Bonds
Promise of Free Money Backfires on California Community Colleges
- Schools terminate deals after funding fails to materialize
- Canadian investment firm says schools didn’t meet requirements
At least two schools are facing the legal costs of terminating municipal securities as well as pursuing alternative financing for construction projects.
Photographer: Brandon Bell/Getty ImagesThis article is for subscribers only.
Some community colleges in California are learning a hard lesson about free money.
The schools signed up to sell municipal securities whose debt service would be entirely covered by the loan and whose principal would be forgiven at maturity. They would never have to write a check.