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PUSD Statement Addresses Bond Measure Financing

The school district clarifies the details of bonds used for construction and modernization.

A Voice of San Diego story on a bond that the Poway Unified School District used to borrow $105 million in 2011 was picked up by media outlets across the country. Much attention was focused on the time frame to re-pay the bond: $982 million between 2033 and 2051.

On Wednesday, the district released a statement concerning bond measure financing:

•••

The Poway Unified School District (PUSD) would like to provide the following information regarding its issuance of bonds to provide financing for school facilities projects approved by voters in the Proposition U and Proposition C bond measures.

In 2002 the voters of the PUSD School Facilities Improvement District (SFID) approved Proposition U authorizing the District to issue $198 million in bonds for modernization and new construction projects at the 24 oldest schools in the District. The ballot language for Proposition U contained an extensive listing of the individual projects proposed for each school site.

In 2008 the SFID voters approved Proposition C authorizing PUSD to issue an additional $179 million in bonds to ensure the timely and full completion of all projects outlined in Proposition U and to include additional upgrades for campus security and technology infrastructure.

Combined, Proposition U and Proposition C authorized the District to issue $377 million in bonds to finance the building program for which voters agreed to be taxed at a rate of $55 per $100,000 of assessed valuation of their property.

The fifth and final bond issuance of the building program in 2011 for the amount of $105 million has a total repayment ratio of 9.3 times the principal amount. However, when looking at all five bond issuances since 2002, including the $105 million issued in 2011, the total amount approved by voters has a repayment ratio for taxpayers of 4.2 times the entire principal amount issued.

With this commitment from the taxpayers living within the SFID, the District qualified for and received an additional $92.5 million in matching state building funds that have no obligation for repayment. In addition, PUSD was able to contribute $73 million of restricted facility funds it had received over several years that could only be used on school modernization or new construction projects. These two sources of funds, in addition to the $377 million approved by the voters, enabled our District to complete a total of $542 million of modernization and new construction projects at our 24 oldest schools.

As a result, the 22,000 PUSD students who attend the 24 oldest schools in the SFID now have equitable and appropriate learning facilities that have been improved to provide another 30-plus years of service to our students and community.

Superintendent John Collins stated, “The most important value received from the building program that is difficult to quantify is the educational value of providing today’s students with quality learning facilities. It is also difficult to calculate the dollar value of savings realized by avoiding the inflated construction costs of postponing the completion of the building program for a decade or more. It is these benefits that the Board of Education and the Poway Unified School District believe the voters of the SFID approved and the students and community members have received.”

