The School Board’s proposed Prop. 39-type financial structure used to repay for its Measure CC bond over the next 30 years takes away too many of the financial safeguards homeowners would want to know before signing long-term mortgages: Fixed payments, and knowing the total cost of their loan.
Homebuyers can look around at different home-mortgage lenders for the best financing available. In the June 3 election, however, we have but one choice: The School Board’s fiscally flawed Measure CC. Take it or leave it!
Declining Tax Rates
Having a fixed tax rate over a bond’s lifetime sounds good in theory — until you look at our current Measure T's repayment structure. It clearly shows that as our property’s assessed valuation increases, our tax rates have declined over the years: From an early high of $71.87 in 1998-99 to $36.12 last year, and they are projected to fall to a low of $21.26 in 2032-33.
I am not a rocket scientist, but I do know that a decreasing tax rate is much better in the long run for taxpayers than an increasing or fixed one. With Measure CC's structure, our tax rate never will go down as Measure T’s rates trend to do so annually.
Cheaper Money
With a Prop. 46-type bond like our present Measure T bond, the annual payments are set at the beginning of the loan. As we make future annual payments, according to School Board member Dr. Steve Levin, we would be paying them with “cheaper money.” But this “inflationary bonus” is offset because we will have to use more of our “cheaper money” each year as our assessed valuation increases our annual payments; thereby mitigating inflation's bonus effect of paying it off “cheaper money.”
Increasing Valuations
Built in to the proposed Measure CC’s financing, we have to factor in our increasing assessed valuations to figure out our annual payments. This means we lose one of the safeguards we found in and voted for in Measure T knowing our future payments and the ultimate cost of the bond.
Dodo Bird
In the School District’s presentation to the Democratic Club, Mike Reynolds, Assistant Superintendent for Business, said the use of Prop. 46 bonds for funding capital improvements were “… rarer than dodo birds.” As the borrower/debtor, our community should know both what our bond payments will be and total cost of our loan. These are still important safeguards to lock in place for a $106M bond, something the Board’s Measure CC doesn't offer us.
Lack of Faith
Measure T was a Prop. 46-type bond that gave the community more assurances. It passed with 80 percent approval. If the amount of the new bond were reasonable and repayment terms were known, why would anyone not think that this time the results would be any different from 1996?
Investor’s Dream
Basically, there are only two entities involved in a loan, lender and borrower. If the terms are stacked in favor of the lender, it will be the borrower who will be at a financial disadvantage.
With Measure CC's lack of safeguards in place, it is a lender’s dream. Everything seems slanted in the lender’s favor. The possibility of an investor’s big, tax-free payoff with a Prop. 39 bond is much greater than with Prop. 46 safeguards in place. As an investor myself, if I had to choose between investing in a $106M Prop. 46-type bond or a $106M Prop. 39-type bond, my choice would the latter.
What Would You Do?
Voters need to ask themselves if they would sign a long-term loan contract without knowing what their payments were going to be and the ultimate cost of a loan. If you answered no, why would you vote to approve Measure CC??
Just because the need to fix our schools is great–and it is– doesn't mean we have to accept any School Board bond proposal. Just because a Prop. 39-type bond has a lower 55 percent passage threshold is insufficient reason to support it.
Our schools need to be fixed, but not with money borrowed with Measure CC; not with all its built-in structural uncertainties.
Just say no to Measure CC.
Mr. Laase may be contacted at GMLaase@aol.com
