Poway board members and administrators were trying to advance their own careers at the expense of taxpayers when they scammed voters into approving over $100 million in capital appreciation bonds with a 1000% interest rate (not 10%, not 30%, but one thousand per cent). My friend Karen Horwitz has a name for this kind of thing: white chalk crime. The voters should get rid of the board members, lawyers and administrators who planned this deception.
This secret bond deal reminds me of the famous City of San Diego pension scam. Where's Bonnie Dumanis' Public Integrity Unit when citizens need it? Down in South Bay, going after Mexican Americans that Greg and Cheryl Cox don't like.
Click on the following link to see Joel's well-done graphic:
CAB scam in Poway
May 12, 2012
By Joel Thurtell
Joel on the Road blog
The nicest thing I can write about the language used by Poway schools in San Diego is that it was shrewdly phrased. But when framed with the ‘no new taxes” promises flung out by bond supporters, the bond proposal amounts to a brazen lie.
Whether they put down “yes” or “no” on the 2008 ballot proposal, voters in the Poway school district in San Diego could not have known that the “legal interest rate” on some of the bonds they approved would amount to an eye-popping, wallet-ripping 2200 percent.
How a $100 million loan turns into a $1 billion payoff at 1000 percent interest
To provide safe and modern school facilities, improve student learning, and qualify for approximately $20 million in State matching money, shall School Facilities Improvement District No. 2007-1 of the Poway Unified School District issue $179 million in bonds at legal interest rates to upgrade aging classrooms, libraries, science & computer labs; replace roofs, plumbing, heating, ventilation and electrical systems; improve fire alarms and school security; remove hazardous materials; fund needed facilities, subject to mandatory audits, independent citizens’ oversight and without an estimated increase in tax rates?
Nowhere in the ballot language was it spelled out to voters that the majority of the debt that was approved would be in the form of Capital Appreciation Bonds with interest rates so usurious that CABs were banned in one state — Michigan — when the monstrosity was exposed.
Neither promised “mandatory audits” nor “independent citizens’ oversight” captured the reality for citizens — that these pernicious instruments of debt could only fulfill the promise of “no new taxes” if property values increase by hundreds of percent.
Nor were voters made aware that there is no escape from this hall of financial horror. A term of the bond official statement states that they may not be re-financed to better terms.
Here in Michigan, I watched the value of our house in Plymouth plunge by 42 percent from its 2005 peak. Around the nation, similar drops in home value make California CAB promoters’ arguments for continuously increasing value seem delusional. Yet since 2000, California schools have issued more than 1,000 CABs with principal of $20 billion and interest that could be triple or more of principal.
All justified by hallucinations about growth in real estate value.
Now, here’s another unpleasant fact about the Poway CAB issue: It is written into the official statement of the bonds that they cannot be refunded. Poway is stuck with these parasites until 2051.
There were opponents to the Poway bond proposal, but they were unaware of how bad the plan really is. They may have had suspicions. In “Arguments Against Proposition C,” opponents stated, “Would you take out a 25 to 40 year mortgage to buy computers that last maybe 5 years, to trim trees, or to make plumbing repairs?”
The opponents had a good point: Had they known how costly these bonds would turn out to be, they could have re-stated their argument: “Would you take out a 25 to 40 year mortgage to buy computers that last maybe 5 years, trim trees, or make plumbing repairs at an interest rate of 1000 percent?”
Here is the real question: If school officials had told voters the truth — that they were obligating taxpayers for 40 years to a sky-high interest rate to pay for short-term projects and that taxes might indeed go up — would the proposal have been approved?
What was so important about this proposal that school officials chose to scam voters?
That’s a question for elected trustees of the Poway Unified Board of Education:
President: Penny Ranftle
Vice President: Linda Vanderveen
Clerk: Andy Patapow
Member: Mark Davis
Member: Todd Gutschow