By Jeff Keeling and Scott Robertson
Commissioner Joe Wise listens to Eldridge.
When Washington County Commissioners meet Monday to consider the county’s first-ever proposed capital investment and funding plan, including a 23-cent property tax increase, they won’t just need to sort through plenty of details, facts and figures.
First they’ll have to agree on what they’re actually talking about.
All parties agree that the plan envisions moving the county toward a mix of cash and debt to pay for its capital needs, reducing the burden on taxpayers through lower interest payments.
But does the 10-year, $145.8 million capital projects plan, authored by Mayor Dan Eldridge and Finance Director (and County Commissioner) Mitch Meredith, commit the county to actions beyond this year or is it simply a framework that future commissions can alter at will?
If the former is the case, then commissioners must decide if they have been given adequate time to consider making long-range decisions Monday night. The commission must also consider whether taking an additional year to vet the plan further could hurt the county because of an anticipated rise in interest rates.
If the plan, however, is simply a framework, with details still to be determined, then commissioners will likely question why they are being asked to approve one potential version of those details now.
The plan, as written, includes a funding scheme for Boones Creek School construction that would require an interlocal agreement with Johnson City. No such agreement yet exists (See “City commission” below).
During the Budget Committee’s Sept. 9 meeting, Eldridge and the four other budget committee members debated whether talk of different allocation sharing with the city was premature. Eldridge contended that it was.
Eldridge also called premature questions about most variables beyond simply whether a capital plan was a good idea and whether 23 cents, which raises $6.4 million per year, was the right amount to fund it.
The 23-cent increase, proposed for this year, would bring Washington County’s property tax rate to $2.20 per $100 of assessed value. It would increase the annual tax bill for the owner of a $150,000 home (near the county’s median) by $86.25.
Joe Wise, a third district commissioner who lives inside the city limits, disagreed with Eldridge’s desire to keep discussion to the merits of a capital plan and the tax increase question. Wise declined to vote to move the capital plan forward, saying too many variables have yet to be explained clearly to the commission – and to the city, which will be affected too. Those variables need to be explained and discussed, Wise said.
One of those variables is a forecast additional tax increase of 11 cents, factored in to the document starting in fiscal 2020. It would increase the annual capital projects funding to around $10 million. Another is a plan, envisioned in an agenda packet document provided to committee members and for some time advocated by Eldridge, to use some of shared revenue with the city to improve Knob Creek Road from Mountain View Road in Johnson City north and west past Boones Creek Road and on to Hales Chapel Road.
On Sept. 9, specifics tied to the capital plan’s future took a further step, with the construction of a new K-8 Boones Creek school near Knob Creek and Highland Church roads being essentially locked into place. It happened when commissioner Joe Grandy moved to amend a resolution funding land acquisition, site plans and other preliminary work – $3.6 million worth – connected with the school. Grandy’s amendment is that if the $3.6 million passes, “to require school construction to take place subject to a final cost estimate agreed to by the full commission, a successful bond offering, and a debt service funding plan.”
All of those things would get the county nearly halfway into its 10-year plan – and trigger a decision on how the bonded school construction revenues would be split with the city. Traditionally, when the county builds schools, it must borrow enough to provide a share for city school capital projects proportionate to the percentage of total students inside the county attend city schools. Currently, that percentage is 46.7.
The document backing up the capital plan shows the county taking out $54.36 million worth of 20-year education general obligation bonds starting in 2017. It shows Boones Creek school costs of $29.875 million, starting with land acquisition.
Of that nearly $30 million, $23.145 million would be borrowed, and the traditional revenue sharing – practiced statewide where counties also have municipal school systems within them – would result in Johnson City receiving $20.28 million for school capital needs.
The “Capital Projects Plan” included in budget committee members’ packets prior to the Sept. 9 meeting, though, shows a different approach. It envisions $31.217 million going to the city – $14 million in 2017 and $17.217 million in 2018. And Eldridge acknowledged in a Thursday interview with News and Neighbor that the $14 million is envisioned to go toward city school capital needs, but the $17 million would be for Knob Creek Road improvements.
