments and an out-dated system of open ditches that drain directly in to Lake Whatcom.

At the beginning of the year, the man-made ditches that make up the majority of the City and County's stormwater management system were overwhelmed with stormwater runoff.

At the city/county line, someone (city or county) installed a culvert that diverts ditch water across the road where it is released to run unfettered across private property. Some of the good folks at the City call this a natural stream!

In the early 1990's, a developer, (who was actually an Engineer employed by the City of Bellingham), purchased a large piece of undeveloped, forested property to create a housing development above North Shore. (Between Academy and Silverbeach Ave). In order to maximize the number of lots he could plat and sell, he proposed to install an underground culvert to put the County's AWOL ditch water underground.

Initially, it didn't seem like such a bad idea. It certainly provided a layer of flood protection for the families that purchased the property. But it was not a comprehensive management plan. The culvert captured water where it entered the developer's property and dumps it back on private property where the developer's plat ended. From time to time, the culvert plugs up with sticks, garbage and other debris, and causes small floods.

Piece meal infrastructure development causes a multitude of problems for adjacent property owners. For instance, we have discovered that the developer's culvert acts as an underground "speed way" that actually increases the velocity of the water before it spills into what has become a very deep dirt ravine.

A few hundred feet down stream, the water is channeled to an outdated cement stormwater catch basin with a smaller culvert on North Shore Drive. And, that's where the trouble begins.

The catch basin is designed to capture the water and guide it to the lake through a smaller underground culvert. There is no treatment or filter to catch sediment. (Hello, phosphorus)! Today, there is a large alluvial fan of sediment where the culvert releases water into the lake.

Apparently, the city didn't think it needed to modernize the catch basin when it permitted the engineer's development (and all of the other housing developments that contribute to the growing runoff problem).

One of the property owners below the development installed a second culvert to protect his property (which was rapidly eroding away) thanks to the developer's culvert.

Today, there is a very deep ravine that was formed as a result of erosion from the piece meal treatment. (The City recently cited the property owner for his "unpermitted" culvert and sent him a letter with a $1,000 fine).

This is where it get's interesting. On the night of the flood, the City claims, in part, that the "unpermitted" culvert caused the flood. I respectfully disagree.

On the night of the flood, the catch basin, which is not designed or even remotely capable of handling the tremendous volume of water that came down the hill that night - overflowed and flooded several homes. The city ditches should have provided some relief, but the city has not maintained the ditches along North Shore, (they are filled with blackberry vines, sediment, rocks and garbage) and the water had no place to go but overland.

If anything, that "unpermitted culvert" and its "berm" of earth prevented thousands and thousands of gallons of additional water from surging across the road during the worst of the flood.

At one point, I was standing in thigh deep water on North Shore Drive. Now, I don't even want to think how deep the water would have been without the added safety provided by that "unpermitted" culvert and berm!
This is not a new problem. Overland stormwater runoff has been steadily increasing in the Silver Beach neighborhood for the last twenty years.

Silver Beach residents have been blamed for much of the pollution in Basin One. But, I hope I have demonstrated that there are many other sources of contaminated stormwater runoff in the Lake Whatcom watershed.

Sadly, the City and County do not appear to be interested in fixing this problem.

And - it is a problem.

I don't think its unreasonable to state that thousands and thousands of pounds (tons) of sediment (carrying phosphorus and other contaminants) have been deposited in the lake from Silverbeach Creek and the miles of ditches in the Academy drainage basin.

With the new TMDL requirement to reduce phosphorus loading by 70%, one would think the City and the County would be taking steps to fix the broken ditch system.

In other communities, citizens have used the citizen enforcement provisions of the Clean Water Act to protect and restore impaired lakes, streams, rivers and bays that have been harmed by stormwater runoff, point and non-point pollution.

Why would anyone think that they need to use a lawsuit to bring the city and county into compliance?

Because the city has a track record of not listening to citizens who are concerned about contamination, pollution or public health and safety issues.

For example, in 2006, a group circulated a petition (The Healthy Bay Initiative) to encourage the City to clean up mercury contamination in Bellingham Bay.

The proponents of the initiative were sued by the City and Port in order to prevent the initiative from being placed on the ballot.

In fact, the city has sued 90% of initiative proponents during the past decade.

So, here's what citizens have learned. If you want the city or the county to address a government-caused problem, you're probably going to have to sue them.

What's the Clean Water Act? (Excerpt from EPA)

The Clean Water Act (CWA) is the cornerstone of surface water quality protection in the United States. (The Act does not deal directly with ground water nor with water quantity issues.) The statute employs a variety of regulatory and nonregulatory tools to sharply reduce direct pollutant discharges into waterways, finance municipal wastewater treatment facilities, and manage polluted runoff. These tools are employed to achieve the broader goal of restoring and maintaining the chemical, physical, and biological integrity of the nation's waters so that they can support "the protection and propagation of fish, shellfish, and wildlife and recreation in and on the water."

For many years following the passage of CWA in 1972, EPA, states, and Indian tribes focused mainly on the chemical aspects of the "integrity" goal. During the last decade, however, more attention has been given to physical and biological integrity. Also, in the early decades of the Act's implementation, efforts focused on regulating discharges from traditional "point source" facilities, such as municipal sewage plants and industrial facilities, with little attention paid to runoff from streets, construction sites, farms, and other "wet-weather" sources.

Starting in the late 1980s, efforts to address polluted runoff have increased significantly. For "nonpoint" runoff, voluntary programs, including cost-sharing with landowners are the key tool. For "wet weather point sources" like urban storm sewer systems and construction sites, a regulatory approach is being employed.

