Association for Govermantal Leasing and Finance

Mark Speros, Director of the Broker Division of Landmark Financial Corporation, Englewood, CO, started his checkered career in the equipment leasing industry in 1965 with Portland, OR based Industrial Leasing Corporation, starting as “Administrative Assistant” and rising to the position of Senior Vice President – Operations.

Between then and now, Mark has worked, primarily in Operations or Marketing functions, with EF Hutton Credit Corporation, Colonial-Pacific Leasing, Denrich Leasing, a subsidiary of Fleet Bank, Granite Financial Corporation (pre FNF Capital), Centerpoint Financial, and was a partner with the lovely and talented Claude Elmore in Seacoast Capital Corporation, a lease broker company in Portland.

Two points to ponder based on the above; (1) Speros obviously can’t hold a job; and (2) Speros is to leasing what Typhoid Mary was to Public Health. Note that NONE of his prior employers are still in business. Landmark, being a “current” employer is still in business and doing very well, thank you.

Landmark Financial, a 22 year old Denver based self–funded direct lessor, started a broker funding division in January, 2001, and acts as a funding source for a limited number of leasing brokers nationwide.

When not actively harassing his broker network, Speros and his faithful companion Barney (a Beagle) spend their time girl watching (not touching, just watching), cruising the Rocky Mountains in a Saab convertible (top down at 60° F or above), and doing his Bob Villa impression around the homestead.

Those wishing to be added to Speros’ Christmas list can contact him at Mark@LFCINC.com or by phone at 800-430-9713, Ext. 23

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Classified---Help Wanted

Credit: Equipment finance & leasing company in NYC looking for processor with credit exp. Will handle credit, documentation and funding of loans/leases.

email:sgramaglia@easternfunding.com

Sales: Small ticket leasing reps, General equip. & medical, Municipal Vendor leads are provided.

Fred St Laurent freds@bwresults.com

Sales: National: 7 offices Medical & IT/ plus. Seeking professionals w/solid book of business & high ethics. Exceptional support & commissions. Expenses paid. 616-459-6800 Email: gsaulter@chaseindustries.com "UAEL"

SALES: Lessor/Broker seeks experienced small - mid ticket reps (IT, Furniture, Telcom, Medical and General), 2 in CA, 2 Nationally and 2 in NE. Must have a book of business. Qualified Vendor leads available, strong commission & support, Draw and benefits. Call 617-641-9628 ext.11 or email MarkG@IntegrityLeasing.com

Sales: LCA is a national equipment leasing company seeking results-oriented, qualified sales professionals with outstanding performance in the lease industry. We offer competitive salary, commissions and benefits. Fax: 248-524-0267 email: kbernia@leasecorp.com

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Menzel/Merrilees to CLP Board/ Davis New President

The Certified Leasing Professional Foundation is very pleased to announce the results of its first two elections.

1. Board of Directors Election: Two new directors have been elected to serve on the Foundation's Board from January 7, 2003 through December 31, 2004. These new Directors are Paul Menzel, CLP with Santa Barbara Bank & Trust and Jim Merrilees, CLP with NetBank Capital.

2. Election of New Officers: The following new officers were unanimously elected by our Board of Directors on January 16th and will serve in their new positions for one year

President: George J. Davis, II, CLP with Fortune Financial, Inc.

Vice President: James G. McCommon, CLP with McCommon Leasing

Company

Secretary: Bruce J. Winter, CLP with FSG Leasing, Inc.

Treasurer: Nancy A. Geary, CPA, CLP with Edwin C. Sigel, Ltd.

The Board of Directors would also like to welcome John Winchester, CLP with ComCo Equipment Leasing Group who has been appointed by NAELB to serve for one year.

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The CLP Foundation is the official governing body for the Certified Lease Professional ("CLP") Program. The CLP designation sets the standard for professionalism in the leasing industry. This designation identifies and recognizes individuals within the leasing industry who have demonstrated their competency through continued education, testing and conduct. The letters "CLP" behind their name represent a visible recognition of this professional achievement and status.

For further information about the CLP Foundation and the CLP Program please contact:

Cindy Spurdle, Executive Director

CLP Foundation

PH: 610/687-0213

FAX: 610/687-4111

Email: cindy@clpfoundation.org

www.clpfoundation.org

We have 231 CLP's with 212 who are currently active.

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Leasing News 2002 Complaints Bulletin Board Year-End Report

by Christopher Menkin, editor/publisher

Over $300,000 was returned to leasing applicants from “advance

rentals” or “deposits,” primarily from leasing discounters or brokers

with “private label” non-recourse lines of credit.

In the year 2002, Leasing News received 237 complaints sent for the Bulletin

Board. We received so many, we changed the name on the tool bar to “Complaints Bulletin Board. “

Our Web Trend report on visitors to our website www.leasingnews.org shows

“The List,” number one, followed by “Archives,” people doing a search for

a subject or past article, and “Complaints Bulletin Board” is the third most

visited.

The original concept in early 2000, was to put an automatic “post” program

on line, but at the insistence of Leasing News Advisor Bob Teichman, we

“screen them,” getting all sides. I am glad we did that. Not just for

legal reasons, but we have been able offset the poor reputation being

made by the few...and get “advance rentals” returned.

Several states have laws regarding “advance rentals,”

but the reality is, when it is less than $1,000, or even a few thousand

dollars, business people don’t have the money to hire an attorney to

pursue their claim. Many have been $10,000 or more, but the business

decision is not to spend $5,000 to chase money they believe they

will never see again.

If there is one observation to make, almost all have made complaints

to the Better Business Bureau. The BBB has been a good source to learn

about how many complaints have been filed against a leasing company Unfortunately, the BBB has no “police” authority. If many of the

businesses were to check out BBB first, they would save a lot

of cash, avoid the frustration and disappoint of not only not getting

a lease for several months, but realizing they had been had.

In almost every case reported to law enforcement, action has been taken, especially when the applicant follows up with the original report. Most people think it is not fast enough. They report if it were “big money,” the law

would make it a higher priority to prosecute. While this may or may not

be true, local law enforcement does follow up. In different states, the

state attorney general’s office are not only active on these complaints,

but have a lot of experience in handling them. The FBI gets involved on the large cases. One thing for sure, once funding sources and others read the

complaint posted in Leasing News, they become very leery about doing business with the broker or leasing company. For this reason alone, Leasing News has been able to get many “advance rental” returned..

We were able to have send back over $300,000 in advance rentals or deposits, some from two companies who eventually made the bulletin board. Only

13 companies were actually listed in 2002. If the money is returned, there is no complaint. 31 the applicant or lessee had signed a commitment letter or paper

(one where we had many complaints, including form ex-employees

and salesmen, had applicants sign a form that any money advance

would not be returned for any reason. Whether this would be legal

in many states, the fact is the applicant was aware they would not

get their money back.) Over two dozen or more were “civil disputes,”

meaning both sides had issues that did not make it clear to us that

the complaint was legitimate. Several we directed to contact

the lessor, or superbroker, or person who made the original commitment.

A few were real disputes, we called a “civil matter,”

meaning for a court or legal arbitrator.

