CVUSD Not Shy About Asking For Three Quarters Of A Billion Dollars In Bonds

The Chino Valley Unified School District’s sponsorship of a three-quarters of a billion dollar bond issuance on the November ballot has garnered considerable attention in recent weeks. Unfortunately, that buzz has been less than a positive one, as public officials in the area with competing priorities who have their own designs on taxpayer-provided largesse have misgivings that the sheer size of the issuance and the lack of clarity as to its ultimate use might deplete the reservoir of taxpayer generosity some prognosticators say voters might evince this year.
Measure G, if approved, would permit the Chino Valley Unified School District to issue $750 million in bonds at legal interest rates to provide, in the district’s words, financing “to upgrade neighborhood schools and retain/attract quality teachers by repairing deteriorating classrooms/restrooms; replace deteriorating, rusty pipes/ensuring safe drinking water; removing asbestos/lead paint; upgrading fire safety, science/computer labs, wiring, classroom technology; repairing, constructing, acquiring educational facilities, sites [and] equipment.”
The mere size of the issuance is remarkable. The $750 million requested is one of the largest bond issuances in San Bernardino County history.
Public bonds are instruments of finance. Public agencies, such as municipalities and districts issue, that is create and sell, bonds which carry a value and duration. The public agency uses the proceeds from the sale to undertake a whole host of public improvements. The investors, variously referred to as the bond buyers or bondholders, are paid a specified percentage of the bonds’ purchase price (typically ranging from four percent to upwards of six percent) over 25 to 40 years. Thus, a typical bond investor will see a return of roughly 150 percent to 180 percent of the original investment.
In the case of the purchasers of the bonds that would be issued as a consequence of the approval of Measure G, investors and those entities engaged in the transactions would stand to net about $1.6 billion by the time the bonded indebtedness is retired in full in 2058.
Those inveighing in favor of Measure G maintain “If we want to attract and retain quality teachers, we must provide competitive, 21st Century learning by investing in our aging schools, technology and classrooms. Measure G promotes strong careers by upgrading and expanding school career education programs that train students for jobs – allowing students to acquire real world skills and effectively compete for employment in health care, computer science and automotive repair following graduation. Measure G addresses the whole needs of the child by ensuring students’ basic social, emotional and academic needs are met and their families get the support they need to succeed.”
In the argument against Measure G contained in the sample ballot now being sent to Chino Valley voters, those opposed to the bond issuance maintain “The board wants to us to increase our property tax. They want money that we don’t have. The board gets a share of the money from property tax that we pay to the State. The board also gets a share of lottery money from the State. What is the board doing with all that money? It is not the taxpayer’s fault that the board can’t manage the money. This board does not deserve any more money from us. They need to work with the money we already give them.”
Moreover, the opponents decry the consideration that the measure had not specified “what type of bond they are going to use” or “what the interest will be. The board is not telling us what the total cost of the bond will be. Has the board repaid the last bond that was approved by the voters? Did the board extend the last bond without voter approval? Are we still repaying on the last bond?”
Based on the $1.6 billion cost of debt servicing the bonds envisaged in Measure G, a combined current population of 156,000 for both Chino and Chino Hills, an average household size of four people and a 40-year life of the bonds, it would appear that Measure G would impose assessments of roughly $1,000 per year on homeowners in Chino and Chino Hills.
That burden is one residents in Chino are not likely to gladly bear.
An indication of that was that two elected Chino city officials, councilmen Glenn Duncan and Earl Elrod, have gone on record as being highly skeptical about the need for the bonds if not outright opposed to their issuance.
Both Duncan and Elrod have referenced the City of Chino’s collection of development impact fees from the builders of residential subdivisions within the city. Those development impact fees are intended to offset the impact of the influx of population into the community as a result of the residential growth and partially defray the cost of new infrastructure, infrastructure improvements or infrastructure augmentations. A portion of those development impact fees collected over the years have been passed through to the school district. Thus, from the perspective of some, the district should have been able to stay abreast of maintenance to its facilities, obviating the necessity of such a large bond issuance at this point.
Of note is that in recent years, the district has actually shrunk, with the district having shut down two of its campuses because student population has over the last five years stabilized or declined. As a consequence, developer impact fees that in years past would have been used to build schools could have been devoted to refurbishing existing ones.
In addition to Duncan and Elrod’s expression of reservation, Chino’s city attorney, Jimmy Gutierrez echoed the concerns of many members of the community with regard to the lack of specificity with regard to how the district will utilize the bond windfall.
The district’s superintendent, Dr. Wayne Joseph, said it was his preference that the district use the lion’s share of the money that will become available if the measure passes to carry out renovations at the district’s high schools, particularly Chino High, the district’s oldest and most dilapidated high school campus. It was not clear whether the school board is in concurrence with Joseph.
District representative Jim DiCamillo said it is his recommendation that the $750 million in bonds be issued in four or five installments of roughly $150 million to $200 million each. He said the money would be spread around the district to do needed improvements and modernizations at all of the campuses and that the district could simultaneously apply to obtain matching modernization funds from the state that would make the money go twice as far. Improvements would include fixing or replacing modular buildings that are more than 20 years old and permanent buildings that are over 25 years old.
Overall, the inexactitude of the bond issuance advocates as to the improvement program and the slightly varied priorities they have among themselves has provided fodder for the bond issuance opponents.
Moreover, there is widespread concern that the imposition of the taxing/assessment regime that would be needed to debt service the $750 million issuance would sour residents on any further local tax increases for another generation.
In Chino Hills, which is a more affluent community than Chino, there appears to be less resistance to the idea of the homeowners saddling themselves with another $1,000 per year assessment on their property tax bill.
On the same November 8 ballot as Measure G the state school bond Proposition 51 will also be considered.
Measure G’s proponents have said of the opposition to the measure “Opponents clearly didn’t bother to read Measure G’s official language, and to our knowledge, they haven’t visited our schools or classrooms, nor have they spoken to our students or teachers. For over a year, our district has engaged the community by holding more than 150 meetings attended by 2,000 educators, parents and community members, and conducted an additional community outreach process with over 3,000 residents providing feedback on school needs and community priorities in order to develop Measure G. Local realtors know that improving neighborhood schools strengthens local property values, and makes our community a more desirable place to live.”
Some have suggested that district officials from the outset had no realistic expectation of Measure G’s passage, but put it on the 2016 ballot as a strategy to make the passage of a $500 million bond in 2018 more likely, as such a scaled-down proposal at that time would, by comparison, seem more conservative and reasonable to a cross section of the electorate.

Leave a Reply