As part of the annual budget discussions, the Kingsport Board of Mayor and Aldermen has held two meetings in the past 30 days to discuss various capital improvement projects within the city. Last month, City Manager John Campbell presented the BMA with a five-year CIP (capital improvement plan) with more than $75 million in possible projects. On Wednesday, the BMA met and outlined the major projects city leaders would like to see the city focus on over the next five years.
The list includes $17.4 million for a new elementary school and $2 million for a new fire station - both to be built in the Rock Springs community. Money for these projects has already been allocated from $24.5 million in bonds issued last December.
Other projects include $4 million for Gibson Mill Road improvements, $4.5 million for renovations and construction at the V.O. Dobbins Center, $6 million to replace Legion Pool with a new aquatics center, $1 million for engineering work on various Kingsport roads, and $2 million for a new fire station on East Stone Drive.
Campbell ranked these projects as "major" projects and added it was likely something would be done on each of these projects during the 2008 fiscal year, which begins July 1, 2007.
Campbell has suggested these projects be bonded for 20 years. Typically, bond issuances in Kingsport are for 15 years. Campbell said the payback should be for 20 years because the projects would last two to three generations.
A second group of projects on the short list includes $800,000 for the Fordtown Road realignment, $1.6 million for K-Play, $2 million for the King's Port on the Holston project, $2 million for the Gibson Mill bridge project, $250,000 for the Kingsport Public Library, and $3 million for city office expansions.
Over the next four years, $6.27 million in debt payments will roll off the city's annual expenses and be available for reallocation. All of the projects on Campbell's list amount to nearly $48 million and would result in $4 million in annual debt payments.
Campbell said this allows Kingsport to have $2.27 million per year in cash flexibility. If Kingsport moves forward on funding a $10 million higher education center in downtown, another $800,000 in debt service would be generated. If the higher education center debt is not funded from another source, such as the regional sales tax, then the $2.27 million would go down to around $1.5 million in cash flexibility.
Campbell said Kingsport could do all of these proposed projects within its financial structure without raising property taxes.
"Not only do you have this roll-off, but we'll be creating more available funds from different kinds of growth, such as interest income and the normal growth in the budget process," Campbell said. "If the city does most, if not all of these projects, they will see an improved growth line that will bring more revenue in."
Kingsport's general fund debt is estimated to be $58 million at the end of the 2007 fiscal year (which includes the Rock Springs bonds). If the BMA approves all of the projects on Campbell's short list, general fund debt would be $56 million - $6.27 million would roll off, though $4 million would be added.
Under Kingsport's charter, the city can incur debt up to 20 percent of the assessed value of property within the city. Under a stricter BMA-adopted guideline, the city cannot go above 10 percent. If the $48 million in new debt is incurred, the percentage of debt would be between 4 percent and 5 percent, Campbell said.
"Even if you took the most extreme situation, you're going to be very prudent managers of money," Campbell told the BMA Wednesday night.
Campbell said the cost to provide services for the upcoming annexations in the Rock Springs community have been worked into the CIP, as has the expected sewer rate increase, which is projected to be 4 percent or less.
During Wednesday's meeting, Alderman Valerie Joh said it was nice to see quality-of-life projects on the list that help protect people's property values.
"If we don't make this a good place to live, people aren't going to want to move here," Joh said. "In order to compete, we need these projects."
Alderman Ken Marsh said it is no accident Kingsport's finances are in the state they are in.
"We got here with a lot of blood, sweat and tears. We knew we were going to get to this point in time," Marsh said. "The biggest negative to the bond situation is we're beholden to one entity for our tax base, and it's still fragile.
"In 2010, we'll have major projects not on this list. Let's be careful that we don't extend ourselves too far and be sure that we really want to see each project all the way through."
"Yes, there's risk, we don't know everything and there's going to be things that come up," Mayor Dennis Phillips said. "Let's not try to live where Eastman may close tomorrow. Somewhere between the worst world and the best world we should try to live."