MSM Capital we were able to get back almost $80,000 in advance

rentals before the company filed bankruptcy. In the beginning, MSM

Capital President Michael Cingari said it was his bookkeeping department

or a mix-up in communications, but after about a dozen, it became

clear it was not. The bankruptcy showed creditors owed $1.2 million in advance rentals.

GSC Capital is listed on the Complaints Bulletin Board, the founders of this company have either negotiated

or returned the full amounts of all complaints submitted to them, over $50,000.

The original complaint has been satisfied, as have been all the others received

after it was posted. GSC is no longer in business.

We were also able to get money back in the beginning when the Funding Tree

was first contacted. As the number increased and it became evident money

was not going to be returned, they moved to the State of Nevada.

Many of the complaints are also “miscommunication, “ such as this one from

the new general manager of a mid-city television station:

“I have recently been named General Manager for *****Broadcasting and have found several problems with the leases. Is it legal for Balboa Capital to originate a lease-$73,000-and sell it to Imperial Business for $84,000. I have several "messes" to clean up. Needless to say, "The leasing industry needs to be regulated." No more leases for *****! I have contacted an attorney, but no attorney seems to have an answer. Previous management did sign the contract, but would you like to wake up tomorrow and your mortgage company has sold your $100,000 mortgage to another financial institution, and your principal balance is now $110,000? Legal action should be taken against the leasing industry. If they are protected, we intend to start a national campaign against the leasing industry. I look forward to hearing from you.”

Basically, we explained the assignment of his home mortgage, then the lease

by multiplying the number of payments remaining, adding if the purchase

option was assigned, it may also be added along with late charges, personal

property tax, and the number would be higher that the cost of equipment.

The most important fact is the lease payment did not change. We assured

him it was common for transaction like these to be assigned, went into

a history, and would be glad to contact Balboa to confirm this.

The assignment or problems due to the assignment, especially Advanta and

Textron, have been among the many complaints.

When we first started, most of the complaints to be posted came

from readers, then from “broker” referrals as they were running into

customers with “poor experiences.” 2002 was different.

If we post one complaint, such as about GSC Capital or Leasecomm,

we are found in browsers by people searching for information about

the company. It has come to the point, that the great majority of

communications are not from leasing brokers, although we still

get :”referrals,” but direct from the internet. The browsers have

put Leasing News on the top, especially regarding “advance rentals.” ****

We look at the listing on the bulletin board as a “failure.” We prefer

to see a “settlement,” rather than a complaint..

*** Our F.A.Q. page is near the top for Leasing Company Complaints:

How Do You Handle Accusations About Advance Rentals?

Leasing News does not want to print accusations. We confirm all information given to us before publishing. We verify all information given to us. We want to be "fair and accurate." Our role is industry news. We encourage your communication, but we have an adopted policy from the date of our inception: http://www.leasingnews.org/policy.htm

If you have a complaint or knowledge of inappropriate conduct, behavior, possible illegal activity, the proper venue for this is a written complaint to your leasing association's standards and ethic committee. If the company you are writing about is a member, they may be expelled or censured.

One of the many reasons to belong to an association is to promote ethics and fairness.

Leasing associations have committees composed of professionals in the industry who work for free and consider all written complaints or information about conduct submitted to them.

It is your best "protection." Exchange business with the members of your association.

If there is a difficulty or a problem, you have a "lifeline" to call. Join an association just for this protection (there are other reasons, but this is an excellent one ).

We also invite all readers to utilize our "Customer Complaint" Bulletin Board.

http://www.leasingnews.org/bulletin_board.htm

Leasing Association Membership Count---End of year, 2002

Membership is up from June, 2001

	Association for Governmental Leasing and Finance	Eastern Association of Equipment Lessors	Equipment Leasing Association	National Association of Equipment Leasing Brokers	United Association of Equipment Leasing
December 2000	250 Members	240 Members	850 Members	475 Members	589*** Members
June 2001	250 Members	213 Members	731 Members	598** Members	310 Members
December 31, 2001	253 Members	228 Members	873 Members	415 Members	379 Members
June 2002	232 Members	202 Members	817 Members	460 Members	341 Members
December 31, 2002	263 Members	216 Members	862 Members	487 Members	378 Members
	AGLF	EAEL	ELA	NAELB	UAEL

http://www.leasingnews.org/DuesComparison.htm

Wells Fargo logs another record profit

San Francisco bank's streak at 6 quarters

Christian Berthelsen, San Francisco Chronicle Staff Writer

Wells Fargo & Co. reported its sixth consecutive quarter of record earnings, with a 24 percent jump in the fourth quarter, thanks to a robust mortgage business.

The San Francisco bank reported net income of $1.47 billion (86 cents per share) compared with $1.18 billion (69 cents) in the same quarter of 2001. The results were in line with analyst expectations.

For the year, Wells earned $5.43 billion ($3.16) on revenue of $24.5 billion, compared with $3.42 billion ($1.97) on revenue of $20.15 billion the previous year. 2001 results included a one-time $1.1 billion charge.

On an operating basis, earnings increased 24 percent.

In a year when scandals rocked corporate America and the banks that supply it with financial services, Wells emerged virtually unscathed by remaining largely a consumer-focused retail bank. It has not jumped into the market for huge loans to corporate clients and has kept its investment banking activities to a minimum.

Retail banking represents two-thirds of its business. Wells showed gains in nearly all areas, but the highlight was its community banking business, which grew 6 percent to $1.04 billion in the fourth quarter from $983 million one year ago.

By contrast, Citigroup -- the New York financial services giant that has plunged headlong into the corporate and investment banking business -- said its profit fell 37 percent in the fourth quarter to $2.43 billion after taking $1.55 billion in charges. The results included a $344 million loss in its corporate and investment banking unit, which took $1.3 billion in charges to cover settlements stemming from analyst research conflicts and litigation related to its involvement with Enron.

With retail banking, "It's the business that Wells knows best and feels it can execute in well," said Joe Morford, an analyst at RBC Capital Markets in San Francisco.

"They tend to not just follow the fad du jour, and when everyone was out paying big premiums for brokerage firms in the mid- to late 1990s, they were not one of them."

While Wells has launched small-scale investment banking and commercial lending operations, "they're not trying to make a big bet or rely too heavily on one business for their earnings," Morford said.

Still, many analysts in recent months have downgraded Wells from "buy" or "strong buy" ratings, believing that its tremendous growth rate cannot go on forever. Concerns have grown that the American consumer cannot afford to carry the economy much longer, and that the boom in mortgage refinancing and home buying may be flagging.

Wells has marketed aggressively to existing customers, hoping to sell mortgages and insurance to people who already use the bank for checking, savings and credit cards. As a result, by the end of the year the average Wells customer had 4.9 accounts or services with the bank.

The community banking division's income rose 11 percent during the year, with a 16 percent increase in same-store sales. During the fourth quarter, the number of checking accounts rose 12 percent and consumer credit sales rose 17 percent.

Revenue in the fourth quarter rose 11 percent to $6.48 billion from $5.88 billion a year ago.

Wells' loan portfolio averaged $183.8 billion in the fourth quarter and $179.3 billion for the full year, up 10 percent from the same periods the previous year. Average core deposits of $194.9 billion during the fourth quarter were 11 percent, or $19.1 billion, higher than the previous year.

