California’s Assembly passed limits on long-term bonds that have saddled school districts with debt of as much as 10 times the principal after financing new classrooms in years of slumping property values.
California capped the total interest costs on capital-appreciation bonds issued by school districts at four times the amount borrowed to rein in the financing method that Treasurer Bill Lockyer called “abusive.”
California Treasurer Bill Lockyer will push for limits on bonds that have saddled school districts with debt payments as much as 10 times the principal and seek to ban those maturing more than 25 years in the future, a spokesman said.
California school districts are financing projects by pushing debt payments as far as 40 years into the future, defying a warning from the Los Angeles County treasurer while incurring interest that dwarfs principal by 10- to-1 or more.
In a rare act of fiscal responsibility, the California Assembly voted 73-0 earlier this month to place stricter limits on a high-yield, long-term bond that was used primarily by desperate local school districts.
Asian investors are the biggest buyers of office property in the City of London this year, wagering that the financial district’s volatile market has changed since it routed Japanese buyers in the 1990s.