Capital News & Notes
For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “I Don’t Want to Become a Meme”
POLITICS & POLICY
- Newsom Answers Questions on Water, Gas Tax, Urban-Rural “Divide”
- “Noisy Activists” Take CA Dem Party Leftward
- California Leads US in Ballot Bonds & Debt
WATER & POWER
- The Re-Shape of Water? Farmers Ask Feds to Fight New State River Limits
- Oil Companies Designing High-Mileage Engines
- How Comic-Con 2018 Unfolds in San Diego
- Brady Bunch Manse for Sale…$61K in ’73…Just $1.9M Today
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
FOR THE WEEK ENDING JULY 20, 2018
READ ALL ABOUT IT!!
Lt. Gov. Gavin Newsom toured a Fresno trade school earlier this week as part of a series of central San Joaquin Valley campaign stops in his bid to become California’s next governor.
During a news conference after the tour, Newsom answered questions on many of the Valley’s most pressing political issues: water storage, the gas tax, crime, high-speed rail and what he called a “divide” and “growing animus” between California’s urban and rural residents.
“I feel a deep sense of responsibility, if I’m successful as governor, to reconcile (the divide) and to get serious about that,” he said. “I don’t want to become a meme. I don’t want to become the guy that’s here before an election and you never see again.”
Newsom spent time with plumbing, electrical and sheet metal apprentices and journeymen, as well as representatives from their respective unions, at the Fresno Area Electrical Training Center near Fresno Yosemite International Airport.
The Democratic frontrunner spent about an hour with the students and staff, exchanging small talk and taking notes on the program using a small notebook he kept in his pocket.
He did his best to put those around him at ease, but the tall, coiffed, well-dressed millionaire couldn’t help but draw reverence as he asked instructors about various electrical training apparatus dangling from the walls.
Newsom said visits like Tuesday’s were important, because Democrats “often don’t treat folks who don’t go to college as we should.” There is space in the state budget to “exponentially increase” programs like the one he toured in Fresno, which he said crucially provided a living wage to trade workers and their families.
Brian Brokaw, a consultant working with Newsom’s campaign, said the candidate also had several private meetings before the tour and planned to have several more Tuesday before flying back to the Bay Area. Newsom had a similarly busy schedule in Modesto on Monday.
At the news conference, Newsom defended the gas tax – a hot-button issue for conservatives, who led a successful campaign to bring the issue to voters in November.
He said voters are free to kill the tax, but they would also be ending thousands of infrastructure projects across the state. Canceled road repairs will lead to more money spent by residents on car repairs, and he said the $5 billion generated by the tax could not be generated elsewhere in the budget, as Republicans have suggested.
He said independent analysis has proven precisely the opposite. Local officials sometimes use Prop. 47, which downgraded some crimes from a felony to a misdemeanor, as a scapegoat for crime in their jurisdictions, he added.
Newsom said the ballooning costs for the high-speed rail project are concerning, but he believes a “(Silicon) Valley to (Central) Valley” train will happen. Once it does, the program will likely need private investment to extend the line south.
The area is not a strong support base for him, as he received only 17 percent of the vote in Fresno County. Republican John Cox, who will face Newsom again in November, finished first with 34 percent of the vote. Democrat Antonio Villaraigosa was second with 20 percent.
Commentary from CalMatters
Last weekend, the state Democratic Party’s “executive committee” voted to endorse state Sen. Kevin de León’s longshot bid to unseat Dianne Feinstein, California’s U.S. senator for more than a quarter-century.
The action says more about the party than it does about Feinstein. It tells us that the party’s political junkie activists are so obsessed with “resistance” to Donald Trump that they are willing to discard one of the Senate’s most senior and influential members.
De León has played the role of resister-in-chief to the hilt, portraying Feinstein as out-of-touch, inferentially too old and insufficiently militant in opposing Trump.
Such gestures endeared him to the party’s most left-wing – or “progressive” in their preferred nomenclature – faction. However, those activists are not ordinary voters, as the June primary election demonstrated.
Feinstein whomped de León by 32 percentage points and he’s still in the running only because of California’s top-two primary election system. Although he got just 12 percent of the vote in June, he topped dozens of other candidates to finish second and gain a spot on the November ballot.
While overall, Feinstein finished with 44 percent of the vote in June, she got an estimated 70 percent support from Democratic voters, which illustrates the yawning gap between Democrats as a whole and the noisy activists on the party’s left wing.
Feinstein’s camp underscored that division in its reaction to the executive committee action.
