The San Leandro school district is considering asking voters to approve another bond measure, the third in the past decade.
Meanwhile, the district continues to pay off debt from bonds made in the past few years.
The district needs another bond to pay for upgrades to classrooms and they are in the early stages of planning another bond measure, according to Superintendent Mike McLaughlin.
The district says it needs money to replacing aging classrooms – including potable classrooms they describe as “decrepit.”
“We have a lot of modernization needs,” said McLaughlin.
The potential bond money could also be used for new heating and air conditioning systems at older schools, making more classrooms technology ready, improving gyms and locker rooms, and overhauling the student pick-up and drop-off areas in front of schools which bottleneck with parents’ cars daily.
McLaughln says that the dollar amount for the bond hasn’t been set yet. One of the next steps will be to poll the public to see if there is enough support for another bond before they decide whether to put it on a ballot.
San Leandro voters passed the $109 million Measure B bond in 2006. And then voters passed the $50 million Measure M bond in 2010, paying for new facilities including the ninth grade campus, the student health center, the high school aquatic center, and Burrell Field.
The Measure M bond was partially made using Capital Appreciation Bonds (CABs).
CABs are very different from other bonds, which are gradually paid off with annual payments throughout the life of the bond. With CABs, no money is due for years and then the entire payment is due 25 years later, and CABs come with a much higher interest rate.
McLaughlin said that any new bond would not involve CABs.
“I don’t think you’ll find a district in California that will mess with CABs,” said McLaughlin. “No, I think we’ll be looking hard at how to structure future bonds to make sure we don’t fall into that mess again.”
CABs end up costing a district many times the original amount borrowed – in San Leandro’s case the various CABs had payments up to five times the principal for a total of $108 million on $20 million borrowed. With other bonds, the interest and principal usually end up around the same amount by the end of the loan, a 2 to 1 ratio.
Last year, the district was able to refinance a portion of the CAB debt, cutting total debt by by $16.7 million. The interest ratio for the refinanced bonds went from over 4 to 1 to 1.6 to 1. But millions in CAB debt is still looming.
The refinancing was done by consultant Dale Scott, who was the person that recommended the district get the CABs in the first place.
McLaughlin says they won’t be using Scott’s services in the future.
“There has been a lot of noise about whether we’ll hire Dale Scott – we will not,” said McLaughlin. “There are only so many companies that do bond service, but we are looking to go in a different direction.”
The CABs are just part of the $356 million ($190 million principal and $166 million in interest) in overall school bond debt that the San Leandro School District has currently, before any potential new bond.