CONTENTS OF THIS ISSUE:

Feinstein and Cunningham Lead California Effort To Remedy Title I 100% Hold Harmless Formula Inequity in Appropriations Conference

Judiciary Subcommittee Reports Agricultural Guestworker Bill

House Passes Bill to Raise Caps on Low Income Housing Tax Credits and on Private Activity Bonds

House Passes Formula Revision for Ryan White AIDS Grants

Court Orders Napster To Cease Pirating Operations

Senate Panel Hears Proposal for Klamath Basin Feasibility Study

Senate Sets Debate and Vote on China PNTR; House Approves Trade Aid Eligibility To Vietnam

House Committee Marks Up Resources Bills

Agricultural Pest and Disease Update: Sen. Boxer Amendment Blocks Argentine Citrus Entrance into U.S.; New Certification Regulation and Genetic Research On Pierce’s Disease

Collaborative R&D Site Preference Announced for UC Santa Cruz Silicon Valley Center

NALGEP’s Air Quality Report Profiles Include Three California Cities as Positive Examples

LAEDC Releases 2000-01 Economic Forecast

Home Prices Continue To Rise; Nation’s Priciest Markets in California

Feinstein and Cunningham Lead California Effort To Remedy Title I 100% Hold Harmless Formula Inequity in Appropriations Conference

California won a major formula funding battle on Thursday evening July 27, when Senator Dianne Feinstein and Rep. Randy "Duke" Cunningham (San Diego), teamed on a conference committee with Rep. Nancy Pelosi (San Francisco), secured the conference’s agreement that California and other growing states would receive their statutory funding level under the Title I (education for the disadvantaged) program. If retained in the final bill, the agreement would mean that California’s Title I funding level for FY 2001 would not be hampered by a 100% hold harmless which has frozen the state’s payments repeatedly at outdated levels.

For years, California members of Congress have been pushing to mitigate the losses in revenues and services to poor children caused by hold harmless provisions in Labor-HHS-Education Appropriations bills which provide prevent school districts from receiving fewer Title I dollars than were received the year before. Such provisions naturally favor areas with slow-growth states over faster-growing areas such as California, New York, Florida and Texas. A bipartisan coalition of California’s appropriating and authorizing committee members have worked hard on the topic, and protest letters have come from Governor Davis, Senators Feinstein and Boxer, and the entire 52-member House delegation.

In 1994, when the Elementary and Secondary Education Act was last revised, Californians joined forces to create a biennial update of child poverty data. The Title I education formula allocates funds to the nation’s school districts based on numbers of poor children. Prior to 1994, decennially-collected poverty data collection caused increasingly skewed funding discrepancies late in each decade, sending dollars to where children used to be, rather than to where they were actually enrolled. Californians had thought their 1994 change would permanently repair the situation, but opportunistic legislators from slow-growth states have attached a special provision for several years in a row, thereby preventing the desired shift in the funding based on the most current available figures.

The compromise struck Thursday creates a twin approach to the Title I hold harmless issue. First, there will still be a 100% hold harmless on Title I funding, so that no state will receive less than it received the year before. In addition, the conferees agreed to provide all states which would otherwise be shortchanged by the hold harmless, including California, with as much funding as they would have received if no 100% hold harmless existed.

According to Sally Shake of Education Legislative Services, a Washington-based firm which represents some large California school districts and which has worked on this issue for many years, the "do no harm" agreement appears to protect both fast-growing and slow-growing states. She cited Department of Education figures which estimated that California’s FY 2000 Title I receipts would have grown by an additional $38.3 million without a 100% hold harmless. Actual figures for FY 2001 have yet to be determined, and no legislative language is yet available for this provision.

Judiciary Subcommittee Reports Agricultural Guestworker Bill

The House Judiciary Committee’s Immigration Subcommittee favorably reported H.R. 4548 on July 27, 2000, by voice vote. The bill, the Agricultural Opportunities Act, is authored by Rep. Richard Pombo (Tracy). It would replace the current H-2A migrant workers program with a three year pilot project that would establish a ten-month H-2C visa and set up a computer-based worker registry. The bill would also establish wage rates for H-2C workers and require that housing either be provided to these workers or that they receive a housing allowance. See, Bulletin, Vol. 7, No. 20 (6/15/00).

