Pacific Coast Business Times Proudly serving Ventura, Santa Barbara and San Luis Obispo counties 2014-10-31T21:52:11Z WordPress Elijah Brumback <![CDATA[Figueroa Mountain says ‘Prost!’]]> 2014-10-31T21:52:11Z 2014-10-31T21:52:11Z Buellton-based craft brewer Figueroa Mountain is headed across the pond with plans to open a new taproom and brewing operation in Germany.

Terra Lee Inglis, bar manager at Figueroa Mountain Brewing Co., pours a draft beer for a customer. (Nik Blaskovich / Business Times photo)

Terra Lee Inglis, bar manager at Figueroa Mountain Brewing Co., pours a draft beer for a customer. (Nik Blaskovich / Business Times photo)

Brewbound, a source for all things beer industry related, dropped the news Oct. 30 that Figueroa is headed to the Bavaria region of the country and plans to start contract brewing there within six months as it looks for possible build sites.

“We’ll start off as a small regional brewery and can grow from there and test the market,” brewery President Jaime Dietenhofer told Brewbound. “Maybe that’s more tied into a 15-barrel system with multiple fermenters just like we started over here and if we need to add capacity we will.”

The moves comes as the country’s 10-largest craft brewer Pasadena-based Stone Brewing is planning it’s own $25 million facility in Berlin.

Brewbound reports that Figueroa plans to finance its project with inside capital and potential international partners, though the company’s ambitions are much more humble than Stone’s.

“One of the things we’re really happy about, we wanted to be this kind of university for our brewers and staff,” Dietenhofer told Brewbound. “We can send them overseas and vice versa, bring staff from Germany to us and kind of cross-pollinate.”

The Business Times recently reported that the Figueroa was moving all its 20,000 barrel per year distribution operations over to Jordano’s Pacific Beverage Company. Earlier this year Figueroa also told the Business Times that it’s opening several new locations throughout the Central and South Coast region.

The brewer is investing almost $6 million for three new taprooms located in Santa Maria, Arroyo Grande and and Westlake Village. Both the Arroyo Grande and Westlake Village locations will produce up to 1,500 barrels annually. The Santa Maria taproom is expected to open Nov. 22. A San Luis Obispo location is also in the works for the new Public Market under development there as well.

Figueroa has partnered with Milano Restaurant Group to help finance the Arroyo Grande and Westlake Village projects, and the company also expects to have its offerings available in the Central Valley and Bay area by 2016, according to Brewbound

Tom Bronzini <![CDATA[O’Connor recalls barriers women attorneys faced]]> 2014-10-31T18:03:52Z 2014-10-31T17:55:57Z Retired Supreme Court Justice Sandra Day O’Connor, the first woman to serve on the nation’s highest court, recalled during an appearance at Cal State Channel Islands that in order to land her first job as an attorney after graduating high in her class at Stanford Law School, she offered to work for free and share a desk at the office.

The former associate justiceO'Connor 1, who stepped down in 2006, charmed an audience of 600 Thursday evening with often amusing stories of how she got her start after growing up as a cowgirl on a Southwest cattle ranch, and how she overcame the formidable barriers women faced in the legal profession. She spoke at a program hosted by the university’s history and political science programs.

Justice O’Connor was interviewed onstage by attorney Kathleen Smalley, one of her first law clerks on the high court who is now with the national law firm Boies, Schiller & Flexner LLP.

O’Connor recalled that after graduating in a Stanford law class that included William Rehnquist, who became the 16th U.S. Supreme Court chief justice, she interviewed at law firms and was asked how well she could type. “They just didn’t have many women in the legal profession in those days and the firms really weren’t looking for us,” she said.

She was hired in 1952 as a deputy attorney at the San Mateo County Attorney’s Office at very low pay after she offered to work for free and share a desk.

After her husband, attorney John O’Connor, was drafted into the Army, she went with him to Germany and worked as a lawyer for the Army’s Quartermaster Market Center in Frankfurt. Upon their return to the States in 1958, she found that nothing had changed; law firms were still not hiring women.

O’Connor set up her own practice and found that it was hard to get business. “But it all worked out,” she said to laughter from the audience. She later served as assistant attorney general of Arizona from 1965 to 1969.

At that point in her career, she entered the political arena and eventually became majority leader of the Arizona State Senate, the first woman in a leadership position in a state legislature.

When Smalley asked the former justice why she decided to enter politics, O’Connor quipped, “Well it was easier than getting a job.”

