Last night, the Davis School Board unanimously approved the Certificate of Participation (COP) to would provide the funding for the new Davis High School Stadium. The school district will receive roughly $4.4 to $4.9 million from the COP.
The board spent considerable time clarifying a number of issues and concerns.
See the Vanguard article from last year for a far more detailed description.
This board had no intention of repeating that mistake. And so Board President Gina Daleiden took great pains to make sure the intended use of this money was crystal clear from the start (although if you watch the tape from 2005, it appears crystal clear what the original COP was intended to be used for as well, that did not stop Superintendent David Murphy from asking for yet another COP a year later with a new board).
Ms. Daleiden said:
“I want to be very clear, so that the community is very clear, what these COP’s are for.”
The second whereas makes it clear what is being funded:
“WHEREAS, the District intends to construct, modernize, improve, furnish, and/or equip certain school facilities projects, including, but not limited to, high school stadium construction and improvements, which are authorized uses of Community Facilities District No. 1 and Community Facilities District No. 2 special tax revenues (the “Project”) through the execution and delivery of certificates of participation, designated the Davis Joint Unified School District, Yolo and Solano Counties, California, 2009 Certificates of Participation (2009 Capital Projects) (the “Certificates”), the proceeds of which will be used to finance the Project, by entering into the documents referred to below.”
Board President Daleiden:
“Just to clarify because there has been a history long before any of you were here and long before any of us were here, that we want to state very publicly that this is what the money is going to be used for. We are binding ourselves by our vote here as a policy that this is what the money will be used for. It then becomes our legal and binding document.”
Board Member Susan Lovenberg pointed out that the language is “including but not limited to.”
As Board President Gina Daleiden explained that this is in there because “if by some miracle” they have money left over, they could it on something else, but this binds them to do the stadium.
Board Member Tim Taylor was concerned that this language did not achieve what Ms. Daleiden intended. He suggested a language change to: “at a minimum but not limited to.”
Board Member Sheila Allen asked a number of questions that were important for the board and the community to understand.
First, she asked if it was still a good time to take out a loan.
The answer was that if the district’s objective is to borrow money to finance a project, then it is a good time to take out a loan given the markets and the current rates. “It’s really about whether you can afford your payments and whether you can achieve your objectives. Certainly that seems to be the case at this point.”
Ms. Allen continued, suggesting that our CBO (Mr. Colby) and the county looked over the documents and believe we have a sound financing plan to repay it.
Mr. Colby answered that yes, we have a sound financing plan to repay it. He also said that the property tax stream that they are basing this COP on is immune to changes in the assessed value of the property. “It is a very secure stream of property taxes.”
Ms. Allen: and it’s totally separate from Measure Q and W and the parcel taxes?
Mr. Colby said that while it comes on the same line, “it is totally different in the abilities that it can be used use for.”
Ms. Allen: “will this affect our ability to secure future borrowing?”
The answer was no this will not impact the district’s ability to get other loans, in specific the short-term beginning of the year loans.
Ms. Allen: “Is this a usual activity or approach by school districts to fund facilities projects?”
Answer: “in a word, yes.”
Susan Lovenberg clarified that the current environment makes it a good time to go forward with the project at this time.
In the original consideration of the project, Board Member Susan Lovenberg was the lone dissenter. However, this time she was on board.
“I appreciated the Yolo County Office of Education and the Yolo County Auditor’s assessment of the plan as being one that will work, that we have the capacity to repay. I do believe that there is a favorable economic environment here. The district has considerable facility needs, there’s no question about that, and we lack the funds to accomplish them. This board has identified the stadium plan as its top priority. I think the finance plan is sound and will NOT impact the general fund. And so I will support the borrowing that we’re looking at today.”
COMMENTARY
While the money used for this is not available for the general fund, therefore money is not being taken from education to finance a new stadium. However. the political perception here is extremely bad. The timing is horrendous. From a political standpoint this is not a good time to do this. It appears to the casual observer that we are funding a stadium at the same time that we are laying off teachers. And we are. The fact that the two are completely unrelated are aside from the point.
But from all other standpoints it really is the right time to do this.
