Poway-The real "Debt Bomb"

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Submitted by desmond on August 7, 2012 - 8:14am

Submitted by The-Shoveler on August 7, 2012 - 8:26am.

So you put your kids through school over the next 15 or so years, then sell and move to a different state, what’s to hate…
Just kidding.

Submitted by ucodegen on August 7, 2012 - 12:15pm.

Unfreaking believable. For a 105mil bond to turn into 981mil would require an interest rate over 10% on a gov bond. No wonder there is a no-refinance clause in the bond. The bond issuers got the city by the gills and doesn't want to let go. The City of Poway should look into whether there was any conflict of interest on any of the advising parties.

One thing I mention to a friend is that if a loan has a pre-payment penalty, then you didn't get the best deal possible. This is for a simple reason. The entity loaning the money will be looking at alternate options for the use of the money. If the entity loaning the money finds that the return from loaning to 'you' is the same as anyone else, then prepayment is not an issue because the entity will just loan it back out to someone else at the same effective rate if it is pre-payed. On the other hand, if the entity finds that they are able to extract a premium in excess of the risk involved, they will want to 'lock' that premium in because they could not redeploy the capital somewhere else and get the same profit.

Submitted by bearishgurl on August 7, 2012 - 1:45pm.

. . . Right now, the district receives about $11 million a year from homeowners towards paying off its bonds.

So, to be able to afford its debt payments 20 years from now, the total assessed value of property within the taxed area would have to quadruple.

That’s possible. In the last 10 years, the total value of property in the school district almost doubled. But if the last decade has shown municipal governments anything, it’s that relying on consistent growth in tax revenues is a risky business.

If the district’s projections don’t come true, homeowners will see their taxes spike to make up the difference.

And there’s no chance of the district refinancing the deal. The loan contains a provision strictly barring the district from refinancing its debt.

The district told taxpayers back in 2008 that it probably wouldn’t have to raise taxes to meet its payments. But it’s fully within its legal rights to do so.

McAllister, whose office is tasked with making sure local school districts pay their bond debts, said his office could be compelled to raise property tax rates to ensure the district can make its payments on the bond.

Of course, many of the residents who voted on Proposition C will be long gone by then. They’ll be dead, or living somewhere else.

But whoever’s left living in the taxed area will have to pick up the tab for the money the district borrowed last year, and for the $877 million in interest the district will have accumulated by then.

(emphasis added)

The $11M bond money currently rec'd by the district from the assessor pays off the bonds they issued in 2002, which were collected from property owners at the rate of $55 per $100K of assessed value. Six years later, in 2008, local taxes should have been raised in order to service the new voted-in Prop C bond debt. But they weren't.

This HUGE DEBT OVERHANG doesn't bode well for the future property values within the PUSD. I realize that many areas of the PUSD, property owners are paying MR, as well, the bulk of which likely goes to the PUSD. But this is not an argument for the bond's proponents to "promise" no new taxes in 2008 to slide Prop C past its voters.

Consider and compare the SUHSD in SD Co's south bay to the PUSD. Half the residential properties within the district have MR encumbrances of which a big chunk of that goes to SUHSD. Yet, voters in the SUHSD passed prop BB in 2000 and Prop O in 2006 (6 years apart) to be used to help build new schools and refurb old schools. Each owner's current Prop O portion of their tax is calculated at the rate of about $60.79 per $100K of assessed value. Yet, the SUHSD has a hodgepodge of permanently-skirted trailers with modular add-ons for its HQ, all likely 50-60 years old.

I'm troubled by the PUSD's all-brick facade multi-level HQ with its (very expensive) dbl-paned "Low E" windows.

PUSD HQPUSD HQ

Why did they think they needed to build this "monument" and not tax its property owners to pay for it? I thought there was a "captive audience" of current and aspiring homeowners in the PUSD. Why wouldn't they approve a new construction bond to build this monstrosity and upgrade its older schools ... even if the bonds from 2000 were not yet paid off?

The SDUSD HQ with its 40-60 year-old trailers and add-ons was originally constructed in the '30's!