Fran August 09, 2012 at 04:00 PM
Financing doesn't happen in a bubble - financing like this takes time. Prop C was drafted and pushed out the door in 2007/2008. There are a lot of questions to be answered - first and foremost - who was serving on the school board when all of this was discussed - and this had to go back to much earlier than 2011. “We could have authorized more taxes, it would just have been breaking the promises we made to the community.” —Todd Gutschow, Poway Unified board member. But it's not deceiving the community to finance school repairs on the backs of our grandchildren to the tune of nearly a billion dollars? Please explain to me how we're not going to get taxed to death to pay for this? The County Tax Accessor can absolutely mandate an increase in our property taxes to pay for this. Capital appreciation bonds are the 2012 equivalent of what “sub-prime loans” were to low-income borrowers and “collateralized mortgage bonds” were to lenders during the housing bubble of the last decade. Capital appreciation bonds are highly risky debt instruments for local governments only with tax-exempt bond financing.
Poway Resident August 09, 2012 at 04:12 PM
I used to be proud to be a Powegian and respected several of our Councilmen with what I saw as people of integrity and a balanced approach with our City’s finances. When this story broke on National news yesterday, I was sick to my stomach. I have a question that I challenge anyone to provide a sensible and responsible answer to. Bond measures, by definition, are a means to finance projects and initiatives when monies are not available and polling shows that the citizens will not approve a tax hike to fund them. So, by proposing a bond measure, the proponents skillfully maneuvered their cause to a position of power. Then, by ensuring that the financing details were effectively concealed from the voters, they sat and watched as the sheep came to be slaughtered. Simply stated, why would our children be willing to pay the taxes that we chose to run away from? What have we done to the future lives and dreams of the future generations of Poway? Poway is now just like all the others that have gone down in flames recently. We now join the ranks of corrupt city officials as we saw in the City of Bell. And, we have laid all the groundwork for Poway to follow in the footsteps of bankrupt cities like San Bernardino, Mammoth Lakes and Stockton.
Bill August 09, 2012 at 04:20 PM
To answer Fran - The board members who approved were mangum, vanderveen, patapow, gutschow and rantfle. Prop C and the underlying scheme was approved by them in November 2007 to be placed before the voters in February 2008. Unfortunately the trustees chose to hide the details of the scheme from the voters. Now we will all pay a hefty price for the trustees duplicity.
Brian August 09, 2012 at 04:38 PM
Bill, Fran, Poway Resident and anyone else. I'll re-extend the invitation to meet and brainstorm on what should be done and what can be done at a grass-roots level. We know that the bonds are not callable - we are stuck with those as far a I can tell. But, there has to be other ways to take action. Anyone in? Or, do we do nothing but complain?
Bill August 09, 2012 at 09:32 PM
Maybe time for a Recall? These elected officials make Betty Rexford look angelic. Recalling these people should be a walk in the park.
Vic Asselin August 09, 2012 at 10:01 PM
mangum, vanderveen, patapow, gutschow and rantfle - goodbye after november, go find something else to screw up. why not run for the ca assembly or senate?
Joe St. Lucas August 09, 2012 at 10:04 PM
Can't we make a case for fraud somehow to invalidate this? I really don't remember seeing the words in the full proposition that the bond couldn't be refinanced. Maybe some lawyer wanting to make a name for himself/herself could work this pro bono.
Joe St. Lucas August 09, 2012 at 10:08 PM
Also, I'm having a hard time w. the poway.org website in searching for when members of PUSD came to the council to say why they should vote for the bonds. If I can find the date they did, I can look up the meeting video and see exactly what councilmembers said "Great, let's all vote for it." or otherwise.
Bill August 09, 2012 at 10:32 PM
Joe St Lucas, Because PUSD voted to put it on the ballot in their November 07 meeting it seems likely it would have to have been late November 07, December 07 or January 08 when they pitched it to the council. So no more than 5 meetings possible. Are you certain such a presentation was made? Is that standard operating procedure? Would it have been a PUSD board member or Don Phillips or ?
Tom Yarnall August 09, 2012 at 10:36 PM
Mr. Collins can try to put a gown on this hog, but it's still a hog. Prop U was passed to modernize the campuses and to upgrade and consolidate administrative facilities. $198M. Just 6 years later, during a time of low inflation, it was determined a 90% increase was needed to complete the program. $175M. What happened? The original estimates were either faulty or disingenuous causing many change orders and additions that probably cost many times more than if they were included in the original order. This had to be gross mismanagement and Mr Collins was the focal point. To pour salt in the wound, the Board was duped into accepting a fallacious financial plan that will later penalize the children who it supposedly helped. Go figure.
Babs August 09, 2012 at 11:19 PM
This PUSD statement is a perfect example of the mumbo-jumbo and lack of clarity that created this mess and that has ruined the lives and livelihoods of current and future taxpayers. For many years, even before Poway was a city, I was proud to live here, now, unlike the PUSD school board, I'm ashamed. Over the decades I have witnessed the growth, the politics, the self-aggrandizing lack of humility that has become popular both on the PUSD board and the city council. It comes with the territory, I thought, of having local government and representatives of taxpayers. The infighting, the rancor, the lack of responsibility exhibited on a continuing basis by these elected officials is not only disconcerting, but shameful. As questioned before, who do we blame? My answer remains the same. Ourselves. We (the majority) voted for these people. We (the majority voted for the ballot initiatives. We (the majority) believed without questioning that these people were doing what was in the best interest of our community. Poway as a poster child for what is wrong with us (the majority) remains a shameful lesson. Shame can be distributed widely, but the one in the mirror is the most to blame.
Joe St. Lucas August 09, 2012 at 11:42 PM
It's not SOP but sometimes PUSD members will come to the council meetings and talk about "stuff" (like how well the schools are doing in standarized tests). Maybe they came to the meetings, maybe not.
Concerned Citizen August 10, 2012 at 03:12 AM
The PUSD statement claims they have spent 542 million dollars on "modernization and new construction projects on our 24 oldest schools", which pencils out to about 22.5 million dollars per school, and this is the good news?
Gary Vineyard Poway City Council Candidate August 10, 2012 at 03:18 AM
