An excerpt from the Will Carless article at the Voice of San Diego – hat tip to several readers!
The Poway Unified School District may be California’s poster child for exotic school bond financing, but it is by no means alone in San Diego County.
As I detailed in my story yesterday, Poway Unified borrowed $105 million last year using a form of financing called a capital appreciation bond. The district won’t start making payments on the loan until 2033, and by the time it’s paid off in 2051, taxpayers will have paid back almost $1 billion, or almost 10 times the original loan.
As I point out in my story, capital appreciation bonds have become increasingly popular across the state, since they allow school districts to borrow money now without raising taxes on current residents. Instead, the burden for paying for the bonds is pushed to future generations, who are left on the hook for loans that are wildly more expensive than conventional bonds.
I’ve been digging through public records to try and find some other examples of these bonds in San Diego County. I haven’t come across anything quite as extreme as Poway’s deal, but I have found some bonds with very similar rates of interest and repayment schedules.
The deals elsewhere in the county mirror Poway’s deal in other ways, too. All three districts had recently passed bond measures to complete previous renovation and modernization efforts that were behind because of cost overruns and delays.
The three bond measures, passed in 2008, all made the same promise to voters: Tax rates would stay the same.
Read more here:
I think this should be considered when making a decision about homebuying!