In the Legislature, O’Connor was a leading advocate of merit selection of judges, a scheme approved by voters. “…We still have it and it’s been a great thing, it really has,” O’Connor said. “I wish every state would adopt that.”

O’Connor became a trial judge in Arizona, and under that merits election system, she rose to the Arizona Court of Appeals.

O’Connor said it was a big surprise when Ronald Reagan asked her to be his nominee to the U.S. Supreme Court. She said she was thrilled and happy to take on the challenge. “If I goofed up, it was going to set things back pretty badly,” she said. “I worked hard to try not to leave a bad impression and it was a wonderful experience.”

She won unanimous support from the Senate and served on the high court from 1981 to 2006. She won votes from diverse quarters, from Sen. Barry Goldwater on the right to Sen. Ted Kennedy on the left.

Smalley took note of the current political rift in Washington and asked the former justice if there is something wrong with the way we are going about nominating and trying to confirm justices of the Supreme Court.

“Oh I don’t think so,” O’Connor said, “because I think members of the Senate do have the power to vote no on a nominee if they think the person isn’t qualified. I think that’s one of the inherent benefits of being a senator. So you can’t really say they’re not doing what they’re supposed to be doing. They are entitled to vote no.”

Smalley asked O’Connor how much being a woman influenced her decisions on the court.

“Oh I’m sure on some of them, where the gender was an issue in the case, it could have made a difference in a way, what I said as opposed to what one of my male colleagues said, but I think by and large these cases are decided based on legal principles that have been discussed in previous cases and decided, and so the process works I think slowly but well,” O’Connor said.

In recent years, O’Connor has devoted her energies to improving civics education for young people through a nonprofit that she founded called iCivics. She said she noticed that many young people who went through grade school, high school and even college don’t know much about how government works and how the courts work, often to a shocking degree.

Her nonprofit’s website,, features resources for teachers and educational games that students can play. Smalley cited figures showing that 40 percent of the nation’s middle school teachers now use iCivics, and the website reached 2 million students last month.

Elijah Brumback <![CDATA[Amid falling energy prices, Venoco slims down]]> 2014-10-31T14:35:18Z 2014-10-31T07:03:33Z Venoco, the Denver-based oil company with significant operations in the Tri-Counties, has signaled to bond holders that it is struggling to manage its debts, and that the company is selling assets and cutting its workforce to help balance the books.

The firm has been on a financial roller coaster since 2012, when founder and CEO Timothy Marquez made a play to take the company private in a $471 million deal.

Recently, Venoco’s chief accounting officer Doug Griggs and chief financial officer Tim Ficker tendered their resignations on the heels of another amendment to the company’s credit facility and the pending divestiture of its West Montalvo oil field — a major gas producing site.

With revenue sagging and pressure mounting to reduce its debt load, Venoco agreed to sell the Oxnard field for $200 million to an unnamed buyer. News of the sale also followed an earlier announcement that the company was cutting just under 10 percent of its workforce. The company said that by hedging against oil price declines and taking other steps it can ride through recent sharp declines in prices for oil and gas.

“We recently closed on the amendment of our revolving credit facility with our bank group, which contemplates a revised borrowing base following the divestiture of our West Montalvo field,” said Venoco Investor Relations Manger Zach Shulman in an email to the Business Times. “This divestiture is moving ahead as currently planned with closing anticipated by the end of October. All of the net proceeds of the sale will be applied towards the credit facility which will go a long way in reducing our total debt balance.”

Venoco acquired the mostly idled field in May 2007 for $61.3 million and would gain about $138.7 million on the sale, excluding the money the firm spent re-working the field to bring wells back into production.

The West Montalvo field is in the midst of being revitalized. The field has both onshore and offshore oil, all of which can be reached by offshore wells. The company had 37 producing wells on the site at the end of last year, most of which were existing wells that had been idle. Venoco was processing data from a 3D seismic survey when the sale of the field was announced, the Business Times previously reported.

In addition to the Montalvo sale, the company also sold 109,000 acres of Monterey shale holdings it had in the Central Valley. It kept 34,000 acres of onshore Monterey shale, much of it in the Santa Maria basin, along with its offshore holdings, which include three drilling rigs in the Santa Barbara Channel. At the time the company said it planned to focus on its three largest fields, most of which are in the Tri-Counties.

The going-private deal, which created much of the big debt burden the company faces, was financed with a mix of bonds and revolving credit lines and imposed financial terms that tighten over time. Venoco must keep its assets and liabilities evenly balanced, and its debts can’t exceed five and a half times its pre-tax earnings, according to company filings.

