We take a look back at the top stories of 2009 in our
community.
City staff contend with layoffs, furloughs in 2009
Anyone looking for evidence of the dire state of the economy in 2009 needed to look no further than the City of Gilroy. The year kicked off with more than 48 layoffs among city staff in February as part of $3.8 million in cuts that the City Council approved in 2008.
The city’s financial woes reflected those of the community, as Gilroy’s unemployment rate peaked at 17.8 percent in July before dropping to 17.2 percent in December. That rate remains the highest in Santa Clara County, according to the state Employment Development Department. By contrast, Morgan Hill’s unemployment rate is 14.9 percent, and the rate in Los Altos and Saratoga is only 6 percent.
One of the city’s largest employers, Gilroy Unified School District, will likely have layoffs this year, Gilroy Teachers Association President Michelle Nelson predicted earlier this month. Currently, the district receives $1,071 from the state for every kindergarten through third grade student enrolled in a class of 20 or fewer students. Reorganizing those nearly 3,500 students into classes of 25 could help the district cut 35 teaching positions. Boosting the class sizes to 30 students would slash nearly 60 positions.
Meanwhile, economic struggles prompted Gilroy’s City Council to freeze annual merit raises for all employees in March, but three months later, the Council approved contracts with the city’s five bargaining units that reinstated employees’ merit pay of up to 5 percent for fiscal year 2008-09. The council also decided in October also to reinstate past merit raises for City Administrator Tom Haglund and City Clerk Shawna Freels who are not union members. Freels received a $4,745 raise, bumping her annual salary up to $99,653, while Haglund received a $9,950 raise to make his salary $208,950. However, like all employees who took 10 percent pay cuts due to furloughs, Haglund and Freel’s actual yearly salaries will total $189,662 and $90,454, respectively, through June 2011.
All city staff will forego pay raises during the rest of this fiscal year, and mandatory furlough days have resulted in a 10-percent pay cut for workers.
Despite the fact that the city and the unions all reached agreements this year, several union officials have indicated they were not pleased with the deals. Tensions were particularly apparent among the police and fire unions.
Gilroy Police Officers Association President Mitch Madruga stated in a mailer in July that the council should “cut its own benefits, stop spending millions on amusement parks and real estate developer bailouts, and consider using a small portion of the city’s taxpayer-funded reserve to make it through this budget crisis.”
Union leaders have advocated for spending more money out of the city’s general fund reserves, which amounted to $18.9 million as of June 30, or 55 percent of general fund expenditures, according to City Finance Director Christina Turner. However, several council members have said that money should be available for major emergencies, such as fires and earthquakes. Turner also noted that the $18.9 million figure does not account for deficits in various city funds.
Gilroy’s Police Officers Association issued a “no confidence” vote in Mayor Al Pinheiro in July and officers on their own time have circulated a mailer critical of the council. Challenges facing the police department spurred local activist Mark Zappa to say he was going to launch a recall campaign to oust Pinheiro. The recall has not materialized, but Zappa said in early November that he plans to collect more signatures to put the recall to a vote at a later time.
Similar to police union efforts, Local Fire Fighters 2805 also took up an informational campaign against the city after the fire department began in November to close down the Sunrise Fire Station. City officials said that firefighters agreed to the “brownouts” at Sunrise, while union officials said they only acknowledged that the city had the power to close the station. In early December, the city began holding talks with the union to discuss ways of keeping Sunrise open.
Although it’s been a challenging year, City Finance Director Christina Turner said the city should be in better financial shape during the next fiscal year because of cuts made during this past one.
“Hopefully, we’ll be able to weather the economic storm,” Turner said.
Gilroyans faced home loan challenges in 2009
Gilroy resident Rose Barry has spent hours on the phone, even contacting people in other countries, all in the quest of obtaining a home loan modification. Barry’s husband lost his job earlier this year, and if they cannot get their loan modified, they will have to consider renting their home and moving to a smaller place or risking foreclosure.
“It has been a very curious process,” Barry said.
Barry’s story is not unique. Real estate industry representatives said it has been particularly challenging to obtain a home loan in 2009, while foreclosures are still going through the roof.
Project Sentinel, which aims to prevent foreclosures in San Mateo, Santa Clara and Stanislaus counties, handled 1,203 cases this year, up from 342 cases in 2008, said Martin Eichner, director of the agency’s HUD housing counseling. In 2007, the group only handled 84 cases, Eichner said.