Credit losses in the fourth quarter were $438 million, or 0.95 percent of loans outstanding, down from $536 million, or 1.27 percent, in the same quarter last year.

E-mail Christian Berthelsen at

cberthelsen@sfchronicle.com.

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Merrill posts profit for fourth quarter but CEO warns of challenges ahead

By Associated Press

NEW YORK (AP) Merrill Lynch & Co. posted a profit in the fourth quarter, but company officials said Wednesday that hard times could lie ahead unless there is ''meaningful improvement in the market.''

The nation's largest brokerage, which launched a broad cost-cutting push at the end of 2000, may not have much more fat to trim, analysts said. Merrill will continue to build capital, executives said, but unless revenues increase, more staff cuts appear likely for this year.

For the quarter ending Dec. 27, Merrill reported earnings of $603 million, or 63 cents per share, compared with a loss of $1.26 billion, or $1.51 per share, during the same quarter a year earlier.

Excluding one-time items that included an after-tax research settlement, Merrill Lynch earned 64 cents per share, beating by a penny the expectations of analysts surveyed by Thomson First Call.

Quarterly revenue was $4.2 billion, down 12 percent from $4.8 billion a year earlier, when Merrill posted a loss largely because of its cost cutting plan and Sept. 11- related expenses.

Merrill Lynch chief executive Stan O'Neal assured investors the company would remain focused on long-term growth, but he cautioned in a statement Wednesday that 2003 was likely to be a challenging year.

''While it will be difficult to maintain 2002 revenue levels in the current year absent meaningful improvement in the market environment we are confident that we have the market position, scale and financial strength to sustain our longer term growth,'' O'Neal said.

Merrill has made aggressive cutbacks in overhead and staff to cope with the weak market. The company has reduced staffing by 30 percent since the third quarter of 2000, when it had 72,600 full-time employees. Merrill said Wednesday that it had 50,900 full-time employees at the end of 2002, having cut 2,300 jobs during the fourth quarter alone.

In a conference call with analysts Wednesday, executives said staffing levels will likely ''drift lower'' this year, particularly if revenues continue to decline.

Thomas H. Patrick, executive vice chairman of finance and administration, said the firm doesn't have a target for the reductions, but has asked each business unit to operate as efficiently as possible.

Patrick and chief financial officer Ahmass Fakahany, named to the post last month, said Merrill would strive to match costs with revenue growth, making adjustments each quarter as necessary.

Most analysts say Merrill, which is posting a profit for the third quarter in a row, is doing as well or better than its competitors when it comes to making money in a difficult market.

''These guys are way ahead of the game in terms of headcount reduction and rightsizing, getting their costs in line; but what we picked up from the call is that there's not much more room for that,'' said Reilly R. Tierney, an analyst with Fox-Pitt, Kelton, Inc.

Additionally, costs related to compliance with the USA-Patriot Act which aims to curb money laundering and legal expenses related to Enron could cut into this year's revenue figure.

For the year, Merrill Lynch earned $2.6 billion, or $2.69 per share, up from $573 million, or 57 cents a share, in 2001. Revenue fell to $18.6 billion from $21.9 billion a year ago.

In trading on the New York Stock Exchange, Merrill shares fell $1.83, or 4.6 percent, to close Wednesday at $38.25.

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Hahn/Buonnanno Join Hunton & Williams to Expand Securitization/ Capital Markets Practice

CHARLOTTE, N.C.--

Lateral Partner and Relocation of New York Partner Augment

Asset Securitization Strength

Robert J. Hahn has joined Hunton & Williams' Charlotte, N.C. office as a partner on the global capital markets and securitization teams.

He was formerly the head of the securitization practice at Kilpatrick Stockton, LLP. In addition, Joseph B. Buonanno, a partner on the global capital markets and securitization teams in the New York office of Hunton & Williams, is transferring to the Charlotte office.

Mr. Hahn's practice focuses on the areas of asset securitization, residential and commercial mortgage securitization, equipment lease finance, synthetic leasing, leveraged leasing and banking. He represents financial institutions, issuers, underwriters, credit enhancers, liquidity providers, asset-backed commercial paper conduits and other securitization participants.

Mr. Buonanno's practice concentrates on the areas of asset securitization, derivatives, banking and finance, corporate and securities, loan syndications and commercial real estate finance. He represents bankers, traders and fiduciaries at the world's leading financial institutions in, among other things, the issuance, administration and underwriting of structured and synthetic mortgage- and asset-backed securities.

Mr. Hahn and Mr. Buonanno are joining a team of lawyers in Charlotte dedicated to serving the securitization needs of clients in Charlotte and nationally. They are a part of the firm's asset securitization practice group, consisting of more than 25 lawyers firmwide. "We are extremely pleased that Bob and Joe are joining us," said Tom Cottingham, managing partner of Hunton & Williams' Charlotte office. "Their combined experience in capital market transactions and securitization work builds on the firm's existing strengths." Nationally, Hunton & Williams has represented issuers, underwriters, trustees, master servicers and other participants in more than 1,000 public and private transactions.

"Bob and Joe have significant experience in structured finance and securitization," said Mike Nedzbala, head of the asset securitization practice in Charlotte. He added, "Bringing them on board is part of a strategic initiative by the firm to expand our securitization and capital markets capabilities in Charlotte, where we have a significant opportunity to grow the practice."

Mr. Hahn received his B.A. and J.D. from St. John's University in 1979 and 1984, respectively. He is admitted to practice before the New York State and North Carolina Bars. Mr. Hahn is a member of the American Bar Association asset securitization task force, UCC committee and federal regulation of securities committee. Moreover, Mr. Hahn is the founder and a former board member of the Commercial Mortgage Securitization Association. He is a frequent speaker and author on the diverse aspects of asset securitization.

Mr. Buonanno received his B.M. from the University of Rochester's Eastman School of Music in 1985. He earned his J.D/M.B.A. from Cornell University in 1989. He is admitted to practice before the New York State and District of Columbia Bars. Mr. Buonanno is an author and a frequent speaker at asset securitization seminars and continuing legal education programs, and a member of the American Bar Association, the New York State Bar Association and the Association of the Bar of the City of New York.

Hunton & Williams provides legal services to corporations, financial institutions, governments and individuals as well as a broad array of other entities. Since its establishment in 1901, Hunton & Williams has grown to over 850 attorneys serving clients in 80 countries from 16 offices around the world. While Hunton & Williams' practice has a particular emphasis on corporate transactions, corporate and structured finance, energy and environmental law, governmental relations and commercial litigation, the firm's depth and breadth of experience extends to more than 50 separate practice areas.

CONTACT:

Hunton & Williams

Kristen Chatterton, 804/787-8084

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West Coast port dispute over; union, companies ratify contract

By Associated Press

Nearly 90 percent of International Longshore and Warehouse Union members who voted approved the multi-billion dollar deal, which should bring labor peace to 29 major ports that badly need to modernize and should do so under the pact.

Slightly more than 7,400 members voted for the deal, and nearly 900 voted against it the largest margin of victory for any longshoremen's contract, according to union officials. Voter turnout was 85 percent.