“While 217 delegates expressed their view today, Sen. Feinstein won by 2.1 million votes and earned 70 percent of the Democratic vote in the California primary election, carrying every county by double digits over her opponent,” Jeff Millman, Feinstein’s campaign manager, said in a statement. “We are confident that a large majority of California Democrats will vote to re-elect Sen. Feinstein in November.”
Feinstein’s long-time campaign advisor, Bill Carrick, had a pithier reaction.
“They are trying to demonstrate that they have a pulse,” Carrick said of de León’s campaign. “And that’s what it’s all about. They have no opportunity between the primary and Labor Day to get any attention. This is the only game in town. Desperate strokes for desperate folks.”
Predictably, de León sees the endorsement as a big plus, declaring, “Earning the endorsement of so many leaders and activists of the California Democratic Party isn’t just an honor and a privilege; today’s vote is a clear-eyed rejection of politics as usual in Washington, D.C. We have presented Californians with the first real alternative to the worn-out Washington playbook in a quarter-century.”
However, it’s still a steep uphill climb. Not only can Feinstein count on strong support from rank-and-file Democrats, but she has much more campaign money and will have the backing of the state’s business community if she needs it.
There’s a strong element of irony in the Feinstein-de León duel. She apparently had to be talked into running again this year by national Democratic leaders who feared that her retirement would ignite a very expensive primary battle that would drain money away from critical Senate campaigns in other states.
Assuming Feinstein wins another six-year term this year – and the odds are still very much in her favor – it’s entirely possible, even probable, that she will resign at some point. That would allow the next governor, who almost certainly will be Gavin Newsom, to appoint a successor.
Would he give the nod to de León? Not likely, since the two have feuded over which is the true leader of the California resistance to Trump.
Perhaps more than any state, Californians govern themselves through the ballot. Most of the attention goes to the laws they write, but voters also spend taxpayer money — a lot of it.
They do so through bonds, instructing government officials to borrow money for specific projects. It’s the closest thing to a sure bet that exists in statewide campaigns, with an approval rate hovering around 90%. Less clear is whether voters fully comprehend the implications of their ballot choice.
State general obligation bond measures approved since 1986 total more than $167.7 billion. Lenders must be repaid with interest, averaging about 5% a year, over a span of several decades. Most general obligation bond payments come from the same bank account that provides cash for services such as education, healthcare and prisons.
A recent report by the nonpartisan Legislative Analyst’s Office estimated that California’s general fund is currently paying off $83 billion in bond obligations. Annual debt payments total about $6 billion. That’s roughly equal to a year and a half in general fund spending on the University of California system, or about triple what the state spends on firefighting.
That’s not to say that bonds aren’t important. The dollars have most often been spent in recent years on infrastructure projects for schools and transportation. Libraries, hospitals and housing efforts have also benefited. Estimates are that California’s annual debt payments, as a percentage of all state government spending, are manageable.
The better question, though, is whether voters understand the trade-offs involved in all of that borrowing.
“When we make these decisions, we have to look at the big-picture context,” state Sen. Bob Hertzberg (D-Van Nuys) said during a legislative hearing last month on November’s slate of bond measures.
Hertzberg spent the better part of the hearing grilling the backers of Proposition 3, an almost $9-billion bond on this fall’s ballot to pay for projects focused on clean drinking water and water supply needs. Analysts project that if voters approve the plan, the state will make bond payments of about $430 million a year for 40 years.
How did Proposition 3 get on the ballot? Through a signature-gathering campaign paid for by donors with a keen interest in the water projects that will be funded — a point on which Hertzberg grilled the supporters at the hearing.
“You’ve got to tell the truth,” he said to the measure’s proponents. “You back up an armored car to the treasury, and you can take $430 million out of the back door because you can poll [on] something, spend a few million dollars because it’s an issue that looks sexy to voters, and draw the dough.”
Proposition 3’s backers insisted they worked with a variety of stakeholders to identify key water supply needs across California. Their effort won’t be the only borrowing voters will weigh this fall: Four such ballot measures, totaling close to $16 billion in bonds, will be up for consideration.
Voters are rarely asked to think about which needs government should meet. In 2004, they agreed to borrow $3 billion for stem cell research. In 2008, voters said yes to $9.9 billion in seed money for high-speed rail. Even though the bonds have only recently begun being soldto Wall Street investors, it’s debatable whether voters would make the same choice if asked again.
With little clout in Sacramento, Republicans are trying to use their power in Washington to reshape California’s water policies.
Less than two weeks after state regulators announced sweeping new water allocation limits, the GOP-controlled House is expected this week to pass spending legislation that would block federal funding for that allocation plan. It also includes measures that would bar legal challenges to major water infrastructure projects in the state.
