Spring Riots Continue to Haunt L.A.’s Economy : More Than 6,000 People Lost Their Livelihoods

Don Chin has gone down to the corner of 71st and Main streets only once since the Los Angeles riots. The grocery store and small apartment on his property were reduced to rubble, and he hasn’t the heart even to look.

“I don’t want to see it,” the 70-year-old man says.

Close to 40 years of Chin’s life has been entwined with the small lot--first as a Chinese immigrant employee of the market, then its owner-operator and, for the last seven years, as landlord to a Korean-American couple who took over the business.

The $1,200 rent he collected from the store and small two-bedroom apartment each month was three-fourths of the retirement income that supported Chin and his wife.

Now, he says simply, “We’re poor. We’re worried every day.”

While an estimated 4,500 businesses were damaged or destroyed in the riots, Chin’s loss demonstrates how the effects of that devastation are rippling through the Los Angeles economy.

When markets or stores shut down, it wasn’t only the proprietors who were affected. Landowners, wholesalers, importers and a host of other business people have ended up feeling the effects of the riots in ways they never dreamed.

“You have to assume for each small retail outlet there were probably two, three or four people dealing with them,” says Jack Kyser, chief economist for the Economic Development Corp., a nonprofit business development group. In all, more than 6,000 workers and business owners lost their livelihoods, according to the state Employment Development Department.

And given the recessionary economy and potential obstacles to obtaining the needed financing to rebuild, Kyser adds, “you’re probably looking at a period of several years before you get back to what you had.”

When Chin’s grocery tenants--Jin Ho and Kwig Park--shut down, three part-time employees lost their jobs. The Park grocery became one of 66 that stopped buying goods from Certified Grocers of California, a wholesale food cooperative in Commerce.

Since the unrest, 25 of the stores have reopened, says Shelley Machock, a spokeswoman for Certified Grocers. But of the remainder, she adds: “We don’t know if they’re going to reopen in two months or two years.”

The Parks bought beer, wine and soft drinks from a variety of sources. While some distributors say that surviving businesses picked up much of the sales volume, many were left with hundreds of thousands of dollars in unpaid accounts when scores of groceries and liquor stores were wrecked in the rioting.

At Mission Beverage in Los Angeles, 408 customers accounting for about 11% of the firm’s sales--among them the Parks--suffered riot damage, according to general manager Dan Holland. A number of those left behind unpaid bills totaling $380,000, he adds.

Mission’s remaining customers have made up the loss in volume by ordering more beverages, but the firm still has suffered. “We had to lay off some employees, because we’re servicing fewer accounts,” Holland says. The nine workers who lost their jobs included two sales representatives and four delivery drivers.

To some extent, the ripple effect of riot losses is unknown because it merges with the ongoing business downturn.

Don Beaver, president of the California Grocers Assn., says sales statewide were off 2% to 5% before the riots. Now, he adds, in Southern California “it’s hard to tell what’s due to the riots and what to the economy. We think the riots have added to (the sales lag), but we don’t have hard numbers.”

Indeed, not every business indicator is negative. Despite the destruction in Koreatown and widespread damage to Korean-American-owned businesses elsewhere, some Korean-American bankers say they have experienced fewer loan delinquencies than they expected.

Jay Yoon, senior loan officer at California Korea Bank, says his institution gave three-month extensions on existing loans to about 180 borrowers who were riot victims--and of those, only a handful are still behind or have not paid off their loans.

“A lot of people are getting SBA (Small Business Administration) loans, proceeds from insurance claims, and help from relatives from Korea,” Yoon says.

At California Center Bank, Senior Vice President Jeffrey J. Lee says one-third of loans to firms affected by the riots have been paid off--a situation he terms “a pleasant surprise.” But Lee cautions that the full effect on bankers may not be known for at least six months, when it becomes clearer which businesses will succeed in reopening.

Ultimately, banks left with unpaid loans could be harder hit than the primary victims, who have had access to federal disaster grants and loans, Lee notes. “No recourse applies to the banking industry,” he says. “We have to just swallow whatever the consequences are going to be.”

Don Chin was among dozens of Chinese-American property owners who owned land in southern Los Angeles and became indirect victims of the spring rioting.

