Wednesday, January 20, 2016

Hartnell brings savings to taxpayers with refinance of Capital Appreciation Bonds

Hartnell administrators recently finished refinancing nearly $95 million in bonds, including some Capital Appreciation Bonds, which can carry a higher-than usual interest rate and could therefore be more costly for taxpayers.

As a result, taxpayers could end up saving $175 million in the long run, Hartnell officials said.

The bonds were approved in 2002 for Measure H to finance college renovations. The money was used to build the library, the student center, the Alisal campus, and the science center.

Capital Appreciation Bonds became an issue in 2012, when it was learned that the Poway Unified School District near San Diego approved issuing a $105 million bond that could ultimately cost local taxpayers about $1 billion to repay. The controversy led to legislation to modify their use, although school districts are still able to use them.

One of the bonds Hartnell used was a CAB, as it's commonly known. Officials always argued the bonds would be financed because their repayment would become too expensive. 

The new bonds were sold with an average interest rate of 4.25 percent with the final maturity of 2049. So at least until then, the taxpayers will be paying for those gleaming buildings.

No comments:

Post a Comment