The GUSD HQ was actually built in the '20's, yet their taxpayers are currently funding Prop U (which they're doing great things with, btw)!

GUSD HQGUSD HQ

Why are PUSD residents so special that they couldn't or wouldn't vote for a bond measure in 2008? The truth is, they might have, or may have voted for a more scaled-down version, but they were duped into voting in this "exotic bond scheme" that will end up blowing up on them in the form of (now exorbitant) property tax hikes to make up the payments for missed principal and interest.

Otherwise the bond debt will end up bankrupting the district.

Submitted by CA renter on August 7, 2012 - 1:46pm.

So many juicy tidbits here. From the article:

"The bond also had considerable cachet, thanks to a coveted endorsement from the San Diego County Taxpayers Association. Indeed, association President Lani Lutar’s name was first on a list of five local dignitaries named on the ballot as supporting the bond.

Lutar said had she known the full implications of the bond, she would not have recommended the association support it.

The taxpayers association recently started studying capital appreciation bonds to fully understand their impact. Its main case study: Poway Unified.

Last month, the association changed its criteria for endorsing school bonds. In the future, it will ask districts how, exactly, they will finance their bonds. If a district plans on using expensive long-term capital appreciation bonds like Poway’s, it won’t get the association’s backing."
------------

The most frightening thing about this quote is the fact that these are the people who are supposed to understand how bonds work.

It reminds me of a conversation with a relative where she was in the middle of ranting about unions and the irresponsible way the govt spent our money. I agreed that money was indeed spent unwisely but asked her why she thought so many voters kept voting for more bonds (~$54 BILLION since 2006 in California alone). She said that was different because taxpayers weren't paying for those...bondholders were. When I asked her who was going to be paying the principal and interest payments to those bondholders, her face went blank. Mind you, this is someone who is more knowledgeable about finances than most Americans.

How many other people don't realize that when the government spends money, it has to take in money in order to pay for it? At least "tax and spend" politicians understand that one requires the other, vs. the "spend, but don't tax" types who have been in charge for much of the past decade.

Submitted by bearishgurl on August 7, 2012 - 2:13pm.

The infamous "Eugene Brucker Education Center," with its nearly four square blocks of the local landmark SDUSD HQ and its hodgepodge of trailers and modular add-ons, houses the administration, transportation, counseling, legal and maintenance staff for SDUSD, a district over four times the size of PUSD.

Built in the early '50's, its roof and some of its windows are now sagging.

4100 Normal St SD4100 Normal St SD

But hey ... it's good enough for SDUSD and the property owners who live within it will not be gouged unmercifully by a catastrophically stupid business blunder made by the district and their hired "lobbyists."

Submitted by carli on August 7, 2012 - 2:55pm.

Hey, BG, if you're implying that SDUSD is too savvy to ever be duped by one of these bond debacles, think again - http://www.voiceofsandiego.org/education...

Also, here's a very interesting piece that gave national exposure to the Poway story via CNBC - http://video.cnbc.com/gallery/?video=300...

What I don't understand is, are the bond ratings agencies asleep at the switch on this? If not, why haven't they lowered their ratings based on this gigantic future debt? Are they counting on increases in real estate values plus inflation to save the day? Crazy. So many questions still unanswered.

Bonds were just approved last week to be placed on the Nov ballot for both Del Mar Union School (encompassing Carmel Valley/Del Mar) and San Dieguito Union High School districts. Gee, I wonder if those will be successful now, especially because those districts are using the same Orange County financial consultant as Poway. Hopefully the voters will have their eyes wide open.

Submitted by bearishgurl on August 7, 2012 - 3:34pm.

carli wrote:
Hey, BG, if you're implying that SDUSD is too savvy to ever be duped by one of these bond debacles, think again - http://www.voiceofsandiego.org/education...

Lol ... thanks for the link, carli! Well, at least we know they haven't yet spent any of their ill-gotten "funny money" on a new HQ (like "top-down" PUSD did).

