The Mid Valley Chamber of Commerce hosts its network connection breakfast. 7:15 a.m. 94th Aero Squadron Restaurant 16320 Raymer Street, Van Nuys (818) 989-0300 midvalleychamber.com

The listing reads, “Great house in great neighborhood. Be ready to write an offer.” But several hours into an open house on what should have been a perfectly nice day for house-hunting, less than a handful of buyers had shown up to see the Lake Balboa home, let alone bid on it. It was the same at no fewer than 10 open houses on a recent Sunday afternoon in Van Nuys, Lake Balboa and Sherman Oaks. Things were so quiet that one broker, on hearing that her visitors were reporters and not would-be buyers responded, “Oh that’s okay. At least it’s company.” Behind the most recent statistics out of the Southland Regional Realtors Association showing a dramatic downturn in the number of home sales is another slowdown: the sheer number of buyers out there looking for homes has dwindled considerably. “Last weekend in Woodland Hills I had two people show up. I had another open house south of the boulevard and I had four people,” said Samira Sacket, a broker with Re/Max who, on this particular weekend, was manning an open house on a cozy cul-de-sac in Lake Balboa. “Last year this time my open houses would be at least 15 people.” In July, the number of home and condominium sales combined plummeted nearly 30 percent to 1,126 versus year-ago sales, according to the Southland Regional Association of Realtors. Single-family home resales were off nearly 33 percent and condominiums were off nearly 30 percent of volumes a year ago, the SRAR report noted. Meanwhile, the number of listings is rising, up to 6,381 for condos and single family homes combined in July, more than double the number of listings in July, 2005. The numbers of active condominium listings tripled in the same period. Some would-be buyers figure that the big up-tick in inventory should lead to a corresponding decrease in pricing. “We’re shocked at what people are asking,” said Chip Adams, who was touring the open houses in his Lake Balboa neighborhood with his wife, Chris and son Brady. “From what we can see, there are more houses than buyers. People have done a good job of fixing up their homes, but they’re asking prices they were asking three years ago.” As had been predicted earlier in the year, homes are staying on the market much longer than they did a year ago, when it wasn’t unusual to list a home and sell it within the same week. But less anticipated is the fact that many sellers, finding their homes on the market for a month or more, are dropping their home prices anywhere from 2 percent to 10 percent in some cases. Some of those shopping the market saw the price adjustments as favorable. “Prices seem to be going down somewhat, and that’s nice for a buyer,” said Helen de Gyarfas, who said she had been looking for about a month after selling her last home. “I’m having a hard time finding something I like.” But even some brokers concede that would-be buyers are staying away figuring that the prices will come down even more. “They think the price is going to drop $100,000 suddenly and that’s why a lot of people are waiting,” said Sacket. “A lot of my buyers, even though they’re still looking, they’re not buying. They’re not anxious to place offers.” Some brokers believe the current climate reflects nothing more than the transition from a time when buyers, encouraged by low interest rates, were more plentiful than the properties available. Convinced that home values are going to hold up, they say it’s just a matter of time before would-be buyers realize they are waiting in vain for a bubble to burst. “There seems to be a standoff going on, but it’s a great time to buy,” said Laurie Sharrigan, a broker with Prudential California Realty who was showing a Sherman Oaks home priced at $879,000 on Sunday. But there may be deeper economic reasons for the surge in properties on the market that could lead to lower prices in the future. In the second quarter of this year, lenders sent 20,752 default notices to homeowners in California, up 67.2 percent from 12,408 notices sent in the second quarter of last year and the fastest pace recorded in at least 14 years, according to DataQuick Information Systems, a La Jolla-based company that tracks real estate activity. (A default notice is the first stage in a foreclosure proceeding and does not necessarily indicate a home will be foreclosed.) Although statistics are not available for the San Fernando Valley, the most recent L.A. County data seems to suggest a similar trend. After declining in May and April, foreclosures rose 23 percent in June in the Los Angeles Metropolitan area, and 15.7 percent in L.A. County, according to RealtyTrac, an Irvine-based database publisher. The RealtyTrac Monthly U.S. Foreclosure Market Report noted that some 4,308 properties entered some state of foreclosure, a rate that translates to one out of every 1,260 households. At the same time, costs are rising for buyers, not just by virtue of home prices. Mortgage rates have climbed somewhat from their levels a year ago, and, perhaps more important, as home values have appreciated, so too have taxes (payable by a new owner.) “I think the prices are out of sight,” said Susan Goldstein, an independent realtor who was hosting an open house for a Lake Balboa home with amenities like a pool and a Viking range for $700,000. “It’s not only the mortgage payment, it’s the taxes. This house is absolutely beautiful. It’s move in and it’s been on the market a month and no offers.”

