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MDUSD Bond Oversight Committee meeting is tonight

By Theresa Harrington
Thursday, March 15th, 2012 at 1:52 pm in Education, Mt. Diablo school district.

The Mt. Diablo school district’s 2010 Measure C Bond Oversight Committee will meet tonight. Since the district’s website does not provide a distinct URL link for the agenda, I am posting the agenda below:

“AGENDA
2010 Measure C Citizen’s Bond Oversight Committee
Thursday, March 15, 2012
1936 Carlotta Drive
Board Room, Dent Education Center
7:00 PM

• Call to order

• Public Comment

• Review/Approval of Minutes of December 15, 2011 (action item)

• Review/Approval of Minutes of February 23, 2012 (action item)

• Annual Report

• Vacant Committee Seat

• Request for volunteers for 2002 Measure C CBOC

• Solar Project: Status Report

• Mechanical (HVAC) Project: Status Report

• Technology Project: Status Report

• High School Enhancements

• Quarterly Report

• Annual Report: Minority Report

• Other Committee Concerns

• Public Comment”

At the last meeting, Chairman John Ferrante pointed out that action items should be clearly identified on the agenda. In the past, they have not been.

In addition, materials already provided to the committee should also be posted with the agenda (such as the draft minutes and annual report). Unfortunately, the district still is not providing this backup material to the public before the meeting.

Do you think the district should post attachments and Powerpoints to be reviewed at the meeting before the meeting begins?

[You can leave a response, or trackback from your own site.]

  • Theresa Harrington

    g: That’s exactly what I asked Isom for yesterday, but he said he hadn’t calculated that yet. I told him this is not an apples-to-apples comparison until the public can see the difference between what the district is doing now and these new options. Isom said that information will be presented at the public forums, which he thinks will be held April 17, 18 and 19.
    Also, the district should release similar numbers showing how they structured the first bond issuances.
    I agree that it’s difficult to understand why the numbers change so dramatically in the different variables.
    I also noticed that even Isom and Stone & Youngberg’s estimates for issuing $150 million in current interest bonds for 25 years varies by $22 million in total debt service!
    The slide entitled “Capital Appreciation Bonds” shows a total debt service cost of more than $276 million, compared to Isom’s estimate of $254 million on the “Issuance Options” slide.
    Isom said his firm’s calculations are specific to the Mt. Diablo district, while Stone & Youngberg’s were more general.
    I also suggested that options 4 and 5 (do nothing or issue more expensive bonds now) could cost more than $1 billion, according to Stone & Youngberg’s estimate for capital appreciation bonds. But, Isom said he would never advise the district to issue that amount of debt and that Stone & Youngberg’s estimate was for “illustrative purposes.”
    He said it’s possible for two different estimates to vary by $40 or even $50 million, based on a variety of factors.

  • g

    So, Isom has walked away with $395,000.00 in fees (so far) for 4 piddling issues totaling $127million, and has not “calculated that (debt) yet”? Anyone can see from what he did present that CIB interest nearly doubles the debt, but CABs more than sextuple the debt.

    Do we even know which, or what portion of, the first four issues were CIBs vs Cabs?

  • g

    Oops, not a piddling $127 million—$121 million. Also, didn’t the board just approve a new 5th issue? Did that happen yet or not?

  • Theresa Harrington

    I have asked Isom to provide me with the following information related to the four MDUSD bond issuances that have already occurred, which total about $120.9 million in principal:
    Year issued, type of bond, principal amount, financing term, total interest and total debt service.

    According to the “Measure C Background” slide, the series B and C bonds included federal subsidies, so I assume they are the CREBs and the QSCBs. I believe the series A bonds are GO. So, it’s possible the series D bonds, which totaled about $7.1 million, could have been capital appreciation bonds. Isom called and said he’ll try to get me that information today.

  • g

    Then we have what I believe to be the most recent $22million in Refunding Bonds to redeem part but not all of the 2002 Bonds (which were themselves refunding bonds covering even older Mello Roos bonds).

