KINGSPORT — City leaders have delayed consideration of issuing somewhere between $35.8 million and almost $42 million in Build America Bonds, or possibly even more or less.
And the president of the Kingsport Board of Education is wondering how a $100,000 to $200,000 capital improvement project at J. Fred Johnson Stadium at Dobyns-Bennett High School got inserted in the school system’s request for bond funding.
The Board of Mayor and Aldermen at its regular Tuesday night meeting voted to delay consideration of a resolution seeking the federal economic stimulus bonds until the regular Oct. 20 BMA meeting, with a called meeting before then dedicated solely to that issue.
After a detailed discussion, the BMA unanimously voted to delay considering City Manager John Campbell’s proposed list of $41.84 million in bonds, which was whittled down to $35.8 million in a revised list handed out to board members Tuesday.
“Give us more information so we can make a better decision,” Mayor Dennis Phillips said, calling it “somewhat irresponsible to pass a $42 million bond issue we seem to be not understanding.”
Among the projects, $4 million in road improvements, $1 million in energy-efficiency projects, $100,000 in stadium repairs, $2 million in sewer system projects and $564,200 in water system projects were pulled, and $1.1 million for the Jefferson Elementary project was to be “frozen until further discussion.”
Campbell said all but a few of the projects have been reviewed repeatedly by the BMA in the past, and interest rates are at historic lows. With the Build America Bonds program, which refunds 35 percent of the interest paid back to the local government, the effective interest rate would be as low as it was in 1967.
“It’s crazy to wait and have to borrow it at a higher expense,” Alderwoman Valerie Joh said.
Savings as compared to regular tax-free bonds would be $800,000, but compared to standard bonds would be $2.5 million. And because of a dip in construction costs, another $6 million to $8 million in savings is projected.
“None of those things are going to change in two weeks,” Vice Mayor Ben Mallicote said. “I think we’re being a rubber stamp board if we do this tonight with one night’s contemplation.”
Another issue discussed Tuesday night was the BOE’s proposed $2.55 million in bonds, which included a $1.3 million project to relocate the Jefferson Elementary library and office, which BOE President Susan Lodal said was to increase security at the school and open up more classroom space.
The original projects list presented to the BMA at its Monday night work session called for $1.1 million for that project and shifted $200,000 to stadium repairs, which Lodal said consisted of restroom work and stand rails scheduled for funding in 2011 and 2012.
The list is to be two years’ worth of capital projects, Campbell explained.
“I apologize for that happening,” Campbell said of the stadium issue. “It was a misunderstanding on our part.”
Lodal said the BOE has already taken care of infrastructure issues in past bonds and planned to do the railings and restroom work — just not in the next two years.
“I’m concerned about the confusion,” Phillips said, although he said he asked Campbell to amend the projects list from Monday to make the bottom line less.
Campbell also addressed Alderman Ken Marsh’s comment Monday that the initial proposal would mark the highest bond issue in the city’s history.
Campbell said that in 1992, the city issued $41.4 million in bonds, which in today’s dollars would be more than $50 million because of inflation. He said other bond issues were $18 million to $19 million.
Marsh said he should have said the proposal would be the largest in his 11 years on the BMA.
“We’ve never had an opportunity to get these kind of interest rates,” Campbell said.