On Friday, Republican Rep. Jeff Denham of Turlock is hosting Interior Secretary Ryan Zinke in his district to “discuss the administration’s potential role in improving water infrastructure and protecting Valley water rights.”
That’s a sign the Trump administration may fight the allocation proposal, which was announced by the California State Water Resources Control Board on July 6.
The legislative proposals have little chance of passing in the Senate, where California’s Democratic senators have already pledged to block provisions that preempt the state’s powers. The legislation would probably need 60 votes to cut off a filibuster, and Republicans control 51 of the chamber’s 100 seats.
California Republicans may have more success enlisting their allies in the Trump administration to battle state regulators. President Donald Trump vowed to have the government deliver more water to San Joaquin Valley farmers during the 2016 campaign.
In January, the U.S. Bureau of Reclamation unveiled a proposal to “maximize water deliveries” in the Central Valley, the opposite of what the state water board is now looking to do.
If nothing else, the latest salvos from Washington allow California Republicans to argue they are fighting for agriculture interests and Southern California water consumers — key political constituencies — in their long-running battles with conservation groups over stewardship of the state’s rivers and reservoirs.
The state’s environmentalists were outraged this spring when House Republican budget-writers, led by Riverside County Rep. Ken Calvert, released a 142-page draft spending billfor the Interior Department and related agencies, that included language prohibiting state or federal lawsuits against the multibillion-dollar California Delta tunnels project.
Formally known as California Water Fix, the controversial project would construct two tunnels beneath the Sacramento-San Joaquin River Delta to connect freshwater from the river to aqueducts conveying water south. It’s been championed by Democratic Gov. Jerry Brown, who is in his final year in office, but vehemently opposed by many conservation groups and other Democratic politicians.
Republicans were not deterred by the pushback. Instead, at a committee markup in June, they adopted another provision, introduced by Rep. David Valadao of Hanford, to extend the ban on legal challenges to virtually every other major infrastructure project that distributes water across the state –including projects to manage the Sacramento-San Joaquin Delta, as well as the Central Valley Project and State Water Project, two networks of reservoirs, dams and aqueducts.
This week, the House will vote on another amendment, drafted by Denham, targeting the recent proposal by the California Water Board that would restrict the flow of water from the San Joaquin river and its tributaries into Denham’s district and other parts of the Central Valley.
The board says the move is necessary to protect a depleted salmon population, but Denham argues that science isn’t sound, as salmon populations have fluctuated every year.
The California State Water Resources Control Board is an easy target in California farming communities that don’t want to see their water shortages exacerbated.
“This is a water grab that will devastate our community both from a water quality standpoint and starving off some communities from water at all,” Denham said. “I feel it’s a social justice issue when you’re shutting off our water, that can completely devastate our community, over a plan to save the fish that’s not based on science at all — so we are pulling the Interior money back so it can’t be used to implement this plan.”
The board will vote to finalize its new allocation limits in August. The proposal was widely unpopular in Denham’s district, where there is already a water shortage in a farming community that depends on water for its livelihood and has an unemployment rate that is 50 percent higher than the national average.
One of Gov. Jerry Brown’s final climate change-related priorities is moving through the California Legislature but faces opposition from some Democrats.
Proponents of planning electricity use with other Western states embrace the possibility of exporting more of California’s solar energy and importing more wind and hydroelectric energy. They say it would save money and solve one of the largest challenges facing the state’s energy grid. But opponents worry it could jeopardize the state’s climate change progress.
“The two sides of the debate are emphasizing completely different issues,” said Bentham Paulos, author of a new report for the nonpartisan think tank Next 10.
Jointly planning electricity use could allow California to purchase wind or hydroelectric power from nearby states at night, when solar energy shuts off. This would replace natural gas plants the state currently fires up in the evening.
At times, California also has more solar energy during the day than it can use, requiring it to shut off that energy or pay other states to take it. A “regionalized” electric grid could solve this problem and reduce emissions in other states.
“It also helps us take dirtier resources off the grid in other states,” Lauren Navarro of the Environmental Defense Fund told lawmakers last month at a hearing. “The renewables we have in California are less expensive and will be chosen more often by the market than dirtier resources like coal.”
Brown has argued the state won’t be able to put much more renewable energy online without a regional grid.
But the plan has divided consumer advocates, environmentalists and Democrats in the Legislature, who fear a new interstate energy agreement could allow federal regulators appointed by President Trump to interfere in California’s electricity mix.
“It is so critical it seems to me that we maintain that protection against an administration that has made a commitment to doing everything possible to undermine the values of this state and our energy principles in particular,” said state Sen. Hannah-Beth Jackson at the hearing.
