Six Yuba-Sutter school bonds on state list

A bond that requires the Yuba Community College District to pay $58 million for $4.6 million in funds that financed the new Sutter County campus is "expensive money," the board president says, but will help more than 150,000 students over time.

"They're going to be men and women whose lives will be changed because we took a risk," Brent Hastey said. "It was money well spent."

Hastey said he read the Los Angeles Times story Thursday quoting State Treasurer Bill Lockyer about capital appreciation bonds that can involve paying 10 to 20 times the amount borrowed.

"They are terrible deals," Lockyer said in the story. "The school boards and staffs that approved of these bonds should be voted out of office and fired."

The 2011 bond by the college district is one of six in Yuba-Sutter on the state treasurer's list of capital appreciation bonds statewide.

Hastey said Lockyer served in the Legislature.

"We see where the state of California is," Hastey said.

The construction of Bullards Bar Reservoir in Yuba County, completed in 1970, also represented a risk at the time but solved many problems for the region, Hastey said.

Tom Dresslar, a spokesman for the state treasurer's office, said that Hastey is not going to be able to hide his culpability in "saddling taxpayers with this unjustified burden by criticizing the treasurer."

"We'll stack Bill Lockyer's record as a lawmaker against anybody's," Dresslar said.

The spokesman said the Yuba Community College District undertook a second such bond in 2007 that involves paying $75 million for $15.1 million in funds. Bonds that involve paying more than four times the amount of the loan are generally seen as imprudent, Dresslar said.

Other capital appreciation bonds in Yuba-Sutter on the state treasurer's list include the Marysville Joint Unified, Sutter Union High School and Franklin Elementary school districts. The terms of the bond are significant, Dresslar said, and not the mere inclusion on the state treasurer's list that covers the past six years.

A 2010 bond, listed for the Sutter Union district, involves $5.7 million and a debt service of $45.6 million. Superintendent Ryan Robison could not be reached Thursday for comment.

Marysville Joint Unified lists a capital appreciation bond this year of $18.3 million and a debt service of $56 million. A 2009 bond was for $3.8 million with a debt service of $16 million.

C. Richard Eberle, auditor-controller for Yuba County, said the capital appreciation bonds involve public agencies deferring payment. He called the bonds a tool that in certain situations may be advisable. Eberle appeared before Marysville Joint Unified trustees in September to provide information about the bonds.

"Their decision was tough," he said. "We just wanted to make sure they have all the information."

Trustees decided against proceeding with that capital appreciation bond. The loan involving Marysville Joint Unified that appears on the state treasurer's list is a separate June sale that trustees approved in May.

Trustee Jim Flurry said the September decision against proceeding with the separate capital appreciation bond "was very easy not to do."

Trustee Frank Crawford agreed and said he's surprised by Hastey's defense of the Yuba College district bond.

"Do the math," Crawford said. "What a deal."

College district Trustee Jim Kennedy said he cast the lone vote against the bond. Kennedy is a former treasurer-tax collector for Yuba County.

"The figures are terrible," Kennedy said of the terms. "You tie up all your future money today."

The 2007 capital appreciation bond for Franklin Elementary west of Yuba City is listed as $999,542 with a debt service of $3.2 million. The funds paid for a new multi-purpose room that opened in 2009.

Douglas B. Reeder, superintendent and principal for Franklin, said the bond allowed the school district to access $1.2 million in state funds and that the financing measure was done correctly.

"I spent so much time trying to be fiscally responsible," Reeder said. "We're trying to be good stewards of the public money."

CONTACT Ryan McCarthy at rmccarthy@appealdemocrat.com or 749-4780. Find him on Facebook at /ADrmccarthy or on Twitter at @ADrmccarthy.