Why are all these coast cities taking out these capital appreciation bonds?
Posted in the Gulfport Forum
#1 Aug 10, 2012
This school district out west took out a 105 million dollar bond over several decades. The idea is that real estate values appreciate -- & thus pay back far more than the initial principle loaned. This is hilarious because this has been done in several states.
But it seems to me that Ocean Springs & Pascagoula borrowing money to amp up their waterfronts/downtowns & Gautier borrowing money to revamp its dying mall & its 'town green' area -- they basically borrowed a variation of these capital appreciation bonds.
They assume that as they 'beautify' downtowns or waterfront property or retail property or w/ever it is that it will cause real estate values to rise -- & when they rise property taxes go up with them. This is a gutsy assumption & I for one know it won't work because there's no underlying demand & we already have over-saturated markets with Gulfport, Mobile, & D'Iberville, not to least mention Biloxi.
Dumping a bunch of capital appreciation muni bonds to fund your city sounds good on paper but I guarantee you the economic benefits won't be as rosy as they're assuming...
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