Frisco's Exide Plant ready to make Upgrades to cut Lead Emissions

Dallas Morning News

Upgrades are scheduled next week to help reduce lead emissions from a battery recycling plant in Frisco.

Plant manager Don Barar said he has already made several changes at Exide Technologies Inc.'s local facility. It's in one of up to 17 areas around the country not expected to meet new federal air-quality standards for lead, a toxic metal that causes serious health issues. The Environmental Protection Agency is scheduled to finalize the proposed areas as early as Friday.

Barar said the plant will shut down operations for a week beginning Monday to improve its bag houses to capture even more lead particles.

"I'm encouraged by the work done at the facility," Barar said. "I believe we're on the verge of compliance" with the new standards, he said.

But Frisco City Manager George Purefoy said Wednesday that's not enough. He and other city leaders issued an ultimatum in a letter to residents released last week. City leaders want Exide to be the "most environmentally advanced plant in the country." If Exide can't do that, then it doesn't belong in Frisco, Purefoy said.

New standards

Battery recycling companies are looking at improvements because of new standards for lead issued in 2008 that are 10 times as stringent. The only area in the south-central U.S. not expected to meet that new standard is in Frisco. State regulators have proposed a 2.4-square-mile area around Exide Technologies that stretches from Frisco High School north to Pizza Hut Park and includes City Hall, several neighborhoods and businesses.

The proposed boundaries are based on maximum emissions allowed under the company's permit rather than actual lead emissions. Last year, Exide emitted 1.67 tons of lead. Its permit allowed up to 6.9 tons per year.

Exide officials and Frisco city leaders have been trying to reduce the proposed boundaries of the area to more accurately show where lead levels are too high. Doing so could spare a large number of properties.

Purefoy said property values are a concern, but the bigger issue is making sure the boundaries reflect reality rather than relying on the company's outdated permit levels.

"There is no doubt that it has caused a lot of concern in a lot of people's minds," he said. "If [the permit levels are] not relevant, why would you continue to worry those people?"

To bolster their case, Exide applied for a permit reduction Oct. 5. State regulators approved it a day later. Gov. Rick Perry has since sent a letter asking the EPA to consider new boundaries based on the reduced permit.

EPA spokesman Dave Bary said he doesn't know whether the boundaries will be changed this late in the process.

Barar, Exide's plant manager in Frisco, said that a new area could be as much as 50 percent smaller than the one proposed. The size of the area won't affect upgrades that the plant needs to make to reduce lead emissions. But it could allay some people's concerns. Barar said he was unsure whether the last-minute change would be considered.

"A smaller nonattainment area ... does a better job helping people understand who is and who may not be at risk," Barar said. "The goal here is to try and develop something that accurately reflects the data that we have and what real emissions are."

Pollution controls

Meanwhile, the city hired a consultant to investigate technology installed at a battery recycling facility in Southern California that reduced emissions well beyond the new standard for lead and other compounds. Dallas-based RSR Corp. has said lead emissions from its Quemetco plant in Los Angeles County dropped from 915 pounds a year to 10 to 12 pounds.

The pollution reduction has been remarkable, said Barry Wallerstein, executive director of South Coast Air Quality Management District, the regulator in that part of the state.

He said RSR has pushed the agency to approve more stringent air-quality regulations that would essentially force Exide to spend $20 million on similar pollution controls at its California plant 15 miles away.

How Texas Escaped the Real Estate Crisis

The Washington Post

These owners in San Antonio are in the minority in Texas. Fewer than 6 percent of the state's homeowners are in or near foreclosure.

 

It's one of the great mysteries of the mortgage crisis: Why did Texas -- Texas, of all places! -- escape the real estate bust? Only a dozen states have lower mortgage foreclosure and default rates, and all of them are rural places such as Montana and South Dakota, where they couldn't have a real estate boom if they tried.

Texas's 3.1 million mortgage borrowers are a breed of their own among big states with big cities. Fewer than 6 percent of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10 percent. The land in Texas might look an awful lot like its Sun Belt sisters Arizona (with 13 percent of its borrowers in foreclosure) or Nevada (19 percent) -- flat and generous in letting real estate developers sprawl where they will. Texas was even the home base of two of the nation's biggest bubble-era homebuilders, Centex and D.R. Horton.

