Measure S Speculates with Taxpayer Money
True Bond Costs Decades Away Cannot Be Predicted
Among the many good reasons to vote a resounding “No!” to Santa Barbara City College’s Measure S, of special importance are the financial implications for property taxpayers (and renters) in the college district, which stretches from Rincon to Gaviota.
We voters are told that if Measure S is approved, the final cost will be $16.65 per $100,000 of assessed value of homes and/or commercial properties. There is no way anyone can accurately say what the tax rate will be if Measure S is approved. This huge bond offering is not one lump sum, one bond to be sold to the public, at one interest rate. Instead, Measure S is a series of bonds to be issued and sold over a 13-year period and repaid over a 38-year period.
SBCC President Lori Gaskin and the school’s Board of Trustees are asking the voters to give them a blank-check authorization for $288 million to issue and sell bonds all the way through 2027. The college doesn’t plan to spend all the money now. Instead, it intends to collect the money from the sale of the bonds in roughly $70 million installments every four years until 2027, spending the funds as they’re received.
So, one may ask, why is that so bad? The reason is there is no earthly way to forecast interest rates for these bonds more than a decade out into the future. And, without knowing the interest rates or future assessed values for all real property in the SBCC district many years from now, it is not possible for anyone to predict with any degree of accuracy what the tax rate will be.
We contend that in all likelihood the rate will be significantly higher than what the proponents of Measure S would have you believe. The bond underwriter, Morgan Stanley, which will be receiving millions of dollars of fees from SBCC for underwriting the bonds, has managed to give new meaning to the phrase “rosy scenario.”
Without a visible flinch, the underwriters and SBCC are suggesting that the historically low interest rates we are experiencing today will continue for the next 13 years. They also assert, seemingly authoritatively, that property values will increase by 4.5 percent every year for at least the next 25 years! That may or may not be right — but we doubt anyone can forecast property values for the next few years, much less the next 25 years.
They had better not be wrong, or property owners and renters in the SBCC district will experience serious financial distress. If you hesitate to believe this, then glance at Measures Q and R, which the voters generously approved in 2010 to finance the many infrastructure needs of the Santa Barbara Unified School District.
In 2010, that school board told us the rates would be $13.98 and $12.48 per $100,000 of assessed value for Measures Q and R, respectively. Just three years later, a new school board with a majority of new members did not think they were ethically bound by the solemn representations of the earlier board. This new board chose to accelerate the issuance and sale of the bonds, deviating from the original schedule of bond sales that formed the basis for the proposed tax rates. Except for one member, the new board, unburdened by the promises their predecessors made, decreed an approximately 50 percent increase in rates to $21.75 and $17.50. And, because very few of us were paying attention, school bond discussions not being among top media hits, few were aware of this 180-degree turn, so the board got away with it without adverse consequences to themselves. Yes, such can happen here.
It is also truly surprising to us that SBCC has hired a leading communications and media relations firm in Oakland and has paid them $185,410 to date of your taxpayer dollars as a “consultant” for polling, informational mailings, and other matters related to what has become Measure S, the largest local bond measure we can ever remember. In addition, a boardmember of the school has formed an outside independent campaign committee that has raised close to $60,000 primarily from building contractors, architects, lawyers, and other vendors who have been paid for services rendered to SBCC for past bond measures.
No one can convince us that SBCC should get authorization from the voters to issue close to one-third of a billion dollars’ worth of bonds over the next 13 years and for which residents will be on the hook until 2052 at tax rates that are anyone’s guess.
Please vote no on Measure S. This unwieldy and encumbering bond measure should be defeated to ensure that voters and residents of our community are not asked to pay for unsubstantiated and uncertain costs, which are likely to be much higher than represented by the proponents of Measure S.
Keep up with developments in this campaign; follow us at VoteNoOnS.org.