So you want a new Football Stadium

[Wabash]

It's problematic that there are no minimum education or business experience requirements to get elected or appointed to many of these positions of fiduciary responsibility. If one is willing to promise enough people enough baloney, and willing to badmouth one's opponents with enough righteousness, a relative illiterate can win a seat at these tables. Many of them are potential Bob Citrons, and it's only surprising that they aren't taken advantage of more often by savvy shysters and con artists.

I agree. Such are the perils of having these types of positions filled by elected individuals.

[John Q. Public]

Trouble is that we usually want educators to be on school boards, not financial wizards. But I'd at least think they would have run something like that by their accountant. Surely they have one.

[MDDad]

Trouble is that we usually want educators to be on school boards, not financial wizards.

If there's more than one seat on a school board, there's no reason we can't have both.

[MDDad]

I agree. Such are the perils of having these types of positions filled by elected individuals.

The perils are just as great if the positions are filled by appointed individuals. The problem of insufficient financial expertise is compounded by the problem of no personal accountability.

[not4u13]

MDDad has it right. The primary qualification most expect out of candidates for the school board is a background in education. These are complex financial instruments. The way they were layer out in the article makes it obvious to us that the risks and payback is too great. I am sure the way they were pitched painted a completely different picture. Lacking the proper background in finance, or worse ye believing they were qualified but were not, they didn't ask the right questions to make it as obvious as we can see it now.

Couple that with a lack of personal accountability and you have a recipie for this type of debacle.

[Old School]

This is so basic, it take two seconds to call an independent third party or and legit investment banker and get a review..My CPA and advisors would have spoken to my wife about taking away my ability to buy gas on credit if I brought this stupid deal to them. How hard is it to understand deferred interest payments and compounding affect of not making a payment for a while. M-Dad said it best

I am sure the super's pension is not deferred. Once again the pubic sector with zero accountability, except our vote, but most waste that too with out realizing.

[Wabash]

This is so basic, it take two seconds to call an independent third party or and legit investment banker and get a review..My CPA and advisors would have spoken to my wife about taking away my ability to buy gas on credit if I brought this stupid deal to them. How hard is it to understand deferred interest payments and compounding affect of not making a payment for a while. M-Dad said it best

I am sure the super's pension is not deferred. Once again the pubic sector with zero accountability, except our vote, but most waste that too with out realizing.

Why would they believe the financial persons they were dealing with were none of the above?

[MDDad]

Why would they believe the financial persons they were dealing with were none of the above?

Because it's their job to scrutinize evey potential financial dealing with a skeptical magnifying glass, or, if they don't have the expertise, to get the advice of someone who does. That's what fiduciary reponsibility means. We deserve better than our elected/appointed officials naively accepting candy from the creepy old guy in the van without fully knowing what the payback will be.

[Old School]

MDDad, I think Wabash is pulling our leg, he can not be serious and not realize how stupid of a deal this was. These great minds at the districts... Hum, the state is broke, funding is scarce and we dig a 40 year old hole debt hole....Zero Accountability in the Public Sector

[Wabash]

Because it's their job to scrutinize evey potential financial dealing with a skeptical magnifying glass, or, if they don't have the expertise, to get the advice of someone who does. That's what fiduciary reponsibility means. We deserve better than our elected/appointed officials naively accepting candy from the creepy old guy in the van without fully knowing what the payback will be.

MDDad, I think Wabash is pulling our leg, he can not be serious and not realize how stupid of a deal this was. These great minds at the districts... Hum, the state is broke, funding is scarce and we dig a 40 year old hole debt hole....Zero Accountability in the Public Sector

Guys, don't get me wrong. I'm not defending this action. I agree with both of you that someone along the way was criminally stupid. Unfortunately stupidity is not against the law.

My observation of these types of boards is they are typically very strongly driven by the district staff. As such the Board members are heavily dependent upon the direction from staff when it comes to the implementation of policy. The Board is certainly not blameless in this issue, but I would be willing to bet there was a staff recommendation that supported the debt structure incurred by these bonds when it was deemed they were needed to construct these facilities. And the Superintendent that was in place at that time just retired with all the pay and benefits that went along with his position. I'm hoping the Board and new Super can figure out a way to renegotiate this deal that is more favorable to the taxpayer. Because right now, they're pretty much uckfayed.