Some had moved into the Adams Boulevard area near downtown and USC after Los Angeles’ original Chinatown was bulldozed in the 1930s to make way for Union Station, according to community leaders, while others bought small businesses in southern Los Angeles after World War II.

“Were it 15 years ago, those businesses would have been Chinese,” notes Deborah Ching, executive director of the Chinatown Service Center. “That generation sold a lot of their businesses to Koreans. They still own the land--and had a retirement strategy to collect the rents. Now they have no income.”

Faced with starting over, they have differing reactions.

Chin says the Small Business Administration had approved a 30-year, $300,000 loan to rebuild his property, but he is questioning whether to bother. He would be 100 years old by the time the loan was paid, and he has no guarantee that the investment would survive another riot.

“If I put a new building there, I am taking a chance,” Chin says.

Instead, he is thinking about investing the loan money elsewhere, as is permitted under SBA disaster-relief rules. But that, in turn, would affect the Parks, who cannot reopen their business if Chin does not rebuild.

The couple may not wait for Chin’s decision. Kwig Park says they are trying to find “a better business” than the small grocery at 71st and Main.

“We’ve been working seven days a week, for seven years,” she says.

Near Adams Boulevard and Vermont Avenue, Irvin Lai has replaced the broken glass, battered doors and damaged fixtures in his 25-store shopping mall, which was vandalized during the riots.

But two or three of the shopkeepers have not resumed paying rent, and he is reluctantly preparing to evict them.

“We know their predicament. They cannot get the inventory and they have nothing to sell,” Lai says. “We gave them three months. This is the fourth month. There’s nothing I can do. I have obligations to pay my note too.”

In Long Beach, the restaurateur who leased Lucy Lee’s property has already told her that he does not want to come back.

Abner S.C. Yu estimates that in the year he ran Star Best Food on Long Beach Boulevard, he invested about $50,000 in the business. After looters broke the glass doors and windows during the riots and took much of his equipment--even the phone--he decided “it would be too difficult” to reopen.

As a consequence, the three employees he paid about $3,000 a month in wages and the suppliers from whom he purchased more than $7,000 monthly in food and beverages were out of luck.

So was the 62-year-old Lee, who collected $1,900 in rent. Now, she has no choice, she says, but to come out of retirement and try to run the Chinese eatery herself.

Lee had been renting out the 70-year-old building since 1983, after operating the restaurant there for six years. Other than a Social Security check of $160 a month, the restaurant rental “was my only income,” she says, putting food on the table and paying for her home in Garden Grove.

Lee escaped from China in 1974, after 14 members of her family were killed in the Cultural Revolution. She worked sewing uniforms and ran a fast-food stand before pouring her savings into the place she named Star Best Food.

Now, her entrepreneurship seems to have come to a dead end.

A $29,000 SBA loan will pay for repairing and replacing equipment in the building--but not for stocking food and other start-up costs. Lee figures she needs at least $10,000 more, but cannot find the capital.

Two sons who live with her cannot help much; one works as a mail-room clerk, the other as a busboy. She had taken out a second mortgage on her house to settle a lawsuit earlier this year; since the riots, she is two months behind on those payments. She hopes her insurance will pay off the mortgage on the restaurant.

Even if the financing works out, she will be reopening the restaurant unenthusiastically; the surrounding neighborhood, she believes, has grown more dangerous since she last worked there.

“I’m scared,” Lee says, “but there’s nothing else I can do.”

The Riots’ Toll on Business

A door-to-door survey by Dun & Bradstreet, the business credit reporting organization, offers the best view yet of the kinds of businesses damaged or destroyed in Los Angeles’ spring upheaval. Even so, Dun & Bradstreet analysts say the full extent of damage was probably almost twice as high as its surveyors’ count--touching perhaps 4,500 businesses. And no one has quantified the ripple effect on those firms’ suppliers and creditors.

Number damaged Percent Type of business or destroyed of total Retail 1,495 64.6% Services 426 18.4% Miscellaneous 109 4.7% Wholesale 103 4.5% Manufacturing 69 3.0% Finance 61 2.6% Construction 30 1.3% Transportation 17 0.7% Public Administration 2 0.1% Agriculture 1 0.0% Mining 1 0.0% Total 2,314 100.0%

Source: Dun & Bradstreet Information Services

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