SDUSD's only saving grace is that they likely have 4x the taxpayers to foot their "future interest due" of $1.05B which is only 16.5% higher than PUSDs "future interest due" of $877M. This is taking into account that parts of SR and all of PQ and RB are part of the City of SD and are not within SDUSD but are within the PUSD.

IMHO, this is really crazy-making by these four SD Co school districts. They're mortgaging themselves (and, as a byproduct, their taxpayers) into oblivion.

Sorry to hear about those school bonds on your ballots, carli. You better hope you don't have at least 30% registered renter-voters, ESP those renters who live there specifically for their kids to attend those schools.

A large contingent of voting renters is enough to get these bonds passed and they don't care ... ESP if they signed a long-term lease. Renters don't (directly) pay property taxes.

Submitted by The-Shoveler on August 7, 2012 - 3:40pm.

Maybe there is a plan,

One wonders if the debt can be done away with through BK.

Plan A, Future BK to wipe out bond holders
Plan B, Future inflation to be over 8% YOY.

If you know your going to have BK in your future anyway, Max out the Cards now....

Just kidding sort of.

Submitted by ocrenter on August 7, 2012 - 6:49pm.

Reading the comments, it appears the bond was financed at over 8%. Plus the bond can not be refi'd.

Someone need to initiate a recall movement on the members of the PUSD board.

Submitted by evolusd on August 7, 2012 - 10:30pm.

It's a negative amortization bond! Must have been underwritten by Indymac.

Submitted by paranoid on August 7, 2012 - 10:52pm.

The consultant is from orange county? That is the capital of all subprime mortgages innovations!

Democracy at it's best!

Submitted by bearishgurl on August 26, 2012 - 3:39pm.

Here's a more recent interesting article from the (Poway) Patch ... written by a PUSD taxpayer and voter??

http://poway.patch.com/articles/poway-un...

...To simplify the events: In 2008, the PUSD needed money to finish numerous facility upgrades that were supposed to have been paid for by Proposition U, which passed in 2002. Why those Prop U upgrades went over budget by tens of million of dollars is a completely different discussion and pales in comparison to this discussion.

In 2007, the school board (President Jeff Mangum and Trustees Linda Vanderveen, Andy Patapow, Todd Gutschow and Penny Ranftle) decided to ask voters for money to finish school repairs and upgrades and to essentially extend the pay-off date for the Proposition U bond. However, by 2007, people were tired of being taxed to death with little to show for it and the country was in the initial stages of an economic free-fall.

So the school board promised that passing the bond would allow them to finish the projects with no tax increase. The length of the taxation would be extended but the tax itself would remain the same. It didn’t seem like such a bad deal at first blush.

However, instead of disclosing to voters the trustees’ intent to use a highly risky financial instrument known as a capital appreciation bond, they simply said on the ballot the funds would be raised with “general obligation bonds.” They certainly knew including the words “capital appreciation bonds” would have been a red flag that the district planned to mortgage our future to the hilt. Capital appreciation bonds are the equivalent of what sub-prime loans were to low-income borrowers and collateralized mortgage bonds were to lenders during the housing bubble of the last decade.

And look where that got us.

So between hiding critical information and repeating the predictable mantra “it’s for the children,” we were intentionally deceived to the tune of a billion dollars. Right, billion with a “B.”

Predictably, Poway has become the laughingstock of the financial world. CNBC intoned this is “the worst loan ever!” The Financial Times said, “At best, this is a case of kicking the can down the road; at worst, a case of the government dancing with loan sharks.” Now, bad financial planning by school districts can be referred to as “pulling a Poway.”...

Sounds like "outraged" is the prevailing PUSD taxpayer sentiment.

http://powayblog.blogspot.com/2012/08/pu...

I wonder why the school board couldn't have just told its voters in 2007, "Due to rising labor and material costs, we don't have enough income from the school construction bonds you passed in 2002 to rehab these schools (or your District HQ, lol) in the manner which you think your children should grow accustomed to. If you won't vote in another school construction bond, we will not be able to make all the repairs and complete all the construction projects we set out to do."

See? Was that so hard?

If the voters didn't wish to vote for another bond measure, then they get what they pay for. That's the way it's done in ALL CA public school districts. Why should PUSD be the exception?

