[Assistant Editor's Note: The Page's Culver City USD observer addresses 11 questions about the proposed $106 million bond measure to modernize school facilities. For responses to the questions by the District's bond advisors, KeyGent, visit the CCUSD website by clicking here.]
Q1. Has the community been consulted on the amount of the bond ($106 million) and whether taxpayers can afford the added taxes?
A1. I never said the community could never afford to pay the $48 per $100K tax rate. What I questioned is whether or not we can afford a $106M bond.
Q2. Is our proposed bond measure cost-effective for taxpayers?
A2. Is paying $110M more for something really cost-effective? As to their reference to “making regular payments of principal & interest,” I guess they are referring to our ever-increasing out-of-pocket costs each year to pay off their bond.
Q3. Does our proposed bond measure use more costly capital appreciation bonds (“CABs”), which defer interest payments to future generations?
A3. I don’t know why they even brought this up. They were told a long time ago by board members that CABs were definitely out.
Q4. Why are each individual series of bonds structured with early principal amortization followed by years where no principal is amortized?
A4. To put it simply, the various 20 years of “interest only payments” had to be used early on in their repayment schedule because that was the only way to make our community’s tax base ($8.0M) fit the board’s $106M bond.
Q5. KeyGent gives an example asking, what if the bond debt service in the first year is $4.8M?
A5. If the board’s $106M bond were to pass, by KeyGent’s own assumption, our AV would increase by 4.5%. This would make our first year’s assessed valuation worth about $8.36M. Multiply that figure by our $48 tax rate and that would give us a debt payment of $4.013M. But wait! Did they not say that the first year of bond debt service was $4.8M? Would that not put us over $780,000 in the hole, just on our very first payment? I guess, even hypothetically, we cannot afford the board’s $106M bond.
Q6. The proposed bond measure makes the assumption that the tax base in our community will grow up to 4.5% annually. Is this reasonable?
A6. Reasonable? Yes! But how reasonable? At the board’s last meeting, Ms Pasapalis deftly defined the legal difference between the terms “estimating” and “guessing.” She gave a simple example using the size of coffee tables. She said that her having been over to a friend’s house that she could “estimate” the size of her friend’s coffee table. But, never having been over at another friends’ house she could only make a “guess” at its size. That is, if they had one at all.
KeyGent uses assumptions and estimates in its projections. But according to Ms Paspalis’s definition, one has to see something in order to estimate it, otherwise it would only be a guess. I don’t know about you, but I don’t think anyone can “see” the future. Therefore, when KeyGent reps say they are estimating the repayment schedule, they are really only guessing because no one can foresee the future. It might be a well-educated guess, but it is still only a guess.
Q8. If the bond tax is $48 per $100,000 of AV, what is my estimated tax rate bill for the bond?
A8. Once set, the tax rate of a Prop 39 bond cannot change. Since, according to KeyGent’s own guess, our homes’ AV will increase every year. That will mean every home owner’s out-of-pocket costs to pay off this board’s bond will regularly increase every year from a modest $176 until it reaches about $550.
Q9. A community member introduced the alternative idea of funding the District’s capital projects with a parcel tax instead of a bond measure? Why is the District choosing a bond over a parcel tax?
A.9 KeyGent’s response: A bond measure can meet the capital project funding timing. The parcel tax option proposed by the community member cannot meet the timing. But …
If it is only a matter of timing, then it sounds like the district has already has made scheduling plans for our capital projects. Does the district administration already have plans in the works, even before the people vote on it? So would it be so utterly impossible to change the timing of some projects to fit a parcels tax’s different payment schedule?
Should it really matter to the board how it gets the $105M or $106M to fix our schools? But a $110M in local tax savings would make a big difference to our business community.
Q10. Various blog posts have claimed that the parcel tax option is fiscally responsible and a bond measure is not. Is this true?
A10. I have never said that the board’s $106M bond was not fiscally responsible. If you want to pay $110M more to upgrade our schools, fine. Let's do it! All I have ever said was that it was much too expensive for our small community.
Why didn’t the board have their consultants customize the bond to fit the community pocket books, rather than squeezing the community to fit the bond?
Q11. What is the estimated cost to an average homeowner of the bond vs. the parcel tax option?
A11. Though mathematically correct, please click here to read my previous answer.
Mr. Laase may be contacted at GMLaase@aol.com.
