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Joel Thurtell, a Michigan blogger on civic issues (joelontheroad.com), last May broke three excellent stories on a municipal bond outrage in Poway. In clearly-written blogs on May 1, May 10, and May 12, Thurtell described how Poway got seduced into a kinky bond deal. In August of last year, Poway issued $105 million of so-called Capital Appreciation Bonds (CABs) — financing that is held in scorn elsewhere in the country. For $105 million, the city's taxpayers will wind up paying $981.6 million, and possibly more than $1 billion. But for 21 years, no payment is due; that gives the politicians who arranged for these stinkers plenty of time to get out of office.

Will Carless of Voice of San Diego recently had a story on these bonds. He had interviewed Thurtell, who explained how this kind of financing worked — (well, doesn't work). But in his story, Carless didn't mention his key source and gave Thurtell no credit for originating the story. Initially, Thurtell wrote Carless to say he liked the story. But then Carless went on CNBC. The announcer gave Carless credit for breaking the story and Carless didn't offer a correction. This annoyed Thurtell, who wrote CNBC and Voice, asking for corrections.

The Voice's editor, Andrew Donohue, gave a mea culpa, which some say was really a sorta mea culpa. Donohue acknowledged that Thurtell had broken the story, but wrote, "We weren't trying to hide his work or take credit for it." Donohue acknowledged that Carless should have given credit to Thurtell on CNBC.

Tonight (Aug. 9) Thurtell told me that CNBC has never answered his complaint or made a correction. CNBC "credited [Carless] with breaking the story. He knew that was incorrect." Thurtell still praises Carless's story. When Carless didn't cite him as a source or the journalist who broke the story, Thurtell thought it might have been an oversight. "Then I watched him on CNBC. It didn't look like an oversight." Should Carless have quoted him in his story? "I helped him to understand how CABs work. My blog articles were a text for him. In such a case, had I been the writer, I would have explained my source's role."

Donohue says it is "really unfortunate" that Thurtell is still unhappy. "I've tried calling and emailing with him to talk it through and he hasn't responded." Among the publications to comment on this story has been City Beat.

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monaghan Aug. 9, 2012 @ 11:54 p.m.

Voice reporter Will Carless has been piggy, if you ask me, and Voice Editor Andrew Donohue oughta say sorry. I thought there was a code among journalists about this sort of thing. But maybe not in this New Era. Anyway, it won't be Donohue's problem much longer as he is departing for a stint at Stanford. Maybe he'll take an ethics class....


Don Bauder Aug. 10, 2012 @ 7:04 a.m.

Definitely: Carless was trying to take credit for something that he did not originate. One of the primary indications is that Donohue admits that after Bloomberg did a story about these bonds, Carless contacted Bloomberg News and wanted credit. The news service then gave credit to both Carless and Thurtell. This incident speaks to Carless's motivations, which were clearly questionable. Very questionable. Best, Don Bauder


mp3michael Aug. 10, 2012 @ 8:12 a.m.

Lets keep focus on the MUCH bigger issue which is unsophisticated or short sighted school boards being exploited by bankers to borrow money now to fuel insatiable union driven school costs.

The big losers are the taxpayers who in 2 decades will get the bill for an irresponsible decision by school boards across the county.

I could careless who gets the credit as long as it opens people's eyes to the financial calamity which is the government school system. The reality is that the attention VOSD gave to the issue moved it to the national stage.


Don Bauder Aug. 10, 2012 @ 11:06 a.m.

Yes, the big issue is how the bankers fleece the taxpayers by conning or conniving with school boards. Best, Don Bauder


SurfPuppy619 Aug. 10, 2012 @ 4:35 p.m.

Lets keep focus on the MUCH bigger issue which is unsophisticated or short sighted school boards being exploited by bankers to borrow money now to fuel insatiable union driven school costs.

Are you kidding us???? Unsophisticated??? A circus chimp would not do this deal. Poway school board memebers knew exactly what they were doing, screwing over the entire area for their own political gain.


Visduh Aug. 10, 2012 @ 8:28 p.m.

There's nothing unsophisticated about the Poway board. In the county, only a few No County coastal districts could have more financial acumen. This ain't San Ysidro (or even the criminally-mismanaged Sweetwater district.) Chillingly, the board might have concluded that hyper-inflation will bail them out. 21 years from now, a debt of $1 billion might be pocket change, with a dollar then is worth less than a cent in current buying power.


Don Bauder Aug. 10, 2012 @ 8:40 p.m.

They might have thought inflation would bail them out. But suppose we have deflation? Best, Don Bauder


Don Bauder Aug. 10, 2012 @ 8:38 p.m.