During the markup, several amendments were offered. Rep. Lamar Smith (TX), Chair of the Subcommittee, offered three. The first, approved by voice vote, tightened the extension provisions in the bill to ensure that automatic extensions would not be granted; the second, also accepted by voice vote, would require that immigrants seeking an extension would have to apply at the U.S. consulate in their home country and show that they had been out of the United States for at least two months. Rep. Smith’s third amendment provided that all H-2C workers would have to have tamper-proof visa cards issued by the Immigration and Naturalization Service, proving their identity. Rep. Howard Berman (Valley Village) offered an amendment to the Smith amendment to require that all farm workers, including American workers, have a tamper-proof card showing their legal status in the United States. The Berman amendment was defeated 5-6, and the Smith amendment was approved by voice vote.

Rep. Sheila Jackson-Lee, Ranking Minority Member on the Subcommittee, offered two amendments. One would have added language to guarantee that the wage formula and housing allowances given in the bill to H-2C immigrants would not result in lower wages or living conditions for American workers. It was defeated by a vote of 4-6. The second would have required employers to provide housing to H-2C workers, rather than just housing allowances, if that was the prevailing practice in the area. It, too, was defeated by a vote of 5-7.

Rep. Berman also offered another amendment, which was defeated by voice vote. It would have established a fund to be used for housing, and other support for H-2C workers. Employers would pay into the fund the difference between the cost of employing H-2C immigrants and the cost of employing American or legal resident workers, where the employer is also required to make Social Security and Unemployment Compensation payments for the workers.

House Passes Bill to Raise Caps on Low Income Housing Tax Credits and on Private Activity Bonds

By a vote of 394 to 27 on Tuesday, July 25, the House passed a community renewal bill that would increase the low-income housing tax credit (LIHTC) cap over five years and speed up raising the current cap on private activity bonds. A large, bipartisan majority of California Members of Congress and both Senators have sought these changes, which would free up capital in an attempt to alleviate a serious shortage of affordable housing in the state.

The bill (H.R. 4923), would raise the $1.25 LIHTC cap by 10 cents a year starting in 2001 until 2004. The bill would then increase the LIHTC cap by 5 cents per year until it reaches $1.75 in 2006, with an index to inflation thereafter.

In addition, the bill would accelerate from 2003 to 2001 the year in which the per capita limit on the private activity bond cap would increase from $50 to $55. Under the bill, the cap would increase by $5 increments until 2004, when it would level off at $70 for three years, and then finally jump to $75 per capita in 2007. The bill does not provide for inflation indexing.

While in the late 1980s Californians built one new house for every 1.6 new workers, since 1995 the ratio is one new house for every 5.4 new workers. California contains 11 of the nation’s 25 least affordable metro areas, and the home ownership rate ranks 47th of the 50 states. Preservation of current public housing units is also a major challenge, with many Section 8 project-based subsidy contracts expiring and building owners incented to bring units into the competitive rental market.

The California Housing Consortium has provided the Institute with information to keep it informed regarding the latest housing developments.

House Passes Formula Revision for Ryan White AIDS Grants

In the wee hours of Wednesday, July 26, the House approved a bill to reauthorize the Ryan White Act and alter the formula for distributing funds under the Ryan White AIDS Emergency Relief Grants. To date, funds have been distributed based on the prevalence of actual AIDS cases in a given area; the House bill (H.R. 4807) would also include persons infected with HIV, the virus which causes AIDS. Cities with high concentrations of persons suffering from full-blown AIDS stand to lose funding unless overall dollars to the program rise.

In order to prevent a precipitous decline in funding for San Francisco and other cities with high concentrations of AIDS patients, the bill would limit the first year decrease in funds to 2% of the prior year’s amount, and assure that no state would be cut more than 25% after the five-year mark. The Senate version of the bill includes a more modest change in the funding formula.

