Emery Style School Bonds Seen As Toxic
The Emery Unified School District may find itself on the wrong side of history.
School Districts across California are wising up to a particularly bad kind of bond financing called the Capital Appreciation Bond, or CAB that saddles taxpayers with crippling debt for generations. It's a type of financing irresponsible School Districts with champagne dreams but only Budweiser budgets have come up with to construct new facilities.
Here at Emery, the School Board wants to finance the closing of the newly remodeled elementary school and move it over to the site of the Center of Community Life, where they are building a new high school. The elementary school move will cost $20 million, before interest.
The problem is Emery doesn't have enough bond raising capacity to build the new high school and move the elementary school over to the site. Emery has proposed using CAB financing for the move, putting taxpayers on the hook for $107 million to borrow the $20 million. Additionally, taxpayers will have to continue to pay for up to 40 years for the last $20 million.
The soon-to-be-abandoned elementary school, Anna Yates, was remodeled in 2008 to the tune of $9 million. The City of Emeryville last week forgave $700,000 of that 2008 loan.
A populist prairie fire is starting at the prospects of arrogant school districts using CAB financing as citizens are getting wise to the pitfalls of CABs. Legislation is being proposed in Sacramento to not allow school districts to use this ruinous form of bond financing and now starting in the south land, districts are pledging not to use CABs for their capital improvements. Emery, is still on record as possibly supporting CAB financing as it considers funding for the Anna Yates move it should be noted.
From the Voice Of San Diego:
Local School Districts Pledge Not to Use Bonds Like Poway's