Evolution of CWA programs over the last decade has also included something of a shift from a program-by-program, source-by-source, pollutant-by-pollutant approach to more holistic watershed-based strategies. Under the watershed approach equal emphasis is placed on protecting healthy waters and restoring impaired ones. A full array of issues are addressed, not just those subject to CWA regulatory authority. Involvement of stakeholder groups in the development and implementation of strategies for achieving and maintaining state water quality and other environmental goals is another hallmark of this approach.

Click here for the entire text of the CWA.
How much do you know about the Clean Water Act already? To find out, take the
Fact or Fiction quiz

Introduction to the Clean Water Act Education Module :

Friday, March 27, 2009

The City and County need to address stormwater runoff on North Shore Drive

In January, my neighborhood, like many others, was damaged by a major flood event. Four blocks away, Silverbeach Creek (photo on top) destroyed a cement stormwater catch basin, over flowed and flooded three blocks of North Shore Drive, depositing logs, sediment, trash and urban contaminants in yards and the lake. The City closed the road to protect motorists from being washed into the lake and creek.

On the east side of the lake, the ditches on Academy Road overflowed from stormwater runoff from residential development and land clearing in the Academy Road drainage area. (Toad Lake Road, Shepardson Road, Huntington, Academy and all the other city and county roads that have ditches that drain to Academy Road). Most of the ditch water drains directly into the lake through a small culvert that runs underneath North Shore Drive. The volume and velocity of the ditch water exceeded the capacity of the culvert creating a massive surge of water that flooded a number of water front homes. One young mother had to pull her children out of bed and leave her house.

Floods are caused by major precipitation events that cannot be absorbed by the ground. The runoff accumulates in low areas such as creeks, streams and man-made drainage systems, like the ditches along Academy Road.

When rainfall is heavy and significant land clearing has taken place for development and roads, the runoff may be too heavy to be contained by these natural and artificial drainage systems.

The rising waters can overflow, like they did in Silver Beach Creek and on Academy Road causing significant damage to property and potentially harming people caught in the flood path below.

Logging and land clearing for housing developments deforest sections of the hillside leaving behind clear cuts, impervious surfaces and fields. When there is significant rainfall, these denuded and developed areas shed more runoff because of the lack of foliage and ground cover.

This increases the likelihood of flooding for property owners that live below the clearings and development.

What can property owners who live "down stream" do?

First we can approach the City and County and ask them to fix the problem. If they refuse, property owners who sustained damage from the flooding can hire a property rights attorney to sue the City, County and contributing up hill property owners to recover damages to foundations, yards, carpets, walls and driveways.

The City and County Planning Departments are responsible for ensuring that permitted development does not harm existing property owners or the lake.

Last year, the City declared a moratorium on development in the Silver beach neighborhood. But it routinely provides utility services to hundreds of new homes in the Tweed Twenty, Greenville, Hillsdale, Academy and Brownsville housing developments. In turn, the stormwater runoff from these developments is flooding the Silver Beach neighborhood.

Second, we can file a citizen's action suit under the Clean Water Act to force the City and County to address stormwater, point and non-point pollution issues. The flood and yearly drainage from the ditches transports tons of sediment into Lake Whatcom. In fact, after the flood, the water in basin one was muddy for several days.

It is the responsibility of local government to ensure that current and future development is not a threat to the public. When new development is ineffective at controlling and containing stormwater runoff that could pose a danger to the community, there may be irreparable damage to the land, air, soil and the people who live down hill from the threats.

Whatcom County was recently declared a disaster area due to flooding. Both the City and the County requested federal assistance to repair flood damage.

Considering the severity of the flooding, I'm having a hard time understanding why County Council member Sam Crawford (or anyone else) would be opposed to providing adequate funding for the County's flood districts.

I guess the penny pincher's won't be happy until one or more of us is dead from flooding!

Thursday, March 26, 2009

What is Banked Property Tax Capacity?

Brett Bonner is circulating a Mini-Initiative (No. M1-2009) to force Whatcom County to adopt an ordinance that requires a vote of the people before Whatcom County taxing districts can access "banked capacity."

Local taxing districts have had the ability since 1986 to "bank" any unused taxing authority that they accumulated by taking less than the maximum levies allowed by law. Many taxing districts accumulated this unused capacity prior to the passage of I-747 and did not use it, even though they could have done so under I-747.

Which raises the question: after all these years, what exactly triggered Mr. Bonner's concern regarding banked capacity?

Has one of the local taxing districts proposed to use a portion of it's banked capacity? If so, what is the purpose of the proposal?

Or, is this a some sort of pre-campaign stunt to cast incumbent County Councilmembers as "money grubbing villains" if they refuse to place Bonner's mini-initiative on the ballot?

After all, Whatcom County has a tradition of being fiscally conservative when it comes to raising local taxes. So, out with it Mr. Bonner - what's the impending crisis that is compelling you to circulate this petition?

Why has "banked capacity" suddenly become a ticking financial time bomb?

Why did the state of Washington adopt "banked capacity in 1986?" To encourage taxing districts to levy only what they need rather than the most that they can get.

In other words, Mr. Bonner's initiative may actually force the County and other local taxing districts to implement the maximum levy provided by law; which - could lead to higher increases in property taxes than we would have had without Mr. Bonner's initiative.

What is "Banked Capacity?"

Beginning in 1986, the Legislature allowed local governments to levy less than the maximum increase in property taxes allowed under law without losing the ability to levy higher taxes later if necessary.

This provision encouraged districts to levy only what they needed rather than the maximum allowable. Prior to that, districts that took less than the maximum, at that point 6 percent annually, permanently lost some of their levying capacity. Therefore, districts tended to use it or lose it. The banked capacity concept allowed districts to be more fiscally conservative without being penalized.

How much banked capacity do local taxing districts have?
The amount of banked capacity varies widely by district. Some districts have consistently levied less tax than allowable and have built up substantial banked capacity. Many others have little or no banked capacity.

Not all districts have this capacity, and of those that do, not all of them will choose to use it. Moreover, districts have maximum statutory rate limits, which precludes many of them from using much of the banked capacity they do have.