California received $58.5 million (or more than 23%) of the nation’s $252 million in AIDS emergency relief funds distributed by formula in fiscal year 1999. According to a statement from Rep. Nancy Pelosi, who represents San Francisco, the city could stand to lose $6.5 million over the next five years if the House version prevails in conference and no new funds are added program. She stated that Congress "should be emphasizing that the solution to the continuing AIDS crisis is to increase overall funding rather than to redistribute existing dollars."

Court Orders Napster To Cease Pirating Operations

In a major win for the recording industry, the U.S. District Court in San Francisco on July 26 ordered Napster to stop operations that allow users to download and upload copyrighted material. Napster officials have stated that the order will effectively shut down the company. The Court’s injunction will remain in place pending completion of the trial.

The Recording Industry Association of American (RIAA), on behalf of its members, sued Napster for copyright violations, arguing that the company facilitates the pirating of copyrighted recordings. Chief Judge Marilyn Hall Patel agreed, and in strong language found that, in effect, Napster’s primary business purpose was to allow computer users to pirate copyrighted works. Judge Patel went so far as to state that not only does RIAA have a "reasonable likelihood" of success on the merits, but in fact a "strong likelihood." RIAA, nevertheless, agreed to post a $5 million bond should Napster prevail at trial. The injunction does not take effect until midnight Friday, July 28, giving Napster’s attorneys the chance to appeal to the 9^th Circuit Court of Appeals to stay the injunction.

RIAA’s lawyers estimated that Napster’s 20 million users have downloaded copyrighted works about 3.6 billion times to date.

Congress has held a number of hearings this year on the issue of new technology, such as Napster and Gnutella, which allows computer users to search other users hard drives and download copyrighted material for their own uses. See, Bulletin, Vol. 7, Nos. 23 (7/13/00), & 24 (7/20/00).

Senate Panel Hears Proposal for Klamath Basin Feasibility Study

On Tuesday, July 25, the Senate Energy and Natural Resource’s Water and Power Subcommittee heard testimony on S.2882, the Klamath Basin Water Supply Enhancement Act, introduced by Sens. Gordon Smith (OR) and Ron Wyden (OR). The bill would instruct the Department of Interior to conduct a feasibility study on ways to increase the storage capacity and groundwater supplies in the Klamath Basin. The basin’s territory extends over both the Oregon and California borders.

At the hearing, several witnesses testified, including: Rep. Greg Walden(OR); Robert Anderson, Counselor to the Secretary of the Interior, Bureau of Reclamation; Roger Nicholson, President, Resource Conservatory, Fort Klamath; and Jim Waltman, Director, Refugees and Wildlife, The Wilderness Society.

Rep. Walden expressed his support for storage as a means to preserve water, and reassured the committee that the allocation of stored water will be determined at a later date. He addressed concerns for the wildlife habitats in the Basin, saying that when an increase in storage occurs, there is an increase in the return flow from the field to the streams, which, he argues, benefits both the farmers and the wildlife, specifically salmon.

Robert Anderson of the Bureau testified that he supports deleting a provision in the bill, which would alter construction cost sharing, and require some non-federal contribution.

Roger Nicholson stressed the need to consider the differences between the upper basin area and the lower basin. Jim Waltman agreed, and further testified as to the need to evaluate water savings, require Congressional approval for the actual post-feasibility study project, include a proposal to improve water quality, and maintain the wildlife habitat in all regions.

For more information, contact the subcommittee at (202)244-2564 or through its website at: http://www.senate.gov/~energy .

Senate Sets Debate and Vote on China PNTR; House Approves Trade Aid Eligibility To Vietnam

Just before adjourning for the August recess, the Senate leadership took up debate on granting permanent normal trade relations (PNTR) to China, setting the stage for a final vote on the issue soon after it returns in September. In order to move forward on the bill, the Senate is expected to vote on a cloture motion to stop a filibuster. Under that motion, debate on the bill in September would be limited to a maximum of 30 hours, paving the way for a final vote on the bill. The Senate is expected to pass the bill, once the debate is ended. The House passed the bill, H.R.4444, on May 24. See, Bulletin, Vol. 7, No. 18 (5/25/00).

