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03 Mar 2013

Anatomy of a Story: How This Desert Sun 'iSun Investigation' Is Not Much of an Investigation

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To readers of the Coachella Valley Independent, the big “iSun Investigation” that ran in the March 3 Desert Sun was not really news at all. 

On Feb. 15, the Independent, in a piece by Saxon Burns, reported that Coachella Valley taxpayers will be on the hook for hundreds of millions of dollars due to questionable bond-issuance decisions by leaders at two area school districts. 

Here’s a selection from that piece, headlined “Generations of Valley Taxpayers on the Hook for Hundreds of Millions After School Districts Issue 'Irresponsible' Bonds”:

When it comes to government these days, maybe, to quote an old Cole Porter song, "anything goes."

Two area school districts, Coachella Valley Unified (the east valley district that runs public schools in Indio, Coachella and points east) and Desert Community College (aka College of the Desert), are among the hundreds in California that have used financing known as capital appreciation bonds, or CABs, to fund construction projects.

These bonds differ from more-traditional cousins in that payments can be put off for years—sometimes decades—allowing districts to save face by not raising property taxes, at least in the short term.

However, interest compounds during those years, and when the bill comes due, many districts—and, therefore, taxpayers within those districts—will be socked with explosive costs. …

Warning bells were raised last year when the Voice of San Diego website, assisted by retired journalist Joel Thurtell, reported that Poway Unified School District would be shelling out a cool billion over 40 years for $105 million in borrowing to renovate buildings. This set off a flurry of coverage from The New York Times, the Los Angeles Times (which published a database of the state treasurer's figures on CABs) and other news outlets.

The fact that things aren't quite Poway bad for our local cases might come as cold comfort. In 2010 and 2012, Coachella Valley Unified School District issued CABs worth slightly more than $35 million. Repayment will set the district back $186.3 million over more than 30 years. …

The Desert Community College District, which serves the College of the Desert, issued nearly $96 million in CABs in 2007, with repayment totaling just north of $430 million over 38.6 years.

Some 16 days later, here are the first two graphs from the piece in The Desert Sun:

A Coachella Valley community college and public school district have engaged in a bond strategy that will cost them hundreds of millions of dollars more than they borrowed by the time the debt is paid off in more than 30 years.

In recent years, both the College of the Desert and the Coachella Valley Unified School District have issued capital appreciation bonds as portions of larger voter-approved borrowing plans. The college and school district used the borrowed money to build new facilities, but the resulting debt — and its escalating interest rates — will linger long after the buildings lose their shine.

The Desert Sun piece, by Brett Kelman, goes on to basically report what the Independent reported, although he did add some nice bits of detail (for example, Kelman broke down what the College of the Desert’s interest payments are slated to be, whereas we didn’t).

He also made one fairly significant mistake: He incorrectly credited nonprofit news orgs The Bay Citizen and California Watch for “uncover(ing)” the story.

While California Watch and The Bay Citizen have indeed done a bang-up job of covering the capital appreciation bond issue, giving them credit for having “uncovered” the story is just plain wrong.

Here’s the anatomy of how this story came to be—first in the Independent, and then in The Desert Sun:

• As we mention above, retired journalist/current blogger Joel Thurtell (translation: unpaid journalist) started covering the financial debacle that is capital appreciation bonds way back in May 2012. While his context was a specific school district, as also mentioned above, he did ring a warning bell about these bonds throughout the state. On May 1, 2012, he wrote: “Let’s hope the California Legislature scraps this abomination. In Michigan 19 years ago, we found that CABs are good only for the handful of bond underwriters, bond attorneys and financial advisers who promote them to enrich themselves at public expense.” 

• On Aug. 6, 2012, news website Voice of San Diego did a piece focusing on Poway. This led to some national attention, from CNBC and other outlets. (It should be noted that Thurtell was apparently upset with Voice of San Diego for not crediting him; VOSD did a piece on that matter, as well as the national attention, here.)

You’ll note that VOSD editor Andrew Donohue writes: “There’s been no concerted effort to act like we were the pioneers. Nor do I believe we have claimed that the information contained within it came to light only as a result of our investigation.”

In other words, VOSD presumably didn’t run the piece under a silly tag like “iSun Investigation.”

• On Aug. 22, California Watch’s Erica Perez did a story noting the coverage of both Thurtell and VOSD. In it, she started expanding the scope of the matter beyond Poway, pointing out the obscene payback amounts some other community college districts were facing in California. 

• On Nov. 29, the Los Angeles Times did a piece on the bonds, presenting them as a true statewide problem. Most valuably, the Times—using data from the state Treasurer’s Office—also published an online database of districts in the state that had issued capital appreciation bonds. 

