[img]1705|right|Mike Reynolds||no_popup[/img]The more restrictive bond measure bill that Gov. Brown signed into law yesterday will not affect the School District’s controversial plans for putting a bond on the ballot next year, Asst. Supt. Mike Reynolds said this afternoon.
Since July 1 when the School Board voted down a scheme to place the measure on the Nov. 5 ballot, elaborate, long-simmering intentions for bringing to the voters a bond priced from $40 million on up, has been on hold.
In two key provisions, the bill that Mr. Brown approved, AB 182, will limit the number of years a debt may be carried and it greatly restricts the cost of what are known as capital appreciation bonds.
To round out the his response to this major and anticipated development, Mr. Reynolds consulted Tony Hseih of Keygent Advisors, whom he described as the District’s financial advisor. Mr. Hseih was a prominent personality last spring when a still unshaped bond was being planned for delivery to voters next month when three School Board members will be elected.
“Tony is a key member of our bond team,” Mr. Reynolds said. “He provided information regarding the efforts and focus of our bond team in terms of their alignment with the provisions of AB 182.”
Mr. Hseih’s report:
The basic provisions of AB182 are as follows –
• Maximum term of current interest bonds – 40 years (no change from current law).
• Maximum term of capital appreciation bonds – 25 years (reduced by 15 years from current law allowing 40 years).
• Maximum debt repayment to borrowing ratio – 4 to 1 for each series of bonds issued (reduced from current law which has no limit).
• Early redemption provision for capital appreciation bonds – after 10 years from the date of issuance (current law does not contain such a provision).
• Requiring public analysis if capital appreciation bonds and/or current interest bonds with a term longer than 30 years are used (current law does not contain such a provision).
Since CCUSD began planning its bond, it already anticipated the passage of AB182, Mr. Hseih continued. Thus all scenarios that have been presented to the School Board and community at public meetings comply with all the aforementioned provisions. In one of the many scenarios we ran and presented to CCUSD, the particular metrics are as follows:
• Maximum term of 25 years for current interest and capital appreciation bonds
• Estimated repayment ratio of 2.12 to 1 for the bond program
• Any capital appreciation bonds are subject to early prepayment after 10 years
• And we would work with the District to conduct the public analysis/discussion of CABs and/or current interest bonds longer than 30 were to be used.
Interest rates will change up and down with general market conditions. Our preliminary estimates show that CCUSD be well within the parameters of the newly signed law.