Please forgive me folks but I've been reading this issue like the rest of you and my wife, bless her heart, keeps telling me to sit it out since I don't have a dog in the fight but it just isn't in my nature to sit back and be quiet when serious shenanigans are going on. I may be missing something here but where did all that money go? I'd like to see an accounting since that is one heck of a lot of money...now it's not close to one billion but still enough to wonder about. And while I'm at it I would like Mr. Dick Lyles, that would be the same guy that asked any and all candidates to just bow out of the upcoming City Council election so that his guy could just walk in and take over, if his guy, Mr. Mangum, is not at fault here then who does HE say is. I'd like to know that and have Mr. Lyles put that on record.
Gary Vineyard Poway City Council Candidate August 10, 2012 at 04:11 AM
My wife is a wonderful, loving, understanding woman with the patience of Job and I can prove it! She's kept me around for over 19 years! She also likes to say I'm like liver; you either like me or you don't but there's never any question as to what you're getting. I know this is a bit off point for this discussion but I've gotta start to get you folks to know me and hopefully vote for me come this November. Thanks for your patience...and BTW I really hope most of you like liver...I can't stand the stuff myself...LOL
Gary Vineyard Poway City Council Candidate August 10, 2012 at 04:40 AM
Again, off topic dang it, but I'm hosting a 'Meet The Candidate' picnic at the Old Poway Park on Sunday the 26th from 10-4. We're gonna have a pie eating contest, apple bobbing and watermelon seed spitting if I can find a watermelon with seeds in it...it isn't as easy as you think...and you get the chance to meet me...and any other of the candidates who want to come. Bring your kids and sunscreen and I'll have some hotdogs and stuff for you to eat. Thanks for your patience. Gary
Poway Resident August 10, 2012 at 06:27 AM
You can reach me at savepoway@gmail.com. I can only hope that enough of us were raised to act as stewards of what was given to us. The burden that has been placed on the families of this City is beyond anything that could ever be paid back unless we find a way to revoke this monstrosity. This doesn't mean that our City officials were complicit in this however, it's hard to imagine otherwise. Before we waste too much of our energy and anger towards them, I hope we can collectively apply whatever skills and talents we have to restore a sense future and promise to this great community.
Bill August 10, 2012 at 01:40 PM
Just saw a tv news truck in the neighborhood of one of the PUSD Trustees responsible for this mess. This story isn't going away. Neither is the debt.
Tom Yarnall August 10, 2012 at 04:24 PM
A great number of citizens who continuously vote in the incumbent are the same ones who support term limits. Go figure.
Bill August 10, 2012 at 04:40 PM
The silence on this bond issue from those in positions of power in Poway City government has been deafening. Surely they must realize PUSD's insanity will effect EVERYTHING in Poway for decades. Remember the City is banking on property values rising to generate more property taxes to get the City budget out of the red. That won't happen now. Home values are predicted to be severely depressed as a result of this fiasco. Better start looking for Plan B. Mayor Higginson? Anything you can tell us? Or are your buddies who got us into this boondoggle asking you to keep quiet?
Joe St. Lucas August 10, 2012 at 04:43 PM
I'll admit that sometimes I don't fully understand situations, so if someone can flesh out these numbers for me, thanks. The voters approved bonds at the rate of $55 per every $100,000 assessed value of their house. The last bond was advertised as being an extension for 11-14 years of the bond approved in 2008. Now we're hearing we'll be paying for 20 years from the Voice article. Is this basically it? Or will the $55/$100,000 be going up to $125/$100,000 for 20 years (instead of 11) or something else?
Bill August 10, 2012 at 04:51 PM
The last bond Prop C was an extension of Prop U in simple terms. No payments for 20 years, until 2031 negative amortization only, then we pay for 20 years until 2051. The SD tax assessor believes rates will have to go up significantly to cover the payments because PUSDs prediction of quadrupling home values in the next 20 year is not realistic. In fact most analysts say this debt load will depress values in which case we are screwed. Make no mistake, the SD County assessor has the unilateral authority to tack any amount necessary onto each of our property tax bills to meet the obligation. in a timely fashion.
Bill August 10, 2012 at 05:43 PM
It is being reported elsewhere that Vanderveen officially filed her papers to run for reelection earlier this week. Patapow filed a few weeks ago. It remains to be seen if Mangum has any more sense than those two. They all should be run out of town.
Concerned Citizen August 10, 2012 at 11:47 PM
Who is the orange county consultant who recommended these bonds? Does this person have any connection to the organizations that purchased the bonds? While the article claims the latest bond can't be refinanced, it's hard to believe bondholders would reject money today in order to try and collect from a potentially bankrupt city in twenty years.
Babs August 11, 2012 at 01:10 AM
http://www.businessinsider.com/joel-thurtell-shames-poway-ca-financing-2012-8
Bill August 11, 2012 at 06:55 PM
PROTEST at the next School Board meeting on 8/20. Let them feel your wrath: Monday, August 20, 2012, 6:00 p.m. PUSD District Office 15250 Avenue of Science San Diego, CA 92128-3406 (Carmel Mountain area)
Bill August 11, 2012 at 10:22 PM
Monimom - I think you meant "did NOT provide"? Might wanna fix - or delete and repost
Monimom August 12, 2012 at 12:48 AM
Thank you for the correction...Poway did NOT provide any new projects or improvements with the $105 million, and that's why the Bond Oversight Committee no longer exists. I'm curious, did anyone attend the Bond Oversight Committee meetings? Was the $105 million ever discussed in these meetings or in the Board meetings? I can't find any discussion in the minutes that would show the Bond Oversight Committee or the School Board meetings ever discussed the cost of this bond. Also, I don't see any minutes that discuss how the bond was spent and whether the bond was spent only on those items disclosed in the Prop. C ballot's project list disclosures...which is a requirement of Proposition 39 (see AB 1908). Did the Board violate the Brown Act by withholding the cost of the bond from the public?
Bill August 12, 2012 at 05:12 PM
There's now a Facebook page about this debacle called THANKS A BILLION! Visit it. LIKE the page. Spread the word!!! https://www.facebook.com/ThanksABillion
P.D. Barnes August 15, 2012 at 02:34 AM
I agree Joe. The proposition didn't explain this boondoggle. What if we contacted the State Attorney General to look into this. It has to be illegal! There's no way each person can afford to pay $21,000 per year for 20 years for this ridiculous scheme!

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