California Inc.: The state's solar-power push has a dark side

Nov. 30, 2015 2 AM PT

Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.

I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.

Cyber Monday is upon us and the holiday shopping season has kicked into high gear. However, retailers have reason for concern. The Commerce Department says consumer spending inched northward last month at a rate well below expectations. One reason: Americans are uncharacteristically saving more. We now have the highest saving rate since December 2012.

Looking Ahead

Cyber Monday: Now that Black Friday (or Thursday, or whatever) is behind us, it’s time for Cyber Monday, when the focus shifts to online sales. Adobe's Digital Index is predicting $3-billion worth of goods will be purchased via the Web on Monday, making it the largest single day for digital sales in history. Forrester Research, meanwhile, expects online sales to rise 11% in November and December. That’s a bit slower than last year’s 12% clip, but still about three times the growth of overall retail for the holidays.

Medi-Cal tax: Legislators will be in Los Angeles on Tuesday for a hearing on a proposal to tax health plans to help fund Medi-Cal, the state’s Medicaid program. California currently imposes a tax on health plans with Medi-Cal patients, but the federal government has said the levy must be changed to affect all managed-care organizations. If lawmakers can’t agree on a plan, the state could lose as much as $1 billion in federal matching funds. The hearing begins at 9:30 a.m. in the Ronald Reagan state building downtown.

New hotel: Gamblers testing their luck at the Bicycle Casino in Bell Gardens will be able to stay the night, starting Tuesday, at the new hotel next door. The casino, known for its 185 tables of poker and other card games, is opening a seven-story, 99-room hotel on land previously used for parking. The hotel will include a fitness center, an outdoor pool deck, a spa and sauna, plus 9,000 square feet of meeting space for conventions or banquets. The $50-million hotel has been under construction since 2013.

Volkswagen suits: Could Los Angeles be the site of one of the largest, costliest legal cases in U.S. history? On Thursday, a panel of judges will meet in New Orleans to decide which court will host legal actions against Volkswagen over the automaker’s rigging of diesel cars to pass emissions tests. More than 230 class-action lawsuits filed across the country against Volkswagen will be consolidated in a single court. Los Angeles is being considered because key evidence against VW was developed at a California Air Resources Board office in El Monte.

Jobs report: The Labor Department on Friday will release the latest jobs report — its last before Federal Reserve policymakers decide at their mid-December meeting whether to raise a key interest rate. With the economy bolstered by steady growth and a strong October jobs report, as well as other indications of economic strengthening, Fed officials have signaled that an interest-rate hike could come in December. The so-called federal funds rate has been near zero since late 2008 in an attempt to stimulate the economy.

The Agenda

Monday's Business section shines a spotlight on California’s aggressive push to increase renewable energy production. There's a catch for people with solar panels on the roof: You don’t count. If a home or business has a rooftop solar system, most of the wattage isn’t included in the ambitious goal to generate half of the state’s electricity from renewable sources by 2030.

Story Lines

Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:

CalPERS Cash: The nation's largest public pension fund peeled back a layer of secrecy to reveal that it has paid private equity managers $3.4 billion in bonuses since 1990, a hefty figure sure to heighten arguments over whether the controversial sector is worth its high risk and expense. The California Public Employees’ Retirement System said it paid $700 million in so-called performance fees just for the fiscal year that ended June 30. The disclosure comes as critics increasingly question the wisdom of pension funds investing in such complicated corporate deals as start-ups and leveraged buyouts.

O.C. homes: Chinese home builder Landsea plans to develop a sprawling, 550-home community in Orange County, a sign that the Asian country's slowing economy has done little to quell overseas developers' interest in Southern California property. Instead, the company, which already has projects in Simi Valley, the Bay Area and other states, has doubled down on the U.S market. It acquired 95 acres in Lake Forest this month as part of a plan to create a permanent U.S. business with homes largely marketed to American buyers. The Orange County development is Landsea's largest to date here.

Bank dance: The third-biggest Korean American bank has proposed a $1.6-billion merger with the nation's largest in an attempt to block a rival lender from doing the same. Hanmi Financial Corp., parent of Hanmi Bank, disclosed that it wants to combine with BBCN Bancorp in an all-stock deal that would value the combined company at roughly $2.4 billion. The offer, made in a letter to BBCN's board late last week, was aimed at preventing BBCN from pairing with Wilshire Bancorp, the second-largest Korean American bank. All three banks are headquartered within blocks of each other in L.A.'s Koreatown.

Drug deal: Pharmaceutical giants Pfizer Inc. and Allergan announced a $160-billion merger that would create the world’s largest drugmaker with high-profile products such as Botox, Lipitor and Viagra, while increasing pressure on Washington policymakers to address corporate tax policy because the deal would shelter the new firm's global earnings. Although New York-based Pfizer is the larger company, the deal is structured so that Allergan technically is the purchaser — a new twist on the controversial tax-avoidance tactic known as inversion. The move allows the new firm to be headquartered for tax purposes in Dublin, Ireland, where Allergan already is located, to take advantage of the nation’s lower corporate-tax rate.

A cable Christmas: Along with early displays of decorations by retailers, the continuous loop of holiday music on radio and the festive color of Starbucks coffee cups, nothing rings in the season quite like the volley of holiday movies that flood the small screen. Hallmark and its Hallmark Movies spinoff, for example, are showing 21 new original Christmas-themed movies this year, up from 13 in 2010. These holiday movies are proliferating because they're cheap to produce, and generate strong ratings and lots of advertising revenue for the television networks.

What We’re Reading

And some recent stories from other publications that caught our eye:

Urban blues: Want to cripple a city economically? The Atlantic explores how Syracuse stumbled in building a giant highway through the middle of town. The city’s experience “is illustrative of the many policy decisions that have made all American cities more segregated by race and income over the last 15 years.”

Somebody’s watching me: Walmart knows if employees have been naughty or nice. That’s the message of a Bloomberg story about how the world’s largest retailer keeps close tabs on union activities.

Food delivery: Medium.com sinks its teeth into how the scramble for private funding is changing the food-delivery business. “In the race to capture funding and subsequent headlines, these companies are burning the trust and respect of restaurants and consumers.”

Disgraceful: The New Yorker doesn’t mince words in its take on the Pfizer-Allergan deal. The tax-dodging transaction “is nothing short of a disgrace.”

Easy on the treats: The Wall Street Journal offers a timely reminder that, tempting though it may be, it’s best not to overindulge pets during the holidays. “Experts warn that certain delectables are truly harmful for dogs and cats, and cite anecdotal evidence that visits to animal hospitals spike around this time of year.”

Spare Change

One last Cyber Monday item: A cautionary tale about consumerism and the pursuit of trendiness from Chris Farlowe. Fittingly, it evolved into the theme to “The Office.”