How did Initiative 747 affect banked capacity?
Initiative 747 did not address banked capacity. The initiative limited taxing districts to 1 percent annual increases in property taxes (not counting any tax revenue from new construction). Taxing districts could continue to accumulate it or use it under I-747, though the maximum amount of banking was reduced to 1 percent from up to 6 percent annually should a district take no increase at all.

How does the invalidation of I-747 by the Washington State Supreme Court affect banked capacity?
The court decision would have allowed local districts to recover some additional banked capacity during the period I-747 was in effect, 2002 through 2007, except the Legislature re-enacted the provisions of I-747 during a Nov. 29, 2007 special session. This means local districts will receive no additional banked capacity.

Do taxing districts need voter approval to use banked capacity?
No. Taxing districts are limited in the amount their levies may increase each year. As long as the district stays within the limit, no voter approval is required. Banked capacity is simply unused levy authority that is within the district’s levy limit.

If a district uses its banked capacity, how will that affect my taxes?
The effect on the tax bill for an individual property depends on a number of factors, including the value of the property. The amount of tax paid to the district using the banked capacity may rise, but there could be corresponding reductions in the levies of other districts. This is because state law limits overall property tax rates applied to individual properties. The amount of property tax that you will pay depends on the value of your property in relationship to the total assessed value of property in the tax district.

Facts courtesy of WA State Department of Revenue

Washington State DOR Banked capacity spreadsheet

Former Poulsbo Mayor arrested for Sexual Assault and Stalking

Breaking News: The Seattle Times just announced that Richard Mitchusson, former Mayor of Poulsbo, (1985-1995) was arrested this afternoon for suspicion of assault and stalking.

"A sheriff's spokesman said Mitchusson, 70, a Poulsbo resident, was accused of "certain actions, conduct and demeanor" that included unwanted personal advances and inappropriate sexual contact with at least three women at their homes or workplaces within the past 15 months. The investigation was conducted at the request of Poulsbo Police."

Mitchusson was booked on two counts of fourth-degree assault with sexual motivation and one count of stalking.

Bail was set at $50,000.

Seattle Times Article:

Seattle PI:


Kitsap Sun,

Monday, March 23, 2009

What protection exists for property owners if Brett Bonner's Mini Initiative is passed?

Former KGMI Radio talk show host Brett Bonner has proposed a mini-initiative to limit property tax increases to 1%, annually in Whatcom County, including banked capacity, unless first approved by a majority of a vote by the people.

How have other Washington communities dealt with this issue?

In 2001, Port Townsend adopted an Ordinance establishing a requirement to obtain voter approval before using banked property tax capacity. The Ordinance was repealed in 2007 by the City Council, because Ordinance 2781 was a local (City) requirement only and was not required by state law.

Voter approval was considered "advisory only," and final authority to set tax levies including banked capacity is vested by the state legislature in the City Council. "Ordinances adopted by one Council are not binding on future Councils, and a future Council is free to amend or repeal the ordinance."

I'm certain Mr. Bonner's intentions are honorable, but the City of Port Townsend has already demonstrated that voter approval of Initiatives at the local level regarding banked capacity are not binding on future councils.

If members of the community truly want to eliminate or limit banked property tax capacity, they need to circulate a statewide Initiative (one written by an attorney who can write legislation) or ask the State Legislature to draft legislation eliminating or limiting banked capacity.

Why can't this be done locally? There is a clause (Uniformity Clause - Article 7, Section 1) in the state Constitution that limits a community's ability to provide targeted property tax relief). However, the Legislature may exempt property from tax across the state. (The law must treat every class of property owner equally).

Unfortunately, previous attempts in 2007 to pass legislation that would eliminate or shine a light on banked capacity has failed to gain enough support to pass the legislature.

In November of 2007, Sen. Don Benton, R-Vancouver,who led the effort for a special session to reinstate Initiative 747, filed a bill to protect homeowners from huge jumps in property taxes by eliminating all banked capacity.

Benton said, “The so-called I-747 bill from the governor is not a true 1 percent cap. It only eliminates banked capacity from when I-747 took effect,” Benton said. “This leaves a huge loophole for local governments to collect anything they didn’t collect under the old 6 percent limit.

To highlight the need for the measure, Benton said, “Just last night, the Port Townsend City Council voted to exceed the 1 percent limit by dipping into the city’s banked capacity. If we don’t eliminate all banked capacity, who knows how many other local governments will join the money grab.”

I wonder, will Tim Eyman "get it right" if he writes a third statewide Initiative? Both of Eyman's previous attempts to limit property taxes, Initiative 722 and 747 were struck down by the Washington State Supreme Court.

Now, it's no secret that I am a strong supporter of direct democracy, but I also believe that proponents of an Initiative have an obligation to write good code. (If one Initiative is struck down, hire a competent legislative attorney to write the second one). This isn't rocket science, it's legislation, for the people, by the people. And, it may be the ONLY recourse taxpayers have to protect themselves from property tax increases.

Without further ado, here's the Port Townsend Ordinance repealing the people's right to vote on banked property rights capacity, six years after adopting an ordinance allowing people the right to vote.

Ordinance No. 2961

WHEREAS, the City Council determines it appropriate to repeal Ordinance 2781 (adopted in 2001) establishing a requirement to obtain voter approval to use banked capacity. The requirement in Ordinance 2781 is a local (City) requirement only and is not required by state law. The voter approval was advisory only, and final authority to set tax levies including banked capacity is vested by the state legislature in the City Council. Ordinances adopted by one Council are not binding on future Councils, and a future Council is free to amend or repeal the ordinance.