    This most recent agreement seems to say that Stone & Youngberg can “negotiate” to sell them as either CABS or CIBS at their discretion. Maybe S&Y hasn’t sold them yet–but something about them should have been included in this most recent report–otherwise, the dollar figures cannot add up.

    We also need to know more than just the difference in interest. We need to know the breakdown of costs of “expenses incidental to the issuance of the Series 2011 Bonds, including financial advisory and bond counsel services, bond insurance and rating agency fees, paying agency fees and the costs of issuance and registration of securities”.

    How might these “expenses” be affected by the different “options”, 1,2,3, etc.

  • Theresa Harrington

    On another topic, I noticed that Trustee Gary Eberhart appeared as the board liaison at last night’s CAC meeting and Trustee Linda Mayo attended as “an observer.”
    Eberhart sat at the table and Mayo sat in the audience. It did not appear that anyone new had been appointed, per Board President Sherry Whitmarsh’s “secret” email to the board (which has still not been produced by the district in response to my PRA).

  • g

    Very interesting that suddenly Eberhart is on:
    1)”THE” BOARD
    2) CSBA representative
    3) Facilities Subcommittee
    4) CBOC Board Rep.
    5) TECH Advisory Committee
    6) CAC Advisor
    Did I miss any?

    He obviously has no home life, and would appear to not have time for much Paid employment either. Maybe the reports of unemployment were not exaggerated after all.

  • Alicia

    @105 g….The district and board instruct the underwriter whether to sell the bonds on a negotiated or competitive bid process. The board should substantiate and inform the public why it would pursue either of these methods since there are advantages and disadvantages to negotiated vs. Competitive bidding process. In looking at S&Y’s contract, Cabs are more costly to issue than Cibs.

  • Theresa Harrington

    Alicia, do you know how much the district has issued in CABS?
    I received information from Isom’s office that reported the district sold about $50.4 million in GO bonds in 2010 and about $7.1 million in GO bonds in 2011, but it didn’t say if they were CIBS or CABS.

  • g

    The Series C bonds were CIBs, as QSCBs issued under ARRA regulations, and the Series D bonds were issued as both CABs and Convertible CABs. But I could not find out how much of each.

  • Theresa Harrington

    Were the Series A bonds CIBs?

    Isom told me after the Monday board meeting: “I’ve always said: ‘We’ll never do 40-year CABs.’”

  • g

    Series A= $2,997,216.20 Capital Appreciation Bonds, showing maturity in 2022, and $47,459,258.80 Convertible Capital Appreciation Term Bonds, showing maturity in 2035.

    Series B= CREBS–$25,880,000.00 at 5.548% Term Bonds due August 1, 2027

  • Theresa Harrington

    Where are you getting this info?
    Isom’s office told me the district issued about $59.4 million in CREBS maturing Aug. 1, 2027.

  • g

    I left out the best part, Series A were sold at 12% interest thru 2021, and drops to 9.7% in 2022.

    See here:

    http://esb.mdusd.k12.ca.us/attachments/98e53d24-edc6-468d-bfa0-936036b50053.pdf

  • Theresa Harrington

    Another interesting detail: cost of issuance for $110 million in bonds was “$1,781,511.06 or less.”
    What it doesn’t say is how much went to each company involved in the issuance.

  • g

    No, and I found the info on random search. If it was actually included as an agenda Attachment, I did not find it. I did find how Richards set it up for banking/drawdown purposes though. http://esb.mdusd.k12.ca.us/attachments/199f381c-00e0-477b-a2d7-3a58eb93b41b.pdf

    I wonder if this drawdown schedule has been followed–if it MUST, by some law, be followed, and how is the drawdown schedule affected by more recent bond sales.

    This is the only drawdown schedule I’ve seen, so I’m wondering if there is such a document out there for the newer Series.

  • g

    I’m assuming the difference of $33,660,000.00 on the Series B bonds between the $25,880,000.00 on the Cost of Issuance statement and the total of $59,540,000.00 actually sold on Series B, is due to the Federal CREBS reimbursement?