No more taxes? Then time to take delivery of trailers, modular units and stucco patch.

Now, no one trusts the board members who voted in this preposterous scheme or even the school board itself. Of course they are all gone now except for one, who is current running for mayor ...

Yikes!Yikes!

What did this "paternal role" of "deciding" for their taxpayers where the (Prop C) money would come from and HOW it would become available and then "duping" them into voting for it do for the District? The city??

Spiraling down a black hole into eventual BK is what it will do for them.

It would have been far better to face reality with the taxpayers' full knowledge than to feed into their fantasies by mortgaging their future away under terms they would never be able to pay back whilst still being able to operate the District's day-to-day activities.

People who think the PUSD will be able to begin amortizing this humungous sub-prime loan and eventually retire this debt due to increased assessed values are smoking fairy dust.

...Unfortunately we have already learned the loan cannot be pre-paid or refinanced, so we need to start planning for the future payments now. And the very tax increase that the board said they wanted to avoid will undoubtedly come to fruition, either by a voter referendum with the money earmarked for future payments or by the far more drastic step of the County Tax Assessor forcing a tax on property owners to ensure repayment

Either way, we need to begin a process of earmarking dollars now. As a result of their actions Mangum, Vanderveen, Patapow, Ranftle and Gutschow have virtually guaranteed us a triple-digit tax increase to cover their mess. ...

(emphasis added)

Submitted by CA renter on August 26, 2012 - 3:46pm.

That is a seriously messed-up situation for Poway residents, BG. IMHO, people should investigate how/why the construction costs ran so much higher than anticipated, as there is plenty of reason to believe that some "back door" deals were made there. If not, idiots were managing those projects and should be held to account, as well as creating safeguards that prevent it from happening ever again.

After that, they should look into who, specifically, knew the details of this loan and went ahead with it in the first place. The fact that it cannot be prepaid is one of the most egregious aspects of it.

Thanks for the additional info.

Submitted by davelj on August 26, 2012 - 6:51pm.

ucodegen wrote:
Unfreaking believable. For a 105mil bond to turn into 981mil would require an interest rate over 10% on a gov bond. No wonder there is a no-refinance clause in the bond. The bond issuers got the city by the gills and doesn't want to let go. The City of Poway should look into whether there was any conflict of interest on any of the advising parties.

Yup, if this was a zero coupon 40-year bond it would yield about 5.75%, but... if you start straight-lining the interest and principal payments (just to simplify) beginning on the 20th year, you get a rate just north of 10%. So these muppets got their faces ripped off.

If Uncle Sam can borrow for 30 years at 3% you'd think that a local government could borrow for 40 years in the 5%-6% range. These folks got horsef*cked. How difficult is it to ask what the assumed all-in yield is on the instrument, and then compare that to other alternatives? Apparently quite difficult.

I'm hoping there's more to this story that makes it look considerably less moronic.

Submitted by joec on August 26, 2012 - 8:21pm.

I'm probably in the minority, but reading another article on this today in the UT, I don't think it's that expensive for the people who have to pay it. They also went through how the board came through this decision and got approval throughout the steps. I'm not sure where the capital appreciation bond came into the equation, but it said the San Diego Unified already had some of these where they will be paying 800-900mil on 150mil loan or something...

Also, the residents are going to have to pay like $200/year or something for this and I read that it maxes at 800-900 or so PER YEAR near the end. That doesn't sound crazy when people pay that in HOAs in like 2-3 months. You don't even have to start with Mello-Roos which are in the neighborhood of 3k-8k or something per year.

In the end, there is simply no money to go around anywhere from the states/city/local gov anymore so unless you want the schools to all collapse and pretty much be crap, I think cities will have to do something.

I wouldn't be surprised if more school districts did this and "kick the can down the road" so to speak.

Not having to pay any interest in 20 years is also pretty sweet.

All that said, I'm not sure if it's the "correct" thing to do, but until some honest financial guy comes in like Rich and breaks it down, I question whether people are just blowing this out or proportions.

Submitted by bearishgurl on August 27, 2012 - 10:39am.