People who are losing their homes in 2009 are experiencing the second wave of housing foreclosures, he said. The first wave, which struck a couple of years ago, wiped out those who had subprime loans, with terms that Eichner described as unconscionable. More recent victims often find themselves already underwater and then a job loss pushes them into foreclosure, Eichner said. Gilroy has suffered during both periods, he said, noting that most foreclosures in Santa Clara County have occurred within proximity of Highway 101, where the county’s cheapest housing stands.
Gilroy has had a disproportionate number of foreclosures for its size, Eichner said. The city had 141 foreclosures in November while Santa Clara County’s total was 2,276. The county had 1,725 foreclosures in November 2008, according to foreclosure listing service RealtyTrac.
Customers who face foreclosures have varying stories, but many of them have similar tales about the banks.
One northwest Gilroy resident, who would not give his name, noted that he bought his house in the mid-$200,000 range about 11 years ago, but then he refinanced with a subprime loan about 3-1/2 years ago.
He struggled to get a loan modification when it appeared that his payments were going to balloon from about $3,760 to $4,200 per month. His mortgage had been sold multiple times, ultimately landing in the hands of City Mortgage. He successfully negotiated lowering his monthly payment to $3,100, but now even that has become too much to bear, as he lost his job earlier this year.
While he maintains hope that he will hold onto his house, he noted that others in his area have not been so fortunate.
“In our community, if I went for a five or six block walk, I bet there would be at least one to two homes on every street that either someone walked away from or someone lost their house,” he said.
Barry also has held onto her home, although she has been unsuccessful in getting her loan modified through Bank of America since June. After she and her husband spent one to two hours each week for several weeks trying to get in touch with the right person, she said the bank sent her husband a letter denying approval because the bank had unsuccessfully tried to reach them by phone. Barry does not recall receiving a single call from the bank.
“They’re unbelievable,” she said. “I don’t know how they can sleep at night.”
Sheila White, a real estate agent with Starritt Realtors, has worked with Barry to help obtain a loan modification, and she said they have put in more than 20 calls to Bank of America.
On one occasion, Barry said she even talked to someone from Costa Rica. She expressed shock that federal bailout money that was given to lending institutions was being spent on hiring employees overseas.
“The need is enormous, and the generosity of the banks with our money is nil,” she said.
Rich Simon, a spokesman for Bank of America, noted that the bank had done 160,000 trial home loan modifications as of November and was expected to do 200,000 by the year’s end.
“It’s impractical for us to assign someone to every one of these customers,” he said.
The Costa Rica call center generally deals with Spanish-speaking customers, he said, although calls can be transferred to various offices if one particular call center is busy.
In order to qualify for a modification, customers must have financial problems that will likely cause them to lose their home but who still make enough money that they will be able to make payments after the loan is approved, Simon said.
“It’s not something where the government is easily convinced,” he said.
Meanwhile, White said Wachovia is the only lender she has dealt with that seems to have processes in place to work with clients effectively.
Terri Schrettenbrunner, a spokeswoman for Wells Fargo, which runs Wachovia, said that bank officials knew that there was public concern when it acquired Wachovia in December 2008 because Wells Fargo had no experience with negative amortization loans. As a result,the bank created a group to manage those loans. Wells Fargo and Wachovia now have 15,000 people who are focused on home retention, and all of them are based in the United States rather than overseas, Schrettenbrunner said.
She noted that banks face plenty of challenges, including keeping up with the volume of customers who need assistance and changes in federal guidelines. Consumer experiences are also changing, Schrettenbrunner said, as there are now more people who are unemployed or underemployed.
Still, she said 92 percent of Wells Fargo and Wachovia customers are up to date on paying their mortgages, and it appears that mortgage relief programs are working.
Others within the industry say that it is extremely difficult to qualify for loan programs these days.
David Hart, owner of Hometown Realty and Gilroy Mortgage Co., said things have gotten so bad that he has given up on home loan modifications.
“It’s a nightmare,” he said.
Banks generally seem to look for reasons not to approve loans, and they often do not believe appraisers, Hart said.
Many homeowners who owe twice as much as their homes are worth are tempted to walk away from the property. Meanwhile, the homes that sell are often bought by people who already have cash in hand.
“Investors are the ones who are keeping the market alive,” Hart said.