Opponents also expressed concern about California lawmakers ceding control to an independent governance board. Similar concerns sank a last-minute effort last year to pass regional grid legislation.
The Next 10 report downplays the chance federal regulators can or will meddle with state renewable energy goals, but a recent Senate legislative staff analysis finds the possibility credible — demonstrating the lack of consensus about regionalization’s effects.
Despite that uncertainty, a bill to create a regional grid passed two Senate committees last month.
When lawmakers return in August, Brown will have one more month to pass one more piece of climate change legislation before his final session in office ends.
Oil Companies Designing High-Mileage Engines
Wall Street Journal excerpt, 7/15/18
NOVI, Mich.—The world’s largest oil company has 30 engineers working away in this Detroit suburb on a project that sounds counterintuitive: an engine that burns less oil.
But there is a common-sense explanation for why the Saudi Arabian Oil Co., known as Saudi Aramco, wants a more efficient internal combustion engine. It is trying to protect its market share by slowing a potential exodus to electric vehicles.
David Cleary, head of Saudi Aramco’s Detroit Research Center, said he wanted any breakthroughs in better-engine designs to be widely shared. “We are not as interested in intellectual property as in selling fuel,” he said.
While electric-vehicle adoption remains small globally, and is expected to rise gradually, the prospect of a large-scale shift is setting up a showdown between oil companies and utilities over who will power tomorrow’s cars.
For oil companies, gasoline and diesel are among their most valuable products. For utilities, electric vehicles represent a radical way to jolt demand for power, which has been largely flat in recent years in much of the developed world.
The internal combustion engine fires the overwhelming majority of the world’s vehicles. Only 1.3% of new cars registered last year were electric cars, according to the International Energy Agency. But the number of battery-run electric vehicles is growing. There were 3.1 million globally in 2017, up from 2,700 a decade earlier, the group said.
In the U.S., electric vehicles could help double, or nearly triple, annual growth rates for power demand over the next three decades, according to a new study from the National Renewable Energy Laboratory.
Such projections are cause for concern in the oil industry. A little more than one-quarter of all oil is used to make gasoline. If that market starts to get eroded by electric vehicles, Big Oil could be left with idled refining capacity and too much crude, which would lower prices, says Phil Verleger, an oil economist.
“If they can make engines more efficient, they can slow the loss of market share,” he said of Aramco’s efforts.
In the U.S., the oil industry has long fought incursions from the ethanol industry. The utility industry, a powerful force in statehouses around the country, could be a more formidable opponent.
Utilities around the U.S. are pushing politicians and regulators to let them build car-charging networks, arguing they would help spur electric-vehicle growth that in turn will help reduce pollution and greenhouse-gas emissions. And they are seeking approval from several states to pass on the cost of these networks to electric customers through higher rates.
“We are very interested in reducing greenhouse gas emissions in the states and the country,” said John Betkoski III, president of the National Association of Regulatory Utility Commissioners. “Utility companies see an opportunity, frankly, to grow their business.”
In May, California regulators approved a plan by San Diego Gas & Electric, part of Sempra Energy , to spend $136.9 million on a network of vehicle-charging stations. Last month, Edison International’s Southern California Edison submitted a proposal to spend $760 million. The state also approved another $578 million to assist the electrification of trucks, buses, forklifts and other heavy equipment, with many of the targeted vehicles in use at California ports.
Utilities have proposed spending another $500 million in New York, New Jersey and Maryland to build out a network of charging stations to make it easier for electric cars to refill their batteries.
Oil companies are beginning to push back. A bill in Colorado earlier this year to allow utilities to install electric vehicle-charging stations died amid opposition from the state’s gas-station owners.
“We’re more engaged at the state and local level on this issue than we have ever been before,” said Chet Thompson, president and chief executive of the American Fuel & Petrochemical Manufacturers, a trade group including most of the nation’s refiners.
Outside of the U.S., some oil companies are approaching the rise of electric vehicles differently. Royal Dutch Shell PLC has bought a charging company and is installing fast-charging points at its fuel stations in Europe. China’s governmental support has made the country the world’s largest market for electric vehicles.
In the U.S., the burgeoning clash between the power and oil industries flared up in April at a meeting of the American Legislative Exchange Council, a group that creates model state laws and advocates for free markets.
The refiners’ lobby pushed model legislation that would prevent regulated utilities from charging ratepayers to create a charging network. The power industry defeated the measure, but the issue remains a point of contention. It is expected to come up again at the group’s next meeting in August.
At its engine-engineering facility in Michigan, state-owned Saudi Aramco isn’t waiting for the next round of the political fight.
