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Kingsport set to issue $28.9M in bonds

July 9th, 2013 10:12 pm by Matthew Lane

Kingsport set to issue $28.9M  in bonds

KINGSPORT — The Board of Mayor and Aldermen took the initial step Tuesday night toward issuing $28.9 million in bonds, money that will eventually be used to fund the city’s 2014 Capital Improvement Plan.

Of course, the BMA probably needs to approve the plan at some point.

The 2014 CIP stands at approximately $28.3 million. Nearly $4.4 million is earmarked for water fund projects, including line upgrades for the annexations in Rock Springs and Colonial Heights; just over $10 million is allocated for sewer projects with the money roughly split for annexations and the Reedy Creek sewer trunk line.

Kingsport City Schools will receive $1.2 million for capital projects, $400,000 is for the purchase of a third ladder truck and the rest of the money is for general fund projects, with the most notable ones being the J. Fred Johnson Stadium renovation and the creation of a new baseball and softball complex to replace the fields owned by Eastman Chemical Company.

Eastman plans to build a new office building on the site of its existing ballfields on Wilcox Drive,  and Kingsport plans to incorporate Eastman’s baseball and softball leagues into its existing parks and recreation leagues next year.

During the BMA’s regular meeting Tuesday night, city leaders voted unanimously to approve an initial bond resolution for $28.9 million. The $600,000 difference is to cover the costs associated with issuing the bonds.

Included in the resolution was a separate, $1.3 million bond issuance for the Kingsport Aquatic Center’s lazy river, essentially a refinancing measure, according to the city’s finance department.

Tuesday’s action by the BMA is basically Kingsport “expressing an intent to issue debt,” said Finance Director Jim Demming, noting the next step would be a detailed resolution to conduct a sale of bonds. Demming added the $28.9 million figure could be reduced before the bonds are sold, done at the BMA’s discretion by removing projects from the CIP.

A detailed resolution could come before the BMA as soon as its next regular meeting on July 23.

City Manager John Campbell reminded the BMA on Monday a final decision on the 2014 CIP needs to be made before Kingsport advertises the bonds. That could also be done at the July 23 meeting.

The BMA had a number of concerns about the CIP Monday afternoon  —  the overall cost and how it runs afoul of an earlier BMA pledge in which any new debt issued next year would not exceed the amount of debt rolling off the books. The proposed general fund debt next year is more than double what’s rolling off in 2014 and 2015.

“This is a lot of money,” said Mayor Dennis Phillips.

Alderman Mike McIntire said he has a real problem with the general fund debt in the proposed bond issuance, with it being $7 million more than the roll-off.

“What’s going to come next year?” McIntire said. “I worry about the debt big time and us going back on our pledge.”

“It’s always a hard thing to put a rule in place because you never know what will come up,” Campbell said of the BMA’s pledge.

Alderman John Clark questioned whether the BMA would be disciplined enough next year to live within its means if the bond issuance is approved this year.

Vice Mayor Tom Parham pointed out if the stadium and ballfield projects were removed from the CIP, then the final figure would be within the debt roll-off next year.

Tying in to the total cost of the CIP, Kingsport does not have an estimate on what it would cost to build new ballfields, nor does the city have anyone on board to do the stadium work for $4.4 million. 

The low bid for the stadium project came in at $5.6 million,  and Campbell plans to see if anyone would be willing to do the work for a guaranteed maximum price of $4.4 million.

McIntire called the ballfield estimate a “wild guess” and questioned the $4.4 million number for the stadium.

Alderwoman Colette George argued in favor of the funding for the stadium and the ballfield projects, saying the cost will only go up next year.

“I don’t think (interest) rates will be as low next year as they are today. I would like having some type of agreement with the schools on their participation in the project,” George said.

The agreement in question deals with any potential revenue stream generated from the sale of the additional seats proposed for the stadium. The estimated cost of the new seats is $1.6 million and Campbell has indicated the funding for the seats could come from donations or special sales.

Board of Education President Randy Montgomery said the city, school and Kingsport Chamber of Commerce officials have met and discussed this issue. Campbell said a framework agreement between the parties could be worked up soon.

In other business Tuesday night, the BMA selected McIntire to serve as vice mayor, edging out Parham, who has held the position for the past two years.

Kingsport’s charter calls for the BMA to select an alderman after the May city election to serve as the vice mayor for the next two years.

The first nomination during Tuesday’s meeting came from Alderman Jantry Shupe who nominated Parham. Parham seconded the nomination. However, the remaining five BMA members voted “nay.”

Then, newly sworn in George nominated McIntire to be vice mayor with Alderman Tom Segelhorst seconding.  Parham voted “nay,” Shupe abstained from voting and the remaining five members of the BMA voted in favor of McIntire.

McIntire has served on the BMA for two years and received the most votes of any alderman during the 2011 city election.


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