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The labor dispute that shuttered West Coast ports and hamstrung Pacific Rim trade last fall formally ended Wednesday when both dockworkers and shipping companies announced separately they had overwhelmingly approved a new six-year contract.

Slightly more than 7,400 members voted for the deal, nearly 900 against it – the largest margin of victory for any longshoremen's contract, according to union officials. Voter turnout was 85 percent.

"They had union meetings to question the negotiators about it and plenty of time to debate it among themselves," said union President Jim Spinosa. "They understood the terms of the contract, the times it was negotiated in and the victory it represents."

The contract takes effect Feb. 1.

Union members began voting by mail earlier this month and sent bundles of ballots to San Francisco headquarters for the official count.

The Pacific Maritime Association, which represents shipping lines and terminal operators, also announced Wednesday that its member companies had "overwhelmingly" ratified the deal.

"Today we begin a new era at West Coast ports," association President Joseph Miniace said. "A modern waterfront will create new jobs, strengthen our economy and enable us to better maintain port security."

The deal boasts handsome benefits, including no-cost health insurance and a 60 percent increase in pensions. By 2008, a union member will receive an annual pension of $1,800 multiplied by the number of years worked – a 30-year veteran, for example, would get $54,000 per year in retirement.

"In a time when more working families than ever are struggling with rising health care costs and insecure retirements, the ILWU has won a historic contract which sets a much-needed benchmark in health care, pensions and living standards," said AFL-CIO Secretary-Treasurer Richard Trumka, whom both sides have credited with helping hammer out the deal.

Salaries would increase 12 percent, giving the average longshoreman around $90,000 in annual pay.

In exchange, union members would accept a new wave of computer technology that would speed the flow of goods through already- congested ports.

Companies have been aching for new cargo-handling systems and "many companies are planning to bring in technology, certainly over the next several months," said association spokesman Steve Sugerman.

As technology arrives, so too will new rounds of dispute between the two sides.

Companies will try to keep as many of the new technology-dependent jobs under their control, while the union will argue that the jobs are theirs according to contract language.

"I'm sure the arbitration process is going to get a workout," said union spokesman Steve Stallone.

Increased efficiency would hit the work force, though not too hard. The contract would guarantee that all current union members keep their jobs, but as they retire, about 400 positions could be lost.

In practice, relations between longshoremen and their bosses have been smooth since union leaders overwhelmingly approved the multi- billion dollar deal in December, according to spokesmen from both sides.

Goods have been flowing across West Coast docks far swifter than during the holiday season, when it took federal intervention to reopen ports darkened by the labor battle between longshoremen and shipping companies.

West Coast ports have long been deemed less efficient than some of their Asian and European counterparts – something the new contract tries to address by introducing computerized cargo-tracking technology.

Still, the relatively smooth flow of goods across the docks is a stark contrast to autumn, when President Bush asked a federal judge to reopen ports that slammed shut when the association locked out workers for 10 days.

Companies said longshoremen were coordinating a work slowdown that amounted to a "strike with pay". The union said bosses were bargaining in bad faith, so workers were strictly observing safety codes.

The economic shockwaves from the dispute spilled across the nation – the ports handle more than $300 billion in trade each year. As huge cargo ships sat at anchor, part-starved auto assembly lines shut down, perishable farm cargo rotted and irate truckers idled in miles-long lines.

Only after Bush used the Taft-Hartley Act to reopen the ports on Oct. 9 did contract talks progress with the subtle cajoling of a federal mediator. Late on the evening of Nov. 23, negotiators from both sides inked a tentative deal, which a delegation of union leaders approved overwhelmingly Dec. 12.

Despite the overwhelming support from both union leaders and the rank and file, not all union members supported the deal.

Jerry Cressa, a veteran crane driver in the Port of Portland, said the deal will drive a wedge between the most skilled workers – who get a bonus under the deal – and the least skilled, who do not.

"I do not understand what has happened to the ILWU when it seems to be adopting the employers' own corporate mentality: the elite deserve more than the majority," Cressa said. "The transformation will make us weaker and weaker until we are no match for the employers in the next contract negotiation in six long years."

On the Net:

Union: www.ilwu.org

Maritime Association: www.pmanet.org

Tyco's first quarter earnings fall 50 percent, outlook lowered

By Associated Press

EXETER, N.H. (AP) Tyco International Ltd. reported a nearly 50 percent drop in its fiscal first quarter earnings Wednesday despite a 4 percent rise in revenues, and executives warned that results for the second quarter and all of 2003 would be near or below expectations.

For the quarter ended Dec. 31, the troubled manufacturing conglomerate earned $634.5 million, or 32 cents per share, compared with profits of $1.2 billion, or 60 cents per share, for the same period a year earlier.

Revenues rose to $8.9 billion, from $8.6 billion, led by a 13 percent increase in its healthcare products sales, but profits in the unit were hurt by higher costs. Sales in the company's electronics business fell 10 percent amid the continued slump in the telecommunications sector.

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Economic Inequality Grew in 90's Boom, Fed Reports

By EDMUND L. ANDREWS

New York Times

ASHINGTON— Economic inequality increased markedly as the boom of the 1990's fizzled, even as incomes increased at almost every level, according to a detailed new survey by the Federal Reserve released today.

Conducted at the end of 2001, when the economy was in a recession, the survey compared wealth and income with levels of 1998. It suggests that the benefits of the economic boom were widespread but extremely uneven.

The wealth of those in the top 10 percent of incomes surged much more than the wealth of those in any other group. The net worth of families in the top 10 percent jumped 69 percent, to $833,600, in 2001 from $492,400 in 1998. By contrast, the net worth of families in the lowest fifth of income earners rose 24 percent, to $7,900.

The median accumulated wealth for families at the top was about 12 times that of lower-middle-income families through much of the 1990's. But in 2001, the median net worth of the top earners was about 22 times as great.

While income in the top 10 percent of households surged 19.3 percent from 1998 to 2001, income for the bottom fifth of households increased 14.4 percent.

The survey is compiled every three years and is based on interviews with more than 4,000 families. Its results come as President Bush proposes a plan to cut taxes $674 billion over 10 years. Opponents of the plan, which has as its centerpiece a proposal to eliminate most taxes on stock dividends, say most of the benefits would be showered on the richest taxpayers.

Administration officials respond that a large percentage of ordinary Americans now own stocks and would benefit from both tax-free dividends and any lift in market prices.

The survey provides some ammunition for both sides. It shows that wealth became more concentrated, but it also confirms that more than half of all families own stocks, either directly or through their mutual funds and pension plans.

A controversial element of the survey may be the part that deals with household debt.

American consumers provided much of the backbone for economic growth, but economists have long been worried that consumers ran up too much debt in the process.

The Fed's report contends that household debt is more benign than it seems. It noted that Americans did in fact borrow more in 2001 than in 1998 but said that their net worth rose even faster.

As a share of total family income, the Fed said, the aggregate debt burden of families in fact decreased to 12.5 percent in 2001 from 14 percent through most of the 1990's.

Even accounting for stock market declines after the survey was conducted, the Fed said, household wealth was still higher in 2001 than in 1998.

"Rising aggregate debt levels alone do not necessarily imply that conditions deteriorated at the level of individual families," the report said.

But at least some outside economists disputed that conclusion on several grounds.

