OC Firm Behind Poway School Bond Advises Other
SoCal Districts
Benjamin Dolinka, who advised the Poway Unified School District on the bond deal, isn’
t speaking, but other finance gurus are chiming in on the deal.
By Tom York
Poway Patch
August 24, 2012

Until the first week of August, Poway residents knew little about the behind-the-scenes
maneuvering of local school finance.

That’s when the San Diego-based news site Voice of San Diego published a story
about Poway school officials using CABs, or ultra-long-term capital appreciation
bonds, to complete renovation of a number of schools in the district.

Now residents know more than they ever wanted about the high interest rates they’ll
have to pay over the next 40 years for those renovations.
They’ll have to pay 10
times the original principal amount because the bonds can’t be repaid early.

The strategy of using CABs came at the recommendation of Irvine-based
consulting firm Dolinka Group. Benjamin Dolinka is listed as the president
and CEO, and several published sources say he has been advising schools
for the past two decades. He did not respond to requests for comments
regarding the Poway bonds...

Dolinka’s apparently familiar with local school officials up and down the state — his
firm is frequently hired to consult with districts on the best way to pay for such things
as school construction projects.

On the firm’s website, the firm says it has 250 clients, including a long-standing
relationship with the Poway school system...

Besides Poway, the firm lists as clients the San Diego Community College
District, San Diego Unified School District, San Marcos Unified School District
and San Ysidro School District.

Dolinka is also advising Del Mar school officials on an upcoming bond ballot measure,
according to local newspaper reporting, and also has a working relationship with the
Escondido school system.

The firm’s website includes a letter of reference from Poway Schools Superintendent
John Collins, who wrote in a recommendation letter dated March 21, 2011: “For the
past 20 years, Benjamin Dolinka has served as a financial advisor to the Poway
Unified School District. During this period, Benjamin was a key player as a member of
the District’s financial consulting team.”

“I strongly believe it is extremely important for all school districts in the State to identify
a financial advisor who understands the needs, the vision, the community, and the
politics of a school district,” added Collins. “As superintendent of the Poway Unified
School District, I can state that the working relationship with Benjamin Dolinka and his
staff has been excellent.”

A copy of the letter is attached in the PDF section of this article.

The firm occupies sleekly designed and furnished office near The Irvine Co.’s
upmarket Spectrum Center in the heart of Orange County.

The firm declined to return calls for comments about the bonds.

Dolinka and bond manager Stone & Youngberg, a unit of Wall Street financial firm
Stifel Nicolaus & Co., are receiving a total of $1.4 million in fees for their services to
the Poway school district, according to Fox News.

Dale Scott, who is president of education financial advisor Dale Scott & Co. in San
Francisco, said the revelations in Poway will probably do as much as legislation to
stop districts from using CABs in the future.

“They’ve been pretty much done in de facto,” said Scott, a 25-year veteran of the

“CABs can be a very effective tool in helping school districts design programs that
provide the guarantees for taxpayers,” he said. “We have used them in moderation.”

“Where they get tuned sideways is when they are used to avoid the payment of taxes
[by the current taxpayers], to design some structure to kick some problem down the
road,” he said. “That’s where the problem lies.”

Scott considers his firm to be one of the top half dozen in the state advising the
education market out of 30 to 40 such firms statewide. He said that the top dozen has
about two-thirds of the market for bond work.

Scott explained that an increasing number of school districts have turned to CABs as
an unintended consequence of Proposition 39, a state ballot measure passed in 2000
that lowered the percentage of voters needed to pass bond issues to 55 from two-
thirds, but set caps on tax rates for repaying those issues.

He said more and more school districts are turning to CABs to get around those caps
so that they can finance capital projects.

Scott said he recommends that districts go back to voters to reauthorize existing
bonds that haven’t been issued rather than using long-term bonds that can be so
costly in the years ahead. The process can save millions of dollars over CABs.

He said the underwriters often write up terms that favor the investors over the districts,
such as issuing instruments that can be “called” or retired early to save money.

“The fact that the bond is not callable is what’s ticking people off,” Scott said of the
situation in Poway.

Meanwhile, the consulting industry’s ability to recommend such costly bonds in the
future might be restricted, if San Diego County Treasurer-Tax Collect Dan McAllister
has his way.

He said he made a presentation Aug. 17 to the top business officers of the school
districts in the county, and told them he would pursue legislative changes to prevent
such bonds from being issued in the future.

Six of the 11 California school districts issuing CABs are located in San Diego County.
Three of those 11 were advised by the Dolinka Group.

