Thursday, Septemer 29, 2011
Mayor seeks support of projects
By SUE WATSON
Holly Springs Mayor Andre’ DeBerry asked the board of aldermen for support of a progressive investment and development capital plan at the September 20 meeting.
He said long-standing problems in the city’s infrastructure not only should be solved from the standpoint of safety and risk exposure, but also to help make the city attractive for local citizenry and for potential industrial and business growth.
His plan, prepared by the consulting law firm Watkins Ludlum Winter & Stennis, calls for a 1 cent on the dollar sales tax to raise $8 million in revenue for a variety of projects, and another $13.21 million in street improvements and sidewalks. He proposed to phase in the street improvement projects and to pay for them with general obligation bonds, utility bonds and/or special assessment bonds. The mayor said a combination of bonding mechanisms could be used if more than one is needed, and possibly all three, to pay off the street projects.
The board and mayor engaged in an in-depth discussion of the advisability of this strategy to spur economic development and also the timing. DeBerry argued the proposed projects would take years to get to the “trigger point” where there would be no going back. In the meantime costs of capital improvements are escalating and getting projects through the process can take years.
Some of the salient points of discussion follow:
• The mayor said the city has tried to address improvements in the city piecemeal out of necessity and his proposal would not dip into the city’s operating budget. It would pay for large equipment and facility outlays in the $8 million that would be paid for by a local and private bill, an approach that would take several years at best to put into action. The city already has a local and private bill that allows the city to collect 2 cents on every dollar in sales tax to pay off the loan on the multi-purpose building and to support tourism. Each gets 1 cent of the special sales tax.
Included in the $8 million expenditure would be a fire station facility on the south side of the city, a new pumper, several large pieces of equipment for the street department and shop, improvements in the parks and addition of parks, money to buy land, landscape, and improve drainage in a number of areas, vehicles for police and building and grounds, and a $3 million thoroughfare project for West Boundary Extended and Mary Rhea Drive.
The $13.21 million would be for milling and overlay of streets, repair of sidewalks and for additional new sidewalks throughout the city.
• DeBerry said the plan “appears to be a substantial bite, but is needed for esthetic purposes, as a recruitment tool, and for safety.
“We all know that has been a great concern of your constituents who ask, ‘When are you going to do something about streets, sidewalks, parks?’”
• Alderman Russell Johnson was concerned about performance on existing projects such as the Chalmers Institute and Hill Crest Cemetery improvement grants. But his greatest concern, he said, was to assess where the city is with its current indebtedness before making any decision on the mayor’s plan.
• Alderman Calvin James was concerned about damage being done by log trucks and other truck traffic to the streets as they wind through the main city thoroughfare -- Memphis and Craft streets.
• Alderman Johnnie Ree Bagley-Johnson was concerned with outstanding bond indebtedness the city “will be paying on down the road.” She was concerned the debt could be so great that the city would have difficulty even paying the interest.
• R. Johnson wanted to know if the bonds would be purchased all at the same time or would the bonds for street work be phased in. He didn’t think it would be wise to have the bond money sitting there and wanted to know if the city would be paying interest on it while it was waiting to be spent. He also wanted to know if the city could invest the bond money and draw interest while it awaited application to specific projects.
• DeBerry explained that he didn’t need a motion to engage in the bond purchasing now but to initiate the project and begin moving it forward.
Johnson responded that the board needs to know the financial situation in the city now, which includes paying off debt on the police station, and a CAP loan on the south side of town, and with a short reserve of only about $150,000.
“Each year we move money out (of reserve) and never put money in,” he said.
• James asked what is the likelihood the Legislature would not approve a local and private bill for an additional 1 cent sales tax.
“It would be putting the cart behind the horse,” he said, if the board approved the plan without first getting the local and private bill approved.
“You can’t get permission to move until you guys give me the permission to move,” the mayor replied. “The Legislature will be in session in four months and we need to get this before the budget committee soon.”
• James wanted to know what the city would have to pay interest on, and DeBerry said only on the general obligation, combined utility project, or special assessment bonds.
DeBerry answered that he needed board approval in order to move forward on the concepts in the plan.
“The longer we wait, the more teeth we are going to have to pull,” he said, using the metaphor of dentistry to illustrate his point.
“There is no way a community can sustain itself unless it invests in itself,” he said. “There are some basic things we have to do, like places like Tupelo have done. It’s not just about looking good. We’ve got some serious liability out there and complaints about deplorable conditions, breaking axles. We can’t continue to stand still. The cost is going up and we have to deal with it.
“We all have said we will have to do something about the city. This is just capsulated and the numbers were crunched by financial experts. Nothing will happen (in the Legislature) before next July and so it is already 12 months down the road.”
• Alderman Garrie Colhoun wanted to know where the city stands on existing projects and then clarified that there are two big projects in the proposed initiative.
“You add 13 and 8 and you got a pretty good chunk of change,” he said.
He said the life expectancy of a street before it needs maintenance is seven years, whereas these proposed bonds may take 20 or 30 years to be paid off.
“Where is the money coming from to maintain the roads (after they are rebuilt)?” he asked.
He added that the city is just losing a grocery store that pulled in sales taxes and property tax, too.
DeBerry said the financial experts will be able to advise the city on tax revenues and if the bonds are feasible to pay off.
• “I am in agreement we have to do something,” said James. “I just don’t want to make a complete commitment.”
• Alderman Harvey Payne asked if the city has to pay the financial consultant who built the plan and crunched the numbers.
DeBerry said the law firm gets no pay unless the projects are acted upon in the plan.
Payne said he thinks the 1 cent sales tax would be fair but he didn’t know if he was in favor of $13 million in bonds and does not know how that works.
• Johnson asked to table the issue until the aldermen could learn more about it.
“At what point will the citizens let us know ‘we don’t mind being taxed?’” he asked.
Bagley asked for a list of the city’s bonded indebtedness.
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