Poway-The real “Debt Bomb”

[joec]

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.

[bearishgurl]

[quote= CA renter]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.[/quote]

[quote=davelj]I’m hoping there’s more to this story that makes it look considerably less moronic.[/quote]

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/pusds-prop-c-naysayers-were-right.html

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/poway-unified-parents-added-to-foundation-board-2

…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-poway-s-1b-bond-deal-means-for-the-future-if-school-financing

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 …

[bearishgurl]

[quote=joec]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.[/quote]

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).

Propositions 58 and 193

http://assessor.lacounty.gov/extranet/guides/prop58.aspx

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.

[quote=joec]I wouldn’t be surprised if more school districts did this and “kick the can down the road” so to speak.[/quote]

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.”

[quote=joec]Not having to pay any interest in 20 years is also pretty sweet.[/quote]

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.

[CA renter]

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.

[livinincali]

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_admin/2012/CA_Property_Tax_3_12_12.pdf
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.

[ocrenter]

http://www.voiceofsandiego.org/education/article_b423f56a-11a0-11e2-9446-001a4bcf887a.html

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.

[ocrenter]

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

[Coronita]

[quote=ocrenter]at least one incumbent involved in the fiasco is voted out.[/quote]

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

[CA renter]

[quote=flu][quote=ocrenter]at least one incumbent involved in the fiasco is voted out.[/quote]

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

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.

[ltsddd]

[quote=ocrenter]at least one incumbent involved in the fiasco is voted out.[/quote]

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.

[Author]

Posts