McAllister said at a press conference this week that he wants to ensure that
“disclosure, openness and transparency, or DOT, is part of all school financial

He wants local school boards and their superintendents to sign off on all future bond
issues and make those letters public. McAllister also said he wants to limit bond terms
to 25 years, along with a number of other changes to prevent financial abuse to

He said he also wants the school districts to be able to repay the debt early.
Prepayment options are missing from most bond issues, which means the districts are
obligated to pay the full amount of principal plus interest no matter what happens over
the next 40 years.

McAllister OK’d Poway’s bonds, but said the long term was “outrageous.”

“It seems as though local districts are able to work and wiggle depending on the
economic climate to manufacture something that isn’t necessarily in the best interests
of their constituents,” he said. He said that obligating the city for such a long period
would impact not only the next generation, but future generations. He described the
terms as “onerous.”

Nevertheless, McAllister said, “There’s nothing illegal about them, they do have a
place in a monitored, managed bond portfolio for school districts and local

Michigan journalist Joel Thurtell, who first broke the story about the Poway bond
scandal on his blog in early May, is an expert in CABs.

He wrote the groundbreaking series of stories about the abuse of the bonds in
Michigan in the early 1990s, stories that prompted Michigan lawmakers to outlaw the

Thurtell said he uncovered a cozy relationship between consulting firms, as well as the
firms that issue the bonds, construction companies and other vendors that benefit
when schools have money and contracts are awarded...
Poway Unified School District CAB bonds
San Diego Education
Report Blog
Poway Unified School District
Poway Unifed blog posts
Poway's Capital Appreciation Bonds   
Posts pn this subject from SDER blog

Information gathered from the Official Statement:
"The Underwriter may offer and sell Series B Bonds to certain dealers and
others at prices lower than the offering prices
stated on the inside cover page
The offering prices may be changed from time to time by the Underwriter."--
Page 44
[Maura Larkins question: who are these "dealers and others"?]

Dated Date: 11/02/2006
Closing Date: 11/02/2006

...The Series B Bonds are offered when, as and if issued and accepted by the
Underwriter, subject to the approval as to their legality by
Bowie, Arneson,
Wiles & Giannone,
Newport Beach, California, Bond Counsel to the School
District and subject to certain other conditions.

McFarlin & Anderson LLP, Lake Forest, California is acting as Disclosure

Certain legal matters will be passed on for the School District by Bowie,
Arneson, Wiles & Giannone, Newport Beach, California. It is anticipated that
the Series B Bonds, in book-entry form, will be available for delivery to DTC,
in New York, New York on or about November 2, 2006.

Page 4
The School District’s financial statements for the Fiscal Year ended June 30,
2005, which are included as Appendix A, have been audited by
Wilkinson &
Hadley, LLP,
El Cajon, California.

Stone & Youngburg, LLC

William Horn, Chairman, District 5
Ron Roberts, Vice Chairman, District 4
Pam Slater-Price, Supervisor, District 3
Dianne Jacobs, Supervisor, District 2
Greg Cox, Supervisor, District 1


Penny Ranftle, President
Jeff Mangum, Vice President
Linda Vanderveen, Clerk of the Board
Steve McMillan, Member
Andy Patapow, Member


Donald A. Phillips, Ed.D., Superintendent
John P. Collins, Deputy Superintendent
Randie A. Allen, Chief Financial Officer


Bowie, Arneson, Wiles & Giannone
Newport Beach, California


McFarlin & Anderson LLP
Lake Forest, California

Treasurer-Tax Collector of the County of San Diego
San Diego, California

Page 11

Bond Insurance Policy
Concurrently withthe issuance oftheSeries BBonds, Financial
SecurityAssurance Inc. (“Financial
Security”)will issue itsMunicipal Bond Insurance Policy for the Series BBonds
(the “Policy”). The Policy
guaranteesthe scheduled payment of principal of(or, inthe case of Capital
AppreciationBonds, the accreted
value) and interest on the Series B Bonds when due as set forth in the form
of the Policy included as
Appendix E to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund
established under New York,
California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
Financial Security is a New York domiciled financial guaranty insurance
company and a wholly
owned subsidiary of Financial Security Assurance Holdings Ltd. (“Holdings”).
Holdings is an indirect
subsidiary of Dexia, S.A., a publicly held Belgian corporation, and of Dexia
Credit Local, a direct whollyowned subsidiary of Dexia, S.A. Dexia, S.A.,
through its bank subsidiaries, is primarily engaged in the business of public
finance, banking and asset management inFrance, Belgium and other
European countries.