In other action, the House rejected, by a vote of 91-332, an effort to prohibit the Administration’s extension of trade assistance to Vietnam. The resolution, H.J.Res 99 was sponsored by Rep. Dana Rohrabacher (Huntington Beach). The Administration proposed another annual waiver of trade restrictions against Vietnam because of its failure to allow its citizens to emigrate. The President can waive the restrictions if it finds that trade with Vietnam would encourage freedom of emigration. With the annual waiver, U.S. exporters to Vietnam will be able to take advantage of limited loan and investment guarantees through the Export-Import Bank and other agencies. U.S. diplomatic relations with Vietnam were re-established in 1995 and the Administration granted the first waiver from the Trade Act of 1974 in 1998.

California currently exports about $60 million worth of goods to Vietnam annually. In 1997, the Census Bureau estimated that there were 770,000 persons born in Vietnam and living in the U.S. For the prior year, roughly one-third of the 42,000 Vietnamese immigrants admitted for that year moved to California.

House Committee Marks Up Resources Bills

On Wednesday, July 26, the House Resources Committee marked up a number of bills, including four that will directly impact California. H.R. 4847, introduced by Rep. Cal. Dooley (Visalia), would direct the Secretary of the Interior to refund certain amounts received by the United States pursuant to the Reclamation Reform Act of 1982. Mr. Dooley’s bill was reported by the Committee with unanimous consent.

The Committee also approved, by voice vote, two amendments to H.R. 2798, the Pacific Salmon Recovery Act, introduced by Rep. Mike Thompson (St. Helena). The Act would provide funds for the conservation and restoration of salmon and salmon habitats in Idaho, Alaska, California, Oregon and Washington. One amendment, by Rep. Peter DeFazio (OR) would expand the definition of salmon so that Lahontan cutthroat trout and Bull trout would be included in the act in Oregon. Another technical correction was made by Rep. Don Young’s (AK) amendment.

The Lake Tahoe Restoration Act (H.R. 3388), as introduced by Rep. John Doolittle (Rocklin), was also reported favorably to the House on Wednesday. The bill seeks to improve the environment around Lake Tahoe by restoring the Lake’s clarity, eliminating methyl tertiary butyl ether (MTBE), and developing a restoration priority list with the consultation of the Tahoe Regional Planning Board.

The Committee also approved Rep. Tom Lantos'(San Mateo) Golden Gate National Recreation Area Boundary Adjustment Act (H.R. 3632). The bill would expand the boundaries of the area by 1,000 acres: 900 from San Mateo County, 95 acres from Marin County, and 2 acres in San Francisco. The land would partially be donated by local governments and conservation organizations.

For more information, contact the House Resources Committee at (202) 225-2761 or via their web site at http://www.house.gov/resources .

Agricultural Pest and Disease Update: Sen. Boxer Amendment Blocks Argentine Citrus Entrance into U.S.; New Certification Regulation and Genetic Research On Pierce’s Disease

On Friday, July 21, the Senate passed an amendment offered by Sen. Barbara Boxer to prohibit the U.S. Department of Agriculture (USDA) from allowing citrus products to be brought from Argentina into the United States, contingent upon an "independent peer review of the [final] rule and the risk assessment underlying the rule." Sen. Boxer offered the amendment because of concerns that Argentine imports may bring in pests and other diseases that could further damage California’s citrus industry.

In related news, the California Department of Food and Agriculture (CDFA) has imposed a new regulation on the eleven counties infested with Pierce’s Disease. Any bulk grape shipments or nursery stock originating in one of those counties will require a certificate assuring recipients that the shipments are free from the glassy-winged sharpshooter. The Wine Institute and the California Association of Winegrape Growers both support the regulation.

