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Old 08-08-2012, 02:37 PM
 
Location: 112 Ocean Avenue
5,706 posts, read 4,785,586 times
Reputation: 8663

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I'm sure this was done because property taxes have gone all to hell. Anyway, what makes these type bonds so toxic is they're not callable, you can't pay them off early, so you're stuck with the entire $1 billion dollar bill.

This really is worse than loan sharking and all school officials responsible for this fiasco should be fired.
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Old 08-09-2012, 10:30 AM
 
Location: Santaluz - San Diego, CA
4,301 posts, read 4,187,556 times
Reputation: 1746
There is a lot of blame to go around here. The San Diego County Taxpayers Association sounds TOTALLY incompetent here if they are trying to say they didn't understand the implications. Basic due diligence and common sense applies when finances are involved. Who would listen to anything the San Diego County Taxpayers Association says after this?

This reminds me of property owners back during the real estate bubble getting "interest only" loans on their mortgages thinking their properties would always increase in value. Remember Wachovia and Pick a Pay mortgage payments? Just totally toxic!

I remember looking at people getting these TOXIC loans back a few years ago and I warned them how dangerous they were. But everyone always wants to take the best case scenario and I don't see it any different in this situation.

Boy these investors really scored! I would have loved to have gotten in on a deal like this. The important thing to probably take a look at is who financed this and did they have any ties/connections to the consultants or anyone on the Board? So, Poway Unified if you ever are looking to do another deal like this again.. PM me! I'd love to get a group of investors together and do a sweet deal like this for investors.

For ANYONE to say they couldn't have known about this is just incompetent. Their excuses are as pathetic as homeowners that got mortgages they say they didn't understand and just signed the papers.
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Old 08-09-2012, 11:39 AM
 
Location: Poway
1,090 posts, read 1,033,950 times
Reputation: 424
I'm still in disbelief, although tax officials were not totally unaware of this.

[from the article]

“This is a perfect example of how something that’s done today can adversely affect the next generation and the generation after that.”
—Dan McAllister, San Diego County treasurer and tax collector.

Justification:

“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.

“We knew the voters wanted these projects, and we knew they wanted them sooner rather than later.”
—John Collins, Poway Unified superintendent.

^^^ These two, along with the rest of the PUSD board, will not be getting my vote in the next election.
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Old 08-09-2012, 12:55 PM
 
Location: Santaluz - San Diego, CA
4,301 posts, read 4,187,556 times
Reputation: 1746
Quote:
Originally Posted by futbol View Post
“We knew the voters wanted these projects, and we knew they wanted them sooner rather than later.”
—John Collins, Poway Unified superintendent.

^^^ These two, along with the rest of the PUSD board, will not be getting my vote in the next election.

I agree about the PUSD board. I'd still be VERY curious to see what entity financed this and then would be curious to see if there are any ties/relationships with anyone on the board or the "consultants" that advised on this deal.

In any long-term loan agreement the basic things ANYONE in a position to do consulting or in a decision making position would immediately look at how much this would ultimately cost over the term of the loan.

Very surprising no one during the process asked, "so what is the catch????".
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Old 08-09-2012, 01:17 PM
 
Location: 112 Ocean Avenue
5,706 posts, read 4,785,586 times
Reputation: 8663
California School District Will Spend $1 Billion to Borrow $100 Million | Fox Business
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Old 08-09-2012, 01:18 PM
 
Location: Lemon Grove, CA, 91945
4,536 posts, read 4,712,570 times
Reputation: 1623
Quote:
Originally Posted by earlyretirement View Post
I agree about the PUSD board. I'd still be VERY curious to see what entity financed this and then would be curious to see if there are any ties/relationships with anyone on the board or the "consultants" that advised on this deal.

In any long-term loan agreement the basic things ANYONE in a position to do consulting or in a decision making position would immediately look at how much this would ultimately cost over the term of the loan.

