The tax would be $5 more than what property owners pay on the bond voters approved in 1997, which is scheduled to be paid off in 2027.
Although the interest rate will remain unknown until the bonds are sold, district officials estimate that for every dollar they borrow, they will be on the hook for paying back about $2.50.
But Akbar Torbat, an economics professor at Cal State Los Angeles, said the bond is “advantageous to the investment banker and not the taxpayer” because the bond would not carry a flat interest rate.
“The projection is like a guess rather than an accurate figure,” he said.
Glendale Unified officials say they're paying roughly $3.80 for every dollar borrowed under a $270-million bond approved by voters in 2011.
Under the proposed plan, Burbank may issue $44 million in current interest bonds and $66 million in converter bonds.
The appeal of converter bonds is that the district doesn't have to pay interest for seven or 10 years, at which time officials say they'll have the revenue to pay the bill. That's when the bonds “convert” and the district must pay interest twice a year — the same as current interest bonds.
The district could also refinance converter bonds five years after they convert in an effort to secure a lower interest rate.
Despite fears of what those interest rates may end up being, Fadel Lawandy — director of the C. Larry Hoag Center for Real Estate and Finance at Chapman University — said the overall benefit outweighs the cost to Burbank residents.
“It seems reasonable,” he said. “The benefit seems to be the winner on this one.”