Page 14-15
In accordance with Government Code Section 53600 ets eq., the Treasurer
manages funds deposited with it by the School District. Each county is
required to invest such funds in accordance with California  Government
Code Sections 53601 etseq. In addition, counties are required to establish
their own investment
policies which may impose limitations beyond those required by the
Government Code.
All investments in the Treasurer’s investment portfolio conform to the
statutory requirements of
Government Code Section 53601 et seq., authorities delegated by the
CountyBoard of Supervisors and the
Treasurer’s investment policy.

page 24
General Information
Improvement District wasformed on August 6, 2002, pursuant to the
provisions of theAct and
proceedings taken by the School District. The Improvement District includes
all of the territory located
within the boundaries of the School District excepting only noncontiguous
territory located within the
boundaries of certain Mello-Roos community facilities districtsformed by the
School District. The area of
the Improvement District is about 65 square miles, representing
approximately 66% of the territory of the
School District. There were approximately 64,716 housing units in the entire
School District of which
approximately44,529 were within the Improvement District inFiscal Year 2005-
06. Approximately 22,220
ofthe School District’s students reside within the Improvement District while
enrollment within the entire
School District was approximately 32,645. All of the necessary filings under
State Law connected with
formation of the Improvement District have been made with the State Board
of Equalization.

The information inthissection describes ad valorem propertytaxation,
assessed valuation, and other
measuresof the tax base of the Improvement District. The Series B Bonds are
payable solely from ad valorem
taxes levied and collected by the County on taxable property in the
Improvement District. The School
District’s general fund is not a source for the repayment of the Series B
Ad Valorem Property Taxation
Taxes are levied by the County for each fiscal year on taxable real and
personal property which is
situated in the County as of the preceding January 1. For assessment and
collection purposes, property is
classifiedeither as “secured” or “unsecured” andis listedaccordingly on
separate parts ofthe assessment roll.
The “secured roll” is that part of the assessment roll containing State-
assessed public utilities property and
real property having a tax lien which is sufficient, in the opinion of the
County Assessor, to secure payment
of the taxes. Other property is assessed on the “unsecured roll.” Boats and
airplanes are examples of
unsecured property.
Property taxes on the secured roll are due in two installments, on November
1 and February 1 of each
fiscal year. If unpaid, such taxes become delinquent on December 10 and
April 10, respectively, and a 10%
penalty attaches to any delinquent payment. Property on the secured roll
with respect to which taxes are
delinquent becomes tax defaulted on or about June 30 of the fiscal year.
Such property may thereafter be
redeemed by payment of delinquent taxes and the delinquency penalty, plus
costs and redemption penalty of
one and one-half percent per month to the time ofredemption. If taxes are
unpaid for a period of five years
or more, the property is subject to sale by the County Treasurer.
Property taxes on the unsecured roll are due as of the January 1 lien date
and become delinquent, if
unpaid, on August 31. A 10% penalty attaches to delinquent taxes on property
on the unsecured roll and an
additional penalty of one and one-half percent per month begins to accrue
on November 1. The taxing
authority has four ways of collecting delinquent unsecured personal
property taxes: (1) bringing a civil
action against the taxpayer; (2) filing a certificate in the office ofthe County
Clerk specifying certain facts
inorder to obtain a lien on certain property of the taxpayer; (3) filing a
certificate of delinquency for record
in the County Clerk and County Recorder’s office in order to obtain a lien on
certain property of the
taxpayer; and (4)seizing and selling personal property, improvements, or
possessory interests belonging or
assessed to the assessee.
Future assessed valuation growth allowed under Article XIIIA (new
construction, certain changes
of ownership, 2% inflation) will be allocated on the basis of “situs” among the
jurisdictionsthat serve the
tax rate areawithin which the growth occurs. Local agencies and school
districts share the growth of “base”
revenuesfrom the tax rate area. Each year’s growth allocation becomes part
of each agency’s allocation in
the following year. The availability of revenue from growth in tax bases to
such entities may be affected by
the establishmentofredevelopment agencies which,under
certaincircumstances,maybe entitled to revenues
resulting from the increase in certain property values.
Assessed Valuations
The assessed valuation of property in the Improvement District is
established by the County
Assessor, except for public utility propertywhich is assessed by the
StateBoard of Equalization. Assessed
valuations are reported at 100% of the “full value” of the property, as defined
in Article XIIIA of the
California Constitution. Prior to 1981-82, assessed valuations were reported
at 25% of the full value of
property. For a discussion of how properties currently are assessed, see

