"CAB" BONDS: GOOD DEAL OR RISKY BUSINESS?
McKinleyville, CA-Taxpayers across the state are taking a look at the high price of debt associated with taking on risky financial loans that have a higher payback price in the future.In our lifetime, we’re all likely to take out a loan of some sort. Whether it’s for school, a mortgage, a car…This is also true for school districts that need more money to take care of their financial needs.A recent article on the national public radio website details information about capital appreciation bonds or cab bonds. The issue for the state however is that in the long run the debt is much higher than the initial loan. It’s create a stir of opinions… Superintendent Michael Davies-Hughes says that the McKinleyville School District took out a cab bond in 2011."The board had to look at capital appreciation cab bonds to as a way of getting that necessary capital. And the benefit for our school district obviously is that we were able to move ahead with the modernization projects at all three of our district sites, says, Davies-Hughes.In this case, the 7 million dollar bond is being repaid over a 40-year period. They chose a loan that would allow them to refinance in the future. In his opinion the school board made the best decision for their circumstances.The McKinleyville School District will look at refinancing those bonds so that taxpayers are not burdened with the large debt service.