They noted that in addition to a further stock market decline, unemployment rose after the survey was finished in December 2001. They also said that the survey understated signs of trouble that were already apparent.

Mark Zandi of Economy.com in West Chester, Pa., noted that the percentage of low-income households more than 60 days past due on a debt increased to 13.4 percent in 2001 from 12.9 percent in 1998.

Mr. Zandi said an abundance of newer data provided stronger evidence that lower-income households were under much more stress than before: personal bankruptcies, automobile repossessions, mortgage foreclosures and other indicators of bad debt all reached records in 2002.

The Fed calculations "clearly misrepresent the debt load as it existed in 2001 and even more clearly misrepresent the debt load as it exists now," Mr. Zandi said. "This is a problem that is going to get worse."

To be sure, the Fed survey also shows that even middle- and lower-income families benefited from the economic boom. Home ownership increased, even though housing prices climbed 25 percent. Stock ownership reached 51 percent of all households.

The average income of African-American families surged 20 percent from 1998 to 2000. But for reasons that Fed officials had difficulty explaining today, the average income for all nonwhite and Hispanic families barely increased.

"I am alarmed and disheartened by the growth in inequality in this report," said Jared Bernstein, senior economist at the Economic Policy Institute, a liberal research group based in Washington. "I am especially mindful of this problem, given the administration's tax proposals. I hope policy makers take this data into consideration."

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Fed Report Details Families' Income Situations

By Albert B. Crenshaw

Washington Post Staff Writer

The rising economic tide of the late 1990s lifted the boats of almost all American families but also sharply increased the wealth gap between the rich and the rest of society, according to the survey released by the Federal Reserve.

The benefits of the soaring stock market and the tight labor market were felt both at the top and far down the economic ladder as the median income among the poorest families jumped 14.4 percent between 1997 and 2000. The median for black families rose more than twice as fast as the median increase for all American families, which was 9.6 percent.

The net worth of most families -- the value of their assets minus their debts -- also rose strongly, with the median climbing 10.4 percent, to $86,100, over the three-year survey period. Among blacks it rose 13.1 percent, to $19,000 from $16,800.

But the net worth of the wealthiest families climbed even more. The median among those in the top 10 percent leapt to $833,600 from $492,400, while the mean soared to $2.26 million, from $1.68 million three years before. These families' median income leapt 19.3 percent, to $169,600, during the same period. The median is the midpoint for a group; the mean is the arithmetical average.

The Fed's Survey of Consumer Finances, conducted every three years since 1983, is one of the most detailed looks at the financial condition of American families. The one released yesterday was based on more than 4,000 interviews conducted in the latter half of 2001 and contains data on assets held by families at that time and on their income in the previous calendar year.

Fed officials acknowledged that much has changed in the economy since the interviews, with the stock market plunging and unemployment rising. One Fed economist involved in the study noted that employment is a key driver of income, especially at the lower end of the economic ladder. Thus it is not clear whether the gains achieved by lower-income families in the period covered by the survey remain in place.

The study examines not only income, but families' net worth, saving and investment patterns, debts, and banking habits. The data is of great interest to researchers in and out of government who study what is going on at the individual level of the economy.

Among the study's findings:

• The number of American families owning stock, either directly or through mutual funds, retirement accounts or other indirect means, topped 50 percent. This was up from about a third at the beginning of the 1990s and is the highest level ever recorded by this series of surveys, as well as by a 1963 Fed study that looked at the same issue. It may be the highest level ever, though Fed economists said data from the 1920s is limited.

• Even after their gains, median income of the poorest 20 percent of families was only $10,300, up from $9,000 three years earlier, and the net worth of these families rose only to $7,900, from $6,300. The median income for black families was $25,500, compared with $21,200 in 1997.

• Despite the gains by blacks, non-whites and Hispanics together fared much worse than whites. Hispanic families' median income declined to $24,700 from $25,600, and median net worth rose only to $11,300, from $10,700. Fed officials cautioned that the numbers might be skewed by the way Hispanics identified themselves in the survey, since their study came up with fewer Hispanics than did the 2000 U.S. census, which asked more probing questions about ethnic origin. Fed economists said it is possible that some Hispanics did not identify themselves as such, perhaps resulting in what appeared to be a larger number of lower-income Hispanics.

• Families' debt grew rapidly over the three years in the survey, but assets grew more rapidly, resulting in a decline in the ratio of debt to assets. The survey found that debt equaled 12.1 percent of assets, down from 14.3 percent in 1998. The decline is by far the largest since 1992, the survey found. The share of families with "home-secured debt" -- a mortgage, home-equity or similar loan -- rose slightly, to 44.6 percent, but rising home prices outran their increase in debt, so owners' equity rose as well. Median home equity among those with home-secured debt rose 9 percent, to $58,100, in 2001, from $53,300 in 1998.

• The share of families borrowing on credit cards rose. The increase was small, 0.3 percentage points, but it ended a decline that began in 1995 and shaved three full points off the proportion of families borrowing on plastic. In addition, credit card borrowing rose only among middle- and lower-income families; for higher-income families, it fell. The average balance among those borrowing on plastic was $1,900, unchanged from 1998.

William G. Gale of the Brookings Institution noted that while "the gains of the 1990s were real," the longer- term comparisons in the Fed report went back only to 1992. Looking back to the 1989 survey, he said, would make some of them less impressive.

"There was a big drop in wealth from 1989 to 1992 . . . and for a couple of age groups the current numbers are not that much better than they were in 1989," he said.

Gale also noted that while the survey provides data on how many families own stock, it does not show how much they own. "Although it's true that more and more people hold some stock, it's also true that the vast proportion of stock is concentrated in a relatively small portion of the population," he said.

Changes in the nation's pension system may also be causing wealth figures to appear to rise more than they have. The value of workers' rights in traditional pensions are not included in the wealth figures, in part because they are so difficult to value. But 401(k) and other types of plans are included. Thus, if a worker's company switches from a traditional pension to a 401(k), the worker might seem wealthier in the survey though in fact he has simply substituted one pension asset for another.

Some experts also found the leap in wealth among the wealthiest troubling.

Jared Bernstein of the Economic Policy Institute noted that in 1992, the net worth of the families in the top 10 percent was 13 times that of the families in the next-to-lowest 20 percent.

That ratio was about the same in 1998, he said, but by 2001 it had climbed to 22.4.

"I think the increase in inequality that's evident in this report is really pretty alarming. It should really alert those who are thinking about implementing aggressive tax policies right now," he said. "This report should tell you we've got enough inequality in the system now without aggressive tax cuts."

• The number of families without a checking account declined slightly, to 12.7 percent from 13.2 percent. Asked why, 28.6 percent of those families said they didn't write enough checks to make it worthwhile, while 22.6 percent said they do not like dealing with banks.

Several private analysts cautioned against drawing overly optimistic conclusions from the Fed data.

Among 4 States, a Great Divide in Fortunes

Kevin Moloney for The New York Times

Unemployed executives and managers discussed job hunting techniques last week at the Pikes Peak Workforce Center in Colorado Springs.

By MICHAEL JANOFSKY

ENVER — Every Wednesday morning in Colorado Springs, dozens of recently laid-off executives gather to share job tips and emotional sustenance.

