KINGSPORT — City Manager John Campbell has pitched another plan for how Kingsport can fund its capital improvement projects — combining two years’ worth of projects into one bond issuance while reducing the overall amount from the original recommendation.
Every year during the budget process, the BMA is presented with a five-year capital improvement plan (CIP) that contains a number of projects and equipment purchases for the city, the school system and the water and sewer department.
Some items are fully funded within one of those five years; others are funded over a number of years. The items are paid for in a variety of ways, including cash, bonds, grants and state and federal dollars.
Earlier this month, Campbell brought forth the CIP for just the general fund (the main operating fund for the city) with the remainder of the CIP (water, sewer and minor funds) expected to come before the BMA in April.
In his original CIP proposal, Campbell allocated $6.76 million toward capital projects, the most notable being $2.7 million for the J. Fred Johnson Stadium project, $1.4 million for the Sullivan Street widening project and $1 million for the next phase of the Harbor Chapel Road project.
This plan is in line with a BMA pledge that any new debt issued next fiscal year would not exceed the amount of debt rolling off at the end of the current fiscal year. However, this original proposal did not cover the remainder of the stadium project, some $1.5 million, officials have said would come from new seat sales and sponsorships of a new scoreboard at the stadium — if one were to be installed.
During a BMA work session last week, Campbell presented a follow-up plan for the CIP — to take the debt roll off over the next two fiscal years and combine it into one bond issuance, rather than doing a bond issuance in fiscal year 2014 and another one in fiscal year 2015.
“While some people fret over debt, the charts show we’re under our self-imposed limit,” Campbell said, calling his comments an editorial vent. “We pay off debt rapidly. The total debt payoff for all funds is $15 million a year.”
Kingsport’s total debt has risen from $114 million in FY05 to an estimated $211 million in FY13.
Campbell continued by noting some people don’t like debt ... period.
“But it’s hard for a major city to not have debt,” he said. “The richest cities in this state, they have debt. Sometimes it’s better financial management to have debt.”
Kingsport has $6.76 million in debt rolling off in FY14 and $6.98 million rolling off in FY15.
According to Campbell’s proposal, $13.7 million in bonds would be issued after July 1 of this year. The funds would cover the previously discussed FY14 projects, adding in $1.5 million for the remainder of the stadium project and $2 million for eight FY15 projects, including money for the Kingsport Greenbelt, Tri-City Linen renovations, Fort Robinson bridge re-build and Bays Mountain dam repairs.
Campbell’s original CIP proposal had $9.28 million earmarked for projects in FY15, but since the latest recommendation has reduced this amount to the FY15 roll off, a number of projects will be pushed back by at least a year. The most notable one being the Kingsport Public Library expansion, now slated to begin in FY16.
Campbell’s proposal also includes $3.4 million for the school’s CIP.
Kingsport City Schools originally asked for $2.88 million in CIP funds for FY14 and $12.7 million in CIP funds for FY15. Obviously, some of the those projects, such as $7.5 million for additional middle school classrooms in FY15, will be affected.
Mayor Dennis Phillips said Kingsport has been very aggressive over the past five years with capital improvement projects.
“What I’m hearing from the public is, it’s time to smell some roses and proceed with caution,” Phillips said. “I don’t think we can go with the same pace we’ve been on the past few years.”
Alderman Mike McIntire said he has some concern over borrowing two years worth of capital, but added the move may cost a little less than issuing two sets of bonds.
“Our debt is at $220 million and we have revenues of $160 million; 15 to 17 percent of our revenue stream is going to pay our debt. That’s kind of uncomfortable,” McIntire said.
The final decision on the make up of the CIP and how it is funded will ultimately be made by the BMA.