What Are Bonds?
Pure and simple, bonds are loans that government entities (like cities and school districts) take out that taxpayers pay via their property taxes. These loans are usually needed because the entity would like to have new construction or remodel old infrastructure. Once the bonds have been approved by voters, residents pay for these bonds (with added interest) for decades to come.
Think of bonds as second mortgages or home lines of credit. Bonds will continue to be a monkey on the residents’ backs years way after the money borrowed has been spent. For example, take a look at a school district in San Diego that is paying $1 billion in interest for $100 million in borrowing:
Closer to home, here is one example of the bonds currently being paid by homeowners in Chula Vista. If you own a home, you will see it in your property tax bill. If you rent a home, you will be paying for it via your rent payment.
As can be seen, the bonds are from some of the very same entities that are coming around now with their hand extended begging for more: SUHSD and SWC. Note that these taxes are in addition to the regular property taxes paid to the County as well as any Mello Roos that the resident may still owe on their property.
These are the current bonds listed on the property tax roll:
Bond Name Year Approved Amount* Entity
Prop AA 2000 $89M SWC
Original Proposal: http://www.smartvoter.org/2000/11/07/ca/sd/meas/AA/
Prop BB 2000 $187M SUHSD
Original Proposal: http://www.smartvoter.org/2000/11/07/ca/sd/meas/BB/
Prop JJ 1998 $95M CVESD
Prop O 2006 $644M SUHSD
Original Proposal: http://www.smartvoter.org/2006/11/07/ca/sd/prop/O/
Prop R 2008 $389M SWC
Original Proposal: http://www.smartvoter.org/2008/11/04/ca/sd/prop/R/
Total: $1.4 Billion
(this does not include interest and it is still being paid by residents)
*Some observations of these numbers:
- There is, still, a total of over $1.4 billion of debt that is still owed
- CVESD borrowed $95 million in 1998 (the smallest amount), in 2016, we’re still paying that debt and in 2012, they passed another $90 M bond (Proposition E)
- SWC and SUHSD each borrowed over half a billion dollars
This series will explore some of the issues and pitfalls that come with issuing bonds:
Part 3: Fool Me Once, Fool Me Twice (coming)
Part 4: Used Car Sales Tactics (coming)
Part 5: Options (coming)