NOW, THEREFORE, the City Council of the City of Port Townsend ordains as follows:

SECTION 1. Repeal. Chapter 3.48 PTMC and Ordinance 2781 are hereby repealed. Chapter 3.38 which is repealed by this ordinance is set forth below:

Chapter 3.48
3.48.010 Citizen advisory ballot measure regarding voter approval before council imposes banked capacity.
A. The city council (by Resolution 01-040 passed September 6, 2001) directed that the Jefferson County auditor place a ballot measure on the election to be held November 6, 2001, for the purpose of submitting to the qualified electors of the city, the following proposition:
Citizen Advisory Ballot Measure Regarding Voter Approval Before Council Imposes Banked Capacity
The decision of the City Council to adopt zero percent (0%) real estate tax increases for the years 2000 and 2001 causes the City to have "banked" or saved ability to raise real estate taxes by as much as twelve percent (12%) (computed at 6% for each year a zero percent increase was adopted) in a future year or years.
Do you support the City Council obtaining voter approval before it imposes upon real property any "banked" real property tax capacity?
Yes _____ No _____
B. At the election on November 6, 2001, the voters of the city of Port Townsend approved Proposition No. 1 by a vote of approximately 70 percent.
C. Based on the results of the approval of Proposition No. 1, the city council declares and establishes a requirement to obtain voter approval before it imposes upon real property any banked real property tax capacity. (Ord. 2781 § 1, 2001).
SECTION 2. Severability. If any provision of this ordinance or its application to any person or circumstance is held invalid, the remainder of the ordinance, or the application of the provision to other persons or circumstances, is not affected.
This ordinance shall take effect and be in force five days after the date of its publication in the manner provided by law.
*Adopted by the City Council of the City of Port Townsend, Washington, at a special business meeting thereof, held this twenty-seventh day of November, 2007.
Mark Welch, Mayor
Attest: Approved as to Form:
Pamela Kolacy, MMC, City Clerk John P. Watts, City Attorney
Here is a list of estimated banked capacity increase from 2007.
Ferry County - 14.2 percent; Franklin County - 13.9 percent; Island County - 13.8 percent; Skamania County - 13.6 percent; Kitsap County - 10.9 percent; Whatcom County - 10.6 percent; Snohomish County - 10.1 percent; Pierce County - 9.6 percent; Douglas County - 9.2 percent; Kittitas County- 9.2 percent; Clallam County - 6.9 percent; Clark County - 6.5 percent; Yakima County - 6.3 percent; King County - 5.8 percent; Spokane County - 5.5 percent; and Asotin County - 5.2 percent. No doubt about it. Property owners will suffer serious payment shock if the above Counties (and cities) vote to use their banked capacity.
Background Research:
Click the title of this post to view original Port Townsend ordinance.
Peninsula Daily News article regarding the repeal of the Port Townsend
Senator Benton's 2007 press release regarding Banked Capacity:

FBI Investigating PMA, one of Norm Dick's Supporters

Money in politics plays a pivotal role in shaping public policy in individual states and nationally. If you want to know who is shaping America's public policy follow the money.

For your convenience, I have included a link to an interactive map that outlnes the relationships between Congress, former Congressional employees and industry lobbyists at PMA:

Real Time Investigations posted the following lead in on their website: "Congressman Norm Dicks has never been shy about accepting campaign donations from favor seekers."

"Now the FBI is investigating one of Dicks’ most generous donors — the powerhouse lobbying firm PMA Group." (Real time investigations article can be accessed by clicking title of post).

The entire post is worth reading, but the excerpt below particularly caught my eye: "The sheer volume of donations from PMA lobbyists raises questions. For example, Sandra K. Welch retired from PMA two years ago as a lobbyist with expertise in education. Her husband was a police officer in Fairfax County, Va. They now live in a Florida home for which they paid about $197,000, according to real-estate records.

Between 2003 and 2006, the couple contributed $121,000 to congressional campaigns as well as $5,000 annually to PMA’s political-action committee. From 2001 to 2006, the couple contributed $12,300 to Dicks’ campaign, with the Fairfax police officer listed in campaign-disclosure records as a PMA consultant."

Who is the PMA Group? The PMA Group assists clients with obtaining defense "earmarks," which are best described as no-bid contracts that federal agencies feel pressure to award companies selected by individual lawmakers.

David Heath, of the Seattle Times writes, "In the 2008 defense bill alone, lawmakers gave PMA clients 172 earmarks. Some of those clients had numerous lobbying firms working on their behalf.""Many of the lawmakers sponsoring those earmarks received generous political contributions from donors with PMA ties.

Since 2003, individuals or groups with PMA ties gave more than $2.5 million to the campaigns of 165 members of Congress, according to the Seattle Times' analysis.

Norm Dicks, who received $84,000 in contributions from PMA is waiting for the results of the investigation before he returns his PMA contributions.

Senator Patty Murray, amid speculation about the legality of the donations, recently donated $3,500 in questionable PMA contributions to Food Lifeline, a charity.

Want additional documentation? David Heath of the Seattle Times reports on PMA Group’s contributions to Rep. Norm Dicks and the earmarks he secured for their clients (there’s a database for all of Congress here, and Dicks’ earmarks are here.) David Heath is the reporter behind Seattle Times’ Favor Factory project.

For additional posts regarding open government and transparency, check out Bill Allison and Anupama Narayanswamy's blog Real Time Investigations on the Sunlight Foundation's website. The two investigative journalists are posting a diary of investigations about their attempts to make Congress more transparent. The Sunlight Foundation in headquartered in Washington D.C.