Venoco had projected that it would be in violation of those terms by the end of September, which could cause its lenders to immediately demand large payments. The company said it planned to ask for a waiver while the West Montalvo field transaction is pending, according to previous Business Times reports.

With crude prices slumping toward $80 per barrel, Shulman said he’s been in constant contact with company bond holders. The falling prices of oil have created liquidity constraints for companies like Venoco with significant borrowings. Still, Shulman said the dip in prices or any further drops are something the company is prepared to handle — even at $70 per barrel.

“The oil and gas business has always been characterized by fluctuating commodities prices, so the recent decline is not something our seasoned team hasn’t dealt with before, and we have measures to address this environment,” Shulman said. “We employ a hedging strategy to reduce the variability of the prices we receive not only to mitigate the impacts to cash flows but also to provide support in executing our capital programs. We have always taken a prudent approach to hedging; a significant portion of our 2014, 2015 and 2016 production is hedged, and we have floors above current market prices. Additionally, as we move forward in formulating our 2015 capital program, we will create a variety of executable scenarios that account for a range of price scenarios – most of our development projects are still economic at $70 per barrel.”

While it’s too early to say for certain what the company’s 2015 capital program will include, recent discussions with its lending group were productive, and the most recent amendment to credit facility allows for the investment of capital into “attractive” projects in Southern California, Shulman said.

“We have an excellent business development team in place that is constantly evaluating fields around California and the nation,” he said. “A lower price environment doesn’t change our outlook or approach which is to find and develop oil and gas assets that are characterized by relatively low decline and long lived reserves.”

In addition to the search for new production sites, Venoco is also considering additional divestitures of non-core assets to improve liquidity. The company is also actively pursuing acquisition opportunities considering the lower price environment and are looking to engage financial partners, Shulman said.

For the first six months of 2014, Venoco’s revenue was down 22 percent to $129.1 million, compared with a year earlier. Net income was $807,000 compared with $36.9 million the same period the previous year.

Marissa Wenzke <![CDATA[Munger on a mission: Housing for 21st century scholars]]> 2014-10-31T14:29:39Z 2014-10-31T07:02:26Z Charles Munger, vice chairman of Berkshire Hathaway, speaks during an event in Pasadena in 2011. (Bloomberg News photo)

Charles Munger, vice chairman of Berkshire Hathaway, speaks during an event in Pasadena in 2011. (Bloomberg News photo)

Ranked No. 17 on the Chronicle of Philanthropy’s Top 50 individual donors for 2013, it’s clear that Berkshire Hathaway Vice Chairman Charles Munger, a frequent South Coast visitor, believes in the concept of a community of scholars.

Munger made headlines nationwide when he gave $65 million to UC Santa Barbara to fund a planned scholars residence for the Kavli Institute of Theoretical Physics, enlisting South Coast developer-financier-philanthropist Mike Towbes, whose Towbes Group will build the three-story project.

The gift, the largest in the university’s history, caps a roller-coaster year for UCSB, where a shooting rampage in Isla Vista shook the campus months ago and more recently, UCSB physics researcher Shuji Nakamura brought light to the university with a Nobel Prize in physics on Oct. 6.

Coming just a few weeks after the Nakamura award, news of the Munger gift first leaked when he filed with securities regulators to donate 100 shares of Berkshire Hathaway stock to UCSB. 

The gift underscores the way that Munger’s philanthropy at times diverges sharply from that of Berkshire Hathaway’s more famous chairman, Warren Buffett. Buffett has pledged some $37 billion to the Bill and Melinda Gates Foundation, whose work eradicating disease in poor countries is world-renowned.

At the other end of the socioeconomic scale is Munger, who pledged $110 million last year to the University of Michigan for interdisciplinary housing for graduate students and fellows. He once studied at the campus as an undergraduate but did not graduate, later graduating from Harvard Law School after serving in the military.

In 2011, he gave $20 million to renovate housing for law students at the University of Michigan’s Ann Arbor campus. And his philanthropic efforts for well-endowed, top-notch schools reach back to 2004, when he and his wife donated $43.5 million for building residential halls at Stanford University.

Munger has said more than once that he believes housing is key to graduate education. “It’s very uncommon that administrations are much interested in creating dormitories because if you’re an elite place and you’ve got 10 applicants for every spot, it’s perfectly natural to think ‘Why the hell do we need to do any more for the students? They’re begging to get in,’ ” the San Francisco Chronicle once quoted him saying. “I don’t think you abuse your best customers merely because you can get away with it.”