The support group at the Pikes Peak Workforce Center attracts people like Sally Schelter, 51, a software programmer from Columbia, S.C., once so certain about a secure future here that she paid her own moving expenses in October 2000 to take a $78,000-a-year job with MCI. Nine months later she was let go.

"I was told this was a great opportunity with a company that doesn't lay off people," Ms. Schelter said. And now? "I'm looking everywhere for a job. I've got a zillion résumés out, but I'm getting very few responses."

In the last two years, thousands of people in Colorado and Utah have been turned out of their jobs, victims of a bursting technology-telecom bubble that had the most profound effects in the high-flying centers of Denver, Boulder, Fort Collins, Colorado Springs and Salt Lake City.

In Wyoming and Montana, where there was no bubble to burst, such anxieties are unimaginable.

"When I came out of college, I had a choice of the oil fields or the mines, and seeing all the oil field workers with one limb missing, I chose the mines," said Larry Likewise, 62, who has worked the coal fields of northern Wyoming for 41 years and loves the financial and psychological stability it has proved.

When he started, in 1961, he made $1.55 an hour. Today, he earns $24.53 an hour.

"I've raised three children and got seven grandchildren," Mr. Likewise said. "I own everything I have. I've got insurance, vacation, just a good life. I like what I do and have no reason to change."

For all their differences, Ms. Schelter and Mr. Likewise capture the latest turn in fortunes in the Mountain West. Two years ago the growing high- technology centers in Colorado and Utah seemed places of boundless potential, while Montana and Wyoming were just tootling slowly along.

By 2000, Colorado, with 4.3 million people, had an all-time low unemployment rate of 2.8 percent. Utah, with 2.2 million people, had a near- record low of 3.3 percent. But as the downturn swept across the country, those states' greatest strengths became their greatest weakness.

Since 2001, Colorado and Utah have lost nearly 60,000 jobs combined, most of them in the region's backbone industries of high tech, telecommunications and transportation. With far fewer people, Montana and Wyoming struggled without much success to diversify their economies. Now that failure has had its bright side, allowing them to escape severe misfortune.

Buoyed by their natural resources of gas, oil, coal and timber and aided by changes in national policies that favor exploration and development, they have added jobs and kept their economies relatively stable. In Wyoming, the nation's leading coal producer, minerals accounted for 50 percent more in tax revenues for the state in 2000 than all other products combined.

And as different as the two pairs of states are — Colorado and Utah, Montana and Wyoming — their fates could become "vastly, vastly different," said Sung Won Sohn, chief economist for Wells Fargo Bank, if the United States goes to war with Iraq.

"If you have a strong economy, with the price of gas and oil staying low, that helps Colorado and Utah and hurts Wyoming and Montana," Dr. Sohn said. "If oil and gas prices go up, that hurts the national economy but helps Wyoming and Montana. War is one of those things that could affect everybody. A short, decisive war might keep oil and gas prices down. A long, messy war could drive them up."

Influx of New Residents

While the four states constitute one of the sparsest regions in the country, with only 7.9 million people, they have had some of the fastest population growth rates between 1990 and 2000, led by Colorado and Utah.

It is easy to see why. The four states have glorious national parks, snow- capped peaks for skiing in winter, wild rivers for rafting in summer, spacious forests for hunting, ample open space for development, labor pools that are skilled and educated and the rugged can-do spirit that has always characterized the Mountain West. But for different reasons they now have only modest hopes about their economic futures.

For the executives who flocked to Colorado and Utah when the states were booming, the downturn has been startling.

Just a few years ago economic fortunes throughout the region were robust, with thousands of workers from other states moving in on the promise of high- paying jobs and secure futures. Office complexes were full. Housing costs were climbing. Retail sales were soaring.

As Americans swelled the population of western states in recent decades, Colorado and Utah benefited as much as any of them with migrants from both coasts drawn to the area's natural beauty, low costs and high quality of life.

By the 1990's, Denver and Salt Lake City were high-

fliers in the style of Silicon Valley, riding a wave of capital investment in the high-tech, biotech and telecommunication industries. Denver's new airport, which opened in 1995, spurred even more growth with flights to Europe and the Far East. Ski resort towns like Aspen in Colorado and Park City, Utah, always a lure for celebrities, became popular as second-home locales for other moneyed classes.

Utah had the additional surge of economic energy fueled by years of preparations for the 2002 Winter Olympics in Salt Lake City. That helped the state build more highways, add hotels and develop recreational sites for use long after the Games ended.

Both states enjoyed near full employment — and that made the recession of 2001 that much more severe.

As market demands began falling, big companies merged or went out of business, job growth receded, housing prices increased at declining rates. The terrorist attacks of Sept. 11 made things worse, chilling travel and resulting in the layoffs of hundreds of United and Continental employees in Colorado and Delta workers in Utah as flight schedules were cut by a fifth.

Nor did it help that consecutive dry summers and snow-less winters were sending vacationers elsewhere: The venerable Broadmoor Hotel in Colorado Springs said summer wildfires last year led to the cancellation of more than 1,000 room reservations.

Economists say the recession was the worst to hit Colorado since the 1930's, sparing almost no sector of the economy and contributing to the current $850 million projected state budge gap, one of the largest in the country.

"We were doing so well through 2000," said Patty Silverstein, president of Development Research Partners, an economic consulting company in Littleton, Colo. "At the end of the first quarter of 2001, things started to fall apart as manufacturing companies, primarily high tech, saw a falloff of production orders. But every sector has been hit equally hard."

In Colorado the unemployment rate last year rose to 5.3 percent, Utah's to 5.2 percent. And both are expected to rise again this year before receding in 2004. A recent one-day job fair in Denver attracted 8,200 unemployed workers, the most ever for an event held six times a year since 1997.

Dr. Sohn, the Wells Fargo economist, said, "Colorado currently has one of the weakest economies in the country after having one of the best only two years ago." Gov. Michael O. Leavitt of Utah described 2002 as "the toughest year for Utah's economy since 1954."

Most of the losses have come in the region's backbone industries of high technology, telecommunications and transportation at companies like Qwest, Lockheed Martin, AT&T, WorldCom, United Airlines and Continental Airlines. And feeling the pinch are the once high-paid managers who show up at the Pikes Peak Workforce Center. Joseph W. Mason, 53 and a father of nine, lost his job three months ago after 17 years with Ford Microelectronics, a company bought by Intel. He was a finance manager, earning $125,000 a year.

"The group has been helpful," Mr. Mason said of the support network. "I get an understanding of what other people are doing and I find job leads. I'm averaging about two a week and I apply. But so far, I've had no interviews."

Nor has Melissa Hogan, 29, a program analyst who left Sacramento in May 1999 for a $60,000-a-year job with WorldCom. She was let go last month, leaving her with a mortgage and a mother living in a nursing home. She has recently returned to school to study electronic business management, taken in a roommate to help with expenses and sent out hundreds of résumés.

"They were boom times when I came here," Ms. Hogan said. "We were writing our own paychecks at that point. I never imagined the bottom would fall out of the market as it has. A recruiter for Qwest recently told me they get 300 to 400 résumés a week for each job they have."