  • Theresa Harrington

    Here’s what a principal in Isom’s office sent in an email:

    “The District’s pursuit of seeking federal subsidy dollars through the issuance of ‘New Clean & Renewable Energy Bonds’ and ‘Qualified School Construction Bonds’ saved the District taxpayers a large sum of interest ($25,342,785.25 in interest savings). Also, I think it’s important to point out the District has financed $120,995,057 of par bonds at on interest cost of $108,974,866 for a total P&I of $229,969,923. This translates into a principal over total debt service ratio of 1.90%, which is very favorable compared to most school districts throughout the state.”

  • g

    Maybe, (Isom person). But CREBs allotments are fully depleted! (hope they don’t make us pay them back for fraud) I believe QSCBs are too? Not sure. Let’s look forward at the next $227,000,000.00. Who’s going to bite that next interest bullet for us? Uncle Deep Pockets has closed up shop.

    If you add about 1.6% “cost of issuance” to the bottom line, quoting 1.9% debt ratio starts to fall apart, and when you look at total cost to borrow on some of the bonds, for instance:

    For those Refunding bonds, where we have to also pay the cost of “any redemption premium thereon, the costs of providing notices of redemption, the costs of paying for other agents to provide for the processing and payments of such Series 2002 Bonds and all expenses incidental to the issuance of the Series 2011 Bonds, including financial
    advisory and bond counsel services, bond insurance and rating agency fees, paying agency fees and the costs of issuance and registration of securities”.

    OK, talk to me some more about our great 1.9% debt ratio.

  • Alicia

    @209 Theresa….the district sold $50.4 million in Cabs on 9/30/10. $7 million in Cibs were sold in April 2011. I’ll send you the links to the debt service schedules later. They can be seen in the official bond statements at http://WWW.Emma.msrb.org. Just search on Mt. Diablo and click on the 9/30/10 bond.

  • Alicia

    @214 G The series A $50.4 in Cabs were issued under government code 53506, where 53532 allows the effective yield on bonds sold at a discount can be as high as 12%. 12% is the maximum effective yield. If the bonds had been sold following the education code 15146, the Cab bond would not be allowed. The district was required to inform the public prior to the election whether they would issue the bonds pursuant to the government code or the more conservative education code. Also, the board was required to disclose at the same time the bonds’ maximum interest rate as a percentage…which they did not do.

  • Alicia

    @215…I had asked for invoices for cost of issuance in a formal records request. I was told by Rolen that the district does not have invoices.

  • Theresa Harrington

    Here’s a blog post about what the Parent Advisory Council has been up to lately: http://bit.ly/HXFBnY
    Meeting tonight will focus on budget, PE and strategic planning.

  • g

    Alicia, it is unfortunate for the taxpayers that the Board allowed their advisors to use Govt Code instead of Ed Code. I doubt that at least three people on the board know the difference, or have ever looked it up.

    However as part of Govt Code 53506 there is reference indicating that the district MUST follow Ed Code 15146 as far as certain reporting goes:

    (4) Estimates of the costs associated with the bond issuance.
    (c) After the sale, the governing board shall (not “may” but “shall”-g) do both of the following:
    (1) Present the actual cost information for the sale at its next scheduled public meeting.
    (2) Submit an itemized summary of the costs of the bond sale to the California Debt and Investment Advisory Commission.
    (d) The governing board shall ensure that all necessary information and reports regarding the sale or planned sale of bonds
    by the school district it governs are submitted to the California Debt and Investment Advisory Commission in compliance with Section
    8855 of the Government Code.

    In addition to Isom’s $35K contract to oversee dissemination of Bond information to the public, and his $90K per bond issue contract, the District did adhere to item (d) above, when it engaged him by contract on 3/29/11 for the sum of $5,000.00 to fill out a simple form for CDIAC reporting and compliance.

