At the last Beaumont Unified School Board Meeting, a representative from Piper Jaffray, the district’s financial advisor, presented a workshop on the district's two bond measures, Measure T and Measure Z.
He informed the board that the bonds issued under Measure Z were already costing tax payers about $60 per $100k of property value. State law limits the amount taxpayers can be forced to pay to $60 per $100k for each school measure approved by voters. Since we are already at the limit in Beaumont, the district will be unable to issue the remaining $75m in bonds until property values increase significantly.
The district could ask the voters to cancel the remaining $75m from Measure Z and pass a new bond measure for $75m. This would authorize them to tack on another $60 per $100k for a total of $120 per $100k. Remember the proponents of Measure Z told us they would hold us to $24 per $100k. They will argue the drop in property values accounts for the higher number. While this is true, even with previous home values, we would still already be over the $24 figure. Because of the concern over the bulk of the Measure Z funds not being used for the purposes listed in the text, it is unlikely voters will pass a new measure anytime soon. When the district needs the money for the new high school, this issue will come up again.
Measure T, on the other hand is going to get some attention now. Because the Measure T bonds are near their 10 year anniversary of issue date, Piper Jaffray is recommending a refinance and the board is interested. PJ told the board they may be able to save the tax payers $400,000 over the final 13 years of the bonds’ term. PJ also told the district the transaction costs would be about $150,000. This means if the district pays PJ and others $150k, each tax payer may save between 40 cents and 80 cents per $100k property value. I could save almost $2 annually for the next 13 years, $26 total…woohoo!
The school board will probably tell you they aren’t paying the $150k in fees since the fees will be financed in the new debt agreement. You ever heard this before when someone is trying to sell you on a refi? I have. The bottom line is the borrower eventually pays it with interest. Who does this really benefit? Piper Jaffray.