Real Time Investigations link:

Background Information:

Wikipedia: "The PMA Group was founded by Paul Magliocchetti in 1989.[2] For a decade, Magliocchetti worked as a senior staffer on the House Defense Appropriations Subcommittee under its chairman, U.S. Rep. John Murtha (D-PA). In September 2007, the nonprofit Citizens for Responsibility and Ethics in Washington (CREW) ranked Murtha, a congressman for thirty-six years, one of the twenty-two "most corrupt" members of Congress, due to "alleged ethics violations stemming “from abuse of his position on the subcommittee to benefit the lobbying firm of a former long-term staffer and for threatening to block earmarks of other members for political purposes."" Since Magliocchetti's departure from the defense subcommmittee, PMA and its clients have established themselves as "major contributors to Murtha's campaign committee," donating well over $200,000 to the 2002, 2004, and 2006 campaign cycles. Consequently, PMA's clients have received notable benefits from Murth's earmarks. In 2006, for example, PMA clients were given "at least 60 earmarks totaling $95.1 million."[4]

Interactive Donations Map: Courtesy of Muckety:

McKenna Urges AIG to reveal names of executives who received bonuses

OLYMPIA — Attorney General Rob McKenna today urged the chairman of American International Group (AIG) to disclose the names of executives who received bonuses between September 2008 and the present, and how federal bailout money was used for that compensation.

“My office has joined with 18 other attorneys general to demand a full accounting of how millions of taxpayer dollars were transferred to AIG executives in the form of bonuses,” McKenna said. “We’ve demanded the information needed to confirm that the billions loaned to AIG are being used as intended – to stabilize the company and help unwind the mortgage-backed securities that damaged our economy.”

letter asks Edward M. Liddy, the chairman and chief executive officer of AIG, to supply a list of all individuals in the AIG Financial Products subsidiary who received bonus compensation, the source of the compensation, copies of employment contracts of individuals who received bonuses and whether federal money was used to compensate the executives.

Sunday, March 22, 2009

How to have a Vegetable Garden - or, living harmoniously with restrictive land use laws

During tough economic times, vegetable gardens can add badly needed $dollars to strained family budgets.

With the adoption of strict land disturbance ordinances for Silver Beach, ordinary activities, like planting a vegetable garden, are becoming increasingly difficult.

So, what's a cash-strapped family that lives within Bellingham's city limits of the watershed to do?

Consider building an organic "no dig" garden.

"No dig gardens" are built on top of the ground, so you can build a vegetable garden almost anywhere. This is organic gardening at its best. To maximize your success, consider building a compost pile for lawn clippings, leaves, weeds and other organic waste.

In order to avoid violating land disturbance ordinances, I suggest that you build your raised garden plots in sections. Build paths out of gravel or flat rocks for access and increased drainage.

First, choose your site for building a garden. For the best results, make sure the site is level and that it receives at least five hours of sun per day.

If the ground is not level, smooth out lumps and bumps as much as possible and fill the gaps with soil, sand, bark, leaves, twigs, washed seaweed, shredded paper, etc. As the compost rots, you will need to add more material to these low areas to gradually build them up.

If the ground is on a slope, build a terraced garden. You can design terraces to be a work of art, or just shore up the levels with cut sections of logs, bricks, stones, or other natural material.

If you choose a site that is currently lawn; mow the area to ground level and build the garden on top, or you can leave the vegetation to decay underneath over time - as long as you make sure no light is getting to the grass.

If you are building your garden on a hard surface, such as a patio or driveway, put down a layer of organic material first, such as bark, leaves, etc.

Raised beds work well in wet climates like ours. Our growing season (zone 8) can be limited, so if you want to grow more food, or varieties of squash or melons that typically require longer growing periods, try using layers of organic material to generate "heat" below your fruit or vegetables.

Start with a layer of alfalfa (4 to 6 inches) , layer some organic fertilizer, like washed seaweed or rotted manure on top (roughly one inch).

Add a layer of loose straw to the garden (about 8 inches) and another layer of organic material then top it off with 4 inches of compost and/or top soil.

Water the garden until it's wet (not soaked) and begin planting your seedlings for an instant garden.

Pressed for space but want potatoes?

Buy a 30 gallon plastic garbage can. Drill holes in the bottom of the garbage can for drainage. Buy your favorite seed potatoes.

Add 3 feet of good quality, well draining potting soil. (At least one large bag). Add organic fertilizer or a low nitrogen fertilizer (too much nitrogen causes leaves to grow but stunts the growth of potatoes).

1. Turn garbage can upside down and drill several holes in the bottom
2. Add 2/3rds of large bag of potting soil in can. Mix in one cup of fertilizer or add organic material to can.
3. Plant seed potatoes. Small ones can be planted whole, large ones need to be cut up into pieces with no less than three eyes per piece. Dry your seed potato pieces on the cut side before you plant them.
4. Water until the soil is moist, but not soggy. If the can gets too dry, you will have misshapen potatoes. If the can is too wet, they will rot.
5. As the plants begin to grow in the can, add compost around the plants, but do not cover the leaves of the plant. Repeat as plants continue to grow.
6. Harvest new potatoes on top for tasty meals, but allow deeper potatoes to grow large for winter storage.

Similar results can be obtained with home made wire cages. (Line cage with newspaper then fill with dirt).

Potatoes absorb everything around them so start with clean, organic compost, dirt and fertilizers.

Vine crops:

Cucumbers, squash, melons and pumpkins, are members of the squash family. And although each of these different vegetables come in many different varieties in and of themselves, most members of this family have the same growing requirements.

Build rounded mounds for vine crops. Start with a layer of grass clippings, or compost. Add a layer of dirt, then another layer of compost. (The compost generates heat and provides nutrients for the vine crops). Water as needed.

Maximize production with inter-cropping:

Some crops take up a large amount of space, but don't actually use this space until they have reached full size. Take advantage of this by planting fast growing lettuce, carrots, radishes or beets in the soil. For instance, you can train late pole beans to grow around corn stalks. Zucchini does well in tomato cages.

Consider using trellis for Lima Pole Beans, Pole Cucumbers, Melons, Peas, winter varieties of squash, such as acorn, and butternut and, finally, Tomatoes,

For additional ideas on how to prepare a site, check out the start a vegetable garden blog:

Many vegetables will keep over the winter. Many fruits and vegetables can be frozen or can be canned. (Take a class - if you plan to start canning).

