With less than two weeks to go before Culver City voters head to the polls to vote on whether or not to tax themselves in order to repair the infrastructure of the school district’s facilities, some residents still may not fully understand the function of municipal bonds.
The Culver City Unified School District plans to issue general obligation municipal bonds totaling $106 million in order to pay for buildings, classrooms, laboratories and restrooms at its 12 schools, which school officials say have been in disrepair for decades. A full-court press by school and city leaders began in earnest in April to convince voters of the necessity of passing the school repair bond, known as Measure CC.
Municipal bonds are securities that are issued primarily for the purpose of financing the infrastructure needs of the issuing municipality. They are considered, among the various types of bonds, relatively safe and traditionally have had very low rates of failure, according to bond traders interviewed by the News. Unlike some bond measures, funds derived from Measure CC? if it passes? would go solely toward infrastructure needs. These bond measures typically have a high rate of success. Since 2008, nearly two-thirds of school-bond initiatives have won.
Much of that can be attributed to Proposition 39, a 2000 voterapproved ballot measure that among other things lowered the threshold for passing school bonds from two thirds to 55 percent of the vote.
Many bond proposals are targeted for June in off-year elections.
“The chances are higher for passage in June because [the organizers of the bond] can target their supporters a lot easier in an election where there are typically fewer voters,” said Culver City political consultant Jewett Walker Jr., who has worked on several statewide and local ballot measures.
Prior to 2001, more than 40 percent of school bond measures failed when the baseline was for passage was higher. Prop. 39 also ushered in more accountability measures for the funds that are generated.
Property owners would pay an additional tax of varying rates per year if the bond measure is successful. For example, according to the Culver City school district, for a home valued at $368,135 the annual tax would be $176. School officials think the public is beginning to have a general idea of what is involved with the school bond measure.
“We do believe there is a basic understanding of how general obligation bonds work among our community members, but there are some aspects related to how the annual tax rate per $100,000 of assessed valuation is set and who sets it after the bond is passed (which is Los Angeles County), that we will be addressing very soon,” CCUSD Assistant Superintendent Mike Reynolds said. “I say this because I am presently working with our financial advisors to develop specific answers to a series of four very recent questions about general obligation bonds and how they work. These Q&A’s shed light on how the tax rates change in response to changes in the assessed valuation of property within the city. We will be distributing this information in question and answer form to the interested persons as well as posting it on our website as soon as it is completed.”
Culver City Unified School District Board Member Katherine Paspalis said in January that the board would be utilizing the type of bonds that other school districts have in recent years called capital appreciation bonds, which allow school districts to postpone bond payments for several years, unlike shorter term bonds.
Residents in Poway will be saddled with $981 million bill for a on a $105 million loan because a capital appreciation school bond passed by voters in the San Diego area school district last year.
One Poway board member said the district decided to go with this type of bonds because local homeowners wanted to keep property tax rates low.
“We’re not interested in replicating the mistakes that other school districts have made,” Paspalis said.
Culver City residents will vote on Measure CC on June 3.
