Borrowing $105 Million Will Cost $1 Billion (Poway: homes, homeowner, deal)

[earlyretirement]

Originally Posted by futbol

So, we paid this firm money to justify his irresponsible actions?

I wonder how much this gem cost us taxpayers? It boggles my mind that the PUSD is still trying to justify this!

[futbol]

Originally Posted by earlyretirement

I wonder how much this gem cost us taxpayers? It boggles my mind that the PUSD is still trying to justify this!

My disbelieve has turned into outrage.

We've already voted one of the board members out of office. Short of a recall vote, I guess we have to wait to remove the others.

[earlyretirement]

Yeah no kidding futbol but I try not to get too stressed over this. Because in all reality, there are ALL kinds of ways the US government is bilking funds from us taxpayers.

I remember when I was younger hearing about the government spending hundreds of dollars on a $3 hammer. Or toilet seats or other things.

The typical taxpayer would probably vomit if they knew all the ways they were getting bilked. I try not to think about them. I have a tough enough time sleeping. LOL.

[shmoov_groovzsd]

Originally Posted by earlyretirement

I wonder how much this gem cost us taxpayers? It boggles my mind that the PUSD is still trying to justify this!

These types of 'consultant' reports can cost at least a few grande. The funny thing is, any responsible district or board would have paid a consultant PRIOR to getting a grant etc to see the actual implications first to the taxpayers.

I dont know when the board decided to go ahead with it, but it would have been in the Meeting Minutes. PUSD Board Agendas/Minutes

[futbol]

The remaining two PUSD board members responsible for the $1B capital appreciation bond are now gone.

Voters pick three new PUSD board members, elect Vaus Poway mayor - Pomerado News | Pomerado News

I'm surprised they got the votes that they did after their very irresponsible terms on the board.

[jeffrow1]

I didn't realize they were the final two.... though I voted against both of them. I do believe they did a good job in a lot of other ways but a point had to be made statewide regarding this kind of stuff. Taxpayers got to vote on the original bonds as they should but when they consolidated them the board should have rolled over to a traditionally structured bond. I didn't calculate the inputed rate of return on this deal but even if its close to not be able to prepay is nuts. And 40 years? Does the district have the discipline to properly reserve for this eventual payoff over that time period?

[futbol]

There is an effort to minimize the impact of this by renegotiating funding. PUSD has been warned to go slow on this.

As it stands now, homeowners living within PUSD are on the hook for that $1B payoff starting in ~20+ years.

It is now illegal in California to structure bonds as CAB.

[GuyInSD]

Originally Posted by jeffrow1

...I didn't calculate the inputed rate of return on this deal but even if its close to not be able to prepay is nuts. And 40 years? Does the district have the discipline to properly reserve for this eventual payoff over that time period?

Let's see:
Loan amount: $105M
Payoff amount: $982M
Time period: 40 years

Playing around with an amortization calculator shows this as being the equivalent of a 23.37% interest rate, for 40 years.

So - where can I sign up to be a bondholder? I can't think of any other investment that'll pay off a guaranteed 23% for 40 years...I'm willing to wait out the first 20 of no payments to get that rate of return overall : )

[cruitr]

Originally Posted by GuyInSD

Let's see:
Loan amount: $105M
Payoff amount: $982M
Time period: 40 years

Playing around with an amortization calculator shows this as being the equivalent of a 23.37% interest rate, for 40 years.

My quick computations show an annual compounded rate of about 5.76%.

[GuyInSD]

Originally Posted by cruitr

My quick computations show an annual compounded rate of about 5.76%.

Uhhh...no - $105M amortized over 40 years at 5.76% would result in total payments of about $269M - that would be a bargain compared to what Poway actually did...