The Kavli Institute, named after the late Fred Kavli whose Moorpark-based company was a leading producer of circuit boards and advanced electronics, will not suffer from vacancies or reach out to other departments to keep it full, according to the institute’s director, Lars Bildsten.

“The amount of visitors we have at the KITP is such that we really expect the building to be full, with 60 to 80 visitors at a time,’’ he told the Business Times.

The new building, which will be 75,000 square feet, will likely be filled to the brim with visitors to the Kavli Institute, he said. Featuring apartments with kitchens and bathrooms located in each one, the new building will also include some common study and lounge areas. 

Most Kavli Institute visitors are faculty from other universities and independent researchers; however, some graduate students and Ph.D. candidates also visit the institute. No undergraduates will live at the new facility and there are no future plans to introduce undergraduates to the new building or any similar facility.

Bildsten was coy about whether the building will be named after Munger, saying, “We’re still letting that play out.”

But Munger, at age 90, continues to roll up his sleeves and get involved in a way that goes way beyond writing checks, Bildsten said, adding that he doesn’t just put monetary resources into the gift but also “time, energy and thought.” The multi-billionaire played a key role in the upcoming UCSB building’s planning, Bildsten said. “The way Charlie works is fantastic because he really thinks about the design.”

The Kavli Institute is distinct from the UCSB Department of Physics, although the two facilities have overlapping faculty and visitors.

With about 10 different 10-week programs throughout the year, the institute hosts around 70 visitors at any given time. Each visitor stays for about a month and the institute estimates that in any given year the number of visitors can reach 1,000 or more.

In making the gift, Munger superseded Jeff Henley, who along with his wife Judy, has pledged $50 million to the UCSB Institute for Energy Efficiency and related programs.

In an email to the Business Times, Henley said he “tried to raise the bar when people think about UCSB,” adding, “I view Charlie’s gift as a huge endorsement of the quality of what we do and I’m delighted he’s topped my gift.”

Now that the door for gifts in the $50 million-plus range has been opened, there may be more. “Over time, I would guess that both Charlie and I will continue to support the great work at UCSB,” Henley wrote.

Elijah Brumback <![CDATA[Santa Maria Valley awaits business park]]> 2014-10-31T14:20:48Z 2014-10-31T07:01:56Z


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Henry Dubroff <![CDATA[Dubroff: A tale of turnout, transition and the state of tri-county politics]]> 2014-10-31T14:14:18Z 2014-10-31T07:00:57Z Henry Dubroff

Henry Dubroff

So many races, so little time.

With the 2014 election cycle headed into the home stretch, it’s fairly clear that among the very few heavily contested elections there is a lot to learn about the future of politics in the region.

The first lesson is that women are playing an ever-larger role. In the three races we’ll be talking about in this column — the 26th Congressional District, the 44th Assembly District and 4th District race for Supervisor in San Luis Obispo County — five of the six candidates are women.

The second is that turnout is going to matter an awful lot in this election. That’s part of the reason former President Bill Clinton made a surprise visit to Oxnard College on Oct. 29 to stump for 26th District Candidate Julia Brownley, a Democrat from Westlake Village. She faces a tough challenge winning a second term against 44th District Assemblymember Jeff Gorell, a very likeable moderate Republican who has a distinguished record of service as an officer in the Navy Reserve.

Without large turnout from heavily Democratic and Latino neighborhoods in Oxnard and elsewhere in Ventura County, Brownley’s race is likely going to be down to the wire. That’s not just my view: Real Clear Politics, one of the few national organizations following the race, makes that point on its website.

Likewise Jacqui Irwin, a Thousand Oaks Democrat and the favorite to replace Gorell in the assembly, needs a strong turnout from the same neighborhoods in the Oxnard plain to defeat Rob McCoy, the GOP candidate, a pastor from Ventura County who was little-known before the primary.

The third theme of this election is the polling power of centrist candidates. That’s the question incumbent Caren Ray is facing as she squares off against Lynn Compton, a relative newcomer who gets a lot of her support for the southern SLO County district from conservative organizations such as Colab.

Ray was appointed to her post by Gov. Jerry Brown when incumbent Paul Teixeira died suddenly last year. She’s impressed a number of people, including the editorial board at the San Luis Obispo Tribune, which gave her a ringing endorsement and noted her role as a powerful swing vote on a board that is split 2-2 between liberals and conservatives.

