- Voice of San Diego - https://www.voiceofsandiego.org -

# What the District’s New Bond Pitch Means for Its Bottom Line (and Yours)

As San Diego Unified seeks a new \$3.5 billion school facility bond, it’s a good time to revisit the school bond debt district taxpayers are already on the hook for, and understand why the new tax ask is actually closer to \$7.5 billion.

The county’s largest school district had success getting voters to approve two other construction bonds in the past decade.

All three bonds are billed as school safety and repair measures that pay for sorely needed construction projects to remove hazards and upgrade or expand school facilities and technology. Some school projects make repeat appearances [1] in different measures, including plumbing [2].

If you find it confusing that the district has promised to build the same projects in multiple bond measures, trying to understand how these deals work can be even harder.

Here are some basics you should know about the bond deals that the district has turned to in order to repair facilities and build new ones:

## If your home is worth \$500,000, the new bond would add \$300 to your tax bill.

Passed in 2008, Proposition S [3] extended taxes from an earlier 1998 bond, at a rate of \$66.70 per \$100,000 of assessed home value. It allows the district to borrow \$2.1 billion.

Passed in 2012, Proposition Z [4] added a new tax totaling \$60 per \$100,000 of assessed home value. It allows the district to borrow \$2.8 billion.

The new 2018 bond measure [5], which will appear on the November ballot, would add another tax totaling \$60 per \$100,000 of assessed home value for 39 years to pay back \$3.5 billion the district wants to borrow for projects.

Someone who owns a home in the district with an assessed value of \$500,000 would already be paying \$633.50 in taxes a year for Props. S and Z, and the new bond would raise that bill by \$300 to \$933.50 a year. It needs the support of 55 percent of voters to pass.

The money goes toward paying back investors who loaned the district money over years and sometimes decades, with interest. Depending on the terms of the debt deal made with each sale, the amount ultimately paid by taxpayers grows, sometimes exponentially.

## The \$3.5 billion price tag is not the only number to consider.

When voters review their ballots, they tend to see one dollar amount front and center, like the \$3.5 billion approval sought this year. That is the dollar amount of bonds voters would allow the district to sell to pay for projects. It does not include interest.

For the new \$3.5 billion bond, for instance, the district estimates the tax would raise \$193 million annually, or nearly \$7.5 billion total at the end of the 39-year run, more than double the amount it plans to spend on projects. Put another way, for every \$1 borrowed for projects, the district expects to use the new tax to repay investors roughly \$2.15.

That’s only an estimate. The precise repayment terms are set at the time of each bond sale, but a 2014 state law brought additional transparency to the ballot [6] by requiring government agencies to tell voters their best debt guess before the bond is approved.

No such estimates were included in Props. S or Z, which were enacted before the law took place.

Debt from those bonds is still on the books, and there is much more Props. S and Z project money and debt to come.

## The district still has more than \$2 billion in remaining bond money it can access.

To date, district bond documents show San Diego Unified has sold nearly \$2.74 billion in Prop. S and Z bonds, and still has \$2.16 billion left to sell.

The district is currently paying off Props. S and Z bonds that have already been sold, as well as old remaining bond debt from the 1998 bond measure Proposition MM.

Altogether, local construction bond debt payments are costing the district more than \$230 million a year. Annual payments are expected to fluctuate between \$65 million and \$310 million from 2018 to 2051 for a total of nearly \$7.4 billion, according to district bond records.

That doesn’t factor in future bond sales.

Debt from the final \$2.16 billion in Props. S and Z bonds will eventually be piled on top of that.

A \$600 million bond sale is planned for fall 2019 regardless of whether the new bond passes, a district spokeswoman said.

Records show the district plans to sell [7] another \$525.7 million in bonds in 2021, \$100 million more in 2023, nearly \$118.8 million in 2025, nearly \$194 million in 2027, nearly \$296 million in 2029 and nearly \$329 million in 2031 to finish Props. S and Z.

How much annual debt costs are expected to rise isn’t clear. VOSD asked the district for its projected debt payments but hasn’t yet received those numbers.

If the new 2018 bond is approved, \$3.5 billion more in bonds will be sold in the coming decades, and the corresponding debt payments, estimated at \$7.5 billion, will be made.