Auto Stiegler Mercedes-Benz, the family-owned Encino car dealer that has called Ventura Boulevard home for more than 40 years, has been sold. Stephen Smythe, an 11-year president of Mercedes-Benz of Beverly Hills, partnered with investor David L. Peterson, a part-owner of Calabasas Motorcars, to purchase the dealership, which has been re-branded Mercedes-Benz of Encino. Smythe would not disclose the cost, although he said escrow closed Aug. 17. “For me, this is a dream of a lifetime,” said Smythe, who has worked in the industry for most of his life. With his new dealership, Smythe wants to update customer service technology and support systems, especially in sales, he said. “We’re going to take the positive heritage this business has had and build upon that,” he said. Smythe said the dealership will operate independently from Calabasas Motorcars, the only connection being both are funded by Peterson, who also owns dealerships in Kentucky with another partner. Officials from Stiegler did not return calls about the transaction. The sale comes a little more than a year after the death of the dealership’s founder, John Stiegler Sr. An immigrant from Czechoslovakia, Stiegler worked at a series of dealerships before opening his own in the late 1950s. The official company Auto Stiegler Inc. was formed in 1965, according to Secretary of State records. The company made its name in luxury cars and in later years used catchy radios ads to attract droves of customers to the Ventura Boulevard dealership between Balboa Boulevard and Hayvenhurst Avenue. (The Stieglers also operated a collision center in Reseda.) Stiegler’s son, John Stiegler Jr., took over in 2004. After John Stiegler Sr. died in June 2005 at 83, many thought the company would be kept in the family, but Smythe said he heard through the industry that the business was up for sale. He approached the family and a deal was hatched save for two caveats: The family would keep the body shop in Reseda and “they didn’t want to sell the Stiegler name,” Smythe said. The sale is a surprise in the neighborhood. “Stiegler has been with the community for years,” said Kirsten Y. Chong, CEO of the Encino Chamber of Commerce, a 400-member organization of Encino businesses, including Auto Stiegler. (John Stiegler Jr. served as its president.) “They’re very active members,” she said, adding that she hopes the family will continue to participate in chamber events.

The State Senate on Monday narrowly approved a bill that gives Mayor Antonio Villaraigosa more control over the troubled Los Angeles Unified School District. The reform bill now moves to the Education Committee of the State Assembly and then to the full Assembly. Gov. Arnold Schwarzenegger has indicated that he will sign the measure, which could happen as soon as next month. The bill passed in the Senate by a 23-14 vote strengthens the school superintendent’s authority, gives the mayor control over certain underperforming schools and creates a council to help run the district. Villaraigosa said the Senate’s vote proved that there was broad, non-partisan support for reforming the school district. “Together, we took a step towards change a step towards giving our parents, teachers, and communities a voice in their children’s education and a step towards giving our children the education they deserve,” Villaraigosa said in Sacramento after the vote. The Valley Industry & Commerce Association opposed the bill because it lacked a provision to allow parents and voters a say on the future of the district and the decision making function of the council of mayors. The move has also been strongly opposed by the elected school board and in a statement released after the vote, Board President Marlene Canter said she hopes the state Assembly will step in and kill the measure. “I’m hopeful that lawmakers in the Assembly will send a strong message about LAUSD reform by sending this conversation back to Los Angeles,” Canter said. Villaraigosa had pushed for near total control over the school district, which includes more than 800,000 students in Los Angeles, 30 other cities and some unincorporated portions of the county. Those plans were scrapped earlier this summer.