What made the bonds attractive to politicians was that it was many years before the payments began. And then they came in a gusher, but the pols who did the deal would be out of office or dead. Best, Don Bauder


SurfPuppy619 Aug. 10, 2012 @ 11:57 p.m.

And if that was what they were thinking they are traitors and frauds. This is a fraud, usury and should be banned.


Don Bauder Aug. 11, 2012 @ 8:23 a.m.

Michigan banned these kinds of bonds years ago. Best, Don Bauder


Don Bauder Aug. 10, 2012 @ 12:07 p.m.

DONOHUE SAYS THINGS PATCHED UP. Andrew Donohue, editor of Voice of San Diego, emailed this morning to say, "Will and I both separately spoke at good length with Joel this morning [Aug. 10] and he's no longer made. We're going to be finding a way to work with each other again. All is good." I emailed Thurtell and have not gotten a response. Donohue says he is on a 10-hour trip to Canada. So I will take Donohue's word on the detente unless I hear differently.

However, this morning's Voice raises further questions. In touting articles in the current Voice, Colin Weatherby continued to shower kudos on Carless, suggesting he was the major source of the information. (In the following narrative, the all-cap emphases are mine.) "The Financial Times decided to weigh in on OUR big Monday story about expensive debt at Poway Unified school district. OUR coverage of the bond issue received national attention earlier this week when WE explained the risk and eye-popping long-term obligations associated wit these types of financial maneuvers. OUR lead investigator Will Carless had a 'pow-wow' yesterday with Fox Business to discuss the details." Hmmm.


Don Bauder Aug. 10, 2012 @ 3:06 p.m.

AND WHAT ABOUT THE TAXPAYERS ASSOCIATION? Carless's story told how the San Diego County Taxpayers Association endorsed the bonds, but is now having second thoughts, showering blame on Poway for not giving the association forthright information.

It's not the first time the association's judgment has been called into question. Early this year, the association said that Encinitas's unfunded pension liabilities were $16 million. But the Encinitas Taxpayer Association said that the unfunded amount was $70 million. Encinitas went to the county association to plead its case. "We got completely stonewalled," says Ed Wagner, who was head of the Encinitas Taxpayers Association for a year and a half, just recently stepping down. There are four groups of pensions in Encinitas: miscellaneous, firefighters, lifeguards, and the water district. The county taxpayer group only counted the miscellaneous employees, says Wagner. Also, "They were looking at the actuarial value of assets rather than the market value of assets," says Wagner. Charles McDermott, a member of the Encinitas association, told the county association in an email that the lowball figure "will be used by public employee unions and crony politicians to defend the status quo in my town as it sinks dangerously deep into the red."

Wagner says the San Diego County Taxpayers Association "is representing the establishment rather than taxpayers. It looks more like a developer and real estate board than anything representing taxpayers."

Good point: on the board are executives of Pardee Homes, Corky McMillin Companies, Erickson-Hall Construction, Associated General Contractors, Associated Builders and Contractors of San Diego, Westfield Corp., Balfour Beatty Construction and the San Diego Association of Realtors. There are representatives of San Diego Gas & Electric as well as its parent, Sempra Energy. The Lincoln Club is represented and so is...er, uh...Bridgepoint Education. Best, Don Bauder


SurfPuppy619 Aug. 10, 2012 @ 4:37 p.m.

No public pension is marking assets to market


Don Bauder Aug. 10, 2012 @ 8:45 p.m.

If public pension systems did mark to market, their deficits would put them much deeper in the hole. Best, Don Bauder


SurfPuppy619 Aug. 10, 2012 @ 11:58 p.m.

Exactly why they don't do it-allows their fraud to continue on.....


Don Bauder Aug. 11, 2012 @ 8:25 a.m.

Marking to market -- an honest way to measure assets -- would upset a lot of established institutions in the private sector, too. Best, Don Bauder


Visduh Aug. 22, 2012 @ 10:05 a.m.

It might be noted that, within the past few days, the Poway board had a meeting and were called out by many, many attendees for approving this deal. The board is, if not defiant, still supporting its decision. All the board members seemed to say that they knew exactly what they were doing, but in an interest of not raising taxes, went for this deal. So, if there was any lingering doubt that some mistake had been made, that took care of it. They did it with their eyes wide open. A couple of the members made some veiled comments that basically said that by the time the bonds have to be paid off, the tax increases would be spread over more value, or some such thing. What they really meant, I'd say, is that inflation is going to bail them out, and those dollars at that time may be as easy to raise as pennies are now.


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