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Searching for a purpose: PBA, City Commission discuss options

Zach Vance • Jan 31, 2019 at 8:11 PM

 Now that the Millennium Centre has been sold to East Tennessee State University, and all the land near it developed, the Johnson City Public Building Authority met with city commissioners Thursday to discuss what comes next. 

And possibilities are vast, considering Johnson City has the only public building authority chartered in the Tri-Cities. 

Attorney Mark Mamantov, with Bass, Berry & Sims, explained to commissioners the history of public building authorities in Tennessee, and what function Johnson City’s Public Building Authority could serve in the future.  

“Mark is here because he’s the expert on the legislation that defines what public building authorities can do,” authority Chairman Dr. Jon Smith said. 

“We are here to work with the city because our major project was the Millennium Centre. We disposed of that. So what we’re trying to do is work with the city so that we can identify projects in the future where it would be beneficial for the Public Building Authority to take a part in.” 

One example Mamantov gave was the public building authority in Knoxville that consists of county and city representatives, providing a perfect “vehicle for collaboration.” Based on the Knoxville authority’s website, that entity manages at least 10 facilities and 12 parking garages and lots. It also funds the salaries for a full-time staff and an executive director. 

One possibility discussed was having the Johnson City Public Building Authority manage a Tennessee College of Applied Technology, which state officials have discussed locating in Boones Creek. 

Mamantov also said public building authorities, no matter where they are chartered, have the ability to manage projects anywhere across the state. This caused some commissioners to begin thinking about regional cooperation, and how the Public Building Authority might expand its reach outside Johnson City’s boundaries. 

Based upon the charters issued by the state, public building authorities also have the ability to issue variable-rate debt to any city or county in Tennessee. Mamantov said PBAs chartered in Sevier County and Clarksville serve that function, producing modest income through administrative fees.

Considering the current economic environment, City Manager Pete Peterson warned against the Johnson City Public Building Authority being a conduit for variable-rate financing right now. But that need could arise in the future, Mamantov said.

“If you hit the market right, variable-rate debt is always going to be lower, but you’re always taking the risk of it jumping,” Mamantov said.

“Depending on who you ask, some would say a city should have 30 percent variable-rate debt, some would say 70 percent is good. Different strokes for different folks, but almost anyone would say, ‘It’s good to have some portion of your debt portfolio in variable-rate debt. So if you have your own public building authority, it’s easier to do that than searching for a PBA across the state.”

Lastly, Mamantov said PBAs have the ability to provide procurement services to cities and counties, who do not necessarily want to select the lowest bidding contractor.  

Mayor Jenny Brock recommended commissioners and the Public Building Authority take 30 days to consider all its options before convening again to try and nail down a mission. 

“I think the entity, we certainly want to keep it together. As you heard in here, it’s the only public building authority in Northeast Tennessee, and they’re very valuable,” Brock said. 

“Hopefully, we can expand the mission of the PBA. I’d like to see a more regional stretch on this that can be used by other entities.”

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