CA renter wrote:
IMHO, people should investigate how/why the construction costs ran so much higher than anticipated, as there is plenty of reason to believe that some "back door" deals were made there. If not, idiots were managing those projects and should be held to account, as well as creating safeguards that prevent it from happening ever again.

After that, they should look into who, specifically, knew the details of this loan and went ahead with it in the first place. The fact that it cannot be prepaid is one of the most egregious aspects of it.

davelj wrote:
I'm hoping there's more to this story that makes it look considerably less moronic.

Well, here we go … for starters. We don't have to look too far here ...

SDCTA
The San Diego County Taxpayers Association is not a citizen watchdog group. Far from it. Back in 2008, I blogged about the SDCTA board of directors and their vested interests in Poway School bonds. As it turned out, I missed a few connections. April Boling is currently on the SDCTA executive committee. In the past, she has been president and held other board positions. Boling is hardly nonpartisan. She has served as campaign treasurer for several local Republican candidates and PACs. She was also campaign treasurer for Steve Vaus' successful Recall Rexford committee. Apparently she was also the "contact person" for the "Friends of Poway Unified School District", a 527 political organization advocating for school bonds in Poway in 2002 (Prop U) and in Nov 2007 (Prop C)……

The Contractor
Echo Pacific Construction did most of the contract work for Prop C. The district used a lease/leaseback agreement to avoid public bidding. New projects that came along, like astroturfing the sports fields were considered amendments to existing contracts. Echo Pacific Construction figures into an ongoing investigation of bidding issues at several other school districts. They know how to play the game to get the contracts. I am not insinuating that anything illegal was done in the PUSD contracts. I am just saying that they are involved in an investigation. And that they have close ties with several influential people in the community.

The Politics
There was opposition to Prop C. A few libertarians (from outside of Poway) organized the ballot statement in opposition to Prop C. The issues were pretty much related to the government-is-too-big theme. A local, grassroots group, South Poway Residents Association (SPRA) studied the issue, polled their members and voted against endorsing Prop C. They issued a press release with their reasons for opposing Prop C. I think one of the biggest issues is that they worried that their taxes would double in order to pay for the 2 separate propositions. Unfortunately, SPRA was belittled for their position and they were told that they didn't care about "the kids"…

http://powayblog.blogspot.com/2012/08/pu...

Poway Unified Parents Added to Foundation Board

Fred Pierce and Christopher Rowe will join eight other members on the foundation's board of directors.

With the new additions, there are now 10 members on the board of directors, which runs the nonprofit organization that raises funds to support the district’s K-12 programs. “They’re very much welcome with our renewed enthusiasm on fundraising,” PUSD Foundation President Toni Kraft said. “This is a working board, so we chose people who we know are not afraid to roll up their sleeves and work hard.”…

[Pierce’s bio]

Rowe is also the father of a PUSD student. His daughter is a sophomore at Poway High School. His son, who is now in college, also attended PUSD schools.

“My wife and I want to ensure through any means necessary that all the kids who live in Poway continue to have the same incredible educational opportunities the our kids did,” Rowe said. Rowe is the president of Echo Pacific Construction, a commercial construction company founded in 1993.

He said his background will help him as a member of the board.

“Having built a business from the ground up and having navigate it through several economic down turns, I felt I could help a nonprofit operate effectively and at a high level,” he said.

To date, the PUSD Foundation has provided more than $1.7 million to district schools. Pierce and Rowe hope to help increase the amount of funds raised and already have ideas in mind to make that possible.

Rowe said his goal for the foundation is to “triple our ability to provide those less fortunate with all the opportunities that they desire.”...

In the comments section, blog author Clariece Tally said...

Chris - The problem with your argument to lump the recall into this bond mess is a real stretch and really not very intelligent.

First there was intentional misrepresentation by the 2007/2008 school board of which Mangum was the Board President.

The fact that some of the same people who stepped up for the recall are also calling baloney on this bond issue is that when we see unethical and/or illegal behavior we speak out.