    Isom may not feel obligated to answer to either you or Theresa, but the Board has a legal obligation to answer to us, and I have found NO indication that after the sale of ANY of the issues did the Board report out the “cost of sale” to the public at the “next scheduled meeting”.

  • g

    Some other scary things about the District. Reading warrant reports I’ve wondered about the tons of payments to Ikon and Office Depot equipment leases.

    I was shocked to see on the Issue C and D disclosure that we have leases for “computer equipment, copy machines and portable classrooms under various agreements” currently totaling $11,485,003.00!

    I was also shocked to see the disclosure that a portion of the Series ‘D’ very high interest CABS money would be deposited into
    the Debt Service Fund to pay a portion of the interest on the other Bonds. Talk about robbing Peter….

  • Alicia

    G…where did you see disclosure to use Series D to pay interest debt service on another bond?

  • g

    Alicia, it’s on page 17 or the Preliminary Statement. Unfortunately, no details, such as dates or dollars, are filled in.

    It says Series C will pay for HS classrooms and repair the two pools (pools that Prop 55 has been used on over and over again).

    http://esb.mdusd.k12.ca.us/attachments/82656e9b-f8fa-46c7-9cc8-158e5f20610e.pdf

  • Theresa Harrington

    g: I thought it was odd that the district claimed it was using the QSCBs for those projects too, since they were virtually completed by the time the bonds were issued and had already been paid for with Prop. 55 funds. Pedersen told me this was because the district had to have “shovel-ready” projects to qualify for QSCBs. But, it seems that it didn’t matter that the projects were already nearly done.
    I also noticed that the most recent quarterly report includes the pool replacement at MDHS, but doesn’t have any information under “Project Schedule.” That may be because the entire project was done or nearly done before the district got the Measure C money.

  • g

    Theresa, Having Chevron back our application for CREBS a year before Measure C went on a ballot, and lying to get QSCBs seemed to me to be a sure shot to get both the Feds and State to come ask for their money back.

    I guess the District counts on both of them to be too busy playing politics to notice.

    But I thought for sure the Grand Jury would notice.

  • Alicia

    Theresa…I only asked for the CREB applications submitted to the IRS. Do you have copies of the QSCB applications?

  • g

    Alicia take a look at the Premium and Issue costs on this one. I’m surprised they didn’t release it on April 1st! Was there any mention of this being in the works at the last couple of meetings about excalating sales of the bonds?

    Today they are issuing for sale the Refunding Bonds for 2002 Series B-2. $40,540.00. First redemption due 7/1–they must need cash NOW? Last redemption 2026.

    http://emma.msrb.org/EP612484-EP479182-EP879590.pdf

    I remember the board approving something like $22million a couple of months ago. I don’t remember $40.5million??

  • g

    Ooops, Last redemption on 2029, not 2026.

  • Theresa Harrington

    Cost of issuance: $350,245.42 for “Payment of Underwriters’ discount, Bond and Disclosure Counsel fees, Special Tax Counsel fees, financial advisory fees, rating agency fees, escrow verification agent fee and other costs of issuance.”

  • g

    Plus they’re being sold at premium (Alicia can explain that waayy better than I), but I look at it as up-front-out-the-door cost is $5,168,827.00 before we ever see a dime in savings (if there truly is any) over just leaving 2002 alone to be paid on the original schedule at the original rate.

  • g

    Plus, then there is the $-unknown Cost of Redemption, which I don’t think is included in the Cost of Issuance.

  • Theresa Harrington

    Brian Lawrence’s top priorities as the first candidate to announce (as far as I know) are: closing the achievement gap, financial accountability, transparency and staff: http://bit.ly/HTkUJv

  • Theresa Harrington

    I have posted the complete proposal submitted to the board by a coalition that is urging increasing the Measure C bond tax rates to accelerate bond sales, lower overall costs and speed up construction: http://www.ibabuzz.com/onassignment/2012/04/06/a-closer-look-at-proposal-to-increase-bond-tax-rates-in-mdusd/

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