“In a conspiracy like this, you build from the outer edges and go step by step. If you shoot too high and miss, everybody feels more secure. You’ve put the investigation back months.” – Deep Throat to Bob Woodward in “All the President’s Men.”
Scott Hettrick
Bloomberg Business Week, the same magazine that in 2008 and 2009 named Arcadia the Best City in California to Raise Kids, published a lengthy article on Oct. 15, 2014, describing Arcadia as a haven for the investment of illegal and questionable foreign money that has paid off our politicians and paid for the new $20 million Performing Arts Center, and which has led to people setting up cannons in front of their homes aiming across the street at their enemies.
In the midst of all those charges is a fascinating story about why many Chinese people have moved to Arcadia, why an increasing number of large homes are built and left vacant, and the challenges Chinese citizens have in getting their money out of their home country. Unfortunately, just as Woodward and Bernstein undermined the credibility of their journalistic investigation of the Watergate scandal during the administration of President Nixon by jumping ahead too far and too quickly, Business Week includes so many factual errors in its story and mistakenly tries to tie things together that have no connection, that readers are now spending so much time talking about the outrageous accusations and inuendos that the most salient points and anecdotes are completely obscured.
First of all, the story of Chinese immigration and the building of mansions in Arcadia (and many other cities) has been going on since the 1980s, so this is nothing new, and the story of dozens or more homes being used as “birthing centers” for pregnant Chinese mothers coming over just long enough to bear their children as American citizens at the local hospital is a couple years old and has been mostly debunked by Arcadia police who say there are only two such establishments in Arcadia (and, by the way, there is nothing illegal about this practice and it is going on all over the country). If there is a new wrinkle about any of this, the Los Angeles Times already covered the story of surging Chinese investment in Southern California in June and again in the L.A. Times in July. This makes it appear as if Business Week was trying to find a fresh angle on the data reported by the Times by digging more deeply into the reasons for the surge and picking a single city in SoCal to use as an example. Fine. But in doing so, it appears reporter Karen Weise spent a good deal of time talking with locals and gathered a bunch of interesting anecdotes and unsubstantiated rumors that she felt were too juicy not to somehow try to weave into her story in an effort to create a coherent narrative.
Unfortunately, the story is riddled with blatantly erroneous facts, misleading conclusions, and unsupported accusations. The biggest factual error is the following:
This flood of money, arriving from China despite strict currency controls, has helped the city build a $20 million high school performing arts center and the local Mercedes dealership expand.
Well, let’s see, the $20 million Performing Arts Center is but a tiny 8% element of a quarter-of-a-billion dollar school bond measure overwhelmingly approved by all Arcadia voters eight years ago. So that has nothing to do with recent Chinese immigration and investment, and it’s not clear why the reporter singles out the Performing Arts Center when every single school building in Arcadia is getting modernized with the bond money. The local Rusnak-Arcadia Mercedes-Benz dealership had been negotiating with the City of Arcadia to expand for more than ten years. A deal was in place a few years ago to use state Redevelopment Agency funds until Rusnak walked away, seeking millions more in incentives from the City. When Governor Brown abolished the Redvelopment Agency, Rusnak and the City came back together a couple years ago and negotiated a new agreement that has Rusnak building a new $30 million two-story showroom on Santa Anita Avenue. Certainly Rusnak is targeting Chinese customers who love the Mercedes-Benz brand, but again, this was in the works long before the recent flood of new Chinese investors.
Here’s an example of a misleading statement:
Arcadia is on track to bring in record revenue this year. In the fiscal year ended in June, fees from building permits and development reached $7.9 million, a 72 percent increase from the previous year.
In the context of the story, this makes it appear as if this is extra spending money for the City of Arcadia. Not true. Building permit fees (or any fees) legally cannot exceed the City’s costs associated with building permits. In fact, City officials say fees cover only about 93 percent of City costs. So, fees could increase 1,000 percent and the City would still not realize any net gain. Certainly, further down the road the City gets a small piece of the property taxes assessed by the County when the property value is increased, but that is not the point being made here, nor the figures quoted.
Mayor Pro Tem Gary Kovacic spent a good deal of time at the Oct. 21 City Council meeting detailing many other points of factual errors and head-scratching statements in the story, including:
Arcadia has no real downtown, only low-rise commercial stretches lined with real estate offices and boba tea shops; Din Tai Fung is the closest thing there is to a central hub.
Kovacic said that while he likes the dumpling house, he is unaware of anyone who would consider it a central hub of Arcadia.
And this:
There are strange rumors—local officials on the take; bridal studios as fronts for massage parlors…
Kovacic and Mayor John Wuo took umbrage at the suggestion that they are on the take, a rumor Kovacic said he has never heard in all his years on the Council. And Kovacic said the reporter must have mixed up Arcadia with another city known for its bridal studios (presumably Temple City, although even that is an old story that is no longer as true as new and varied retail shops have opened there over the last several years).
Strange rumors indeed. Perhaps the venerable Business Week should go back to reporting facts, and not “strange rumors.”
— By Scott Hettrick