Sectors Feel the Pinch

Virtually all the economic measures have been discouraging. Last year, the new Denver airport reported its first annual decline in passengers in seven years, a 6.8 percent drop. Investments in the advanced technology industry fall by 70 percent, to $1.5 billion, from the year before, according to a report by US Bank. Hotel operators in Denver said last year was their worst in more than a decade, with an occupancy rate of 60.5 percent, the lowest since a 60 percent rate in 1990.

Despite the lowest mortgage rates in more than 30 years, permits for new houses in Colorado last year fell by 25 percent from 2001. Retail sales deteriorated over the year and the picture "looks much worse than the industry nationally," David Givens, an analyst for Economy.com, said in a report on Colorado for 2002. He also forecast another rise in the unemployment rate, to 5.6 percent, for this year before falling in 2004 as new investment resumes.

In Utah, the overall effect of the recession has been much the same but on a smaller scale, said David Harmer, executive director of the Utah Department of Community and Economic Development. The state got lucky, he said, in that many new capital projects, like highways and hotels, were completed before the downturn hit hardest. Still, even the smallest of businesses have suffered.

"Last year was a bad year for everyone in our type of business," said Don Norberg, general manager of Sheri Griffith Expeditions in Moab, Utah, which arranges river rafting trips in Utah and Colorado. "We were down 30 percent, with a peak of 28 boats and 130 guests. In 2001, we had 170 guests. This year, we didn't go way out of our way to purchase any additional boats."

Declining tax revenues have contributed to a state budget deficit of $117 million, a gap large enough that few programs are being spared. Mark Shurtleff, the Utah attorney general, eliminated the nation's only "porno czar," an assistant responsible for helping enforce Utah's strict pornography and obscenity laws. The job was created just two years ago to great fanfare in a state known for its conservatism.

"We have to make cuts somewhere," Mr. Shurtleff said.

Birth-Rate Plus and Minus

Future growth in Utah is assured in one respect. It has the highest birth rate of any state in the country. That would seem a plus. But economists say it puts an added burden on state officials to find some way to restart the rapid job creation that came during the 1990's.

"How well we do depends upon our ability to generate new jobs," Mr. Harmer said. "We have a lot of young people coming into the work force. The question is, are we increasing the number of jobs to absorb them?"

The picture is not as grim to the north. Montana and Wyoming never had the same kinds of high hopes for growth as Colorado and Utah so they did not experience such a deep fall.

With fewer people than Washington, D.C., Wyoming is the least populous state in the country. Montana is ranked 44th. What both states lack in people, they make up for in natural resources, and for now, the gas, oil, coal and timber industries are keeping them economically buoyant and relatively insulated from troubles affecting other regions.

How long that continues is a function of efforts in Montana and Wyoming to diversify their economies. Growth may hinge on whether state leaders can attract a wider array of companies offering higher paying jobs to keep more high school and college graduates in state jobs and wean the states off a dependency on revenues from oil.

An Industrial Expansion

So far, Montana has done a better job than Wyoming.

Despite low business costs, cheap housing and a high work ethic, the rural nature of both states has remained a disincentive for companies with high- paying jobs to locate there. Neither has a strong revenue base from manufacturing or high technology. In each state, an Air Force base is the biggest employer, Malmstrom in Great Falls, Mont., and F. E. Warren in Cheyenne, Wyo.

But Montana has had more success growing industries that have proved resilient to economic declines elsewhere, like business services, real estate, housing construction and wood products, ending last year with the nation's second highest rate of growth.

"In almost all industries, Montana had a very broad-based expansion," said Andy Kish, an analyst for Economy.com. "Manufacturing was down, unemployment stayed low, at 4.4 percent, and consumer confidence in Montana was a bit higher."

Paul Polzin, director of the Bureau of Business and Economic Development at the University of Montana, said the lack of high-tech industries in Montana would keep the state's long-term growth at a slower pace than the rest of the country. "But through 2001 and 2002," he said, "when everybody else was going through the floor, we were doing better than the national average."

Wyoming's employment rate has remained steady for three years at 3.9 percent, well below the national average. But that's both good and bad news for the state. It reflects Wyoming's continuing role as a major supplier for the nation's natural gas and coal. However, it also indicates that the state is failing to bring in many new jobs in other industries.

For now, the negative effects are overshadowed by good fortune. Wyoming is producing a third of the coal used in the United States and 41 percent of its natural gas. Those levels are expected to increase as exploration expands and new pipelines for natural gas are completed. Together, coal and gas generate about a third of state revenues.

Further, Wyoming is one of the few states with a surplus, about $137 million, and last year spending increased by 17 percent.

But both states have drags on their economies that could harm them in the long run. Montana is currently facing a budge deficit that could reach $240 million within two years, making it the state's deepest gap in nearly two decades. Wyoming is constantly losing its college graduates to other states, where jobs pay more.

Without the kind of high-tech industries that have aided Colorado, Utah and other western states, Montana and Wyoming will remain heavily dependent on the ups and downs of resource markets, leaving them less control over their own economic destinies. Many economists agree that for both states the lack of economic diversity, low wages and slow population increases mean long-term growth is likely to lag behind any national recovery.

"The mountain states are expected to regain economic ground with the 2003 recovery," Dr. Sohn said. "They have beauty, scenery, a good quality of life and their populations are growing. But they all have one factor in common for their economic strength in the future. They need to attract jobs."

This story is part of a periodic series examining the economic conditions in various regions of the country.

Home prices up 20.5% in San Diego County; gain is 7th in row

By Roger M. Showley

SAN DIEGO UNION-TRIBUNE STAFF WRITER

SEAN M. HARREY / Union-Tribune

Some high-priced neighborhoods, such as these homes along the boardwalk in South Mission Beach, have turned in relatively modest increases. economy and continued strong demand, San Diego County home prices rose 20.5 percent in 2002, the seventh straight year of increases.

For the year, the median price on nearly 55,000 sales hit a record high of $323,000, up from $268,000 in 2001, according to locally based DataQuick Information Systems.

The increase was the biggest since DataQuick started keeping track in the 1980s.

It eclipsed a 16.5 percent jump at the height of the last housing boom, when the median price surged from $139,000 in 1988 to $162,000 in 1989.

Once-disdained Golden Hill is now at the top in gain

Key factors in the upward spiral, experts said, included record low interest rates, strong demand, tight supply and an overall economy that's outperforming the rest of the state and nation.

"I think 2002 was turbocharged," said Cheryl Betyar, president of the San Diego Association of Realtors. "And I think we're going to see in 2003 one of the best years on record since we've been keeping track of real estate in San Diego."

Kent Aden, president of the San Diego Building Industry Association, said home builders have been unable to boost construction in the face of rising demand.

"Often when the market is good like this, I don't think builders can respond as quickly as they'd like to from a market standpoint," Aden said.

He was speaking by phone from Las Vegas, where he is attending the National Association of Home Builders annual convention – and where housing production is running twice the rate of San Diego, even though the population is half as big.

The price news should not surprise buyers and sellers, since monthly prices rose at a year-over-year pace of 20 percent for much of the year.

DataQuick said the monthly median for December 2002 stood at a record $357,000, up 24.8 percent from December 2001.

For renters who can't afford to buy, the news represented another reminder that the first rung on the ladder to homeownership has gotten harder and harder to climb.