The facility needs are considerable. The safety issues alone are alarming and could prove to be a liability for the school district. That liability could affect the general fund.
Despite suggestions to the contrary, the UC Davis alternative is not viable for a number of reasons.
Moreover as multiple financial experts attested to on Thursday night and previously–the economic climate is good for this type of lone. Interest rates are low but the yield from the property tax stream is unaffected by the current housing crisis.
Moreover, all strongly agree that the district has a sound plan to repay the debt and it will not adversely impact the general fund or the ability to take out additional loans either long term or short term.
I remain a strong supporter of Emerson Junior High, but the site evaluations conclusively demonstrate that the repairs there are less urgent than the need for a new stadium. It can wait. The district is not going to close this facility and certainly not for reasons that were cited last year. It should be pointed out once again, that when considerations were made last spring to close Emerson, the report on the facilities was not completed, therefore, the district did not know if was going to be an issue or not. The district was looking to save money for an immediate crisis, and while the facility issue was raised, it was not the primary issue raised.
Emerson was spared for mainly logistical reasons having to do with the geographic layout of Davis and the location of the other junior highs in relations to that layout.
I have one single remaining concern. Part of the funding for the stadium will come from fundraising by the Blue and White Foundation. At the same time, we may see fundraising by the Davis Schools Foundations in an effort to mitigate staff layoffs. If these two efforts occur at the same time, they may work at cross purposes.
In the coming weeks, the Blue and White Foundation may submit an additional piece to the Vanguard to lay out their plans. However, for the most part, I am satisfied and all Davis residents should be satisfied that this is the right thing to do, it will not affect the general fund at all, and the current situation is dangerous to our students.
—David M. Greenwald reporting
[b]The school district will receive roughly $4.4 to $4.9 million from the COP. … Mr. Colby answered that yes, we have a sound financing plan to repay it. He also said that the property tax stream that they are basing this COP on is immune to changes in the assessed value of the property. “It is a very secure stream of property taxes.”[/b]
I’m agnostic on this project. However, I don’t completely understand the financing. Is the COP not a loan? If it is essentially a loan, then in future years won’t the district repay the loan making interest and principal payments?
It has been said repeatedly that the money going to this project is different from the money going to pay teacher salaries and other ongoing expenses. That raises this question in my mind: Why can’t the money which will be used to repay the loan go to pay teacher salaries? That repayment money is coming from property taxes, is it not?
[b]While the money used for this is not available for the general fund, therefore money is not being taken from education to finance a new stadium. [/b]
You say the money used for this is not available for the general fund. I understand that. It wouldn’t exist but for this project. But what about the money which will repay the loan? Would that money not go into the general fund in future years but for this project? In other words, if you don’t borrow the $4.5 million at all, wouldn’t the general fund have more money for ongoing expenses (like teacher pay) in the future?
This is NOT THE RIGHT THING TO DO. IT IS A SLAP IN THE FACE TO TAXPAYERS.
1) As you so rightly pointed out, Emerson is in need of repairs. Emerson was slated for closure, and probably would have been closed had not citizens raised an unholy stink. Emerson is still in need of repairs. And will still be in need of repairs when the renovations to DHS Stadium are done. Watch DJUSD bring up the huge cost of repairs as a tactic to close Emerson whenever DJUSD is in need of more money, and wants to frighten the public into coughing up more tax dollars.
2) Are you telling me we couldn’t do this “renovation” project for less than $4.5 million? Give me a break. Leave it to DJUSD to pick the most expensive way to do renovations.
3) This business about different pots of money is getting old. When DJUSD wanted to justify the closure of Emerson to save on OPERATING EXPENSES, they had no problem using the excuse that the $16 million needed for repairs couldn’t be afforded. DJUSD has no problem mixing “different pots of money” when it suits them.
4) This sense of skewed priorities is typical of Davis – let Emerson rot, while we build a fancy new stadium to watch football from. A new stadium is far more “visible” than renovations to the interior of a junior high.
5) Renovations to Emerson would serve students in the entire west end of town, in all subjects. Renovations to DHS Stadium only serves the Physical Education Dept. Whoop-de-do!
6) Efforts to raise money for the DHS Stadium will compete w efforts to raise money for saving teachers, as if the two were equivalent issues. Talk about screwed up priorities!
Color me disgusted. This is the reason I wouldn’t give one thin dime to DJUSD schools. Will this town ever wake up and smell the coffee? Why do you think DJUSD gave Bruce Colby a raise in the middle of an economic downturn? Arrogance comes to mind. Where does that arrogance come from? The parcel taxes and donations the taxpayer blindly keeps shelling out, every time the DJUSD asks for a handout. Stupid, stupid, stupid!
“But what about the money which will repay the loan? Would that money not go into the general fund in future years but for this project? In other words, if you don’t borrow the $4.5 million at all, wouldn’t the general fund have more money for ongoing expenses (like teacher pay) in the future?”
No. Money cannot cross over between general and facilities funds ever and under any condition.
Sorry Disgusted but the DHS was more pressing and unusuable. Emerson repairs are mostly updates to codes that won’t affect anything until they do construction on Emerson and have to update the codes.
Money cannot cross over between general and facilities funds ever and under any condition.
So what you are saying is that X percent of the property tax money the district gets each year, or at different intervals, is by law shoved into a special “facilities fund,” and it will be from that fund that they repayment of the loan will be made?
Or is it the case that the “facilities fund” is normally empty or nearly empty, is not regularly replenished, and that only when the district needs to pay for facilities improvements, the district applies to the state (or other sources) to direct money into this “facilities fund” to make these repayments, and that if the district did not apply for these monies, they would be directed instead to other school districts, not ours?
“Sorry Disgusted but the DHS was more pressing and unusuable. Emerson repairs are mostly updates to codes that won’t affect anything until they do construction on Emerson and have to update the codes.”
Yes, that is your sense of priorities, but not mine!
Rich: I don’t want to claim to be an expert on it, so as I understand it, there are separate sources for that money as opposed to general fund money. I will try to find out more definitively later.
Disgusted: Understood. For me there are several considerations at work. First, whether there is a danger to health and safety at Emerson. The answer is no from all indications. Second, whether the lack of repairs at this time would hasten closing the school. The answer is no. Third, whether the state requires us to repair the school at this time. Again, no.
On the other hand, there is a risk to health and safety with the football field. There is not a reasonable alternative. And the money is available. The rates are good right now. And any accident or injury would imperil general fund money.
So my position is in the affirmative.
Rich, The funds comes from property taxes that are payed yearly. (I believe the title is CFDs) They can only be used for facilities needs. Just how a parcel tax can only be used for the general fund.
The district is using the yearly garuanteed income from the CFDs (like your personal income when go apply for a loan to buy a house) Its makes sense to take out a loan, so you can have the facilitie (house) now and enjoy the lower construction cost and usage now and pay it off over time. (think house again) The COPs are what is issues from the CFD revenue.
[i]The funds comes from property taxes that are paid yearly.[/i]
SBW, does that mean, then, that in years when the district is not investing in any facilities, a CFD fund is continually building up? If that’s the case, is our fund now empty, from paying off past projects? Or is there some amount in there which will go toward the new athletic facilities?
On a completely unrelated topic…. Does anyone know much about the California teachers retirement system? Is it in as much trouble as CalPERS? Has CalSTRS announced that it will have to raise its rates due to the market decline? If so, how much is that going to impact the district’s finances?
Rich: This is funded through a CFD (Community Facilities District) also known as a Mello Roos.
A Mello-Roos Community Facilities District(s) (“CFD”) is a special taxing authority that may be formed to finance certain designated public services and capital facilities by levying special taxes which are continuing liens levied against the real property within the service area.
Here is some very basic info that can help you get a better grasp on this complicated subject.
INFO ([url]http://www.mello-roos.com/pdf/mrpdf.pdf[/url])
“””””On a completely unrelated topic…. Does anyone know much about the California teachers retirement system? Is it in as much trouble as CalPERS? Has CalSTRS announced that it will have to raise its rates due to the market decline? If so, how much is that going to impact the district’s finances? “””””
Got nothing better to do hey Rich , besides stir the pot on possibly your next hit piece in the Enterprise .
