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Kingsport BMA postpones bond issue

July 23rd, 2013 9:50 pm by Matthew Lane

Kingsport BMA postpones bond issue

KINGSPORT — The Board of Mayor and Aldermen is not fully comfortable issuing nearly $29 million in bonds to fund the 2014 capital improvement plan, especially since the actual cost of two of the most significant projects on the list is unknown at this time.

City leaders spent a good 30 minutes or more discussing the proposed bond issuance during a work session Monday afternoon, weighing the pros and cons of moving forward with the issuance or waiting until better numbers are determined on the cost of the new softball and baseball complex and the J. Fred Johnson Stadium expansion.

The ballfield complex is a late minute addition to the 2014 CIP and comes at the request of Eastman. The company recently announced plans to build a new office building on the site of its existing ballfields on Wilcox Drive. Kingsport plans to incorporate Eastman’s baseball and softball leagues into its existing parks and recreation leagues next year.

Kingsport has estimated the cost of the complex at $3.5 million, but city and elected officials admit the actual cost is unknown at this time.

During Monday’s meeting, Alderman Tom Segelhorst said he does not see $3.5 million being enough,  and Mayor Dennis Phillips said the BMA would have egg on its face if the $3.5 million turns out to be $4.5 to $5 million.

“We do not want to get into another aquatic center situation and have to go back and borrow additional money,” Phillips said. “Why can we not, before we sell these bonds, get a better idea of the cost of the ballfields?”

Alderman John Clark asked about the business case for the ballfields, how firm the $3.5 million estimate is and if projected revenues have been determined.

“(A business case) would help us ensure we’re spending money wisely,” Clark said.

The other wrinkle in the bond issuance decision is the cost of the stadium project. The BMA would like to see it kept at $4.4 million in light of recent bids coming in more than $1 million over the original estimate. The BMA has directed City Manager John Campbell to see if a company would be willing to do the project at $4.4 million.

To date, such a company has not been found.

“We’re hoping to attract some other interest,” Campbell said, noting he could come back with better numbers on the stadium by the BMA’s first meeting in September. “We’re trying to figure out the process to get as close (to $4.4 million) as possible.”

Vice Mayor Mike McIntire said he would be willing to have a called meeting if the numbers were in by the middle of August, as Campbell has indicated. Alderman Jantry Shupe, a strong proponent for the stadium project, said doing the project is not an option.

Phillips asked about the repercussions of putting off the bond issuance for 30 days to allow the city time to come back with better numbers for the two projects.

“I know a piece of land is being considered (for the ballfields) and we’ll have an answer in 30 days. If so, there’s a real chance of the work getting done (by spring),” Phillips said. “And could we get the stadium costs in 30 days too?”

Campbell indicated that could be done. Ultimately, the BMA deferred action on the $28.9 million bond issuance during Tuesday’s regular meeting; a separate $1.3 million bond issuance for the refinancing of the Kingsport Aquatic Center’s lazy river was also deferred.

The 2014 CIP  —  which the BMA has yet to officially approve  —  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.

While the stadium and ballfield projects are giving the BMA heartburn in determining whether to move forward with the bond issuance, most everyone agrees the city needs to move forward with the water and sewer projects in order to meet the deadline for providing services to the annexed areas.

Public Works Director Ryan McReynolds said on Monday his department could fund the annexation work through the water and sewer reserves and pay back the money with the bond issuance.

“We all realize this is not something anyone on the board is comfortable with,” Phillips said of the overall bond issuance. “If we could wave a magic wand, we would not do this.”

Then Phillips continued by pointing out how Eastman could have just as easily gone somewhere else with its corporate headquarters and how many people went to bat for Kingsport.

“These ballfields have a major impact on the employees, the parks and recreation department and the visitors bureau,” Phillips said. “We need to continue to show enthusiasm on the decision made by Eastman. If we had to put off things, I’d rather it not be the ballfields.”

McIntire said he worries about the cost of the ballfields and the stadium project, which stands at a minimum of $7.9 million.

“I wish we had a plan and knew what we’re going to do. The reality is we don’t know what we’re going to do,” McIntire said.

“Let's say we don’t do it. How many people will make the decision to not live here? What is the cost of not doing this?” Alderwoman Colette George said. “In the long run we have to do these projects.”

Phillips said the BMA agrees the projects need to be done, but the board needs to know the figures.

“I’m willing to do them, but I need to see some better numbers,” Phillips said. “Before we sell bonds, I need to know if we can do the stadium for $4.4 million and the ballfields for $3.5 million.”


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