This unconventional approach would require an interlocal agreement between Johnson City and Washington County.
Eldridge said Thursday he had confirmed with the University of Tennessee’s County Technical Assistance Service that such an approach would pass legal muster.
Eldridge maintained that the commission’s main focus should be whether a capital investment plan is a good idea, and whether a 23-cent tax increase should be passed to fund it. “If they adopt the plan and approve the tax levy, then the next step is, fill in the projects,” Eldridge said.
In the same discussion, though, he advocated strongly for specific decisions down the road that would be up to the commission – including funding of the Knob Creek Road improvements through an interlocal agreement. An economic impact study completed early this year projected that residential and commercial property tax growth from development would begin offsetting borrowing costs for that money in the ninth year after “build out” begins.
The project, Eldridge said Thursday, would create, “a very significant economic impact, to the tune at full buildout of more than $10 million a year in new revenue to the county, and Johnson City is something similar to that between sales and property tax.”
Not funding the project, Eldridge said, means, “you’re saying, ‘in a flat revenue environment, we are going to max out the indebtedness of Washington County (around $287 million) with no means remaining to stimulate growth in this county.’”
Details of the capital plan from the budget committee’s agenda packet will be linked at the end of the online version of this story, jcnewsandneighbor.com/capitalbudget.
For a PDF version of the plan, please click here.
City commission opts to weigh in on county plan
By Jeff Keeling
Johnson City commissioners agreed Monday to send a two-pronged message to the Washington County Commission regarding its proposed capital improvement plan and tax increase: Let us help determine a fair amount for city school capital needs, and let’s all have a discussion about the most effective projects for economic development funding.
The latest written county capital plan envisions money borrowed for a new K-8 school in Boones Creek being shared with the city not solely for city school capital needs, as is the tradition (see related story above). Instead, it envisions $14 million for city school capital needs and $17.2 million for a Knob Creek Road improvement project north and west from State of Franklin Road in Johnson City through Boones Creek Road to Hales Chapel Road.
With the county commission set to vote on the plan and a 23-cent tax increase next Monday, city commissioners agreed at their Sept. 14 agenda review meeting that the city schools’ needs could exceed $14 million. They also suggested the Knob Creek Road project is only one of at least a handful of potential economic development initiatives that could benefit both the city and county. And all seemed eager to discuss these topics with county representatives.
Commissioner David Tomita, who also serves on the county commission, said he thought the vote would occur regardless of city commissioners’ or anyone else’s interest in taking more time to discuss it. But, he said, a city commission statement of some sort probably wouldn’t go unheard.
“I think one of the larger items on there that may affect the outcome on Monday is if we’re, number one, open to an interlocal agreement, to use a portion of those proceeds for economic development,” Tomita said. “And if so, what those items are.”
City Manager Pete Peterson said several potential projects could compete with Knob Creek improvements for their degree of economic impacts. He mentioned the Young Farm property on the east side of the Boones Creek exit at Interstate 26. Commissioner Jenny Brock mentioned the possibility of new industrial park development – a hot topic last year when about 200 acres near the Appalachian Fairgrounds in Gray was being discussed.
Brock also spoke most strongly about making sure the city schools’ needs were considered.
“I think it’s very important we make a vocal statement about the educational share and that it’s needed, that we have a very clear understanding of what our schools need of that revenue and that if there’s anything left over, we have the willingness to consider striking a deal for an interlocal agreement,” she said. Brock also said the discussion shows the need for a functioning city/county liaison committee.
In the end, commissioners decided to draft a letter to the county commission stating they’re unsure how the county came up with the $14 million school capital amount (it is listed in the schools’ five-year capital plan), and that city commissioners have not had a discussion with county Mayor Dan Eldridge regarding whether or not the Knob Creek Road project is the best use of economic development dollars, if there were the willingness to explore an interlocal agreement.
