Lyon businesses stagger under foreclosure load

Lyon County, which once led fast-growing

Nevada in the rate of its population increase,

now leads the state in home foreclosure rates.

The sour state of the housing segment

impacts business and development. County

managers feel the pinch as well.

One out of every 30 households in the

county was in foreclosure in October, reports

RealtyTrac Inc. That translates into 571 houses

in foreclosure.

The Lyon County foreclosure rate was up

716 percent from September to October and

up 1,293 percent from a year earlier. On a perhousehold

basis, it ranks 1st in Nevada, which

ranks 1st in the nation.

Across Nevada the foreclosure rate is one

of out 74 households. The U.S. figure is one out

of 452. In Clark County, 12,155 homes are in

foreclosure, half the per-household rate of

Lyon County.

The opening of Dayton's River Vista Center,

for instance, proved ill timed and the shopping

plaza on Dayton Valley Road stands largely

empty.

"We opened when this started," says Phil

Cowee, owner and president of River Vista

Properties Inc."The high foreclosure rate is

affecting commercial development.No new

homes are being built.No construction workers

are spending."

And of development projects in general,

he says,"It's a wait-and-see attitude.

Everything's stalled out."

The owner of a small coffee shop on U.S.

Highway 50 East in Dayton finds herself in

the same boat. Karen Duran, owner of Makin'

Coffee LLC bought the business 15 months

back. Traffic is off 40 percent, she says.

"Some customers lost homes and left,"

Duran says."Some come by just to talk, but

can't afford to buy anything."

An adjoining health store, Health 1st Plus

Organic Living, continues to do well, and its

traffic keeps the coffee shop afloat.

To keep the doors open, Duran works

100-hour weeks, running the shop from 4:30

a.m. until 7 p.m.Would she do it over again?

"Absolutely not," says Duran."I wouldn't have

bought it."

But not everyone in Dayton feels the

downturn. Gold Canyon Steakhouse owner

Joe France, for instance, has done well since

he restored a historic building in old Dayton

into a cozy Victorian getaway.

"We cater to a group of people who are

substantial in their lives," France says."This is

a special occasion place for when visitors

come to town. People then are willing to

spend the extra money."

But staff members at Lyon County's utilities

department are troubled by the high foreclosure

rate.

"We have seen an absolute huge increase

in foreclosures," says Mike Workman, water

director."We never used to have those. It is a

real issue for us just managing these things. If

we turn the water off, the yards die. But if we

leave it on if there's leaks or just normal

usage, we may not get paid for that.We survive

on user fees.We've been working closely

with real estate agents and have developed

special programs to leave the water on."

Fernley Public Works Department takes a

tougher stance.

"We have enough problems with bad

debts," says Bonnie Duke, finance director

and city treasurer."We don't leave the water

on unless someone's paying for it."

And when homes go into foreclosure, she

adds, some real estate agents and banks

choose to keep the water on, but some let the

lawns turn brown.

And due to the economic downturn, water

payments paid by homeowners and business

owners yielded $400,000 less than the $4 million

expected, says Duke.

In Lyon County's rural region, Smith

Valley resident Gary Garms says,"The impact

is going to be immense unless dollars show

up."He points to 60 homes for sale in Smith

Valley and says,"That's an atrocious number

for this area." And in Fernley, he adds,"It's

every other one."

Garms, who serves on an advisory committee

for Northern Nevada Development

Authority, says he sees empty storefronts and

vacant homes while he drives around the

county..

"Good Lord! I just shook my head," he

says."Who is going to clean this up? Who's

going to do what with all of this?"

Federal aid may help. Fernley City

Manager Gary Bacock says an application

filed this fall with the Neighborhood

Stabilization Program is expected to bring

$900,000 to be distributed between Fernley

and Dayton through Western Nevada Housing

Consortium, a conglomerate of cities and

counties.

Most of the federal funds went to Clark

and Washoe counties, says Bacock, but the

rural areas deemed most in need were Lyon

and Douglas counties."We were the hit the

hardest."

The money would go to homeowners to

save their properties, including some flooddamaged

homes. Funding is expected to

arrive in February or March.

But while the foreclosure situation has

slowed Fernley's former runaway growth, it

hasn't stopped it entirely.While state demographics

pegged the city's growth running as

high as 18 percent earlier this decade, it was

still chugging along at 3.9 percent from July

2006 though 2007, says Bacock. Figures

haven't been released for 2008.

Meanwhile, business owners in Fernley

are hanging on.

"We just try to be hopeful that things will

turn around," says Brenda Hoge, owner of

Mirage Garden and Gifts."The sooner the

better." She bought the store, originally

opened in 1998, three years ago. Now she

says,"It's been a tough year. It started with

the flood.And then in the middle of this year

we saw the downturn in the economy."

Mirage Garden manager Cynthia

Ceresola, says,"The nursery has seen the

biggest changes since Fernley was leading the

nation in growth. Business has been steadily

declining since 2006 but we saw a 30 percent

slide in the last year. The gift shop began as

sideline initially. Now it's prime.My first

months here, new people were coming in all

the time. That dramatically ended."

The pain of belt-tightening has spread to

the labor market.

At Fernley's Manpower employment

office,manager Donia Herrera says,"We're

seeing a lot more people coming in who have

lost their jobs.A lot of the manufacturing in

town has slowed down. Fernley is a bedroom

community; it started with the gas prices;

they couldn't afford to drive to Reno. Now

jobs are going."