The Strange World of Politics Episode 31: Follow-Up Lease Bond Issuance: We Can Account for $15.25 Million. Where Is the Other $24.65 Million Going?

City Finances· Accountability· Strange World of Politics Series· Affordable Housing

In my previous discussion of Culver City's 2026 bond financing, I focused on how the borrowing works. Lease-revenue bonds are a common form of municipal financing in California, and having a bank directly purchase the bonds is also not unusual.

But once I understood how Culver City is borrowing the money, I became much more interested in another question:

What exactly are we borrowing all this money for?

And the City's own budget information gives us part—but not all—of the answer.

$39.9 Million in Net Proceeds

According to the City's FY 2026–27 Capital Improvement Budget information reviewed in my follow-up research, the proposed bond issuance provides approximately:

$39.9 million in net proceeds

"Net proceeds" is important. This is approximately the amount available for use after issuance costs, rather than simply the maximum amount of bonds the City Council authorized.

We can identify approximately $15.25 million of that money in specific capital-improvement projects.

*The remaining identified capital projects include such things as building and elevator improvements, storm drains, the radio tower, pool resurfacing and other improvements. The material I reviewed does not provide an individual amount for every one of those projects.

So now we can do some very simple arithmetic:

$39.9 million

minus

$15.25 million

equals:

$24.65 million

And that's where my question begins.

Where Is the Other $24.65 Million Going?

The material I reviewed does not itemize that remaining approximately $24.65 million in the Capital Improvement Budget discussion.

The analysis suggests that Jubilo Village and other affordable-housing expenditures are likely a major part of the remaining amount, along with potentially other costs, but the budget information reviewed does not establish the exact breakdown.

That's an important distinction.

I'm not going to tell voters:

"$24.65 million is going to affordable housing."

I don't have documentation establishing that.

Instead, I'm asking:

How much of the remaining $24.65 million is going to Jubilo Village and other affordable-housing expenditures, and where exactly is the rest going?

That should be an easy question for the City to answer.

Now Compare That With Our Sidewalks

This is what really caught my attention.

We have discussed an estimate of approximately $10 million to address Culver City's sidewalk needs.

Yet among the capital projects identified in this financing, only approximately $1 million combined appears allocated to sidewalks, curbs and ADA work.

If the City is already undertaking a borrowing of this magnitude, I think residents have every right to ask:

Why aren't we using substantially more of it to fix the infrastructure residents encounter every single day?

Sidewalks.

Curbs.

Streets.

Alleys.

Trees.

These aren't glamorous projects. But they're some of the most basic responsibilities of local government.

Interestingly, the City DID Add More Money for Streets

There's another piece of the story worth knowing.

The size of the proposed financing changed considerably as it moved through the process.

In April, the preliminary structure was approximately $35.85 million.

By June, the Council had authorized up to $48 million.

Around the same period, S&P described the planned transaction as approximately $42.6 million.

Why did some of that increase happen?

According to the information I reviewed, the Council added $3 million in additional net proceeds for street projects and broadened the category to include Safe Streets and Complete Streets projects.

I think that's important.

It demonstrates that the allocation wasn't written in stone.

The Council could change the priorities and add money for infrastructure.

And apparently, it did.

That makes me even more interested in understanding why substantially more wasn't allocated to sidewalks and other basic infrastructure.

This Is Not an Argument Against Affordable Housing

Affordable housing is a legitimate public priority.

But that's not the question I'm asking.

Government is constantly choosing among multiple legitimate needs with limited resources.

If affordable housing receives $10 million that could have gone toward infrastructure, that's a policy decision.

If infrastructure receives that $10 million instead, that's also a policy decision.

Neither choice should simply happen without voters understanding the tradeoff.

And borrowing makes that choice particularly important because future City budgets will have to accommodate the payments on this debt. The analysis I reviewed specifically identifies that loss of future budget flexibility as one of the legitimate issues residents should consider with lease-revenue financing.

Affordable Housing Has Financing Tools That Sidewalks Don't

There's another issue that deserves discussion.

As I've learned while researching Jubilo Village, qualifying affordable-housing projects can have access to specialized financing mechanisms, including tax-exempt municipal financing through organizations such as the California Municipal Finance Authority.

Private investors can provide the capital. Government provides the legal and tax structure that can make that financing less expensive.

But a sidewalk can't issue a housing bond.

A broken curb can't collect rent.

A dying street tree can't obtain affordable-housing tax credits.

Those things depend heavily upon Culver City deciding to spend money on them.

That doesn't mean housing shouldn't receive City money.

It means that when the City decides how to use its own long-term borrowing capacity, we should openly discuss the competition between those priorities.

Give Residents the Complete $39.9 Million Table

What I would like to see from the City is remarkably simple.

Take the approximately $39.9 million in net proceeds and show residents this:

Then give us three more numbers:

What is the final interest rate?

How many years will Culver City be making payments?

How much will Culver City ultimately repay—principal plus interest?

Those final figures were not established in the material I reviewed.

This Financing Isn't Inherently Improper

I also want to be very clear about that.

Nothing I've reviewed indicates that using lease-revenue bonds is inherently improper. It is a common and legal municipal financing mechanism used by California cities.

I'm not questioning whether Culver City can borrow this way.

I'm questioning the priorities attached to the borrowing.

There is an enormous difference between:

"Something improper happened."

and:

"I disagree with—or want an explanation for—how government chose to spend borrowed money."

My concern is the second.

The Bigger Question

The more I learn about municipal finance, the more I realize that the important political questions aren't always hidden in complicated financial terminology.

Sometimes they're incredibly simple.

Culver City is preparing to borrow tens of millions of dollars.

We can identify approximately $15.25 million in specific capital projects.

That leaves approximately $24.65 million that isn't itemized in the Capital Improvement Budget information I've reviewed.

Meanwhile, we have substantial sidewalk and infrastructure needs.

So my questions are:

Where exactly is the remaining $24.65 million going?

How much is going to Jubilo Village and affordable housing?

Why were those expenditures prioritized over putting substantially more money into sidewalks, curbs, streets and trees?

And finally: