let’s bring in another guest here who saw red flags and decided to get out of all small city bonds, marilyn, thank you for joining us, you know what i find amazing and shocking is the rating agencies are not reflecting this financial risk, are they? they are not and that’s a big bullseye. many people look at their monthly statements and say oh, aa 2, no problem
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it’s the ultimate subprime loan. and it works like this. poway gets that $105 million today. it doesn’t have to pay a dime for — wait for it — 20 years. then it starts paying $50 million a year in interest and principle for the next 20 years. so what you’ve got here is a 40 year loan that is so toxic that the los angeles treasurer wrote a letter to school districts last year saying he will not support any loans saying he will not support any loans like these. herb, stay right there, let’s bring in will, the staff writer at the voice of san diego, he broke this story, do you have any new details? it’s canis. okay, fair enough. ive heard it all before. i guess the newest details, we started to look at some of the other school districts in san diego county, it’s not an isolated incident. we’re seeing bonds at the biggest school districts. san diego unified is over a billion dollars, some are borrowing $30 million and paying back $260 million. how can it be allowed. i know michigan banned it’s school districts from this kind of bond. our children and grandchildren will get screwed, shouldn’t this banned everywhere? well, you know, there are people who back this and think this is a good idea. we think the property values we keep increasing all over california. they never go down and in the future this will be worth all of the homes will be worth more money and that will mean we’ll be able to pay for this out of our existing taxes. we’re pushing the repayments further and further ahead with spending money today and placing the burden of this on future generations. i think they will start ake a look at this. there was legislation last year talking about making these more transparent to the school districts would have to tell the public what they’re going to do and what this will cost. hopefully we’ll see more changes going forward. let’s bring in another guest here who saw red flags and decided to get out of all small city bonds, marilyn, thank you for joining us, you know what i find amazing and shocking is the rating agencies are not reflecting this financial risk, are they? they are not and that’s a big bullseye. many people look at their monthly statements and say oh, aa 2, no problem, and they go off on their merry way. so it is really disingenuous that people do not know what’s below the surface. can it be renegotiated? bonds like this? i don’t know the answer to this unless it was under a structured bankruptcy which is what we’re seeing in stockton, california and san bernardino. but herb, you know southern california, it’s not a growing area there, even if it quadruples, that’s not enough taxes to pay these off, no way.
