Tag Archives: Capital Appreciation Bonds

Facing a boom and few options, Anna ISD turned to controversial bonds

Vernon Bryant/Staff Photographer  “When the recession hit, we had the option of just letting the high school sit there half finished or selling the bonds it was going to take to complete that,” says Anna Superintendent Larry Johnson.

Vernon Bryant/Staff Photographer
“When the recession hit, we had the option of just letting the high school sit there half finished or selling the bonds it was going to take to complete that,” says Anna Superintendent Larry Johnson.

DallasNews.com, By EVA-MARIE AYALA, 06/15/13 – The rural Anna school district in Collin County had a trifecta of bad luck in 2009 that left officials with a half-built high school and few options to pay for its completion.

The aggressive growth that officials had projected stalled. Taxable property values dropped. And a state law capping school district tax rates hindered the district’s ability to sell new bonds.

“When you get to that point, and you’re stretched to the max … you have options, but none of them are good options,” Superintendent Larry Johnson said.

So the district turned to a controversial form of financing called capital appreciation bonds, or CABs. Because they don’t require periodic interest payments, as traditional current interest bonds do, they don’t count against the state tax rate cap until the payment is due. That could be decades later.

Continue reading →