As Kristin Houser makes the switch from the biotech industry to directing the Employee Training Institute at the College of the Canyons, the one lesson she brings is how quickly training needs change. An employer may have educated and well-trained employees but their skills and abilities may not serve a business wanting to maintain a competitive edge. “Things don’t stand still, it’s a dynamic business environment particularly if you are interested in competing globally,” Houser said. Houser begins her new position at the college on Sept. 5. What attracted Houser to the ETI directorship was the opportunity to use both her business and academic backgrounds. She comes to the college from Miltenyi Biotec, Inc., where she served as general manager. She also taught for five years in the business program at the University of Redlands and was director of its masters in management program. The College of the Canyons started the Employee Training Institute in 1989 and receives state funding to provide classes and seminars to the Santa Clarita Valley business community. The more she researched the college, the more impressive was its role in economic development, providing business-related internships and programs such as the Center for Applied Competitive Technologies, Houser said. She particularly liked that the ETI’s state funding has increased over the years, Houser said. “That doesn’t happen unless you are doing something that’s working,” Houser said. In her role as the director of the institute, Houser said she wants to be the bridge between the college and its programs and the business community. If there is a program that companies want not being offered, then one will be created, she said. “It’s the mission of the ETI to be the preferred partner of choice for employers and it’s important to accurately assess what they need and then be able to deliver on that,” Houser said.

Santa Clarita officials are feverishly bidding for a new state designation that would make a portion of the city an Enterprise Zone. As many as 35 California cities are submitting applications for 23 available Enterprise Zone designations, which provide financial incentives and tax credits to businesses within a certain area. Santa Clarita Economic Development Director Carrie Rogers said that more than 30 staffers have spent the last six months preparing a comprehensive economic development plan to be sent to Sacramento before the Sept. 6 deadline. “We’re part of an extremely competitive process,” she said. “We’ve been working 16 hours days to get this thing done.” The Santa Clarita bid calls for the Enterprise Zone to cover most of the city’s existing industrial and commercial properties and addresses job development, underemployment, infrastructure, capital improvement and marketing. Businesses within the zone would receive income-tax credits from the state up to $31,544 per employee, accelerated business expense deductions, preference points on state contracts and use- and sales-tax credits for machinery. The Santa Clarita application targets biotech, entertainment and aerospace businesses. California has 42 Enterprise Zones, 23 of which will expire from September through March. Each one lasts 15 years. Locally, Enterprise Zones include portions of Lancaster and Palmdale as well as Pacoima, which was nearly disqualified earlier this month after it was discovered the area did not meet the minimum amount of industrial and commercial land in the zone. Gov. Arnold Schwarzenegger eventually changed the regulation. Enterprise Zones have usually applied to economically-depressed areas, similar to the federal Empowerment Zones. Santa Clarita, however, has for years been one of the fastest growing cities for business in the region. It was recently named one of the most business-friendly cities in the area by the Los Angeles County Economic Development Corp. because of its ample available land and lack of business license fee and utility user tax. More housing than jobs Still, Rogers said the city would benefit from even more businesses moving there. She cited a recent city-commissioned study that showed Santa Clarita has more housing units than jobs and that 70,000 residents leave the city for work each day. “As our population continues to grow, if we’re not able to attract the right types of businesses to get the workers off the freeway, it’s going to continue impacting not only traffic, but the jobs-to-housing imbalance will be even more significant,” Rogers said. She also pointed to recent local closures, including that of Delta Scientific and US Borax, and the possibility of the Magic Mountain theme park following suit. Other businesses have moved to other states. Dena Maloney, the dean of economic development at the College of the Canyons in Valencia, said the lost businesses have to be replaced. The Enterprise Zone designation will help draw new companies while ensuring existing ones don’t leave, she said. “This is a trend that we would like to address early on and provide the right type of economic climate,” said Maloney, who helped on the Santa Clarita application. “We need to make sure we’re creating jobs locally.” Rogers is optimistic that the state Department of Housing and Community Development, which administers the program, will agree. “We wouldn’t be applying if we didn’t think we had a good chance,” she said. Zone Benefits The California Enterprise Zone Program uses financial incentives to jumpstart industrial and business growth in more than 40 designated areas, 23 of which expire through next year. Benefits include: Tax credits for sales- and use-taxes paid on qualified machinery and equipment. Tax credits of more than $30,000 for hiring qualified employees. Accelerated business expense deductions. Net operating loss carryover. Interest deductions for lenders on loans. Preference points on state contracts. Unused tax credits can be applied to future tax years. Source: California Department of Housing and Community Development