Very surprising no one during the process asked, "so what is the catch????".
Totally agree. But lets look at the time this was put into place.

"real estate prices will never go down, they will only go up in San Diego because of X reason" - John Q (Kool Aid drinker circa 2008)

earlyretirement, I am wondering if anyone on that board signed their home loans in the same fashion and simply copy/pasted that same mode of thinking with this deal.

A lot of bright and well to do folks in Poway. If I were living there, I would looking at starting a citizens action group with an attorney to fight this. However, that might not happen considering the loan will wont actually kick in for a while in the tax bill.
By then, I am guessing most folks that know now, will sell their home relatively close to D day.
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Old 08-09-2012, 01:27 PM
 
Location: Santaluz - San Diego, CA
4,301 posts, read 4,187,556 times
Reputation: 1746
Hey Shmoov.

Absolutely I wouldn't be surprised if some of these people that approved this had the same mentality when buying their homes (or using their houses as an "ATM").

I doubt there will be any citizens action groups fighting it. If there is one thing I've learned is that people by nature are generally lazy as it pertains to their finances. Plus this won't probably be felt for 20 years so people have the "kick the can down the road" mentality.

That's the biggest problem these days with the government at the local/state/Federal level is everyone has the "kick the can down the road" mentality. No one really wants to face the problems of today.

I'll be in my home at least 15 years until our youngest is done with high school and then we will most likely downsize. I think as long as the school district is one of the best, you will still have demand in the area, even with increased taxes.

I'm just curious how much the taxes will go up by then. Again, they are going by the best case scenarios but it won't look pretty under the worst case scenarios.
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Old 08-09-2012, 01:34 PM
 
Location: Lemon Grove, CA, 91945
4,536 posts, read 4,712,570 times
Reputation: 1623
It looks like the story has caught national attention...

Bonds for $105 Million to Cost School Over $1 Billion - Businessweek

I am guessing that the total assesed values of the homes in that area would have to at least quadruple? Wow.

Totally agree on the city politics and laziness stuff earlyretirement. Pass the buck mentality.
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Old 08-09-2012, 02:33 PM
 
Location: Poway, CA
2,590 posts, read 4,914,828 times
Reputation: 1849
I don't get the arguments brought about in the articles that say property tax 'fell off a cliff'. Back the truck up just a minute. Isn't the more accurate statement that property taxes have started to come back down to reality? In my neighborhood (RB/North Poway), houses that went for $200-$250K in the late 90s and 2000s only started to go through the roof a couple of years ago, selling for $450-$600K without breaking a sweat. And even now, you can't touch a house around me for less than MAYBE high $300s, and that's a 'fixer upper.' How short of an attention span did the district have? Then again, I guess it's just emblematic of how ALL government has budgeted itself in the last few years.

It's funny. PUSD gave me a GREAT education and certainly has earned its rep for being one of the best public school districts in the state (if not the nation), but the only class I ever took from them that even began to teach about economics (micro or macro) was some half-assed joke of a class they made all high school students take. Even at that time I thought the class lacked the ability to convey worthwhile lessons about how to manage money, and now I know why. You can't teach what you don't know.

Mike
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Old 08-09-2012, 02:57 PM
 
Location: Poway
1,090 posts, read 1,033,950 times
Reputation: 424
Quote:
Originally Posted by earlyretirement View Post
I agree about the PUSD board. I'd still be VERY curious to see what entity financed this and then would be curious to see if there are any ties/relationships with anyone on the board or the "consultants" that advised on this deal.

In any long-term loan agreement the basic things ANYONE in a position to do consulting or in a decision making position would immediately look at how much this would ultimately cost over the term of the loan.

Very surprising no one during the process asked, "so what is the catch????".
If it is found that there was a criminal conspiracy to set this up then it might be easier to undo.

$105M amortized from 2011 until the maturity date of the loan might make some mathematical sense, but the payoff date makes no business sense.
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