Emeryville Council Member Jennifer West's website,emeryvillewest.blogspot.com contains a gross inaccuracy that may have given voters the wrong impression of the cost of the bond financing for the newly passed Measure J, the school rebuild bond.
In an October story about Measure J entitled Financial Considerations For Measure J, Ms West, a Measure J supporter, maintains the total cost of the $95 million bond will likely be $266 million for Emeryville residents, an amount far less than other independent bond analysts claim. To arrive at the lower number posted on the website, it appears that only traditional bond funding was considered. Ms West failed to include the zero coupon bond that will be a part of the financing scheme and those bonds, with their deferred interest are much more expensive than traditional bonds.
Emeryville's Measure J zero coupon bond will be paid back at a nearly 4-1 ratio, very expensive financing compared with traditional bonds and was the chief reason the Oakland Tribune and the Green Party of Alameda County recommended a NO vote on the contentious measure.
The actual cost, factoring the zero coupon bond Ms West left out will total about $383 million for Emeryville residents according to the Oakland Tribune and other independent bond analysts.
Council member West obtained her bond information from Khushroo Gheyara, an employee of Caldwell, Flores & Winters the financial "partners" for the school rebuild project. The firm, retained by the school district, provides financial services for school bonds state wide and donated at least $8000 to the Emeryville Measure J campaign. Caldwell, Flores & Winters is under contract with the district and in the wake of the Measure J victory, is expected to receive far more than payback for their $8000 election gamble.
Here is the text from Council member West's website:
"If the bond were sold today, at today’s interest rates, the cost of the bond would be principal plus interest roughly equal to 1.8 times the principal. In other words, with $95 million borrowed, we would pay back the $95 million plus an additional $171 million, or a total of $266 million."
If the councilwoman was told that the total cost to residents would probably be $266 million from the financial firm the city retained then that's what she has to tell Emeryville people and post on her website. I don't see a problem.
ReplyDeleteFollowing the money and references--always a great way to get at some of the reality of all this. What with this news and councilmember Davis' comment last week; that no money for redevelopment comes from anything but redevelopment, I'm disappointed more than ever. (What was that 3 million interest on bonds in the general fund early this year?) I hope councilmember West considers and verifies her sources in future, and does not use Davis as her mentor.
ReplyDeleteI see a problem here! Council members are supposed to give us reliable info, not a sales job. She should have left it up to us to decide if we wanted to vote for the thing with unadultered info.
ReplyDeletesorry this has happened. she tries so hard for transparency.
ReplyDelete