Poway School Bonds

[ocrenter]

[quote=harvey][quote=dumbrenter]Harvey,
Those who can’t do math will eventually have to go to work for those who can.[/quote]

I like that quote. Even though I don’t know if it’s true in general, it’s sorta worked for me. I’ve actually managed to do well in my (now former) career of “doing the math.” Never had more than a few people working for me though, and they all could do the math better than me…

[quote]This is a very good deal that PUSD has gotten into.

[…][/quote]

There’s the old saying: “If you owe the bank $100, it’s your problem, if you owe then $1 million it’s their problem.” This is has some characteristics of one of those situations. Even if they can’t pay, full-on bankruptcy may not be the only alternative, debt can often be renegotiated without BK.[/quote]

The same justifications used for this loan is the same type of arguments used to justify the zero down zero doc loans. It was essentially free money.

I suppose at the end of the day it was a very good deal for the zero down, zero doc borrower, some of them are still sitting pretty rent free in a home near you.

If that’s the type of argument, that essentially this loan is so bad that it is good, aka Poway will just BK out of it if property tax doesnt increase five fold, who can argue with that?!

[Anonymous]

If I were an ambitious prosecutor, I’d dig a little into the relationship between the Orange County financier who is arranging the loans, the bondholders, and the goverment folks who are authorizing these bonds.

I thought there was still development going on on the West side of the PUSD, vacant lots at Santaluz and more to be built in Del Sur, at a minimum. Is that not the case? Still an ugly deal, just curious.

[Anonymous]

If I were an ambitious prosecutor, I’d dig a little into the relationship between the Orange County financier who is arranging the loans, the bondholders, and the goverment folks who are authorizing these bonds.

I thought there was still development going on on the West side of the PUSD, vacant lots at Santaluz and more to be built in Del Sur, at a minimum. Is that not the case? Still an ugly deal, just curious.

[CA renter]

[quote=westwood]If I were an ambitious prosecutor, I’d dig a little into the relationship between the Orange County financier who is arranging the loans, the bondholders, and the goverment folks who are authorizing these bonds.

I thought there was still development going on on the West side of the PUSD, vacant lots at Santaluz and more to be built in Del Sur, at a minimum. Is that not the case? Still an ugly deal, just curious.[/quote]

Definitely need to do this. Might want to check out any/all relationships with the developer(s) as well, as those costs seem very inflated to me.

This is why I keep saying that the #1 place to look for fraud in govt spending is where public money and private corporations intersect. This is where 90% of the fraud and abuse occurs.

[sdduuuude]

[quote=harvey]I believe that outrage should be proportional to turd size.[/quote]

Move that one to the “classic post” list.

[sdduuuude]

[quote=CA renter].. where public money and private corporations intersect.[/quote]

Of course, you include unions in this, which are just private corporations in disguise.

[CA renter]

[quote=sdduuuude][quote=CA renter].. where public money and private corporations intersect.[/quote]

Of course, you include unions in this, which are just private corporations in disguise.[/quote]

We’ve already agreed that unions, themselves, could be considered “private,” but the individual union members are NOT private companies/employees. Compensation of the individual union members is determined by elected officials and is much more transparent than the individual compensation of those who own/control/work for private entities.

Also, with very few exceptions, we don’t have the huge fraud issues with unions that we do with private corporations; again, because it is more transparent than the deals with private companies. The primary incentive that unions can offer is campaign contributions, but private corporations can offer that AND very cushy jobs in private industry when the politician gets out of office. They have much more lucrative offerings if politicians do their bidding, which is why labor has been losing the past ~30 years. Even the Dems have been jumping ship.

[no_such_reality]

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.

[joec]

Maybe Rich can comment more specifically on how something like this would work/pros/cons…

I can mostly assume that in 20 years, the value of money will probably be lower so if the value of money is halved every 15-20 years, that 1 bil is like 500 mil in payments in today’s dollars.

Even with little/no inflation, this is generally the case.

[Anonymous]

I am not a finance guy so I could be off base but…
Maybe the bond holders are not taking as much risk as some think. Could the fact that current Mello Roos expiration can be significantly extended provide a fairly secure future revenue stream? I was told that my current Stonebridge MR CURRENTY expire FY 34 but can be extended to 2051 when new debt is issued. The payoff amount on the MR increases as new debt is incurred. I was also told PUSD is imminently issuing new debt. Do you think this bond issue is tied to Mello Roos?

[all]

[quote=sdseeker]I am not a finance guy so I could be off base but…
Maybe the bond holders are not taking as much risk as some think. Could the fact that current Mello Roos expiration can be significantly extended provide a fairly secure future revenue stream? I was told that my current Stonebridge MR CURRENTY expire FY 34 but can be extended to 2051 when new debt is issued. The payoff amount on the MR increases as new debt is incurred. I was also told PUSD is imminently issuing new debt. Do you think this bond issue is tied to Mello Roos?[/quote]

The bond does not affect CFD’s. The bond is supposed to pay for non-CFD schools to be brought to CFD schools level and it will (or is supposed to be) paid by non-CFD residents.

[Author]

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