Irwin, one of the more pro-business voices on the Thousand Oaks city council, is a more centrist candidate than McCoy. To appeal to a broader base of Democrat voters, she has stressed her record on education and women’s issues.

McCoy recently has gotten big donations from the Republican Party coffers of SLO and San Bernardino counties in an effort to counter the more than $1 million that’s poured in from unions and others in support of the Irwin campaign. It is clear that the loss of one more seat in the General Assembly is something the GOP would like to avoid.

Brownley, who ran a successful campaign on social issues such as education two years ago, has been trying to broaden her credentials, particularly when it comes to securing money for Naval Base Ventura County.

Gorell has a compelling argument for sending him to join the majority in the House but he has to convince voters he’ll stick to his moderate guns if elected.

Money and party lines still count. But in the end, turnout will matter most. That’s certainly true as Ventura County picks a candidate for a rare open seat in the assembly and picks a House member who could be around for decades to come. And in the contentious race for 4th District Supervisor, turnout will matter a lot in San Luis Obispo County too.

Guest commentary <![CDATA[Op/ed: Blaming QE for alien invasions and everything else]]> 2014-10-31T13:17:07Z 2014-10-31T07:00:49Z By Noah Smith

Sometimes I feel like if aliens opened a wormhole and invaded the solar system tomorrow, there are people who would immediately start writing articles blaming the incursion on the Federal Reserve’s program of quantitative easing.

Niall Ferguson, Harvard historian and outspoken political and economic commentator, might be one of those people. On Oct. 24, Ferguson penned a column in the Wall Street Journal blaming QE for the stock market volatility of Oct. 15.

Ferguson writes: “I suspect that the return of volatility has relatively little to do with poor growth data or political turbulence. Instead, it is mainly about monetary policy… QE offers a ‘tradeoff between more stimulus today at the expense of a more challenging and disruptive policy exit in the future,’ as the authors of a recent paper, put it. ‘Stimulus now is not a free lunch, and it comes with a potential for macroeconomic disruptions when the policy is lifted.’ … Like the ‘taper tantrum’ of summer 2013, this year’s October volatility has shown that there is indeed no smooth way out.”

The paper Ferguson cites, by economists Michael Feroli, Anil Kashyap, Kermit Schoenholtz and Hyun Song Shin, presents an interesting conjecture and shows some evidence that monetary policy changes can disturb the financial system. That’s not at all surprising.

But Ferguson takes this evidence and draws two conclusions that seem like a stretch to me. His first conclusion is that this is a big worry, and a reason to avoid QE. This doesn’t seem to fit the findings of a May 2013 paper, “Taper Tantrum,” which is the example of financial instability cited by the Feroli, et al.

The taper tantrum didn’t coincide with a lasting rise in the VIX. In fact, the whole episode looks minor compared to the huge surges of 2010 and 2011. For that matter, the recent events of Oct. 15 don’t even look very serious when plotted on a graphic.

Nor did the real economy seem particularly hobbled by the taper tantrum. There was no immediate drop in growth after the taper tantrum, and growth has been generally robust since the taper was announced.

Ferguson’s other questionable conclusion is that the tapering of the Fed’s asset purchases was responsible for the events of Oct. 15. But unlike in the case of the taper tantrum, there was no major Fed announcement in the two weeks before the market’s sudden freak-out.

No doubt Ferguson sees Oct. 15 either as a delayed reaction to earlier indications of tightening, or a sign of a sudden shift in the market’s expectations regarding future tightening. But he presents no evidence for either of these. And furthermore, if financial pundits are allowed to wave their hands and invoke unobserved expectations or long and variable unobserved delayed reactions, then there is basically no discipline whatsoever on the claims that pundits can make.

As for Ferguson’s own thought processes, it is clear that he has been dead-set against QE from the beginning. Ferguson was one of the people who predicted back in 2010 that QE would cause high inflation. But unlike more circumspect inflation-warners such as hedge-fund manager Cliff Asness, Ferguson never admitted that he had been wrong about his inflation prediction. Instead, he cited the bogus website to claim that inflation in 2010 was actually in the double digits — a claim that most of the signatories of the inflation-warning letter were wisely unwilling to make. (For a thorough debunking of ShadowStats, see James Hamilton and John Aziz.)

Ferguson’s use of ShadowStats, along with his questionable claims about Oct. 15, suggest that his reasoning starts with a conclusion — that QE is bad — and grabs hold of any available justification to support this conclusion. It just goes to show that some people will always despise QE, no matter how benign it turns out to be in practice.

• Noah Smith writes for Bloomberg View. Reach him at