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Board postpones action on $5 million bond issue for Public Works projects

By Bill Short

Flag City LogoThe Millington Board of Mayor and Aldermen voted this week to postpone action on a $5 million bond issue intended to fund Public Works projects.
Board members took the action Monday night during their regular monthly meeting on a motion offered by Alderman Bethany Huffman and seconded by Alderman Mike Caruthers. The motion was passed by six affirmative votes, with Alderman Hank Hawkins absent.
Huffman asked City Manager Ed Haley and Finance Director John Trusty to prepare a “detailed list” of the Public Works projects that “absolutely need” to be done and present it at a “work session,” so the board can “get some clarity on what that involves.”
The tabled resolution will be placed on the agenda for the board’s Aug. 10 meeting.
It would authorize the city to incur $5 million of bonded indebtedness by the execution of a loan agreement with the Public Building Authority of Clarksville to provide the funding.
During discussion shortly before the vote, Caruthers noted that $3,789,000 in interest would give Millington a total indebtedness of $15,228,458. When the alderman asked how that would affect the city’s bond rating, Trusty said it has “historically” never had one “per se.”
“We looked at getting one before this issue and were advised that we did not need one,” he noted. “And because of the cost of obtaining a rating, we decided not to do that. So, with or without a rating, the interest rate would be the same in our case.”
While acknowledging that “improvements” are needed in the city, Caruthers said the “bigger issue” is how they will be financed.
“My big concern is that we’re taking money that we had intended to put into the schools and are using it for debt service to pay this until 2036,” he noted. “So, what happens when the school board comes in with its Capital Improvements Plan and needs to borrow $10 million or $5 million? Is the city going to be able to do that, or are we just going to have to blow it off?”
Trusty said Millington repays the principal on its debt each year, which rebuilds its debt capacity. And under its debt policy, that capacity is also increased as the city’s tax base grows.
He also said that, under Tennessee law, there is “no limit” to Millington’s debt capacity.
“We have created our own internal limit in our debt policy,” he noted. “And we have attempted to be very conservative in that.”
When the board wants to issue additional debt for the school system or “anything else,” Trusty said, it will choose whether to increase that capacity.
Caruthers said the “most successful businessman” in Millington is seeking to sell many of his businesses “because of what’s going on in this city.”
“He said there’s absolutely nothing in this city to bring new residents into town except for a school system,” the alderman recalled. “So, if we don’t have the best school system in Shelby County, we’re going to wither on the vine.”
While he praised the Millington school system’s students, teachers and Central Office staff, Caruthers noted that it does not have “great facilities.” He said the board has to understand how important those facilities are to the city’s future.
Although he acknowledged that improvements are needed for the streets, Caruthers said they are not what will bring new residents into the city.
“We need to have the best school system possible,” he said. “In order to do that, we’ve got to have the best facilities possible, and we don’t have them.”
Aldermen Chris Ford and Thomas McGhee also expressed discomfort with the proposed bond issue.
Ford said he is a native of West Memphis, Ark., where the current school superintendent, principals and teachers are “good friends” who graduated with him. Although he thinks they “run a great school system,” he noted that the city’s population has decreased by 4,000.
“People like me want to get educated and never go back,” he said, “because the city is in disarray.”
Ford said neither the Millington city board nor the school board is in a position to give all the money to one party.
“Everybody has growth needs,” he acknowledged. “It’s our job to make sure that this money can be spent conservatively for the best interest of not only the schools but the residents of this town.”
Ford said both boards must understand that they have to use the money from the half-cent sales tax increase and “grow together.”
“If one thrives and the other fails, we all lose,” he said. “I come from a municipality that proves it.”
Because the city board has “issues” that it must address “incrementally,” McGhee said it cannot “throw everything” it has at only one of them. He noted that it needs to manage all the city’s finances in a way that is “responsible” to all the residents.
But the alderman also said he does not want to “lock up” all the money, which would prevent the school system from receiving it if it is needed.
“I need a little more information before I’m going to be in agreement with a bond issue,” he concluded. “And I’m far, far away from a tax-increase vote.”

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July 2015
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