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Democrats, sent out a non-binding letter asking districts not to issue these bonds: “The transactions have been structured with 40-year terms that delay interest and principal payments for decades, resulting in huge balloon payments and burdens on future taxpayers that cannot be justified. Too frequently, board members and the public have not been fully informed about the costs and risks associated with CABs. In some cases, board members have reported they were not even aware they approved the sale of CABs.” Lockyer, who has been especially vocal in his opposition to CABs, has called them “irresponsible” and “bad deals,” and has even likened them to “payday loans.” • California Assemblyman Ben Hueso, a San Diego Democrat who has co-sponsored a bill in the State Assembly that would prevent districts from issuing many of these bonds, told The New York Times, “Right now, if they don’t have the revenue, school boards can say, ‘Let’s just kick the can down the road 20 years and let them deal with it.’” Hueso’s bill was given a unanimous thumbs-up by the Assembly Education Committee in mid-March. • “This generation will not pay for what it needs, so some of its leaders have decided to saddle future generations with the bills,” wrote Floyd Norris, a commentator on economic issues, also in The New York Times. After hearing these quotes, Hunter said she didn’t have the expertise to explain how, exactly, CABs are a fairer way to borrow, adding that Ellis would be the one to talk to on that front. You already know how that turned out.
Hunter provided one final tidbit of information worth noting: When asked where this bogus CAB justification came from—if it was official, etc.—she said it was written by the “bond adviser.” The Independent has been met with silence in trying to confirm if Hunter was referring to “this generation the bond counsel will not pay for for College of the Desert: Stradling, what it needs, so Yocca, Carlson some of its leaders and Rauth, a San Francisco corpohave decided to ration that gets saddle future paid for facilitatgenerations with ing these deals, and is involved the bills,” wrote with districts up Floyd norris, a and down the state. commentator on We’ve also economic issues, been unable to also in the new determine if these points were york times. made available to district trustees when they agreed to issue the bonds in 2007; the three board members from that time who still have their seats would not return calls from the Independent. Lockyer told The New York Times that the real beneficiaries of these schemes are the financial advisers, who, according to the state treasurer’s office, have received millions in compensation.
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abomination. In Michigan 19 years ago, we found that CABs are good only for the handful of bond underwriters, bond attorneys and financial advisers who promote them to enrich themselves at public expense.” • On Aug. 6, 2012, news website Voice of San Diego did a piece focusing on Poway. This led to some national attention, from CNBC and other outlets. It should be noted that Thurtell was apparently upset with Voice of San Diego for not initially crediting him; VOSD then did a piece on that matter, as well as the national attention. In that followup piece, VOSD editor Andrew Donohue wrote: “There’s been no concerted effort to act like we were the pioneers. Nor do I believe we have claimed that the information contained within it came to light only as a result of our investigation.” In other words, VOSD presumably didn’t run the piece under a silly tag like “iSun Investigation.” • On Aug. 22, California Watch’s Erica Perez did a story noting the coverage of both Thurtell and VOSD. In it, she started expanding the scope of the matter beyond Poway, pointing out the obscene payback amounts some other community college districts were facing in California. • On Nov. 29, the Los Angeles Times did a piece on the bonds, presenting them as a true statewide problem. Most valuably, the Times—using data from the state Treasurer’s Office—also published an online database of districts in the state that had issued capital appreciation bonds. (Interestingly enough, the Times wound up running a correction on the piece: They initially cred-
ited VOSD, without crediting Thurtell, for breaking the news on Poway. Props to them for later amending the piece to credit Thurtell.) • The Times piece—and the database, especially—led to all sorts of coverage, including localized coverage. In Northern California’s Humboldt County, for example, my friend Hank Sims, of online news source the Lost Coast Outpost, did a story discussing that county’s school districts which had issued capital appreciation bonds. A heads-up from Hank is how I first learned about the Times database, and therefore the Coachella Valley angle. (Side note: The daily in Eureka, Calif., credited the Lost Coast Outpost for first publishing the information locally—something the folks at The Desert Sun felt no need to do.) California Watch then did more, expanded coverage (some of which was used in The Desert Sun piece); The New York Times did a piece on the bonds in California. With the Coachella Valley Independent fully up and running after the first of the year, I asked Saxon to look into the Coachella Valley angle after Hank’s tip. That’s how, to my knowledge, we became the first valley publication to report on the matter. I am very happy The Desert Sun did their piece; this is an important story that Coachella Valley taxpayers need to know about. But to call this as an “investigation” without properly crediting the journalists who really exposed this matter—especially Joel Thurtell—is wrong, plain and simple. CVIndependent.com
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