I have empathy for those who are losing their jobs at Eureka-based Security National Servicing Corp. The company today announced it is forced to layoff 31 employees, 21 of them here in Eureka. It is tough to suddenly be unemployed in these times, when the economy is almost certainly mired in a recession.
For months speculation has swirled in local circles that Security National, the family-owned real estate loan servicing company held by Eureka movers and shakers Rob and Cherie Arkley, has suffered financially because of the subprime loan crisis. Because it's family owned SNSC doesn't have to disclose its finances to stockholders, like publicly held companies. SNSC has always been somewhat secretive, even mysterious, given the complicated securities market the company deals in.
How I understand it is that Rob Arkley is a pioneer of sorts in the field of buying distressed real estate loans then repackaging the loans and selling them to investors. My understanding is that this type of securities trading is relatively new, developed in the past two decades or so, and Arkley was super successful at it.
But now with so many Americans who got subprime loans unable to keep their homes because property values across the country finally peaked then started to decline, the market for this particular commodity has taken a severe beating. The collapse of this market crippled the nation's fifth largest investment bank, Bear Stearns. Lenders are foreclosing on subprime loan recipients on an unprecedented pace.
SN had employed 142 people in Eureka. A layoff of 21 employees is a 15 percent reduction of the company's local staff. That is far from catastrophic (unless you're one of the 21).
But looking forward, what does this mean for Arkley's Marina Center, the megacontroversial Home Depot-anchored development proposed for the Balloon Track in Eureka, which SN bought in 2006? It seemed right after the November 2006 election that this project was going to appear before the Eureka City Council very quickly. But for a year and a half now, there has been little news about the status of this project. There have been reports that various bureaucratic flies in the ointment -- such as expensive traffic mitigation measures demanded by Caltrans -- has slowed the momentum on this project. But that does not fully explain why this project seems to be completely stalled; many in the community expected to see this project come before the City Council early last year.
Then there is the Eureka Reporter, Arkley's expensive rival to the Times-Standard which most certainly is still a major drain on Security National's capital. Recently the newspaper scaled back its publication from seven to five days per week and cut its staff. Last month a jury in San Francisco awarded a multimillion dollar verdict to a newspaper who had sued a rival paper for unfair competition. That verdict makes the Eureka Reporter even more vulnerable to a lawsuit by the Times-Standard, in my opinion, though it remains to be seen if the verdict survives an appeal.
Personally, I would hate for the Eureka Reporter to disappear. I have come full circle on how I view the Reporter, a topic I hope to blog about in the next few days.
However if recent developments mean Arkley is wavering on whether to move forward with trying to force a Home Depot onto Eureka's waterfront, I believe the community benefits. Not only is a Home Depot on the waterfront a bad idea for Eureka for many reasons, the proposal itself has proven to be exceedingly divisive for this community.