What do Chevron and The Buckley School, a Southern California private, upscale K-12 complex nestled on 18 acres in the Santa Monica Mountains, have in common? They both benefit from millions of dollars in tax-exempt bonds issued by the nonprofit California Municipal Finance Authority (CMFA) and, in return, they “provide a public benefit.”
But while Chevron used its millions (250 of them) to finance work at its refinery in the city of El Segundo, Buckley’s $40 million is going to subsidize “the acquisition, construction, improvement, renovation and equipping of facilities” at the 770-student school where tuition is $30,000 a year and campus serenity is “unparalleled.” Its average high school classes have 14 students and Buckley alumni include: Alyssa Milano, Bret Easton Ellis, Christian Brando, Laura Dern, Nicole Richie, Paris and Nicky Hilton, and Kim and Rob Kardashian.
The CMFA, which has been around since 2004, has more than 150 municipal members that lend their borrowing authority and help distribute the authority’s millions of dollars. In the case of Buckley, the Los Angeles City Council found itself in the awkward position of approving millions for a privileged institution while schools in the Los Angeles Unified School District struggle to provide the basics for their students.
Other CMFA projects include: Community Medical Center ($550 million plus), Azusa Pacific University ($136.7 million), Eisenhower Medical Center ($110.7 million), Biola University ($100.9 million), Westmont College ($65 million), Mater Dei High School ($25.5 million) and Oxford Plaza ($23.5 million). In 2005, the L.A. City Council approved a $30 million CMFA bond for Loyola High School, a Catholic school where Mayor Antonio Villaraigosa’s son was in attendance.
Activities at the CMFA and another similar power, the California Statewide Communities Development Authority (CSCDA), piqued the curiosity of Assemblyman (and former L.A. Councilman) Mike Feuer who called for an audit of the authority in May 2011. He noted in a letter to the Joint Legislative Audit Committee that “issues have been raised about the authorities’ transparency and effectiveness.” Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, seconded that emotion, “We have long believed that CSCDA is a private business being run out of a government agency. A thorough scrubbing of their books and their operations is long overdue.”
Political watchdog Ron Kaye asked, in the case of Buckley, “Why would city officials help private schools reduce their costs of borrowing so they can expand to drain off more students from public schools? Why would they give up state and federal income tax revenue from the profits on the bonds?”
But more generally, Kaye questioned the core of what CMFA does. “The list goes on and on into billions of dollars in tax-exempt bonds for private corporations, hospitals, schools, affordable housing and not-so-affordable housing—all carried out by a non-government agency accountable to no one, an agency that is free to pick and choose which projects to support by its own values as long as it can find a city or county to provide cover.”
The audit is scheduled for release in August.
–Ken Broder
To Learn More:
Buckley School Loan: Sherman Oaks Campus for Rich Kids Granted $40M Charity Loan By LA City Hall (by Simone Wilson, LA Weekly)
Burbank Joins the Parade: Few Questions Asked before Approving Elite French School Selling Tax-Free Bonds (Ron Kaye L.A.)
Request for Audit (Assemblyman Mike Feuer) (pdf)
Conduit Sparks a Row (by Randall Jensen, The Bond Buyer)
Council Approves Bond Deal to Help Loyola High (Los Angeles Times)