[i]”possibly your next [u]hit piece[/u] in the Enterprise.[/i]
My asking a question upsets you? A hit piece? Anger management issues? It’s seems likely that if CalSTRS has suffered setbacks the way CalPERS has, it could be yet another problem in educational finance. I frankly don’t know anything about how CalSTRS affects the DJUSD — that’s why I asked the question.
FWIW, I looked at my property tax bill and see we already have a $75 (and increasing annually) CFD #1. I guess that’s what will pay for the athletic facilities.
Wow, spending money that we don’t have. Typical. I’m disgusted to say the least. BTW, take a look at Freddie Mac’s investment profile. Calpers owns a big stake in it. It’s lost about 98% of its value in the past six months or so. Just a side note.
Where’s all the money gonna come from. Where has all the money gone?
Why are we using financial trickery to fund a football stadium? Have you taken a look around at the schools and how dilapitated they are? Honey, check out some 3rd world countries and you’ll see they are the same. Brookville School in Ohio is what we would call a nice school. Take a look at the website. Why can’t we do the same here? Is it because we don’t have our spending priorities straight?
What’s wrong with this county?
“Wow, spending money that we don’t have.”
Actually, the whole point of the article is that we are spending money that we have. Read the info I posted above on Mello Roos and how this works before you make comments like that.
Just to view all of the options
I understand this is a $10 million project – although that might be significantly reduced in this economy since people are hungry for work. I am asking all of our vendors to cut their prices by 20% and on average we are getting 10%. The project funding is split roughly $5 million cash on hand and $5 million borrowed from the future stream of parcel tax money.
The alternative – they could put the cash in hand in the bank and pass the interest from the facilities fund to the general fund – that would be around $200K per year (2-3 teachers). If I am wrong about that option please speak up.
“The project funding is split roughly $5 million cash on hand and $5 million borrowed from the future stream of parcel tax money. “
Not parcel tax money. Parcel tax money can only be used for general fund. This is a future stream of cfd money. I don’t believe they have cash on hand either. I believe they are using $5 million roughly for the first phase and then there will be another $5 million for the second phase.
“The alternative – they could put the cash in hand in the bank and pass the interest from the facilities fund to the general fund – that would be around $200K per year (2-3 teachers). If I am wrong about that option please speak up.”
I am pretty sure you cannot do any of that even if you had the money on hand which they don’t.
The Blue and White Foundation wants to raise that additional $5 million so they can do both phases at once.
Again, this is very complicated, but that is my understanding.
Just read in the Emptyprize that we will have new lights, a new scoreboard for the DHS stadium upgrade – in other words the deluxe package. Again, I repeat, this is not my idea of a top priority, when Emerson is left dilapidated. I’m sorry people, but I just don’t get where you are coming from!
Analogy: If your roof on your house were leaking, and so was your backyard pool, which would you fix first? The pool, bc you might incur liability in case a neighbor’s kid might get hurt swimming in it? Come on!
Disgusted: That is the portion that will be privately funded.
They are only funding phase one now: Phases ([url]https://davis.csbaagendaonline.net/cgi-bin/WebObjects/davis-eAgenda.woa/files/MTIzODg2MjQyODczMC9kYXZpc2VBZ2VuZGEvOTUvMTc2MS9GaWxlcw==/dhs_stadium_masterplan121208-phasing_plan.pdf[/url])
If we’re spending money we have, then it should go to keeping programs and teachers instead of a damned stadium. what a pitiful waste. spend it on art, science, special education, pe. you know the kind of stuff that actually relates to education.
Madame: Come on, you are not new here. This is money that you cannot use for general fund. All of the things you have described are general fund expenditures. This can only be used for facilities. Click on the link above I posted in response to Rich on Mello Roos it explains it rather simply.
“Disgusted: That is the portion that will be privately funded.
They are only funding phase one now: Phases”
Money that could be put toward fixing Emerson!
I cannot believe Davisites think that $1.5 million is best spent on stadium lights and a new scoreboard, when Emerson and many other Davis schools sit dilapidated! I come from back east, and your schools would be considered shacks in comparison to those on the east coast. Your sense of priorities in Davis just absolutely escapes me – and I live here!