Ross Starr, an economist at the University of California San Diego, attributed San Diego's robust housing market to a relatively healthier economy than in the state or nation. But he said a similar price increase this year is "extremely unlikely."

DataQuick analyst John Karevoll, who projects a 12 percent increase for 2003, took a longer view. He said San Diego County's housing market has simply found a new standing in California markets. It speeded ahead of Los Angeles County after the recession and is just behind Orange County and the San Francisco Bay Area in median prices.

"It's not a temporary thing in any way shape or form," Karevoll said. "The underlying values, demographics, housing stock have recalibrated themselves relative to the rest of Southern California."

Put in perspective, the annual increases since the mid-1990s have been breathtaking. Since real estate began its post-recession recovery, the median home price has nearly doubled from its 1995 level of $166,000.

The latest figures help explain why San Diego County has ranked among the five least-affordable housing markets in the country, according to various measures.

In 2002, only three rural neighborhoods locally had medians of $166,000 or less on single-family resale houses. Even in the more- affordable condominium market, the pickings were slim for affordable housing.

Last year, there were only 10 neighborhoods with resale condos selling below the $166,000 median.

The median represents the halfway point of all sales, with half above and half below that figure.

Individual neighborhoods turned in widely different appreciation rates, according to the DataQuick compilation.

Golden Hill, the 92102 ZIP code just east of downtown San Diego, saw a stunning annual appreciation of 33.7 percent, highest in the county among areas with 75 or more resale single-family home transactions.

The median home sale there reached $233,909, up from $175,000 in 2001.

The San Ysidro 92173 ZIP code at the Mexican border ranked second with a 28.8 percent increase to $270,500. Other areas among the largest increases were the City Heights 92105 ZIP code in eastern San Diego city; the 91913 ZIP code in the eastern Chula Vista area that encompasses parts of EastLake and Otay Ranch; and the 92114 ZIP code in Encanto, another inner-city San Diego neighborhood.

One indication of San Diego's strong upward price pressures was that only three neighborhoods saw a net decline in their median prices, and none of those neighborhoods had much sales activity.

Of the communities that had 75 or more sales last year, some high- priced neighborhoods turned in relatively modest increases.

Coastal Coronado, the 92118 ZIP code; posh Rancho Santa Fe, 92067; Scripps Ranch, 92131, on the Interstate 15 corridor; and ocean- hugging Mission Beach and Pacific Beach, 92109, rose between 5.2 percent and 7.8 percent last year. Their medians ranged from $465,000 to $1.8 million.

DataQuick's Karevoll said these communities turned in low price increases because they rose faster earlier in the real estate cycle.

"Those neighborhoods emerged from the recession first and kicked into gear during the years of growth," he said. "Then other markets followed them in this cycle. So, basically, the entry level and midprice markets are now seeing the appreciation that the prestige and move-up markets saw a year and a half to two years ago."

Behind the numbers are many trends that should keep demographers, builders and economists hunched over their calculators and spreadsheets for months to come.

For example, the condominium market came back to life in both sales and price increases.

The highest appreciation resale condo neighborhoods with at least 75 sales last year were Serra Mesa, ZIP 92123, overlooking Mission Valley, up 40.3 percent to $224,500; Allied Gardens-Del Cerro, 92120, to the east, up 37.2 percent to $201,000; southern Oceanside, 92054, up 35.2 percent to $219,000; Chula Vista's EastLake-Otay Ranch, up 34.7 percent to $225,000; and City Heights, up 33.7 percent to $115,000.

As in the single-family resale market, upper-end condo prices cooled off in several key areas. They included Coronado, down 1.5 percent to $625,000; Del Mar, the 92014 ZIP code, up 1.3 percent to $457,000; neighboring Solana Beach, 92075, up 11.1 percent to 400,000; and Carmel Valley, 92130, east of the North County beaches, up 12.7 percent to $344,000.

Russ Valone, president of the San Diego-based new-housing research firm MarketPoint Realty Advisors, said the new-condo market downtown represented about half the sales of newly built condos last year.

But a growing segment of the condo market comes from apartments converted to for-sale status. He said projects from Bankers Hill, just west of Balboa Park, to inland North County went condo.

In 2000, there were 282 conversions and in 2001, 261, he said. But last year, the total soared to 619 sales.

The average base price of converted condos was $216,300 last year, compared with $418,300 for newly built condos, he said.

"There are tens of thousands of units," Valone said, that could be converted.

However, as strong as San Diego's housing market was in 2002, it was not big enough to accommodate all would-be buyers.

Valone estimated that 2,500 or more housing units in southern Riverside County were bought by San Diegans who choose to commute to work here while owning a home across the county line.

"Whatever percentage you use (to estimate sales to San Diegans), you're going to see a continued increase in leakage from San Diego to southern Riverside," Valone said.

An undetermined number of San Diegans also have bought in Tijuana and work here.

This prospect of distant commutes north and south worries area analysts, who say the failure to house San Diego workers will contribute to area traffic problems and may lead to business decisions to relocate.

Erik Bruvold, vice president of the San Diego Regional Economic Development Corp., called the 2002 price increases "mind-boggling."

"It clearly shows that we've got an imbalance between the demand for housing and the supply in our marketplace," Bruvold said. "That 20 percent increase (in price) comes at a time when the economy has significantly slowed . . . and yet prices continue to go up and up and up."

Kelly Cunningham, chief economist at the San Diego Regional Chamber of Commerce, said salaries are not keeping pace with housing prices and that companies have to wonder if they can continue to attract and retain workers who find it difficult to buy a home.

Just last week, Buck Knives, which employs 250 people, announced its relocation to Idaho, citing the high cost of doing business in California.

At the end of the 1980s housing boom, San Diego real estate was hit hard by a retrenchment of defense spending after the 1990-91 Persian Gulf War. Prices slid from 1991 to 1995. But Cunningham said there are no signs of a repeat this time.

"The question keeps coming up, is there a 'housing bubble' forming," Cunningham said. "Maybe we're naive, but we're not expecting that to happen this time."

SuperBowl Sunday---What Will You Be Doing?

Most everyone I talk to in Silicon Valley believes the Oakland Raiders

will win. Certainly in Oakland itself where fans are already staking on

claims for a tail gate at the Network Coliseum. If they can’t go, they

can party.

Bad news for those going to the game in San Diego, no tailgating.

For security purposes, transportation by bus, trolley, bicycle, limousine, taxi

is the mode. No tailgating outside the stadium.

At home “tailgate” parties will be numerous. The TV news said more avocadoes

is sold this one day than any other. Guacamole dip seems to be very popular.

Fresh crab is abundant and cheap, but the theme will be California-Mex in

most homes. While we did super bowl parties in the past, perhaps because

we are older and wiser, it will be one couple joining us so we can watch

the game on TV and not act as host and hostess to a lot of people, who

talk during the game, and party, forgetting the purpose is to watch the

football game. This should be a very interesting game. I have no predictions,

but Jon Grudin is one heck of a coach, but the Raiders have all his plans and

Superbowl experienced players ( most of them ex-49ers.)

Let me know what you are doing for the superbowl, and I will print it Friday.

Kit Menkin