Until Tuesday night's board meeting, the Lakeside Union School District had $10.1 million in debt coming due on June 1, 2014 and no way to pay it.
But after weeks of cooperation between taxpayers and officials, the board voted unanimously to issue controversial bonds in order to refinance the debt.
Although the vote means the district is essentially borrowing more money and that property taxes in the southwest Bakersfield district will rise, with agricultural interests bearing the bulk of the tax burden, it was seen as a win-win decision.
Farmers and dairymen had been working with the board to brainstorm strategies for reducing the amount the district would need to borrow. At times, that communication became highly emotional, with some landowners threatening litigation.
But at Tuesday's special board meeting, there were no signs of animosity. In fact, taxpayers and board members bent over backward to thank each other for hearing the other out and being open to ideas.
"We've had some excellent discussions back and forth," said Dennis Tristao of J.G. Boswell Company.
The new borrowing the district voted for included a capital appreciation bond, or CAB. That's a long-term, very high interest bond that has led to exorbitant debt obligations across the state, typically $6 for every dollar borrowed but often much more.
The district will use $550,000 in cash on hand to repay a portion of the debt on the front end, and then set aside 25 percent of future revenue from the fees developers pay the district when they build in the area. That will be for debt reduction down the road. The bond the district is issuing has a no-penalty call option at various intervals, starting seven years from now.
Those moves and others have allowed the district to get to a repayment ratio of $4.96 for every $1 borrowed, down from 6-to-1 when the district first invited the public to weigh in with solutions.
At the time the 2009 bond anticipation note was issued, Lakeside expected a jump in revenue from increased property taxes and enrollment growth. But that revenue didn't materialize after the housing market crashed and falling milk prices depressed the value of dairy land.
Superintendent Gary Mullen looked visibly relieved after the resolution to issue the new bonds passed without any further debate.
"It was a long row to hoe, but we got it done," he said.
Mike Turnipseed, executive director of the Kern County Taxpayers Association, said other districts should learn from Lakeside's example.
Most boards would have worked out a much more expensive plan behind closed doors, he said after the meeting, but Lakeside benefited greatly from shining a light on the crisis and asking the public for help solving the problem.
"This has never happened before in the whole state of California," he said. "They went out and were honest and created informed consumers. Informed consumers can make good choices and give good advice. Everyone didn't get everything they wanted, but we met somewhere in the middle, and it's better than where we started."
In another matter, the board appointed Scott Dewar to fill a vacancy on the board until November 2014. Dewar was one of two candidates vying for the position. He will serve until the next general election, when voters will pick someone to serve the remaining two years of the position's term.