[Scarleg]

I believe this deal was in place a few years before he retired and the new super was on the board during that time as well.

[ringer]

Guys, don't get me wrong. I'm not defending this action. I agree with both of you that someone along the way was criminally stupid. Unfortunately stupidity is not against the law.

My observation of these types of boards is they are typically very strongly driven by the district staff. As such the Board members are heavily dependent upon the direction from staff when it comes to the implementation of policy. The Board is certainly not blameless in this issue, but I would be willing to bet there was a staff recommendation that supported the debt structure incurred by these bonds when it was deemed they were needed to construct these facilities. And the Superintendent that was in place at that time just retired with all the pay and benefits that went along with his position. I'm hoping the Board and new Super can figure out a way to renegotiate this deal that is more favorable to the taxpayer. Because right now, they're pretty much uckfayed.

Wabash, I have worked with local public entities at a professional advisory level for many years, and what you say is pretty much true. The main thing that is terrible in this present situation is that the bonds are not callable, so there is limited opportunity to refinance this debacle....In 30 or 40 years the local property owners will be on the hook for approximately $10 million out of every $1 million borrowed. Guess who is making the money off of it right now? It ain't the District Board members or staff....It's the company that sold this idea to them. All perfectly legal, just a bad decision.

[ocexport]

http://www.pylusd.k12.ca.us/homepgnews/ ... _bonds.asp

[ringer]

http://www.pylusd.k12.ca.us/homepgnews/ ... _bonds.asp

I ain't no financial genius, but I can wade through the spin, and this part of the deal looks bad:

2008 Election GO Bonds, Series D and E(2)(3)
$40,003,918
$304,242,770
7.61


That's $40 million available now for current construction, with ultimate debt of $304 million at a 7.61% interest rate over 3 decades, with limited opportunity to refinance under today's laws. Again, it was perfectly legal, but that to me seems like a bad long-term debt decision.

[Wabash]

Wabash, I have worked with local public entities at a professional advisory level for many years, and what you say is pretty much true. The main thing that is terrible in this present situation is that the bonds are not callable, so there is limited opportunity to refinance this debacle....In 30 or 40 years the local property owners will be on the hook for approximately $10 million out of every $1 million borrowed. Guess who is making the money off of it right now? It ain't the District Board members or staff....It's the company that sold this idea to them. All perfectly legal, just a bad decision.

Wow!! And scary.

[not4u13]

A new article appears in Today's OCR about the topic of school facilities and funding. The focus of this article is the CASH conference and the contained focus on capital appreciation bonds. Many seem to have written this off as an anomaly of the PYL district. Well, it isn't.

If you want that new stadium, and many up here complain about the stadium facilities at their school, you may be looking at these types of bonds without ever knowing it.

This is not just about educators not understanding, this is also about the public and their increasing cries for better facilities without having a clue how am you e is goi g to come up with the money.

[Wabash]

A new article appears in Today's OCR about the topic of school facilities and funding. The focus of this article is the CASH conference and the contained focus on capital appreciation bonds. Many seem to have written this off as an anomaly of the PYL district. Well, it isn't.

If you want that new stadium, and many up here complain about the stadium facilities at their school, you may be looking at these types of bonds without ever knowing it.

This is not just about educators not understanding, this is also about the public and their increasing cries for better facilities without having a clue how am you e is goi g to come up with the money.

I read that article. I admire the chutzpah of a group that argues against limiting the payback amount to 4x the amount borrowed.

[Mr. Grady]

For those of you from South OC who may have went to Shadow Hills HS to see the Mission Viejo JV's a couple seasons ago play La Quinta you saw one of the nicest if not nicest HS venue in California. A remote, brand new, smaller division school with a sparkling 6,000 seat stadium and state of the art pressbox, and it was paid for with with these same sort of Capital Appreciation Bonds.

[Mr. Grady]

For those of you from South OC who may have went to Shadow Hills HS to see the Mission Viejo JV's a couple seasons ago play La Quinta you saw one of the nicest if not nicest HS venue in California. Shadow Hills is a remote, brand new, smaller division school with a sparkling 6,000 seat stadium and state of the art pressbox. And it was paid for with with these same sort of Capital Appreciation Bonds.

[Old School]

Building nice football stadiums with hot money is just stupid...

What is up with El Toro's stadium?