The funds from the sale will be used build a new athletic complex at Elizabethton High School, new classrooms and science labs at T.A. Dugger Jr. High School and a new band room for the high school. Part of the revenue raised would be used to pay off a 2008 issue of school bonds that were used to construct new classrooms and gymnasiums at some of the schools.
The vote to authorize the sale was 5-0. Councilwoman Nancy Alsup abstained she said because she had been unable to attend the workshops leading up to Thursday night’s decision. Councilman Jeff Treadway was absent because of illness.
As was the case with the 2008 bond issue, the bonds will be paid back with revenue from a half-cent of the local option sales tax. That portion of the sales tax was approved by the a city referendum in 2008.
In working up the payback plans, the city has been planning on using $720,000 a year from the sales tax. That is a conservative number. City Finance Director Deborah Kessler said that during the depths of the economic recession in 2011, the half-cent sales tax brought in $756,000. It has since averaged around $770,000 annually.
City Councilman Richard Tester said he thought the economy was improving and he would be comfortable with an annual payment larger than $720,000.
Mayor Curt Alexander said another concern was with maintaining the athletic complex to be built with some of the proceeds from the bond issue. He said the school system would need to replace the surface of the track in 10 years at a cost of $100,000 and replace the synthetic turf on the football field in 15 years, at a cost of $500,000. He wanted the school system to have enough capital project money coming in each year to provide for that maintenance.
Alexander said he hoped maintenance funds would be set aside for the new athletic complex. He said the old stadium “hasn’t been maintained for 40 years.” He said it was his intent to leave the school board enough funds so it wouldn’t have to come back to the council in 10 years and ask for $700,000.
The council authorized the mayor to work with financial advisor Rick Dulaney of Raymond James and other experts to get the most advantageous bond package. One of the biggest concerns was rising interest rates. Because of that trend, Alexander said it was important to move fast.
The council was less united on another loan. Utilities Manager Johann Coetzee asked the council to approve the a capital outlay note not to exceed $263,000 for the purchase of a dump truck, two service trucks, two pickup trucks and a dump bed for the Water/Sewer Department. The bonds, at 3.5 percent, could be paid off in five years, with annual payments of $58,250. The payback will come from the water and sewer enterprise funds.
Coetzee said the new vehicles will replace old vehicles that have become expensive to maintain.
Coetzee’s request narrowly passed. Alsup and Mayor Pro Tem William Carter voted against the bond issue, while Alexander, Tester and Sam Shipley voted for it. Bob Cable passed, making the vote 3-2. Cable was then asked if he wanted to change his vote and voted in favor, allowing the request to pass by a 4-2 vote.
The council was more receptive to a second capital outlay note request of $300,000 from Coetzee, which would be used to buy a track hoe boring machine and ancillary equipment.
Coetzee said the horizontal boring would save the city money, as the water department crews lay 1,200 feet of pipe a month. He said a boring machine would save the city $705,000 over five years by not having to cut ditches through roads, driveways and sidewalks. At a payback of 10 years at 3.5 percent interest, the annual payment would be $36,000. The funds would come from the water and sewer funds.
The council approved the bond issuance by a 5-1 vote, with Alsup the only dissenting vote.
The divided council failed to approve the hiring of a professional counselor to examine the Mass Mutual Pension Plan for Elizabethton Electric System employees. The council voted 3-3 on the question.