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To pay for new Shoreline area ball fields, pedestrian overpasses and a fire station, the City Council approved the issuance of $26.5 million in new bonds Tuesday, extending Shoreline debt payments another 29 years.
Paying off the new bonds will cost the Shoreline Community, an authority headed by the City Council, an estimated $58.5 million over 29 years, said Patty Kong, finance director. Payments estimated at $2 million a year will add to Shoreline’s $19 million in ongoing annual expenses used largely to maintain Shoreline Park and the surrounding business park that’s home to Google.
Resident Steve Nelson spoke in opposition to the bonds and threatened a lawsuit sometime “in the next 25 years” over the Shoreline tax district’s diversion of property tax revenue from local schools. The city reached an agreement with Mountain View school districts in February to give them a larger share of Shoreline’s property tax revenue, $13.6 million over three years.
Nelson also pointed out that the city has already paid for much of the new Shoreline area fire station, the costs of which would be covered by the bond. City staff said that would allow the use of the funds previously allocated to the fire station for “other purposes.”
The council did not respond to Nelson’s request to reduce the bond amount in light of this and had little comment before the unanimous vote.
According to 2010 estimates, the bond will provide $9 million for new soccer and baseball fields on a former landfill along Garcia Avenue, $10 million for the new fire station under construction across the street from Shoreline Amphitheatre and $4 million for a crossing for the Permanente Creek Trail over Highway 101.
How quickly the bonds will be paid off depends on a fluctuating interest rate for municipal bonds, which will rise if investors are not interested in purchasing them and increase the city’s payments, Kong said. City staff estimate that the average interest rate will not exceed 7 percent.
This question has been asked several times on this forum in the recent past… What are the latest S&P or Moody’s ratings for M.V. G.O. bonds? My guess is AAA for S&P.
What would be the basis for Mr. Nelson’s threatened lawsuit? While he may think it unwise to issue the bonds, it seems perfectly legal.
Some of the money should go into rehabbing Micheals. It is looking very run down. Especially the lobby and bathrooms. It is a great location and resource for Mountain View but not as a shabby shadow of itself.
Instead of stopping by Michael’s you could always continue on to the lake. There is a nice cafeteria/restaurant down there – with great seating overlooking the lake…
Why don’t we just use the $40 million we received fro Google to pay this. This is fiscally responsible – no additional interest cost of $32 million in the next 29 years.
WARNING TO SCHOOLS/PARENTS – the official bond documents show that Shoreline is planning to cut off your new money after 3 years!!!
The rating for the bonds is not as high as AAA but were estimated as A. The reason is that they are not backed by the City or general property tax revenue – only the “tax increment” by this special redevelopment district. My warning to the Shoreline Board/Council and the bond attorney – is that “threatened litigation” against that particular source of income (25% tax diversions from the elementary district) would / if successful / possibly limit the ability to repay. At over 300% tax diversion revenue/ debt payment ratio (statue limits to < $125%) at this point would not really be a problem if MVWSD got back its rightful (IMO) taxes. But .. San Jose’s regular redevelopment district overborrowed and now has almost NO operational money