The push by California Insurance Commissioner John Garamendi to have auto insurance premiums based less on where someone lives and more on how someone drives is putting some of the state’s auto insurance companies on edge. The mandatory change which Garamendi calls “Good Driver Reforms”, puts more of an emphasis on driving record, general driving experience and how much someone drives versus ZIP codes and marital status. So far, State Farm, Auto Club of Southern California and USAA Insurance have agreed to the new policies. Woodland Hills-based 21st Century Insurance Co. will submit its plan to the state before a Sept. 14 deadline, said Larry Krutchik, a spokesman for the company. “We’re a California company and we are complying with the regulations,” Krutchik said. “We’re committed to being fully complied,” he said. “We’re going to do what we need to do.” Krutchik would not elaborate about the difficulties the changes have presented. The insurance industry has been critical of the move and filed an unsuccessful suit to block it. In a note to investors, Meyer Shields, an analyst for Stifel Nicolaus, said insurance companies use ZIP codes to base premiums because history indicates certain factors impact whether a person is likely to submit claims. Taking that trend analysis away means premiums will not be as effective, he said. “Whenever the link between loss costs and rate levels is weakened, it becomes more difficult to manage underwriting profitability,” Shields wrote. “Territorial differences explain a lot of the variation in loss costs, meaning that restrictions on the use of territory will impede ratemaking precision.” Sales Up for Hemacare HemaCare Corp., a Woodland Hills developer of blood collection devices used in hospitals and clinics, reported its 11th straight profitable quarter for the second quarter ended June 30. Revenue for the company jumped $8.4 million from the same 2005 period and the boost drew net income to $360,000, or $0.04 per diluted share. Robert S. Chilton, executive vice president and CFO said the company’s 12 percent increase in revenues for the second quarter are a result of a restructuring of the business last year, which closed six underperforming divisions and refocused operations. The company also credited the jump in revenue to a 16 percent increase in sales of its blood products, which tallied $6.8 million in the quarter. Blood products revenue topped $1.7 million, or 15 percent, mainly due to sales growth in the California market. “We’ve been finding that our California customers have been receptive to our business model,” Chilton said. For the first six months of the year, HemaCare reported $16.6 million in revenue, up 14 percent from the same period in 2005. The first six months did see income drop 38 percent to $445,000 compared to last year, which the company credited to the recognition of $361,000 in non-cash share-base compensation expenses. The blood services sector also took a hit due to a 3 percent increase in the cost of albumin, used in certain therapeutic procedures. Overall, the division’s profit slipped $190,000, about 42 percent from last year, the company reported. The next phase is for HemaCare to enter the researching side of business, Chilton said. “We think research is a real good opportunity for us. The margins are good there,” he said. HemaCare also runs a blood donation center on Van Nuys Boulevard in Sherman Oaks. Help for CHAD? It was a rough first fiscal quarter for CHAD Therapeutics, the Chatsworth developer of oxygen and respiratory care devices. The company reported that revenue dropped to $5.5 million from $5.9 million a year ago. Losses continued with the quarterly loss posted at $116,000, or $0.01 per diluted share, from a net loss of $42,000, or $0.0 per diluted share during the same 2005 period. Revenue suffered from a 7 percent drop in sales of CHAD oxygen conservers and therapeutic devices. Domestic sales also suffered a 17 percent decline, with international sales faring worse, decreasing 42 percent. The bleak outlook, however, could turn around with an upcoming change in Medicare reimbursement procedures, which will give patients automatic ownership of equipment after 36 months. The change could mean healthcare companies will have to buy more equipment, said CHAD President and CEO Earl Yager. “By intensifying pressure on homecare providers to reduce operating and equipment costs, we continue to believe that this policy ultimately will stimulate demand for CHAD’s TOTAL O(2) home oxygen filling system ,” Yager said in a statement. CHAD also hopes to bring a new product to treat sleep disorders to market next spring. More Trouble for Cheesecake Nasdaq issued a letter last week to Calabasas Hills restaurateur Cheesecake Factory telling the company that it did not meet listing standards because of tardy second quarter financial reports. The company hasn’t submitted the reports because it is investigating how stock options have been issued. The problem meant that Cheesecake’s once high-flying ticker symbol was grounded as it appeals the ruling. Meantime the U.S. Securities and Exchange Commission is looking into Cheesecake’s stock options practices. At the same time, a group of shareholders are suing the company for abuse of control, waste of corporate assets and gross mismanagement. Staff Reporter Chris Coates can be reached at (818) 316-3124 or at [email protected] .

