Election Section

BUSD is High on HI bond money and Moral Hazard

By Justin Lee (Reader Commentary)
Tuesday October 26, 2010 - 10:50:00 PM

The BUSD could certainly use some tax money to rehabilitate facilities, but the Measure I bond initiative is yet another foray of the City of Berkeley and BUSD into excessive bond debt and overspending for every bolt,bag of cement and piece of lumber spent. It is amazingly poorly designed request for a huge sum of money with little definition of the projects. 

To quote: 

"Install, construct, renovate or rehabilitate site improvements, including pedestrian paths, sidewalks and walkways, exterior shade canopies and rain structures, outside gathering and eating areas, lawns, quads and courtyards, benches; landscape improvements... 

"Renovate, replace or construct physical education playgrounds and athletic fields and associated facilities, including all-weather tracks, natural or artificial turf fields, courts and stadiums, lighting, bleachers and rest rooms. Provide storage for physical education, athletic and grounds maintenance equipment." I would like to point out that the Berkeley High Track surface and field is relatively new turf with the latest materials-so that portion of the claim is not accurate. 

Not only is the wording vague, but I am just going to assume that(as usual) the system will float bonds at every general budget problem that turns the corner. Despite the claims that there will be an oversight committee, watch for the BUSD to spin the Dark Arts and stack the committee with self-interested parties with a variety of "talents." Not surprising, the donations to Measure I are a host of self-serving unions, developers, construction monoliths, consultants and finance banksters and total over $100,000. 

The Oakland Tribune calculates the $210 million dollar bond to exceed $610+ million at the end of the loan. As a comparison, Giants Field(AT&T) cost around 310 million dollars. At $610 million over a period of 10-30(with a maximum life of loan that can legally stretch past the 30 years into 40 which of course I can guarantee.) 

That means that 400 million dollars of the total loan+interest is going to entities like Goldman Sachs, JP Morgan for their annual XMas bonuses. Getting the names of the bond underwriting company is near impossible, so let's pick on the obvious. 

The baseline issue for all government entities is cowardice and the inability to ask for people's real money with real budgets and needs. In a historic recession such as the last 4 years, belt tightening for private and public sectors is essential for the economy to recover from excessive debt creation. If the BUSD needs the money for "real" projects, the scope needs to be accurate and inflict as little damage on the taxpayer as possible. GENERAL OPERATION MONEY must be requested as a tax(such as H) and not rolled into a large facilities burrito and hidden from the public. 

Contrary to popular economic belief, fighting debt deflation with more brain-dead credit and debt is a sure way for the City of Berkeley to lower it's credit rating and cannibalize other civic projects. Just imagine what Berkeley Iceland could do with some of that interest money, or any of our parks. 

The BUSD Measure I is sloppy, morale hazard, overreaching and disrespectful of money and those who have to pay for the next 30-40 years of can kicking. It is also disrespectful of the City's other departments as the sticker shock and lack of evident improvement in the schools will make all voters reticent to continue down the bond issuance path.