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School District Dances on Tax Measure Questions

The Alameda Unified School District has finally responded to questions on 2004's tax bond measure. (File Photo)

The Alameda Unified School District has finally responded to questions on 2004’s tax bond measure. (File Photo)

As they prepare to put another tax measure on the ballot this fall, Alameda Unified School District officials have responded with redirection to questions about the structure of, and behind-the-scenes deals surrounding, the last tax bond measure, Measure C, in 2004.

District officials confirmed this week that in the fall of 2003, before Measure C went to voters in March of 2004, the district hired political consultant Tramutola Advisors to support the bond measure. The district did not say how much money it spent with Tramutola.

In a written response provided by the district, officials said, “it is appropriate and legal for a school district to use general fund dollars to contract with a political consultant (as well as bond counsel and a financial advisor), prior to the Board of Education’s adoption of a resolution to place a measure on the election ballot.”

The AUSD Board of Trustees approved a resolution on November 25th, 2003, putting Measure C on the ballot. In a bond memo dated December 3, 2003, AUSD’s financial advisor California Financial Services asked Tramutola for guidance on the tax rate statement to go before voters.

The district also defended the use of capital appreciation bonds in Measure C, which defer principal payment and ultimately increase the amount that taxpayers must repay. These type of bonds have been described as a “ticking time bomb” and were subject to legislative scrutiny last year. The Measure C bonds were issued in two tranches, the second of which won’t be fully re-paid until the year 2036.

The district wrote, “the concern over capital appreciation bonds (CAB) that we’re seeing now, both in press reports and in the state legislature, is really focused on the types of CABs passed that used the Government Code and financed bonds for 40 years, with the final cost being two or three or even four times larger than the face value of the bond.”

However, a spreadsheet compiled by Action Alameda News, based on repayment schedules previously provided by the school district, show that that $63 million figure on the Measure C ballot in 2004 translates to just under $176 million in principal and interest repayments due to the use of capital appreciation bonds. That’s a final cost of three times the face value of the bonds that voters approved.

Action Alameda News previously reported that some Alameda residents questioned the structure of the bonds back in 2004, highlighting the expansion in the repayment amount.

The same spreadsheet shows that next year, combined principal and interest payments on the Measure C bonds will balloon from $1.4 million to $5.5 million, and in 2028, the total combined payments will be over $16 million.

Ignoring this, the district responded to point out that taxpayer rates have remained steady; in other words, the district’s payments balloon but property tax bills to pay it remain steady.

But the district hasn’t said where the money will come from to pay the balloon payments, if tax rates remain steady. And the district has not yet responded to a public records request asking for an accounting of the revenues received and corresponding expenditures under Measure C since 2004.

Finally, on the point of whether the school district plans to approach this year’s bond measure differently, officials responded, “AUSD’s current administration is fully committed to doing only what is legally and ethically appropriate in these situations.”

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