I personally did not vote for the bond measure. I'm cheap that way. Those who did support the bond measure were deceived. When a ballot measure states "general obligation bond" and there is no further disclosure about how you intend to finance that bond (and I believe did in fact how they were going to do it) is deceitful.

Trying to point a finger at the SDCTA is also wrong. They were given the same information as the voters. As far as lumping city council in on this - they had no say on the bond issue. Some may have supported it for the same reasons 62% of the voters did and that's they were kept in the dark.

Mangum, Vandervene and Patapow were all present and accounted for when this mess was created. Under no circumstances should any of them ever hold the public trust again…

See: http://ranchobernardo.patch.com/articles...

...The strategy of using CABs came at the recommendation of Irvine-based consulting firm Dolinka Group. Benjamin Dolinka is listed as the president and CEO, and several published sources say he has been advising schools for the past two decades. He did not respond to requests for comments regarding the Poway bonds.

His biography says he “focuses on creating new financial and demographic services.”

Dolinka’s apparently familiar with local school officials up and down the state — his firm is frequently hired to consult with districts on the best way to pay for such things as school construction projects.

On the firm’s website, the firm says it has 250 clients, including a long-standing relationship with the Poway school system.

The firm “is a strategic partner in financial advisory and facilities planning services exclusively for the California education community,” the website says. “And it also advises local community college districts as well as county offices of education.

Besides Poway, the firm lists as clients the San Diego Community College District, San Diego Unified School District, San Marcos Unified School District and San Ysidro School District.

Dolinka is also advising Del Mar school officials on an upcoming bond ballot measure, according to local newspaper reporting, and also has a working relationship with the Escondido school system.

The firm’s website includes a letter of reference from Poway Schools Superintendent John Collins, who wrote in a recommendation letter dated March 21, 2011: “For the past 20 years, Benjamin Dolinka has served as a financial advisor to the Poway Unified School District. During this period, Benjamin was a key player as a member of the District’s financial consulting team.”...

(emphasis mine)

http://poway.patch.com/d/articles/what-p...

Everything I read in support of Prop C was that it was voted in "for the kids" and "it's what the kids want." I truly believe the kids were completely oblivious to it. They can get the same education in a trailer or temporary buildings, like hundreds of thousands of other CA public (AND private) school students do. It seemed to me like the teacher/administrator-voters who supported (and still support) Prop C are using their students (perceived) desires as an excuse to justify the exorbitantly priced rehabs of schools and the new construction of the District HQ. Many of the PUSD parent-supporters of Prop C are still out in fantasyland in regards to their kid's (public) education. Their unrealistic "expectations" in this regard are through the roof and their kids opinions really have nothing to do with it.

It seems the usual culprits are to blame here for this morass .... adherence to the "patronage system" in combination with a "comedy of errors" (gross incompetency) all the way around. I've seen this combo in play over and over again in my lifetime, lol.

As time permits, I’m on a mission to find more instances (of what appears to be) incest. This is not hard to do in a small city such as Poway and within the PUSD, lol …

Submitted by bearishgurl on August 27, 2012 - 11:10am.

joec wrote:
In the end, there is simply no money to go around anywhere from the states/city/local gov anymore so unless you want the schools to all collapse and pretty much be crap, I think cities will have to do something.

There would have been more money to go around for CA public school districts had it not been for Prop 13's pass-thru provisions of assessed value of properties deeded to family members (via Props 58 and 193).

http://www.hjta.org/propositions/proposi...

http://assessor.lacounty.gov/extranet/gu...

This special tax treatment hasn't and won't die with the original (April 1978) property owners. The result is that much younger "heir" owners are now enjoying a drastically reduced assessment on their properties (abt $45K to $150K) when the actual assessment should be $250K to $2,500,000. A portion of these "heir" owners currently have children attending public schools.

As I have posted before, I do not support Props 58 and 193 because they amount to unjust enrichment of thousands of dollars per year for a few taxpayers at the expense of many. And many of those whose assessment is "protected" by Props 58/193 have children in school and many more are already heavy users of city and county services.