Gardening can help you save hundreds of dollars on your food bill, while providing a long term source of healthy food.

Remember to donate some of your garden produce to neighbors or local food banks.

Friday, March 20, 2009

"Read the Bill" Petition to Congress

In its haste to stop economic hemorrhaging, Congress rushed the Stimulus Bill through both chambers without bothering to read it.

Very few members of Congress actually read legislation before a vote is taken. Unfortunately, the same is true for state legislatures. All too often, legislators rely on lobbyists or caucus leadership for information about pending legislation.

Below, I have posted a letter I received from the Sunlight Foundation and a copy of a petition to Congress to implement a 72 hour publication rule before Congress votes on a bill. I urge you to sign this petition today.


Our fears have materialized about what happens when no one reads legislation. Now we have proof that 13 hours wasn't enough time to read the 1100 page Stimulus Bill. Reports have emerged that Senator Dodd, at the behest of the administration, inserted an unnoticed loophole that allowed AIG employees to receive exorbitant bonuses.

I am certain that if Congress had put that legislation online for 72 hours before it was considered -- if they had a chance to read it, or if you did -- someone might have caught that last minute loophole. That's why we want you to sign the petition to urge Congress to Read the Bill:

It's ridiculous that members of Congress don't read the legislation they vote on, but with your help, we can tell Congress that we expect it to do its job. Most people don't know that lawmakers fail to read the bills they vote on. We need your help to change this. Forward this email onto your friends and ask them to sign the Read The Bill petition.

Thanks, Ellen Miller
Executive Director, Sunlight Foundation

P.S. Read more about the AIG bonus loophole at the Sunlight Foundation blog.

Bailouts will cost Taxpayers Trillions of Dollars

The U.S. Government is undertaking an unprecedented and very expensive effort to rescue the economy and prevent an economic depression.

CNN Money has added up the dollars allocated to the economic rescue to date; and, with the Fed's addition of $1.1 Trillion, we are looking at an allocation of $13.5 trillion dollars, of which approximately $2.2 Trillion has actually been spent.

Some economists estimate that it will cost double what has already been allocated to save the economy.

For additional details about where the money went, click on the plus signs in the chart below.

The link to CNN's chart can be found here:

Today's trivia question - if we divided $13.5 Trillion by the adult population in America, how much is each taxpayer's share?

Hints for answering today's trivia question:

A trillion is a thousand billion, which would be written as a one with 12 zeros:

Let's say the population of the U.S. is approximately 250 million. If we divide $1,000,000,000,000 (a trillion dollars) by 250,000,000, (million people) we get $4,000. That's $4,000 for each man, woman and child in the United States.

As of February 2009, the United States has an estimated resident population of 306 million. People under 20 years of age make up over a quarter of the U.S. population (27.6%), and people age 65 and over made up one-eighth (12.6%) in 2007. The national median age was 36.7 years.

Wednesday, March 18, 2009

Federal Reserve will buy $1.1 Trillion in Treasuries and other Securities

Breaking News:

Fed will buy up to $1.1 Trillion in treasuries and other securities. Treasuries rally on the announcement!

Latte Republic will report additional information as it becomes available.

Tuesday, March 17, 2009

Protecting Consumers from Fraud - Living Trust Scams

There is no end to the creativity of a con artist. They can rip off billions like Bernie Madoff in an elaborate Ponzi scheme, or steal thousands of dollars from an unsuspecting senior.

Regardless of the thief's degree of sophistication, consumers across the nation lose billions of dollars each year to fraud. According to a study conducted by AARP, people over the age of 50 are especially vulnerable and account for half of the victims of scams.

The scam artist prefers to target older individuals because they have spent a lifetime saving for retirement. Con artists use a variety of tools to contact potential victims including the mailbox, telephone and the Internet. Others may target widows or widowers to take advantage of their vulnerability and loneliness.

We can stop con artists from victimizing family members if we take the time to educate ourselves and our friends, parents, and co-workers about scam artists and how they operate. Today's topic is Living Trust Scams.

The Washington State Bar Association tells citizens: "Revocable living trusts have become a popular alternative to the traditional Washington state will as a way to pass property on when you die. Even though Washington's probate system is among the simplest and least expensive in the nation, many citizens are attracted by the possibility of even quicker and easier asset transfers."

"But revocable living trusts have some drawbacks. Here, to help you decide if a revocable living trust is right for you, are answers to some of the most frequently asked questions about these trusts."

The Living Trust Scam: (information courtesy of the WA Attorney General's Consumer Warnings)

The living trust scam attempts to get you to purchase a trust. It plays on the fear that probate costs and estate taxes will erode the value of your estate. While living trusts can be a useful tool for some, many unscrupulous sales persons use it to simply get in the door and sell high-commission investments to consumers, whether or not it is the best thing for them.

The Opening Pitch
“Do you want to leave a legacy for your grandchildren and not have the government take all the money you have spent a lifetime saving? Come to a free seminar to learn how.”

The Presentation
You respond to such a mailer, phone call or advertisement by attending a workshop. Or you might call to find out about it and someone will come out to your home to present information. They will sign you up for a living trust by having you fill out forms that disclose all of your financial assets. Once they have seen your finances, they begin to recommend different investments, usually insurance type products like annuities, in order to earn high commissions off the sale of those products.

The Result
Sometimes the living trust document you buy is not filled out properly because lawyers are not doing it. If these documents are filled out improperly, you may end up going through probate anyway, the very thing you were told you could avoid. In addition, many older people end up buying investments that are not appropriate for them given their situation.

How to Avoid It

If you want to know if a living trust will truly help you, you should get the advice of an estate-planning attorney. You can find the name and phone number for such an attorney by calling your local bar association, lawyer referral service.

