. . . 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.
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)!
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.