I support the older homeowners who are still residing in their Prop 13-protected property to live out the remainder of their lives with this special tax treatment. They are the sole reason why Prop 13 was written for and passed. After their deaths, their properties should be reassessed at market value, IMHO.

As it stands, CA school districts will continue to have this problem of not enough property tax coming in (in its older areas) to rehab/rebuild schools unless bond measures are passed to pay for it. Essentially, this was the purpose of Prop C in Poway. The money was used to rehab older schools and build a new HQ. The MR areas within the PUSD already had newer schools, paid for with MR.

joec wrote:
I wouldn't be surprised if more school districts did this and "kick the can down the road" so to speak.

After all the national coverage on this debacle, I highly doubt taxpayers in ANY US school districts would be stupid enough to vote in "pulling a poway."

joec wrote:
Not having to pay any interest in 20 years is also pretty sweet.

Not if property taxes have to be raised "in the triple digits" to pay all that deferred interest down.

********************

There's no free lunch, joec.

Submitted by CA renter on August 27, 2012 - 5:36pm.

Thank you very much for digging up all that info, BG!

Regarding Prop 13, don't forget the landlords whose profits are subsidized by California taxpayers, and the owners of commercial buildings who also benefit from Prop 13 AND can pass these low assessed rates onto other buyers of these commercial properties via LLCs and other "business entities."

Prop 13 should ONLY apply to a single primary residence, period. If we eliminated the protections for landlords and commercial properties, we would be in a much better place financially.

Submitted by livinincali on August 28, 2012 - 8:34am.

Total Property Tax in CA has been rising at a pretty good clip over the years. Barring years in recession annual collection of property taxes have increased by about 8-10%. California collects a little over $45 billion in property taxes on a total assessed value of 4.1 trillion dollars. How much bigger do you think the 4.1 trillion is in real terms.

According to the LAO http://www.lao.ca.gov/handouts/state_adm...
the residential real estate component is 2.2 (SFH) trillion + 770 billion (MultiFamily) ~ 3 trillion or about 75% of the total property tax collected. 2010 census data says CA has 13 million homes. The median home price in CA is about $300K so if we completely got rid of prop 13 and reassessed every house it looks like we'd potential increase the assessed value to 3.9 trillion from 3 trillion (30% more than the current assessed value). That corresponds to about 10 billion dollars in additional tax revenue. Total commercial property is about 891 billion so even if we applied a higher value like 50% to those properties we end up with about 5 billion in additional revenue.

Of course in doing so property tax revenue would become more volatile as there wouldn't be a cushion in under assessed properties. As prices rose or fell in CA the tax revenue would do the same. Right now property tax revenue tends to always increase. A lot in the boom years and basically flat in the recession years. Without prop 13 and under-assessing property values CA's budget might have had a 30-40 billion dollar hole when the housing market collapsed.

Submitted by ocrenter on October 26, 2012 - 8:31pm.

http://www.voiceofsandiego.org/education...

If you are within the PUSD territory, be sure to vote the board members responsible for this mess out of office.

Looks like the superintendent can't even manage his own finances, bought at the peak and currently foreclosing. Is it any surprise PUSD will eventually declare bankruptcy because of this guy.

Submitted by ocrenter on November 7, 2012 - 11:03am.

at least one incumbent involved in the fiasco is voted out.

Submitted by flu on November 7, 2012 - 11:05am.

ocrenter wrote:
at least one incumbent involved in the fiasco is voted out.

Yes, but more importantly, what happens to his/her pension? :)

Submitted by CA renter on November 7, 2012 - 8:26pm.

flu wrote:
ocrenter wrote:
at least one incumbent involved in the fiasco is voted out.

Yes, but more importantly, what happens to his/her pension? :)

If they're found to have committed a felony while in the course of business, they lose it. It remains to be seen if anyone will be able to prove whether or not bribes and back-door deals were going on.

Submitted by ltsdd on November 7, 2012 - 9:00pm.

ocrenter wrote:
at least one incumbent involved in the fiasco is voted out.

The damage is already done. Looks like what's really needed is a change to include some sort of check and balance to prevent these yahoos from doing something like this in the future.

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