Another immediate solution to lessen the impact of the disease is currently in the works at the University of Riverside. The USDA will decide in the near future, whether or not a non-stinging parasitic wasp specie is safe to breed and release in California. The wasps lay eggs in the Sharpshooter’s eggs, destroying them before they can hatch. A distribution of egg-fighting wasps could be introduced as early as this summer.

As a long term solution to the disease, scientists are making some progress. UC Davis scientists are breeding new grape strains and evaluating patterns in the DNA of grapes to develop a plant that would be resistant to the disease. Other researchers are mapping the strain of DNA that causes Pierce’s Disease, Xylella. Mapping will hopefully lead researchers to the genes that enable Xylella to kill plants, so that future antibiotics can be developed to help combat the disease.

Collaborative R&D Site Preference Announced for UC Santa Cruz Silicon Valley Center

The University of California, Santa Cruz (UCSC) has announced that NASA Ames Research Park is a preferred site for the planning of the Silicon Valley Center, a research and development center for graduate and undergraduate students. The effort will include higher education collaboration with UC Santa Cruz, San Jose State University and Foothill-De Anza Community College District and research focused in the areas of biotechnology, nanotechnology, planetary sciences, astrobiology, social justice, education, labor and economics.

UCSC Chancellor M.R.C. Greenwood commented that "NASA’s innovative vision for a research complex that emphasizes synergy among participants is compatible with our campus’s goals."

Funds for planning the center have been included in the state budget — $1.1 million in 2000-01. In spring of 2001, UC Regents will consider the final planning and offer a final proposal for the Silicon Valley Center in order to begin construction. They hope to enroll students in 2003.

For more information, contact the UCSC Public Information Office at (831) 459-2495, the U.C. Washington office at (202) 588-0002, or visit the UCSC Silicon Valley Center website at http://svcenter.ucsc.edu/ .

NALGEP’s Air Quality Report Profiles Include Three California Cities as Positive Examples

On Wednesday, July 26, the National Association of Local Government Environmental Professionals (NALGEP) showcased their latest report, Profiles of Local Clean Air Innovation, Empowering Communities to Meet the Air Quality Challenges of the 21^st Century. The report focuses on the role local communities play in improving environmental quality, while recommending ways to better establish partnerships with municipalities and the federal government. In the last section, the report profiles local governments’ efforts to improve air quality, enhance intergovernmental communication, promote smart growth, and increase the use of clean energy.

NALGEP found that local governments are beginning to play a significant role in air quality improvement, reaching beyond the Clean Air Act mandates. Yet, the report indicates that they would benefit from regional air partnerships in order to better accomplish their goals. The report also recommends that the Environmental Protection Agency (EPA) establish a federal fund under Section 103 of the Clean Air Act for local clean air demonstration projects; the Department of Transportation (DOT) issue rules to prioritize Congestion Mitigation and Air Quality (CMAQ) funding for local air improvement projects over road-upgrade projects; and the EPA and states establish regional clean air partnerships at the metropolitan level to coordinate air monitoring across boundaries.

Santa Barbara, San Francisco and Santa Monica are profiled in NALGEP’s report as positive examples of collaboration. A Santa Barbara initiative encourages visitors to travel to and around the city through various means with new bike paths and walkways, as well as an electric bus system. Santa Monica has implemented a "Sustainable City Program" which includes a 1999 decision to enter into contracts with utility companies to purchase 100 percent geothermal energy to power all city facilities; this project and others could reduce greenhouse gas emissions by 11,090 tons over the next ten years. San Francisco has established a Transportation Fund for Clean Air (TFCA) which includes a vehicle buy-back program, air quality campaign, vehicle incentive program, and a "smoking vehicle" project to lessen car emissions.

For more information, contact NALGEP at (202)638-6254 or [email protected] .

LAEDC Releases 2000-01 Economic Forecast

The Los Angeles County Economic Development Corporation (LAEDC) predicts how California’s economy will fare next year in its 2000-2001 Economic Forecast & Industry Outlook for the Los Angeles Five-County Area. With the American economy in its 11th year of expansion and the "strongest world growth in a decade," the report states, the California economy also shows vitality as it moves into its fourth year of economic growth. Job growth will slow to 2.8 percent, with the state’s unemployment rate at 5.1 percent in 2001, indicating what they believe is "an end to the wealth effect in the dot-com sector."