You say that Emerson is dilapidated? What evidence is there of that? The school board set as a priority the health and safety of the students–is there another site where the health and safety are threatened?
Calstrs pays retired teachers 1.4% x the average of your top three years salary x years of service at age 55. The age factor increase.01% each month hitting 2% at 60 and capping at 2.4% at 62. There are some caveats, you can use your top year if you have 30 years of service and it goes up more after age 60 and a few other extras for those with over 30 years.
I don’t know how STRS is doing but I imagine because of their size and their diversified approach they took a hit. I’m not sure but I think if they come up short they ask the state for more money not the districts. The districts contribute around 8% of salary maybe its 8.5, the teachers pay 8% and I think the state pays 2% although I’m not sure about the state.
In all the pensions paid by STRS are modest compared to all the others you are always whining about with teachers making large contributions so get off your high horse.
Stockton Record ([url]http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090326/A_OPINION01/903260321/-1/A_OPINION[/url]): “The nation’s second biggest retirement fund, CalSTRS, the system for the 833,000 teachers in California’s public schools, has a portfolio valued at $114 billion, down from a high of $174 billion, a 34 percent drop.”
“You say that Emerson is dilapidated? What evidence is there of that? The school board set as a priority the health and safety of the students–is there another site where the health and safety are threatened?”
At one time the DJUSD thought Emerson was so dilapidated, they were going to have it closed. Spt. James Hammond has commented publicly that he is surprised at how shoddy our school construction is. If you would get out of town, and check Woodland’s new Pioneer High School, you would better understand what I am talking about. My comment is far from hyperbole, but your comment comes from ignorance. Get out of Davis and look around (try Elk Grove)…better yet, take a vacation this summer, and visit someplace on the East Coast, and take a look at the schools. Start w the Washington, D.C. area, where I come from…
“At one time the DJUSD thought Emerson was so dilapidated, they were going to have it closed.”
As I demonstrated last time you posted this, this is simply untrue. The district raised the issue of closing Emerson as a means by which to cut costs. During the course of that discussion the repairs were raised as a potential additional factor. However, and this is the point you miss every single time you bring it up, they had not done the study yet until June. So they did not know the extent or the severity of the facility needs. They discovered in June upon completion of the report that the facility needs were non-critical. By that time, they had already taken Emerson off the closure list due to transportation and logistical problems.
“As I demonstrated last time you posted this, this is simply untrue. The district raised the issue of closing Emerson as a means by which to cut costs. During the course of that discussion the repairs were raised as a potential additional factor. However, and this is the point you miss every single time you bring it up, they had not done the study yet until June. So they did not know the extent or the severity of the facility needs. They discovered in June upon completion of the report that the facility needs were non-critical. By that time, they had already taken Emerson off the closure list due to transportation and logistical problems.”
And at what point did citizen outrage play a part in the DJUSD decision to decide Emerson repairs were not so critical as claimed?
I think citizen outrage alone was not decisive in this. There was certainly plenty of citizen outrage when they closed Valley Oak. It didn’t stop them. What convinced them that they couldn’t do it was the logistical issues. Whenever the issue of repairs came up according to both my notes and the minutes, it was always said that they do not know and they will be examining the site. They did so in June and discovered that most of the issues were not structural and had to do with updating codes rather than real safety issues. On the other hand, the track and the stands are real liability issues for the district.
“On the other hand, the track and the stands are real liability issues for the district.”
Lights and a new scoreboard are real liability issues? I know, I know, the funding for these things is coming from community donations. Sorry, I think upgrading Emerson is more important than upgrading a high school stadium. We will have to agree to disagree on this one…
I believe lights and scoreboard are phase II not phase I.
“I believe lights and scoreboard are phase II not phase I.”
As if that makes a difference!
It makes a huge difference in that it completely undermines the basis of your argument. You argued that lights and scoreboard are not real liability issues. You are correct, they aren’t. However, the school board did not authorize them in this project. They are left for a future project or possibly the private financing. That pretty much nullifies your argument that they are funding non-liability repairs in this phase.