Washington Attorney General's site for Consumer Protection:

Forbes Article on Madoff and other famous Ponzi scheme artists:

Monday, March 16, 2009

Unlocking Credit for Small Businesses Fact Sheet

Latte Republic has published a number of articles discussing the effects of the Financial Crisis on small businesses across America. Here is a statement from the Obama Administration regarding the steps they are taking to unlock credit for struggling and healthy businesses.

Read Secretary Geithner's RemarksView the Q&A for Small Business
The Obama Administration firmly believes that economic recovery will be driven in large part by America's small businesses, which have generated about 70 percent of net new jobs annually over the past decade. But as the flow of credit has dried up during this recession, small business owners who were prudent and responsible have been set back by the behavior of others in our financial system who were not.

Businesses with strong credit histories have seen loan applications denied due to conditions that have nothing to do with their own actions and are now struggling to expand their businesses, make their payments or even keep workers on their payrolls. As a result, while the U.S. Small Business Administration (SBA) typically guarantees about $20 billion in loans annually, new lending is trending below $10 billion this year.

The Obama Administration has already taken several positive steps to ensure that small businesses have access to the credit they need to support an economic recovery.

The American Recovery and Reinvestment Act signed by the President provides for increased guarantees and reduced fees for certain Small Business Administration loans. In February, the Treasury Department made a special effort under the Consumer and Business Lending Initiative to improve terms for securities backed by SBA loans in the TALF.

Today, as part of an effort Treasury Secretary Timothy Geithner first outlined in introducing the Financial Stability Plan (FSP) in February, we are taking immediate action to help ensure that credit – the lifeblood of America's small businesses and its economy – gets flowing again to entrepreneurs and business owners. As another part of the Consumer and Business Lending Initiative, the Treasury Department will – by the end of the month – begin making direct purchases of securities backed by SBA loans to get the credit market moving again, and it will stand ready to purchase new securities to ensure that community banks and credit unions feel confident in extending new loans to local businesses. These purchases, combined with higher loan guarantees and reduced fees, will help provide lenders with the confidence that they need to extend credit, knowing they both have a backstop against their risk and a source of liquidity.

These measures will complement other steps the Administration is taking to help small businesses recover and grow, including several tax cuts under the Recovery Act.

Unlocking Credit for Small Businesses
1. Jumpstart Credit Markets For Small Businesses By Purchasing Up to $15 Billion in Securities
2. Stand Ready to Purchase Securities Pooled from the SBA's Largest Loan Program for Small Businesses
3. Stand Ready to Purchase Securities Pooled from the SBA's Community Development Loan Program
4. Temporarily Raise Guarantees to Up to 90 Percent in SBA's 7(a) Loan Program
5. Temporarily Eliminate Certain SBA Loan Fees to Reduce the Cost of Capital Call by Secretary Geithner for New Reporting Requirements on Bank Lending to Small Businesses and Greater Efforts to Extend Small Business Loans
6. Issue Guidance for an Expanded Carryback Provision as Part of the Recovery Act's Comprehensive Tax Cut Package for Small Businesses
Jumpstart Credit Markets For Small Businesses By Purchasing Up to $15 Billion in Securities

Begin Direct Purchases of Securities Backed by Loans from SBA's 7(a) Program: Traditionally, SBA lending has been supported by an active secondary market, as community banks and other lenders sell the government-guaranteed portion of their loans, providing them with new capital to make additional loans. But since last fall, this secondary market – which has historically supported over 40 percent of SBA's 7(a) lending program – has frozen up. As a result, both lenders, including community banks and credit unions, and the "pool assemblers" that securitize their loans have been left with government-guaranteed SBA loans and securities on their books. This has prevented them from making or buying new loans.

Today, the Treasury Department announces that – in order to get credit moving immediately to small businesses – it will:
Stand Ready to Purchase Securities Backed by 7(a) Loans Packaged Since Last July: Treasury has hired an investment manager who will be authorized to purchase – starting by the end of this month – securities backed by guaranteed portions of 7(a) loans packaged on or after July 1, 2008. This will help clear the backlog of securities that has built up since the beginning of the credit crisis last year, providing pool assemblers and banks with a source of liquidity so that new lending can occur.

Stand Ready to Purchase New 7(a) Securities Packaged Between Now and the End of the Year: Between now and the expiration of Emergency Economic Stabilization Act (EESA) authority on December 31, 2009, Treasury stands ready to purchase new securities backed by the guaranteed portions of 7(a) loans. By making this pledge, Treasury provides assurances to community banks and other lenders that they can sell the new 7(a) loans they make, providing them with cash they can use to extend even more credit.

Make Direct Purchases to Unlock Credit Markets for SBA's 504 Community Development Loan Program: The SBA's 504 program combines government-backed loans with mortgage loans from private lenders to provide long-term financing of up to $10 million that directly supports economic development within a community. First-lien mortgage loans made by private-sector lenders – which account for 50 percent of the financing for 504 projects, and are not SBA guaranteed – were often traded in the past on an active secondary market that has frozen in the last year, leaving billions in unsold assets on the books of banks. To get the 504 lending market moving again, Treasury will:

Stand Ready to Purchase Securities Packaged From 504 First-Lien Mortgages: Treasury will stand ready to buy first-lien mortgage securities connected to SBA's 504 loan program. No later than May, Treasury will begin purchasing securities packaged on or after July 1, 2008 that meet eligibility criteria designed to protect taxpayers.

Prepare to Buy 504 First-Lien Mortgage Securities That Receive New SBA Guarantees: As part of the Recovery Act, SBA is working to develop a secondary market guarantee program for securities issued from pooled 504 first mortgage loans. Once this program is fully implemented by SBA, Treasury will stand ready to purchase these government-guaranteed securities.

