The devil is in the details as from the linked article, it looks like they’ve laddered the bonds as well has zero-couponed.
I’m curious who bought the bonds. It reeks of a bunch of people getting their commissions and the bill coming due long after they’re gone.
Granted, over the next 22 years, Poway can expected their property values to double, not including any new builds. Thus their revenues will, well, maybe not double, probably somewhere between 44% and double, due to prop13. However, all their city service demands will also increase and inflate.
Roughing in some numbers with some arbitrary payment assumptions, I get a 7% bond rate on the 22 year bonds and a 9% on the 40 year.
Financially, this could be brilliant, but my gut tells me the reality is more desperation like someone going to a payday loan shop.
