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October 25, 2006 | South Carolina Headlines


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The House that BEST Built.
Jonathan Pait
July 18, 2001

The following is an excerpt taken from a letter sent by a school board trustee to a citizen of the Greenville School District. Any references to personal information have been removed. The purpose of publishing this letter is not to point out any one trustee, but to allow readers of The Common Voice to understand the reasoning behind some of the trustee’s decisions.

What do you think? Use the Comment link in the Interact section to give your feedback. A special thank you to the reader who passed along this information. Any information that helps us better understand the issues we face are welcome.

The South Carolina Supreme Court ruled years ago that debt of private entities like BEST is not debt of a school district. It can't be because the SC Constitution simply prevents it from being such. The BEST bondholders will have no right to come back against the district to collect on the bonds if BEST were to default. So it is not school district debt. So it does not violate the 8% debt limit. End of story.

Perhaps this analogy will make it clearer:

Imagine that your family desperately needs a home, but you don't have the ability to borrow the money to build one. So you have to rent expensive hotel rooms each night and you can never build up enough money to get out of that trap.

Your brother sees your problem. He has the ability to borrow the money to build you a home and agrees to do it. You have no legal obligation to pay off the loan for your brother. However, you intend to take a part of the money you're now spending on hotel rooms each night to give to him to pay off the loan. In fact, you'll save tons of money by having home with a mortgage rather than paying each night for a hotel room.

After a while, however, for some reason, you stop giving you brother your rent money (you have the right to stop!). Your brother then doesn't pay back the loan. The bank takes the home to cover the loan. It has no right to come after you to pay off the loan. You're not any worse off than you would otherwise have been since without your brother's help you wouldn't have had the home in the first place. Now you're back to sleeping in hotel rooms and paying the high single night rates. Moreover, the bank can't come after you since you aren't on the loan. You have no liability.

Or, assume the alternative, you continue giving your brother your rent money and he pays the loan off over the 25 years. At the end, you own the home. No more payments. Your rent money can be used for other things.

This gets your family out of hotel rooms AND saves you tons of money over the years

In terms of our project, it gets kids out of deteriorating schools quickly rather than over 25 years and saves hundreds of millions of dollars in the process (and thereby ensures no tax increases for school buildings!).

I do not understand how you or anyone else can think this is a bad thing. It will end up helping the students of this county and it will end up saving YOU (and me) money.

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