This regular feature focuses on philanthropic activities by Valley-area companies and businesspeople. The Blue Cross of California Foundation, the charitable giving arm of WellPoint Inc. announced it has granted the Tomas Rivera Policy Institute (TRPI) at the University of Southern California the resources to fund a one-year fellowship to study healthcare trends among the nation’s Latino community. Representing one of the fastest growing populations in the country, Latinos suffer disproportionately from many preventable health problems. Ongoing research to identify these issues is crucial to meeting this population’s needs in coming years. In a nationally competitive process, the WellPoint/TRPI Fellowship will be awarded in early September with the fellow’s research being published and distributed throughout the public health community. “We are confident the data gathered will help provide policymakers and healthcare providers with valuable information to better understand these critical health issues and work together with us to improve the overall health of this country’s burgeoning population,” said David Helwig, president and CEO for WellPoint’s western region. “We appreciate the foundation’s strong commitment to the Latino community”, said Harry Pachon, Ph.D., president of the TRPI and a public policy professor at USC. Blue Cross of California Foundation invests in social programs and partners with non-profit public charities focusing on making health care more accessible, affordable and helping to shape the development of health-related public policy. Gift for Foundation The charitable foundation of the Encino-Tarzana Hospital is the recipient of a $2,000 gift from the new Ventura Boulevard bistro, the Coral Tree Caf & #233;. The foundation was the guest of honor at the Encino restaurant’s recent grand opening and ribbon cutting ceremony, where it was presented with the donation. The Encino-Tarzana Hospital Charitable Foundation is dedicated to promoting good health habits among San Fernando Valley residents by supporting programs, activities and charities that focus on wellness. The caf & #233; is dedicated to promoting nutrition by offering health-conscious menu items. 9/11 Anniversary Event Local non-profits and community leaders of Ventura County are preparing to honor the 5th anniversary of 9/11 with the inaugural 101 Leadership Summit for non-profit & charity leaders. Scheduled for September 8 at the Sherwood Country Club in Thousand Oaks, organizers from the 101 Leaders Alliance anticipate the event will assist groups with leadership challenges that 101 corridor groups face with today’s uncertain times. The full day event will concentrate on programs such as motivating volunteers, generating more revenue from projects and events and building a community of supporters. Among the presenters will be Bob Brooks, Ventura county sheriff and Jeff Cathcart, founder of the alliance.

The internet search engine Google will start selling online ads outside the U.S. for eBay. Read the story in the Chicago Tribune.

