California Law Bans Long-Term CABs For School Construction

The Los Angeles Times (10/3, Weikel) reports that California Gov. Jerry Brown (R) has signed legislation “cracking down” on the use of long-term capital appreciation bonds for school construction. The Times characterizes the practice as “risky,” and notes that it can lead to “debt payments many times the amount borrowed.” The Times notes that observers have criticized the bonds as being “reminiscent of the lending and Wall Street excesses that contributed to the Great Recession.”

        The Orange County (CA) Register (10/3, Kyle) reports that the bill means that schools “will no longer be able to shift debt payments for new classrooms to taxpayers 40 years in the future,” noting that it “sharply limits the cost of so-called capital appreciation bonds, which dozens of California schools have used in recent years.”