Susan Jacobsen, another real estate agent at Starritt Realtors, said she has never seen a market that is this bad.
“We’ve seen cycles like this before, but nothing like this,” she said.
On the other hand, it is potentially a good time for first-time home buyers, Jacobsen said, noting that products such as FHA loans can be helpful. Several members of the real estate industry also mentioned that new home buyers can get an $8,000 tax credit as a benefit.
Jacobsen urged new home buyers to be wary of purchasing foreclosed homes, as they can come with tax liens and property damage among other problems.
Patty Filice of Intero Real Estate Services said there are great deals to be found if buyers are willing to wait through the short sale process.
Looking ahead, what happens with the market next year all depends on interest rates and unemployment trends, Schrettenbrunner said. And ultimately that’s anybody’s guess.
In the meantime, homeowners and the real estate industry face many challenges.
In the words of Hart: “It’s just going to take a little time to heal.”
CRIME
Cardinalli case
The patriarch of a family of tow truck operators accused of manipulating courts to defraud hundreds of motorists spent 2009 in a jail cell. But he’ll get his day in court in 2010.
After a grueling, two-month preliminary hearing, Vincent Cardinalli, 66, his son Paul Greer – formerly Vincent Cardinalli, Jr. – Greer’s sister, Rosemary Ball, and her husband, Michael Ball will stand trial for their alleged crimes.
After stumbling thorough his preliminary hearing without an attorney, Cardinalli recently secured a lawyer to represent him for trial. He and his family face 158 counts of conspiracy, forgery, perjury, attempted grand theft and other felony charges stemming from a tow-and-sue scheme they used to turn their towing and collections businesses into a gold mine, according to court documents.
The charges stem from Cardinalli and his associates filing more than 2,000 small claims lawsuits in San Benito and Santa Clara counties, according to an investigation conducted by the Santa Clara County District Attorney’s Office.
Attorneys expect the trial to last several months.
Martinez murder arrests
Taking unprecedented steps to crack down on gang violence in Santa Clara County, District Attorney Dolores Carr charged both sides involved in a deadly gang shooting with murder, even those who were friends and relatives of the victim.
Suspected Norteño gang member, Larry Martinez, 18, was shot down just blocks from the Gilroy Police Department in November 2008. Two of his best friends, Angel Solorzano, 20, and Robert Barrios, 20, and his cousin, Heather Ashford, 19 – none of whom fired the gun that took his life – now face life sentences. The fourth defendant is a suspected Sureño gang member who police believe may have been the one to fire the gun. Invoking the provocative act murder theory, Carr charged both sides of the altercation.
“They’re all accountable for being members of violent criminal street gangs and provoking this kind of deadly response by going after each other,” she said earlier this year.
Just before the shooting, three Sureños – Cristian Jimenez, 21, who is in custody, and two others who are still at large – threw a rock at the car Martinez rode in with his cousin and a friend. Martinez and his companions picked up another friend and returned to confront the Sureños with a baseball bat. The Sureños turned and fired, killing Martinez on the spot.
The defendants are currently awaiting a date for their preliminary hearing.
Aloha Club murder
The brazen, execution-style murder of 47-year-old Andres Cebreros at the Aloha Club last April went unsolved as police had little to go on other than a sketch of the hooded suspect.
Cebreros, a man with a wife and two children, sipped water and played pool at the Monterey Street bar the evening he was shot in the head at point blank range. Only a few people were inside the bar when the shooter walked up to Cebreros and shot him dead without a word.
Police believe the shooter targeted Cebreros specifically and did not deem the homicide bar- or gang-related, unlike the three murders that occurred in 2008. Cebreros’ marked Gilroy’s only murder this year.
Rape of 13-year-old
Bizarre details emerged around the 13-year-old girl who was allegedly raped by two homeless men in Christmas Hill park in November.
Cresencio Evarado Blas, 29, and Benancio Quinones, 49, tied the girl up and raped her in a makeshift tent near the Uvas Levee after befriending her and providing her with cocaine, marijuana and alcohol, according to the police report. She returned to the men later that night in search of more drugs and was again raped by the two men, according to the police report.
Police arrested Blas and Quinones on multiple sex and drug charges. The two men are currently in custody with $1.2 million bail each and are awaiting a January plea hearing.
Rape advocates were careful to make clear that a juvenile cannot consent to sex, no matter the details of the case.
