Kingsport mayor believes higher ed center best use of 'MeadowView tax'

Matthew Lane • Jan 28, 2007 at 12:18 PM

KINGSPORT - Mayor Dennis Phillips believes the best way for the Model City to improve itself and for local companies to have access to good employees is through the creation of higher education center in downtown Kingsport.

A group of local educators, city officials and community leaders have for months worked on locating a higher education center in downtown Kingsport. The proposed center is being modeled, in part, after a multi-college higher education center in Greenville, S.C., where several different colleges offer associate, bachelor's and master's degrees under one roof.

The vision is for Northeast State Technical Community College to operate the facility and offer core courses, with other universities and colleges offering their bachelor's and master's programs. King College, Milligan, Tusculum and the University of Tennessee have all expressed an interest in offering courses at the center.

"Our goal is we want to have a better Kingsport, and to have a better Kingsport includes having employees for the business and industry we have," Phillips said. "If we can't provide an educated work force, we have been told very clearly that industry would do what it has to do to survive."

Phillips said hospitals cannot hire nearly the number of nurses needed, and Eastman Chemical Co. - the city's largest employer - is concerned about being able to fill its ranks of retirees and some possible growth.

"If we cannot fill the employment needs of what we have today, it's going to be very difficult for us to recruit industry to Kingsport," Phillips said. "If you want to move here with a plant that needs 100 employees, the first thing you want to find out about is the labor force."

Phillips said rough figures call for the proposed center to be around 50,000 square feet and cost up to $10 million. Possible sites include the Shelby Street parking lot or the Clinchfield Street parking lot - both of which are owned by the city.

In order to fund construction of the center, Phillips said he thinks the city should earmark a portion of the regional sales tax toward the project.

The regional sales tax came about in 1992 when Kingsport took on $25.7 million in debt to pay for the construction of the MeadowView Conference Resort and Convention Center and Cattails Golf Course.

To pay off this debt, city residents voted 2 to 1 by referendum to increase the sales tax by a quarter cent and earmark the money toward the debt and operating subsidy for the center.

This past year's subsidy to MeadowView from the city was $432,000. The highest amount has been around $830,000.

The quarter-cent tax amounts to $3.1 million annually, and the money goes toward the debt and operation of MeadowView and the golf course. Phillips said it is estimated that approximately 60 percent of the regional sales tax funds comes from people living outside the city of Kingsport.

The final payment on MeadowView will be made in September 2007. Beginning in fiscal year 2009, approximately $2.1 million will be available to the city. The golf course will not be fully paid off until 2017.

However, City Manager John Campbell said he recently learned the city's general fund needs to be paid back approximately $3 million from the regional sales tax - money loaned from the general fund to cover shortfalls in the tax over the years.

Campbell said this money could be paid back all at once, thus taking nearly all of the regional sales tax for fiscal year 2009, or in increments over a number of years.

"There is no leeway in fiscal year 2008 for any money to go anywhere," Campbell said. "I think you'd have to look at the $3 million to be paid off next unless you do a project that would really enhance the community like the higher education center."

Some people in the community believe the regional sales tax should sunset when MeadowView is paid off. However, according to the ordinance, no sunset provision exists, and for the tax to come off another referendum would have to be held, Campbell said.

"The Board of Mayor and Aldermen at the time had a chance to place a sunset provision in the ordinance," Campbell said. "They chose not to, and I would say it was the appropriate thing to do at the time, not knowing what kind of expenses would be involved."

If the BMA were to vote for a referendum in September to repeal the regional sales tax, Phillips said that would have a major, negative impact on Kingsport.

"We would still have $600,000 in debt service to 2011 and then $150,000 to 2017," he said. "It would be about 10 cents on property taxes to offset the debt and subsidy if we do away with the regional sales tax.

"The BMA is not going to raise property taxes for this purpose, and we don't need to. We need to do the right thing."

Campbell said a proposal on the higher education center is going before the BMA in March. Afterward, Campbell said the tentative schedule is for the city to seek out an architect and have drawings done by December, go out to bid on the project in January or February of 2008, and complete the building in the summer of 2009.

Last November, Alderman Pat Shull suggested earmarking half of the regional sales tax to paying off debt. Kingsport's debt dropped from $114 million to $107 million in fiscal year 2006. However, that figure has grown to around $122 million this fiscal year with the issuance of $24.5 million in bonds last December for a new elementary school and fire station in the Rock Springs community.

This week, Shull stuck by his suggestion, adding that he is opposed to earmarking the tax toward a proposed higher education center.

"I think if this higher education center is so important and the citizens are behind it, which remains to be seen, that it ought to stand on its own merits," Shull said. "I'm not necessarily for it or against it. I want to see if it's affordable in light of all those other things (facing the city). I honestly can't say it takes a higher priority than a new fire station or modernizing our sewer system."

The BMA is scheduled to meet Wednesday to discuss the city's capital improvements plan (CIP) and will likely include such topics as the higher education center, a new fire station on Stone Drive, the $18 million in improvements needed at the city's wastewater treatment plant, the King's Port on the Holston project, and the renovation of Legion Pool.

Shull said ideally, the BMA needs to prioritize the CIP projects and have a discussion on the city's debt level - an issue Shull takes very seriously.

"What I'd like to see is the board come to some kind of consensus about what is an okay level of debt," Shull said. "When you start getting above $150 million, I'd be real uncomfortable and probably vote against things that would bring us up to say, that area of $180 million to $200 million.

"Eventually I'd like to see debt go back down and have the flexibility to do things in the future with future boards."

Under Kingsport's charter, the city could take on an additional $209.5 million in debt. Under a stricter, BMA-adopted guideline, the city could take on an additional $83 million in debt.

"There is some threshold where the debt is too high, and I'm worried that end result of all of this CIP may be we get past what I'm comfortable with," Shull said.

"New things come up that was on nobody's radar two or three years ago. Are we going to have the flexibility to actually adjust and adapt to those things? Are we going to be able to seize a future opportunity if it comes up or are we going to be handcuffed with the need to pay down debt?"

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