Both New & Old Bond Requires Taxpayers Pay $107 Million For $20 Million Borrowed
|The new school bond has been |
proposed to replace the
But if it looks like a duck and
walks like a duck
and quacks like a duck....
The criticisms caused the District to change the 'Series D' bond, the final proposed bond for the new school from a CAB, considered a risky financing scheme that defers payments for many years to a General Obligation Bond, generally considered safe. The new Series D bond would begin repayment in 2014 and finish in 2053 as opposed to the former proposed CAB that would have deferred payments until 2032 and finally be paid off in 2049. Both bond schemes would cost taxpayers $107 million for the same $20 million borrowed. Both bonds assume a 4% Emeryville Assessed Valuation growth every year for the duration of the bonds and both bonds assume no greater than the promised $60 per $100,000 of property valuation. The General Obligation bond requires payment every year starting in 2014 but each payment is less than $100,000 until 2032 when the large balloon payments begin.
Capital Appreciation Bonds have been much in the news of late since cash strapped school districts from cities with low property value appreciation across the State have turned to them and reporters have shown the fiscal impropriety of this type of high interest borrowing. The media has depicted CAB financing as a sort of bellwether for irresponsible financial chicanery in school districts up and down California.
Emery, too has been revealed to be entertaining the idea of CAB financing to fund the move of the existing Anna Yates Elementary School to co-locate with the proposed new high school. The District has claimed it needs an extra $20 million to close down the elementary school on top of the already raised $48 million to rebuild the high school.
|It's a duck.|
One parent at the meeting commented that the new bond is a CAB in all but name and that the replacement General Obligation Bond is a cynical ploy meant to deceive Emeryville residents. The parent expressed frustration at the lack of transparency by the staff. "Show us your work" the parent challenged the staff, noting how math teachers require students to reveal how they arrived at an equation.