BLUNDERS
MACSA
After months of debate, the Gilroy Unified School District shut the doors of its only charter school this year, a decision that brought tears and protest from many students and staff.
A GUSD investigation revealed that El Portal Leadership Academy, a charter school operated by the Mexican American Community Service Agency, didn’t have the financial or academic stability to stay afloat. Further scrutiny by the Santa Clara County Office of Education verified the nonprofit’s flailing finances: it owed its El Portal employees $140,000 and an additional $268,000 to its employees at Academia Calmecac, a San Jose charter school. Instead of directing that money into its employees’ retirement accounts, MACSA staff used it to pay operating expenses.
Since those investigations, the agency has experienced a complete overhaul, said Maria Elena De La Garza, MACSA’s interim chief executive officer. Much of the money has been repaid, former Chief Executive Officer Olivia Soza-Mendiola resigned June 30 and former Chief Financial Officer Ben Tan is also no longer employed by MACSA. Still, the county forwarded its findings on to the District Attorney, who will decide whether or not to file criminal charges.
Bond mishap
Residents may have received a tax break this year but will end up paying extra over the next two years to make up for a mistake made by the school district.
The Gilroy Unified School District didn’t collect about $6 million in Measure J property taxes this year because of a paperwork error. That mistake jeopardized the district’s ability to pay a $5.4 million debt and threatened the district’s credit rating. School board members considered sending out a corrected tax bill, but opted to borrow about $3 million from the county and pool some of its own funds to cover the debt and wait until next year to recoup that money from the taxpayers.
Over the next two years, taxpayers will pay up to $105.70 per $100,000 of assessed value in Measure J taxes, as opposed to the $70.50 per $100,000 rate they were used to.
Following the flub, the district placed Keiko Mizuno, the former director of fiscal services, on paid administrative leave for more than 50 days before she resigned. She was placed on leave due to various mistakes at work, officials said.
Water district suit
Despite a Superior Court decision that ruled certain local groundwater charges unconstitutional, the Santa Clara Valley Water District continued to send out bills as the year wound down.
Great Oaks Water Co., a San Jose company, sued the Santa Clara Valley Water District for a full refund of about $4.6 million in groundwater charges the water retailer paid to the water district in 2005-06. A San Jose judge found the water district’s charges to be in violation of Proposition 218 because they were not approved by the voters. Based on that ruling, some residents refused to pay their bills, claiming they are owed a refund like Great Oaks. The City of Gilroy will continue to pay its water bill while it waits for the “dust to settle in the Great Oaks lawsuit,” Councilman Perry Woodward said.
The hope is that the strength of the decision in the Great Oaks case will allow Gilroy to reach a settlement with the water district, Woodward said. He estimated the value of the city’s refund to be more than $5 million and possibly closer to $10 million.
Whether Gilroy recoups that money remains to be seen.
TRAGEDY
Sarah Botill
Tragedy struck Gilroy on Dec. 5, when 15-year-old Sarah Rose Botill died after a night of drinking vodka and sparkling cider with two friends during a birthday sleepover.
Toxicology results are still pending, but police indicate that Botill died from pulmonary vascular congestion with mild edema, and her condition may have been alcohol-related.
Few local deaths in recent memory have garnered so much attention, with news crews from throughout the Bay Area coming to Gilroy to report on the story.
The incident was particularly sensitive because it took place at the house of former Gilroy City Councilman Roland Velasco, who works as a policy aide for Santa Clara County Supervisor Don Gage, and because Botill was the daughter of Gilroy firefighter Mike Botill.
The girls stopped at the home of a Gilroy police officer that evening, where police said the officer’s son removed a beer from Botill’s hands after she took it from the refrigerator.
Police say Velasco and his wife, Lisa, were sleeping when the girls were drinking, and that 18-year-old Kayla Dunigan had snuck in the vodka from her father’s home. Police say it is unclear whether Dunigan or the
16-year-old whose birthday was being celebrated that weekend will face charges.
Communities United in Prevention seized on the incident as an opportunity to teach a lesson about the dangers of teenage alcohol consumption during a Dec. 16 candlelight vigil conducted in Botill’s honor. Regardless of what toxicology results ultimately reveal, Gilroy High School attendees say the incident has caused at least some fellow students to reevaluate dangerous drinking behaviors.