Page 27
Largest Property Owners
The following table shows the 20 largest owners of taxable property in the
Improvement District as
determined by secured assessed valuation in Fiscal Year 2005-06.
Largest 2005-06 Local Secured Taxpayers
2005-06 % of
Property Owner Land Use Assessed Valuation Total
1. Sony Corp. of America Industrial $ 194,138,608 1.21%
2. Hewlett-Packard Co. Industrial 155,804,138 0.97
3. Cymer Inc. Commercial 131,408,872 0.82
4. BAE Systems Mission Solutions Inc. Industrial 83,299,572 0.52
5. Carmel Mountain Ranch II San Diego LP Apartments 69,100,000 0.43
6. NCR Corp. Office Building 59,015,783 0.37
7. Arden Realty LP Commercial 58,527,756 0.37
8. Slough Poway I LLC Industrial 58,289,768 0.36
9. Rreef American REIT II Portfolio LP Commercial 56,640,385 0.35
10. Kilroy Realty LP Commercial 56,315,824 0.35
11. CCC Retirement Communities I LP Rest Home 55,219,190 0.35
12. Toppan Optical Products Inc. Industrial 39,229,965 0.25
13. Pomerado Leasing LP Industrial 38,668,859 0.24
14. TRW Inc. Industrial 35,301,606 0.22
15. Lincoln RECP Pointe OPCO LLC Industrial 34,996,000 0.22
16. Villaggio LLC Condominiums 33,784,746 0.21
17. Nacar of San Diego Inc. Industrial 32,524,464 0.20
18. BRE Properties Inc. Apartments 31,841,929 0.20
19. Unisys Corp. Industrial 31,279,256 0.20
20. TA & Western LLC Commercial 30,721,500 0.19
$1,286,108,221 8.04%
2005-06 Local Secured Assessed Valuation: $16,002,145,044.
Source: School District.

The Underwriter may offer and sell Series B Bonds to certain dealers and
others at prices lower than
the offering prices stated on the inside cover page hereof. The offering
prices may be changed from time to
time by the Underwriter.

Page 44
Some ofthe data contained herein has been taken or constructed from
District records. This Official Statement has been approved by the School
District Board of Education.


By /s/ John Collins
John Collins, Deputy Superintendent, of the
Poway Unified School District

Appendix F
San Diego Education Report
San Diego
Education Report
Sept. 29, 2012

CUSIP *        

Maturity Date        

Principal Amount At
($) 3,080,766    

Initial Offering Price
(%)     31.37    

Security Description *     
02-DIST 02-1-B    

Current S&P LT Rating
Re: Poway
Unified School
District Dancing
With The Devil!
08-15-2012, 10:48 AM
hplc chem  
Registered User

I don't think
pushed these bonds.
I think
politicians/ administrators
were sold these bonds.

"The underwriters for the nearly
$1 billion Poway bond deal,
Stone & Youngberg,
a unit of Stifel
Nicolaus, and
financial advisor
Dolinka Group of
Irvine, Calif., will
get a sweet $1.4
million in total fees,

says FOX News analyst James

"Citigroup (C: 28.94, +0.16,
+0.56%), Goldman Sachs
(GS: 103.72, +0.11, +0.
11%), Bank of
America/Merrill Lynch (BAC:
7.85, +0.13, +1.68%),
among others, will split a
cool $2.1 million on San
Diego’s $164 million bond
where taxpayers will
eventually pay a billion
dollars, Farrell notes."

Investigate Dolinka Group. I
did some research on the
internet and just used their
own information. Along with
information available on the
internet. Take this:

Benjamin Dolinka is a
managing member of
School Construction
Compliance LCC and a
principal of Venture
Compliance Services

Now the question to my mind
is whether there were any
kickbacks involved with those
making decisions in the
various school districts or
whether the problem is that
high finance has become a
very complicated process and
the administrators/politicians
are just very naive.
Dolinka Group--A
Strategic Partner
Exclusively to the
California Education

Benjamin Dolinka,
focuses on
creating new financial and
demographic services,

identifying potential
public-public and
private-public partnerships,
and establishing long-term
client relationships. For over
two decades, Benjamin has
also collaborated with various
vendors and organizations
throughout the country to find
the best solutions for LEAs in
their facilities planning needs.
His efforts have resulted in
the timely funding and
construction of scores of
facilities for LEAs across the
State of California. Benjamin
holds a B.A. in Economics
from the University of
California, San Diego.
Posts pn this subject from
SDER blog
Poway Hires Forensic
Accountant to Review
September 10, 2012

The Poway Unified School
District has hired a forensic
accountant to review its
controversial 2011 bond
issue, district Superintendent
John Collins announced at a
Monday night school board

[Maura Larkins comment:
John Collins was the
Assistant Superintendent
who signed the official
statement about the bonds.]

“We want to be open,
transparent and forthright in
our responsibility to the
Collins said. “We
realize that it’s not good
enough to say that
think we acted in good
faith or we believe we did

with the best industry
expert advice and
We want to take
it a step further.”

The district’s 2011 bond deal
became headline news across
the nation after Voice of San
Diego ran a story detailing the
repayment terms for the
bonds. Taxpayers will pay
almost $1 billion on an initial
loan of $105 million...
Poway Federation of Teachers
involvement in this issue