(Interestingly enough, the Times wound up running a correction on the piece: They initially credited VOSD, without crediting Thurtell, for breaking the news on Poway. Props to them for later amending the piece to credit Thurtell.)

• The Times piece—and the database, especially—led to all sorts of coverage, including localized coverage. In Northern California’s Humboldt County, for example, my friend Hank Sims, of online news source the Lost Coast Outpost, did a story discussing that county’s school districts which had issued capital appreciation bonds. A heads-up from Hank is how I first learned about the Times database, and therefore the Coachella Valley angle.

(Side note: The daily in Eureka, Calif., credited the Lost Coast Outpost for first publishing the information locally—something the folks at The Desert Sun felt no need to do.) 

California Watch did more, expanded coverage (some of which was used in The Desert Sun piece); The New York Times did a piece on the bonds in California.

With the Coachella Valley Independent fully up and running after the first of the year, I asked Saxon to look into the Coachella Valley angle after Hank’s tip. That’s how, to my knowledge, we became the first valley publication to report on the matter.

I am very happy The Desert Sun did their piece; this is an important story that Coachella Valley taxpayers need to know about. But to call this as an “investigation” without properly crediting the journalists who really exposed this matter—especially Joel Thurtell—is wrong, plain and simple.

4 comments

  • Comment Link Joel Thurtell Monday, 04 March 2013 13:50 posted by Joel Thurtell

    Thank you, Jimmy Boegle of the Coachella Valley Independent, for setting the record straight regarding the history of reporting on Capital Appreciation Bonds in California.

    Joel Thurtell

    http://www.joelontheroad.com/?p=10275

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  • Comment Link Tom Hickey Monday, 04 March 2013 08:54 posted by Tom Hickey

    To Mr.Boegle,

    I share the same interest with you as to the journalistic practices of TDS

    My issue with the Desert Sun is that they ran a story similar in letter but identical to the findings of an investigation that I reported on and published in an article three weeks prior.

    The Sun's story was the most popular investigative piece of the summer according to a follow-up editorial. The editor credited his journalists for their work making no mention of how the story came to be or their sources.

    Compare the Examiner article to the Desert Sun article:

    EXAMINER STORY published July 10, 2012;
    PALM SPRINGS MURDER SUSPECT, OUT ON BAIL, RACKS UP THREE NEW ARRESTS
    http://www.examiner.com/article/palm-springs-murder-suspect-out-on-bail-racks-u...

    DESERT SUN STORY published August 4, 2012;
    OUT ON BAIL PROSECUTORS SAY CANDACE DURAN RACKED UP NEW VIOLATIONS
    http://www.mydesert.com/article/20120805/NEWS0801/208050324

    Points that indicate plagiarism are:

    EXAMINER HEADLINE; out on bail, racks up, new arrests, murder suspect
    DESERT SUN HEADLINE; out on bail, racked up, new violations, Candace Duran
    (Copying other's words and structure without giving credit)

    EXAMINER INVESTIGATION "No previous bail bonds, including her bail for murder have been revoked."
    DESERT SUN INVESTIGATION; "We found that no judge ever ordered that her bail be revoked."
    (Stating reports as new and original but are not)

    EXAMINER'S ISSUE; "Is this blind justice at work?
    DESERT SUN'S ISSUE; "Prosecutors could not explain why"
    (Passing off another's story idea as one's own)

    Plagiarism is a violation of journalism ethics. It also cheapens the value of work for all writers. Plagiarism is a growing problem on-line for media content providers like myself.

    I contacted the editor with my suspicions but did not get an opinion as to my points that I think show a strong likely of them co-opting my work.

    I would like to know if you think I have a case for plagiarism, and if so, is there any way to garnish satisfaction (I thought my work should get credit) apart from bringing it to public light?

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  • Comment Link Jimmy Boegle Monday, 04 March 2013 08:10 posted by Jimmy Boegle

    Thanks, Dean. I'd love to see a link to that story about capital appreciation bonds.

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  • Comment Link Dean M Gray Sunday, 03 March 2013 23:43 posted by Dean M Gray

    "we became the first valley publication to report on the matter."

    To set the record straight and to get this story correct...

    1. The Desert Valley Star first reported on bond issue problems in 2009.

    2. The Desert Valley Star changed name to Desert Star Weekly.

    3. That newspaper is a "valley publication" printed on newsprint and distributed to over 800 locations from Indio to Palm Springs as well as the hi-desert all the way to the 29 Palms Marine Base, and also has a website. At the peak 11,000 copies were printed with another 5,000 unique readers online every week.

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