In one bay, a large truck diesel engine has been retrofitted to run on a gasoline, using a technology that increases engine efficiency by modifying the fuel and running the engine at a higher compression. A modified Ford F-150 pickup truck was able to get 37 miles a gallon with the Aramco technology. The Environmental Protection Agency rates the truck at 21 mpg for combined highway/city driving.
Elsewhere, work was under way to outfit a Volvo truck with the technology as well as onboard carbon capture, another idea Aramco is working on. The system will separate the carbon dioxide from the truck’s exhaust, which then can be off-loaded at truck stops for industrial reuse or storage. Aramco also hopes to reduce the truck’s fuel consumption by up to 10%.
“Why is this the right thing to do?” asked Mr. Cleary, the facility’s head. “We are going to be using internal combustion engines. Let’s make them better.”
It was the first official day of Comic-Con 2018, and fans of comic books, television, film and other popular arts were delighted by the surprises that the annual convention is known to produce.
The fantasy world created at the San Diego Convention Center and surrounding streets was bursting with industry news and other magical moments just blocks from our downtown newsroom. The San Diego Union-Tribune is bringing you up close to all things Comic-Con over the four days of the event.
Here’s a look at what went down.
Here’s the story of a lovely family home, which just hit the market in Studio City for $1.885 million.
The Brady Bunch house, a Traditional-style residence near the Colfax Meadows neighborhood, was used for outdoor representations of the beloved television family’s abode. That included the show’s opening and closing scenes as well as numerous interludes to denote the time of day. Interior scenes for “The Brady Bunch” were filmed in studio.
Violet and George McCallister bought the two-bedroom, three-bathroom house in 1973 for $61,000, records show. The series ran from September 1969 to March 1974 before moving into reruns in syndication.
Ernie Carswell, a Douglas Elliman agent who is listing the property, said the split-level house has been updated and upgraded but retains almost the exact interior decor from that era, though the layout does not resemble the TV show home.
A rock-wall fireplace and wood-paneled walls are among classic details found in the living room, which features a built-in bar. Floral wallpaper and window coverings are another vintage touch. The home’s MusiCall intercom and whole-house radio also remain.
“This is a postcard of exactly what homes looked like in the 1970s,” Carswell said.
The home has about 2,500 square feet of living space, but that may not include an expansion of the downstairs family room, according to Carswell. The garage was converted into a recreation room.
The desirability of the property is enhanced by its size, a 12,500-square-foot lot that abuts the L.A. River. It sits in an area that has been ripe for tear-downs and new development in recent years. But the owners will give first consideration to bidders who want to keep the home intact, Carswell said.
“We’re not going to accept the first big offer from a developer who wants to tear it down,” he said. “We’re going to wait a few days, in case there are others who want to purchase it as an investment to preserve it.”
“The Brady Bunch” as a brand has stood the test of time, according to Joe Maddalena, founder of the “Profiles in History” memorabilia dealer and auction house.
Maddalena, who is not affiliated with the listing, has experience when it comes to marketing properties with Hollywood cachet. He previously handled the personal property collection of late singer-actress Debbie Reynolds, which included her North Hollywood dance studio, and once marketed a property seen on “American Horror Story.”
“‘The Brady Bunch,’ over the next 20 or 30 years, will never be forgotten,” Maddalena said. “I think there is a definite cool factor [in buying] one of the most recognizable television homes in existence.”
Carswell expects to see overwhelming interest in the property. “We’re preparing for an avalanche,” he said. “Emails, telephone calls — we may see upwards of 500 calls a day.”
The Brady Bunch house is among the most photographed homes in America and attracts a steady stream of 30-50 fans each day, according to the agent. The property even has its own Yelp page.
“Finally got to see the Brady Bunch house, and couldn’t help but feel nostalgic… 4 stars!,” one Yelp user wrote.
From there, the challenge becomes weeding out the looky-loos from actual potential buyers. Carswell said he plans to show the house by appointment only — something residents in the quiet suburban neighborhood will likely appreciate.
“I just don’t think we can have a Sunday open house where 1,000 people show up,” Carswell said. “We’d be inviting chaos.”
Private broker tours are another possibility, but not without security on site.
“The house is for sale, but this is not an exercise in publicity,” he said.
Violet McCallister, the mother of an almost-Brady “bunch” of five sons, was never bothered by the daily visitors who came to take a picture or drive by the house, according to Carswell. However, after the public became emboldened enough to approach the front door, a low brick wall was erected around the property.
The McCallisters have both passed away. Their children are selling the home.
The home’s celebrity is something the next owner will have to consider, said Maddalena.
“You’re buying a never-ending attraction,” he said. “There are positives and negatives.”