MILE MARKERS
Swine flu fears
Faster than the H1N1 virus could spread around the globe, information of a deadly pandemic hit communities worldwide. The severity of the virus was not well known, but its particular danger to children – a departure from the traditional flu – was documented and world leaders prepared for the worst.
In Gilroy, swine flu fears struck close to home, sickening several children at Rucker Elementary School in the north of the city. The school closed for a day in late April, but reopened the following Monday – a scene that was being played out at schools across the country. Several people died in Santa Clara County and scores more died nationwide, but within a month, swine flu fears largely subsided, and the city was quiet for the summer.
However, the spread of the swine flu flared back up as school started up again. Six students fell ill at Ascencion Solorsano Middle School in mid-September, and schools showed increased absenteeism throughout the first few months.
Yet, by the fall, residents and world leaders had a much better sense of the danger the virus presented. It still had the ability to kill children, but most children survived unscathed, though certainly they were miserable for at least a few days. The Gilroy Unified School District and local health centers encouraged sound sanitation practices while Santa Clara County fought for its fair share of the limited vaccines being manufactured by the federal government. By winter, many of the high-risk residents – including pregnant women, health care workers and infants – had received the vaccine, and the federal government was making promises of more vaccine shipments in the near future.
Phone system sabotage
The phone lines were cut. Internet was down. Long lines formed at banks where employees and police only let one person in at a time for security concerns. And residents everywhere felt stranded, unable to contact family members or work colleagues. With one late night act of sabotage in early April, Gilroy came to a screeching halt, reminding everyone how much they rely on technology.
An unknown number of saboteurs cut 10 underground fiber optic cables in San Jose and San Carlos early in the morning on April 9, causing Internet access and 911 service to drop throughout southern Santa Clara County, along with ATMs, cell phone texting, cable TV and land line service.
The city opened its Emergency Operations Center and distributed information about emergency contacts early in the morning. Meanwhile, residents got used to a cash-only economy, as businesses were unable to use credit card machines to process transactions. To the relief of city leaders and residents, no major crimes occurred, and most services were restored by 8 p.m.
While multiple law enforcement agencies – including the FBI – have been working on the case, and AT&T has offered a $250,000 reward for information leading to the arrest and conviction of the person or people responsible for the sabotage, there have been no arrests related to the incident.
Medical marijuana dispensary
It seemed like the idea of a medical marijuana dispensary in Gilroy was dead. But then, like a weed poking through the concrete, one day in early November, MediLeaf established itself as Gilroy’s first and only cannabis collective. Now, the two entities have embroiled themselves in a legal debate that could prove lengthy and costly.
The Gilroy City Council first encountered dispensary co-directors Batzi Kuburovich and Neil Forrest back in June, when they applied to open their business and Police Chief Denise Turner quickly rejected it for violating federal law. The council then asked staff to draw up possible local regulations for dispensaries, but then rejected these regulations, effectively barring dispensaries citywide.
That didn’t stop Kuburovich and Forrest, who opened a collective at 1321-B First St. – between Rock Zone and Antdawg Universal Strength Headquarters – without a business license. The store immediately became a focal point of the community and region. Cannabis users swung by to check out the operation, television crews from around the Bay Area stalked the business all day and curious residents drove past just to get a glimpse.
The city soon served MediLeaf with a cease-and-desist order, which spurred a legal battle that has already cost the city about $37,000 and will likely take many more months, council members said. The issue has divided council members, three of whom boycotted a closed session discussion of the issue because they feared it violated state and city open government laws. In two opinions, judges have agreed with those council members, pointing to these closed session violations as reasons not to shut down the dispensary just yet. Councilman Perry Woodward, who boycotted the closed session, has cited this as an example of continuing poor legal advice from the city’s hired law firm and has demanded a refund of the $37,000 the city has spent on legal aid since the dispensary debate began.
City residents have also been divided on the issue. The dispensary claims to have more than 600 members, including 300 Gilroyans, and brings out dozens of supporters to council meetings to extoll the virtues of medical marijuana. On the other side, Ron Kirkish, a local activist and unemployed engineer who has built his reputation on the comment boards below Dispatch Web articles, has led opposition against the dispensary that includes church leaders, school parent club presidents and local businessmen.
The city and dispensary are expected to continue to battle out issues of whether the collective violates city code in a trial some time next year.
GAME CHANGERS
