The key point is that this illustration shows that we are maxing out our debt service capacity. We will have to either take on additional debt to make near-term payments (the route of capitalized interest being rolled into the initial bond issue), or draw down the capital reserve budget. (Jan. 19 column)
Misconception No. 3: “The district will max out its borrowing capacity if it issues a $35 million bond.”
Response: We did not say the district would max out its “borrowing” capacity. The Jan. 19 column said “debt capacity.” We acknowledge that we should have said “debt service capacity.”
Approximately $2.7 million in debt service is the upper limit LASD has used in all of its presented financing options.
Misconception No. 4: “Borrowing $35 million over 25 years will actually cost us approximately $65 million, which we can’t afford.”
Response: Of course there is interest on a loan, but the amount of interest paid over the life of a loan varies based on different starting points: borrowing less to start with, changing the term, or adjusting the interest rate all alter the ultimate cost of the money. The point from the Jan. 19 column is that the $35 million would cost taxpayers less if LASD were not funding capitalized interest.
Misconception No. 5: “The district is building an excessively large high school.”
Response: Our space calculations are based on actual data. http://www.peterli.com/spm/pdfs/SchoolConstructionReport2013.pdf
According to the district-commissioned feasibility study, that much square footage could be accommodated on the current site.
If the band and choir alone require 30,000 square feet, as Dr. DiRocco stated in the Jan. 23 school board meeting, we are not arguing. We’re big fans of LASD’s nationally recognized music program. And we have no wish to deprive our student-athletes of needed indoor space – which could be built at the current high school, according to page 37 of the Feasibility Study Update from Sept. 9, 2010 (http://www.lasd.us/page/2560).