Acalanes district residents seek transparency and accountability related to bond measure’s broken promise
By Theresa Harrington
Friday, June 27th, 2014 at 6:01 pm in Education.
In the Acalanes school district — which includes Acalanes, Campolindo, Las Lomas and Miramonte high schools — some residents are seeking greater accountability and transparency regarding bond measures and financing.
Several residents were alarmed Tuesday when they found they could not trust the 2008 Measure E ballot language promising not to raise their property tax rates for $93 million in new construction bonds.
The Acalanes board voted 4-1 that night to issue $15 million in current interest bonds authorized through Measure E. That ballot measure included language that promised tax rates would not increase above the $35.58 per $100,000 in assessed valuation property owners were paying for previous bond measure debt. The new debt pushes tax rates over that amount.
District officials said Tuesday that the tax rate promise is likely to be broken this year, regardless of whether trustees approved the new bonds. The additional $15 million just pushes it farther over the promised limit.
Since Tuesday, I have received phone calls and e-mails from community members expressing concerns about the board action, which includes a decision to seek validation in Contra Costa County Superior Court regarding the legality of issuing bonds that contradict the ballot language.
The district is relying on the county counsel’s impartial analysis of the measure, which said the tax rate projections were only estimates, “which are not binding on the district,” and could fluctuate based on a variety of factors.
Although the board has discussed the likelihood of exceeding the promised tax rate for a year-and-a-half, it hadn’t yet gotten around to officially informing property owners. So, the news appeared to blindside many residents, including Michael Cochrane, of Lafayette, who questioned the district’s reasoning when it agreed to issue $68 million in Capital Appreciation Bonds, or CABs in 2010 and 2011 under the assumption that assessed property valuation in the district would climb 5.75 percent a year.
At that time, Cochrane said in a Friday phone interview, the state was in the midst of a recession and real estate values were growing more slowly than projected.
“At best it was negligent, assuming rates were going to go up that much, and at worst it was fraudulent,” he said. “They should have known this was one of the biggest recessions of all time. People could see it.”
Cochrane said trustees and financial advisers who relied on such rosy projections should be held accountable.
Trustees Kathy Coppersmith, Tom Mulvaney and Richard Whitmore were on the board in 2010 when $30 million in CABs were issued. Trustee Susie Epstein joined the trio when $38 million in CABs were approved in 2011. Trustee Nancy Kendzierski was not on the board when either CAB was issued.
But Tuesday, Kendzierski voted with the majority to approve the $15 million in new bonds, while Mulvaney was the lone dissenter. Whitmore expressed regret that Mulvaney, whom he called the king of the bond program, did not feel comfortable approving the additional $15 million.
Mulvaney said he struggled with his vote because he had personally assured voters in 2008 that their tax rates wouldn’t go up. But meeting minutes from 2010 show Mulvaney appeared eager to believe estimates provided by Keygent financial adviser Tony Hsieh, who persuaded the board that the 5.75 percent annual growth rate was reasonable.
“Mr. Mulvaney stated that the assumptions were very conservative,” according to the March 3, 2010 meeting minutes.
Yet, Hsieh cautioned that “recent weakness in the California real estate market may have an impact on the district’s bond program.” His report also showed that assessed valuation grew only 2.37 percent the previous year.
The minutes also show the board was keenly aware of the recession.
“Coppersmith opined there was irony as they prepare to sell bonds,” which could be used for facilities, but not for salaries or education programs, according to the minutes. Earlier in the meeting, the board approved layoffs, furloughs and praised staff for making sacrifices required by deep budget cuts.
“She was hopeful that in several years the economy would change,” the 2010 minutes state.
Do you think Acalanes district residents should contest the board’s decision to issue new bonds that will exceed the promised tax rate?