Garrett Proposes 'New, Best Option' to Lower School District 304 Debt

Dan Garrett lost a bid to become a new School Board member by 19 votes in March, but he didn't stop trying to find ways to help the district claw out of debt.

Now Garrett is about to offer what he calls a "new, best option" for reducing School District 304's debt service and easing the burden on property-taxpayers. Please watch and listen to the attached showme.com presentation for details, but the gist of it is he'd like the board to consider using half of its reserves — about $30 million of the accumulated $60 million — to buy back its own bonds.

By doing that, Garrett says the district would earn interest on the $30 million — about 3 percent per year — and use that to reduce the debt service. "It will pay debt early, and it will earn interest going forward," Garrett says in the presentation.

William-Blair, the district's financial adviser, made a presentation at the Oct. 28 School Board meeting, suggesting four scenarios for flattening the district's debt payments and the burden on taxpayers over time. Some of those scenarios include using reserves toward debt service when bonds can be called. The next call date for the 2007A bonds is Jan. 1, 2017.

"The problem is, that doesn't really save you any interest," Garrett said. "Those four options fall short for various reasons."

One of those reasons, Garrett says, is that William-Blair's estimates include optimistic projections on the growth of the district's tax base. He believes those projections aren't realistic because the Estimated Assessed Value of property in the district has dropped for the past several years and isn't likely to rebound soon.

William-Blair's Elizabeth Hennessy, who made the presentation on Oct. 28, cautioned that the ideas Garrett is presenting might not be practical.

"You have to get the holders of those bonds to agree to sell back to the district. A lot are traded in small spaces. The ones in big chunks, the prices they want to charge the district outweigh the savings," she told board members. "I'm not saying it's strictly impossible. But that just does not happen very often."

Garrett plans to make his presentation at the School Board Finance Committee meeting, which takes place at 5:30 p.m. Monday, Nov. 11, at Williamsburg Elementary School, 1812 Williamsburg Ave. The Finance Committee agenda also includes a review of the 2013 tax levy.

The full School Board meeting follows at 7 p.m.