Texan subprime borrowers do especially well compared with their counterparts elsewhere. The foreclosure rate among subprime borrowers in Texas, at less than 19 percent, is the lowest of any state except Alaska. Part of the reason is that Texas didn't experience the stratospheric run-ups in home prices that other states did. On average, the home-resale prices of the 20 metro areas in the Case-Shiller Home Price Index peaked in 2006 after more than doubling since 2000. In Dallas, one of the 20 areas, they rose just 25 percent, gradually, and have barely declined.

But there is a broader secret to Texas's success, and Washington reformers ought to be paying very close attention. If there's one thing that Congress can do to help protect borrowers from the worst lending excesses that fueled the mortgage and financial crises, it's to follow the Lone Star State's lead and put the brakes on "cash-out" refinancing and home-equity lending.

A cash-out refinance is a mortgage taken out for a higher balance than the one on an existing loan, net of fees. Across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans cannot total more than 80 percent of a home's appraised value. There's a 12-day cooling-off period after an application, during which the borrower can pull out. And when a borrower refinances a mortgage, it's illegal to get even a dollar back. Texas really means it: All these protections, and more, are in the state constitution. The Texas restrictions on mortgage borrowing date from the first days of statehood in 1845, when the constitution banned home loans.

"Delinquency and foreclosure rates are significantly lower in Texas," says Scott Norman of the Texas Mortgage Bankers Association. "The 80 percent loan-to-value limit -- that's the catalyst for a lot of this."

Research from the Federal Reserve Bank of Dallas backs up Norman. Texas's low-ish unemployment rate, 8.6 percent, is a help. But so is the fact that fewer Texans took cash out of their home equity than did borrowers in any other state -- and took out less when they did. The more prevalent cash-out refinances are in a state, the more likely it is that mortgage borrowers there will run into trouble. For every 1 percentage point increase in a state's share of subprime mortgages that are cash-out refinances, the likelihood of foreclosure in that state goes up by one-third of a percent.

During the boom, cash-out refinancings were the unofficial currency of bubble states from Florida to California, beloved by mortgage brokers as a way to persuade existing homeowners to take out new loans repeatedly. As home values surged, the sales pitch was a slam-dunk: Borrowers could refinance their homes at extremely low interest rates, and based on newly reappraised property values, they could get more cash in their hands than they might earn in a year. Sure, these were teaser rates that would adjust upward after two years, but brokers routinely assured borrowers they could just refinance again before that happened.

Subprime cash-out refinancings became a standard way for borrowers drowning in credit card debt to pay it off, boost their credit scores so they could qualify in a few months to refinance into a lower-rate prime mortgage, and get a big tax deduction in the bargain. Edmund L. Andrews recounts in his underappreciated book "Busted" how he conjured $50,000 this way.

Homeowners and mortgage brokers weren't alone in their addiction to the cash that flowed from homes-as-ATMs. The entire U.S. economy was right there with them. One of Alan Greenspan's lesser-known contributions to the annals of the credit crisis was a pair of studies he co-authored for the Fed, sizing up exactly how much Americans borrowed against their home equity in the bubble and what it was they were spending their newfound (phantom) wealth on.

Greenspan estimated that four-fifths of the trifold increase in American households' mortgage debt between 1990 and 2006 resulted from "discretionary extraction of home equity." Only one-fifth resulted from the purchase of new homes. In 2005 alone, U.S. homeowners extracted more than half of $1 trillion from their real estate via home-equity loans and cash-out refinances. About $263 billion of the proceeds went to consumer spending and to pay off other debts.

As home prices skyrocketed in many markets, cash-out refinancings became standard, even in the relatively sober world of Fannie Mae and Freddie Mac. By 2006, Freddie Mac reported that 88 percent of refinance mortgages it purchased were for amounts at least 5 percent higher than borrowers' previous loan balances. Subprime lenders, in insane pursuit of risk, piled on with cash-out refinances for high-risk borrowers, often approaching the appraised value of the home.

But not in Texas. A borrower there can secure a home-equity line of credit from a bank. And she can refinance her mortgage or take out a home-equity loan. But the total amount of debt on a home cannot exceed 80 percent of its appraised value, and any proceeds cannot be used to pay off other debts.

Until 1998, Texans couldn't take out home-equity loans at all. The roots of this fierce resistance to debt's temptations go deep in Texas history. Seven years before the republic joined the Union in 1845, many homesteaders lost their property because of a bank panic and the resulting foreclosures. Drawing from Mexican codes protecting landholders, the new constitution of the state of Texas forbade lenders from peddling mortgages to homesteaders.

The home-equity restrictions have not only helped keep cash-out refinances a rare breed in Texas; other risky mortgages were scarce there, too. The home-equity borrowing restrictions helped keep home prices from overinflating, and home buyers therefore didn't need to turn to exotic mortgages with such features as 2/28 ARMs, interest-only payments, or negative amortization in order to buy a home. Even when they did, Texas law requires these risky features to be clearly disclosed. Fewer than 20 percent of Texas subprime mortgages included any of them.

That's not to say that Texas borrowers didn't get into bubble trouble. Plenty bought overpriced houses, which is why one in eight Texans now owe more than their home is worth. And it was easy enough for lenders to get around the home-equity borrowing limits by using creative appraisals that pretend a home is worth more than it really is. But the casualties are orders of magnitude less than they would have been without the home-equity limits.

Mimicking Texas would be the perfect opportunity to get our home-equity debt addiction under control and learn to live as an 80 percent nation.

Raytheon Shopping for Big Texas Office Space

The Dallas News

A high-profile office tenant is shopping for a big block of space in Dallas' northern suburbs.

International defense and high-tech conglomerate Raytheon Corp. is looking for potential locations for consolidating its Dallas-area offices, real estate brokers say.

The deal would encompass several hundred thousand square feet of space and would be one of the largest in the Dallas area in the last year.

Raytheon already looked at moving into part of the former headquarters of Electronic Data Systems, which is now a unit of Hewlett-Packard. But a transaction to take over a large portion of the EDS headquarters building in the Legacy business park fell through, real estate agents familiar with the deal said.

Raytheon is now considering office locations in the Telecom Corridor, including Nortel's buildings along U.S. Highway 75 near Campbell Road.

Officials with Massachusetts-based Raytheon wouldn't confirm that the company is hunting for office space. But they didn't rule it out.

"We stay abreast of opportunities in the market," Raytheon spokesman Keith Little said. "We don't discuss specific properties that we may be considering."

Real estate brokers say the EDS headquarters and Nortel buildings are logical choices for a company that needs a big office in Dallas' northern suburbs.

Both companies have reduced the amount of space they use in the Dallas area in recent years, and Nortel is in bankruptcy.

"Yes, we have been talking to companies about the Richardson space," said Nortel spokesperson Jamie Moody. "And, just like we're selling off all our businesses, we are also selling our assets, including real estate, so that we can recover the greatest value in the interest of our creditors."

Despite a real estate downturn that has left acres of North Texas' office space sitting empty, there are few prime vacant offices as big as Raytheon would need.

"For spaces 200,000 and up, your options are fairly limited," said Greg Biggs of Cushman & Wakefield of Texas. "We are working on a transaction in North Dallas that's fairly sizable, and the amount of existing space available is fairly limited in big blocks."

Raytheon has operations in several Dallas-area locations, including on U.S. Highway 75 north of LBJ Freeway, farther north in McKinney and on Lemmon Avenue in Dallas.

Unlike in previous economic downturns, the area isn't awash in vacant Dallas apartments or office space. That's why some companies – including Pizza Hut – have recently chosen to build.

"We don't have all the see-through [empty] buildings we had here in the early 1990s," said Greg Langston, managing principal in CresaPartners' Dallas office. "One thing we didn't do is overbuild this time."

REIT Shopping for North Texas Medical Offices

Dallas Business Journal

Arizona-based Healthcare Trust of America was one of the country’s most active investors in 2009, spending $494M

Healthcare Trust of America Inc. is scouring North Texas for health care real estate acquisitions.

The Scottsdale, Ariz.-based real estate investment trust is looking to invest a portion of its $225 million cash reserves in the Dallas-Fort Worth medical marketplace.

The company has a portfolio of health care properties throughout the U.S., about 90% of which are medical offices and smaller hospitals, said Mark Engstrom, executive vice president for acquisitions at Healthcare Trust of America. HTA is looking to invest in health care as a defensive strategy to weather the downturn, he said.

“It doesn’t have as much of the cyclical variability as other types of real estate investments,” Engstrom said.