LAEDC also compares the gross products of California, Los Angeles County, and the five-county area of Los Angeles with other countries. The United States ranks first with a 1999 Gross Domestic Product (GDP) of $9,256 billion. California ranks sixth, with a GDP of $1,171 billion; Los Angeles-five county area ranks 11^th with $536 billion; and Los Angeles County alone ranks 16^th with a GDP of $310 billion.

According to the report, Los Angeles County’s economic growth will slow in the second half of 2001. While public projects under construction, such as the Alameda Corridor, will help the economy, job losses in aerospace and apparel may add to the slowdown. LAEDC also notes the importance of the Census count, as it will determine somewhat future funding for the area.

Orange County has enjoyed solid growth in 2000 with the expansion of the convention center and the anticipation of two Disney park openings in the fall. Housing prices, freeway connection, and the debate over the El Toro facility, however, could prove to be negative forces in the area’s growth.

Riverside-San Bernardino will continue as "Southern California’s growth leader" through 2001. LAEDC speculates that the area’s easily developed land, expansion of Ontario Airport, and burgeoning technology sector will help it maintain its growth. Total personal income growth is predicted at 8.8 percent in 2000, and 7.1 percent in 2001.

Ventura’s economy also looks favorable, with technology propelling its growth. High housing costs may become a problem for its tech sector as well as the tourism industry, however.

Overall, the report predicts that international trade and tourism will be two of the driving forces behind California’s economy.

For more information, contact the LAEDC at (213)622-4300 or their web site: http://www.laedc.org .

Home Prices Continue To Rise; Nation’s Priciest Markets in California

According to the California Association of Realtors (CAR), California’s single family home sales and prices have continued to increase, with total sales climbing in June 2000 by 0.8% and prices rising by 8.7% compared to June 1999. However, when comparing June with May 2000, prices were up 1.4% while sales volume was down 3.1%.

Within California, every region’s prices were up over one year prior. Reports were mixed, however, in comparing May with June. Increases were strongest in the Ventura area, where prices were up 11.7% over May and 33.5% over June 1999. On the other hand, Monterey saw a 12.9% increase over a year prior, but a 9.6% decline from the previous month. Increases were evident in Orange, San Bernardino and Riverside Counties as well as the Northern wine country, San Luis Obispo, and the San Francisco Bay area. Mixed results (rises over 1999 but declines from May) took place in Los Angeles, Palm Springs and San Diego.

For more information, refer to CAR’s website at http://www.car.org/newsstand/news/jul00-4.html .

In other real estate news, Coldwell Banker’s 2000 Home Price Comparison Index considers Palo Alto to be the country’s most expensive real estate market, with an average home price of $974,237. According to the survey, there is an $870,597 price difference between Palo Alto and Mt. Pleasant, Michigan, at $103,640 the nation’s most affordable housing market.

Eight of the top 10 most expensive markets were in California, while seven of the 10 most affordable were in the Midwest. California areas surveyed with prices above $500,000 included (in descending order) Palo Alto, Beverly Hills, San Mateo, La Jolla, San Francisco, the Hollywood Hills, Fremont, the Monterey Peninsula, Newport Beach, Pleasanton, Palos Verdes, San Rafael, Oakland/Montclair, Santa Barbara, and Pasadena. Only three areas surveyed were listed with an average price below $200,000: Bakersfield, Fresno and Riverside/Ontario. California prices are available on the California Institute website at http://www.calinst.org/datapages/constre/homepric.htm . Survey comparisons were based on an approximately 2,200 square-foot single-family home with four bedrooms, 2.5 baths and a garage.

The complete database is available at http://www.coldwellbanker.com/html/PriceCompare.htm . In addition, the CAR website provides extensive statewide price information at http://www.car.org .

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