So far, the numbers aren’t bad, but anyone listening closely to some of the comments coming from CEOs can’t help but notice the hint of some economic bumps ahead. Phrases like “challenging retail environment” and “slowing pace of home sales,” are creeping into the vernacular of the heads of companies nationwide as they size up performance of recent months and look to the second half, and the San Fernando Valley is no exception. Other troubles that could take an economic toll locally have also been emerging in recent months. Ford Motor Co. has said it may reduce its dealership network, which now numbers about a dozen in the Valley. Several of the Valley’s tech companies, including Vitesse Semiconductor Corp., THQ Inc. and Semtech Corp. are all facing SEC investigations. And the threat of inflation continues to dog the economy. The Valley, with its diverse economy, is likely to fare better than most in the second half of the year and the next one, experts say, but some sectors are primed for a downturn and, overall, there are signs that the growth of recent quarters is slowing considerably. “Indications are the economy is slowing its pace of growth, and that will slow revenues,” said Dan Blake, director of the San Fernando Valley Economic Research Center at California State University Northridge. “Secondly, we’ve seen a boost in the inflation rate, which means companies’ costs are going up, and we know that their energy costs are going up and that can be a big chunk for some companies.” As books closed on the first half of 2006, many of the Valley’s largest public companies reported enviable increases in earnings and revenues. Still, a review of the 10 largest public companies in the region showed an average 4 percent decline in earnings and a more modest 9.5 percent increase in revenues, a performance that seems all the more lackluster in light of several previous quarters when the group averaged double digit growth in earnings and revenues. The first half earnings slump was due mostly to Amgen, which saw a 47 percent decline in net income to $1 billion or $0.84 per share in the first half of 2006 compared to $1.9 billion or $1.49 per share in the first half of 2005, largely due to acquisition expenses, and Ixia, which was hit by problems at Cisco Systems Inc. that affected numerous telecom companies. Ixia reported its net income fell 95 percent to $785,000 or $0.01 per share on revenues of $78.8 million, off just a hair from revenues of $79.7 million in the second half of 2005. Entertainment, health care and insurance sectors registered some of the strongest numbers in the first half of the year. Earnings at Health Net Inc. more than doubled to $153.6 million or $1.30 per share from $74.9 million or $0.66 per share in the comparable period a year ago. Zenith National Insurance Corp. reported its earnings rose 30 percent to $11.6 million or $3.00 per share, compared with $85.7 million or $2.36 per share in the 2005 half year. And 21st Century Insurance Group logged a 24 percent increase in earnings to $49.6 million or $0.58 per share, versus net income of $39.9 million or $0.47 per share in the first half of 2005. Walt Disney Co., which last month reported its nine-month figures, logged a 20 percent earnings increase to $2.6 billion or $1.28 per share, compared with earnings of $2.2 billion or $1.03 per share in the first nine months of 2005. But even among some companies that saw earnings rise by 10 percent or more, there were indications that the momentum was flagging. Home builder The Ryland Group, which reported a 10.6 percent earnings increase for the first half, also noted that new order dollars in the second quarter of 2006 declined by 40 percent and new order units fell 39.4 percent. Although its first half earnings rose 12 percent to $1.4 billion or $2.25 per share, Countrywide Financial Corp., noted that pre-tax earnings on loan production in the first half declined 47 percent. Shortly thereafter, the company noted that mortgage loan fundings for the month of July were off 19 percent from levels a year ago. And at music retailer Guitar Center Inc., where earnings in the first half were relatively flat, at $29.1 million or $1.03 per share, officials said they anticipate that net income in the third quarter will fall closer to the low end of the guidance range provided in February. “The baton is being passed from the consumer to the business sector, and I think that’s real,” said Hessam Nadji, managing director of research services at Marcus & Millichap of the shift from the past several years when consumer purchasing fueled economic growth. The slowdown in consumer spending is likely to affect the local economy in many ways, these experts said. A general tightening of purse strings will likely affect restaurants, entertainment and big-ticket durable purchases such as automobiles and washing machines. Then too there are the jobs that were generated over several years of frenzied home buying activity employment levels in construction, the mortgage industry, real estate brokers and home improvement store workers all will decline, depriving the economy of that spending power as well. In 2004, the most recent year for which those figures are available, the Valley’s real estate industry generated an annual payroll of $500 million, according to San Fernando Valley Economic Center data. “With home sales down, you wouldn’t have a disappearance of 25 percent of that, but you would have some of that going away,” Blake said. The Economic Center data projects employment growth of 1.6 percent in 2006 with a slight rise over that in 2007. But Blake said current indicators suggest 2007 growth may be slower still. “We think it might be closer to 1.6,” said Blake, who is currently at work revising those earlier predictions. For several years now, as business retrenched, consumer industries have more than picked up the slack. Now, however, as consumers appear to be tightening their belts, business will not be able to pump enough into the economy to make up for the losses on the consumer side, experts say. “Two-thirds of the economy is driven by consumers,” said Nadji. “No matter how much business kicks in, there will be a shift and slowdown in growth, but I don’t see it as becoming a dramatic downturn, especially in the San Fernando Valley, for a number of reasons.” Nadji said that in the Valley entertainment, business services, health care and education will help to mitigate the consumer spending downturn.