The principal outstanding is a good place to start a discussion. Based on the principal and interest structure the district adopted in 2005, only $825,000 (1.6 percent) of the principal has been paid off in nine years, all the while, millions of dollars in debt service has flowed from taxpayers.
This extraordinary interest expense results from a financing strategy known as bond “wrapping,” which permitted the district to have its money up front, defer principal payments into the future and minimize the tax burden in the moment. In the long run however, it cost taxpayers millions in unnecessary interest expense. This is a fine example of the costs associated with “kicking the can down the road.”
As to the additional $3.9 million under consideration, the district’s financial advisor has described the scenario as refinancing a home and taking equity out at closing (cash).
No. It is like paying off a loan with an even bigger loan. The district has no equity position … only OPM (Other People’s Money) with which to work.
There are options to reduce the tax burden with this refinancing, however to no one’s surprise, these options have failed to garner majority support. Taxpayers are due relief, considering the millions of dollars that have already been squandered away on interest expense.
Bill Matthews
Mt. Lebanon
4 comments:
"As to the additional $3.9 million under consideration, the district’s financial advisor has described the scenario as refinancing a home and taking equity out at closing (cash)."
Yeah, right! A is A, and debt is debt. The financial advisor (or adviser) failed to stress the fact that "taking equity out at closing" is just another way of saying that one has assumed more debt! Who seriously believes that his house pays him back on a refinance?! (The same thing holds true with a "reverse mortgage.")
What is galling is that our esteemed District leaders seem to think that by kicking the debt down the road, making the total payback not only bigger but placing it on the backs of future residents, they have done a good deed. Of course, no good deed goes unpunished. The irony is that when this house of cards collapses most of these people will be either long gone or dead, and will thus escape the repercussions of it.
If you think this is funny, think again:
1) This is the same government body that won't reveal how much money a donor gave for naming rights
2) The District says it knows better how to teach the children about math and money.
"We are the math experts" -Dr. Steinhauer
The Newcomers Tax is/was part of the pyramid scheme.
They aim to meet their short-term goals and forget about the long-term outcome for the community. Their values are harmful.
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