Provide Liquidity While Keeping The Secondary Market in Place: These direct purchases of 7(a) and 504 securities will provide liquidity to lenders, including community banks and credit unions, enabling them to restart the process of recycling capital and extending loans. At the same time, the TALF component of the Consumer and Business Lending Initiative will provide investors with an attractive source of financing, allowing them to continue participating in the market. This is intended to keep the existing secondary market in place so that private investors can replace the government as the purchaser of these securities when market conditions return to normal.

Temporarily Raise Guarantees to Up to 90 Percent in SBA's 7(a) Loan Program: The purpose of the 7(a) loan program is to provide a government guarantee that reduces the risk lenders face when they make loans to borrowers who cannot find credit elsewhere. But during the current recession, the guarantees – up to 85 percent for loans at or below $150,000 and up to 75 percent for larger loans – have not been large enough to give banks the confidence they need to lend.

As part of its implementation of the Recovery Act, the SBA today announces: An Increase in Maximum Loan Guarantees to 90 Percent: Beginning today, any lender who participates in the 7(a) program can request a guarantee from the SBA of up to 90 percent for each eligible loan. This temporarily available increase in guarantees will help provide banks with the greater confidence they need to extend credit during the current recession.

A Confidence Boost Lenders Need to Extend Credit: Combined with Treasury's efforts to unlock secondary markets, higher loan guarantees will ensure that lenders have both greater safeguards against possible credit losses and assurances that there will be an active secondary market to purchase their loans and provide the liquidity they need to keep lending.
Temporarily Eliminate SBA Loan Fees to Reduce the Cost of Capital
Elimination of Borrower and Lender Fees for 504 Loans:
On any new eligible 504 applications submitted beginning today, SBA will temporarily eliminate the Certified Development Company (CDC) processing fees charged to borrowers and the third-party participation fees charged to lenders. As a temporary provision authorized by the Recovery Act, these measures will reduce costs to both borrowers and lenders participating in the 504 program, which has a demonstrated record of supporting community development and creating jobs.

Elimination of Up-Front Fees for 7(a) Loans: For any new eligible 7(a) loan, the SBA will temporarily eliminate the up-front fees that lenders pass along to borrowers. These fees – which go up to 3.75 percent for larger loans – increase the cost of borrowing for small businesses and make it more difficult for them to access the credit they need to expand or make new investments.

Rebates for Fees Paid Since February 17th: For borrowers or lenders charged any of these fees on loans approved on or after February 17th, the SBA will provide a refund, to ensure that Recovery Act provisions create the maximum possible economic stimulus.

A Pledge to Quickly Turn Around Loans: To maintain a high level of service to potential borrowers and lenders alike, the SBA also pledges that complete loan applications will be turned around quickly by the SBA – usually in as little as two to three days.

Call by Secretary Geithner for New Reporting Requirements on Bank Lending to Small Businesses and Greater Efforts to Extend Small Business Loans.

Require the 21 Largest Banks Receiving Financial Stability Plan Assistance to Report Their Small Business Lending Every Month: As part of the President's commitment to increasing transparency and accountability, Treasury will – for the first time – require the 21 largest banks receiving capital from the government to report how much small business lending they do every month.

Call for Quarterly Reports of Small Business Lending By All Banks: Today, Secretary Geithner called for every bank nationwide to report their total lending to small businesses in their regular quarterly reports, rather than just once a year. Secretary Geithner will ask bank regulators to take steps to amend the quarterly Report of Condition to achieve this important objective. This will offer more current information about trends in small business lending, while at the same time providing important information about how well government programs are working to stimulate these loans.

Issue Call for All Banks to Make Efforts to Increase Small Business Lending: Today, Secretary Geithner called on all banks – whether or not they receive FSP assistance – to make an extra effort to extend small business loans to creditworthy borrowers. In light of the extraordinary assistance provided to the banking system, Secretary Geithner emphasized that lenders should take a special responsibility for providing the credit that small businesses need to operate, expand and add jobs.

Issue Guidance for An Expanded Carryback Provision as Part of the Recovery Act's Comprehensive Tax Cut Package for Small Businesses:

Establish Five-Year Carryback Provision to Increase Tax Refunds for Small Businesses:Today, the IRS will issue guidance for a provision in the Recovery Act that allows businesses with gross receipts of up to $15 million to "carry back" their losses for up to five years, effectively allowing them a rebate on taxes paid in previous years. The Joint Committee on Taxation estimates that this measure will increase liquidity for small businesses by $4.7 billion by September 30, 2009.

Continue Implementation of Recovery Act's Comprehensive Tax Cut Package for Small Businesses: The carryback provision is only one of several measures in the Recovery Act that will improve liquidity for small businesses by lowering their taxes, including:

Incentives to Invest in Plant and Equipment by Allowing Small Businesses to Write Off Up to $250,000 of Investment: The Recovery Act allows small businesses to immediately write off up to $250,000 of qualified investment in 2009, providing an immediate tax incentive to invest and create jobs.

Additional Liquidity Support By Reducing Estimated Tax Payments: Normally, small businesses have to pay 110 percent of their previous year's taxes in estimated taxes. But with incomes down for many small businesses this requirement is too burdensome – and causing a cash crunch.

The Recovery Act allows small businesses to reduce their estimated payments to 90 percent of the previous year's taxes, helping to boost their liquidity and better align their estimated taxes with their actual taxes in a year of severe economic contraction.

Extension of Bonus Depreciation Deductions Through 2009: The Recovery Act also extends through 2009 bonus depreciation,allowing businesses to take a larger tax deduction within the first year of a property's purchase.

Incentives for Investors to Put Money in Small Businesses: Finally, the Recovery Act includes a measure that will exclude from taxation 75 percent of the capital gains for investors in small businesses who hold their investments for five years. In his budget, the President proposes to go further, eliminating all capital gains taxes on small businesses and making this measure permanent.