City Poised to Issue Bonds for $2.7 Million Police Department Construction Project

May 28, 2020
By: Dwayne Page

The City of Smithville is now prepared to issue up to $2.7 million bonds for construction of a new police department building.

During Monday night’s regular monthly meeting, the aldermen voted unanimously to adopt a debt management policy and an initial bond resolution in preparation for the issuance of bonds. The vote was 4 to 1 on the more detailed bond resolution which actually authorizes the issuance and sale of general obligation improvement bonds not to exceed $2.7 million. Alderman Brandon Cox voted against it. The action came prior to first reading passage of the city budget for the 2020-21 fiscal year which includes debt service funding of $172,310 or less for the first year of the project.

Scott Gibson, Senior Vice President of Cumberland Securities Company, Inc. in Knoxville, addressed the mayor and aldermen Monday night on what these resolutions mean.

A debt management policy provides guidelines for the issuance of bonds and other forms of indebtedness to finance necessary capital construction.

“This is something the state mandates that every city has and we wanted to make sure that Smithville has a debt management policy in place. This policy has been used statewide. It’s a fairly robust policy. It lays out what kind of debt is out there and what you will and will not do. It basically says you will do traditional level debt and not a balloon debt. You can do variable rate debt but we limit that to about 25% of your debt portfolio. Right now you don’t have any city back debt. You do have some water and sewer debt. That is generically what it is,” said Gibson.

The initial bond resolution is also mandated by state law, according to Gibson.

“It basically says what you are going to use the money for. The interest rate that you are pledging your full faith and credit to and the taxing power to the repayment of the debt. We will have to publish this resolution and there is a protest period. The citizens have a right to protest the issuance of the debt if they get a petition together. The only purpose of this resolution is to give citizens a chance to speak on it,” said Gibson.

The more detailed bond resolution specifies that the city not exceed $2.7 million worth of debt for the construction of the new police department building project.

“It lays out the terms, conditions, and how the bonds will be issued and paid. It is fairly detailed. By adopting this resolution you will be ready to move forward with the bond issue to raise money for your project and we will continue to go down that path,” Gibson added.

The Boyce Ballard Construction Company of Murfreesboro had the lowest bid for the construction of the new police department building at over $2.6 million for a total roofed area of 12,800 square feet which includes a 1,400 square foot sally port. Although the cost may still be trimmed somewhat the city has budgeted the full amount to be funded by a bond issue with a projected payout schedule of over 20 years and at a debt service payment the first year (2020-21) at $172,310 or less.

Plans are to build the new police department on the north side of the city hall/fire department complex at Don Cantrell Street on land donated to the city.

The proposed facility encompasses a front lobby, records clerk office, hallways, three holding cells, armory, conference and training rooms, offices for the chief, captain, detectives, and other officers, rooms for records, evidence, investigations, filing reports, locker room, electrical room, closets, restrooms, break room, and a sally port.

June 2, 2020
By: Dwayne Page

For any DeKalb Middle School student who will be going into 7th or 8th grade only this coming year, if you are interested in joining the DeKalb Middle School Cross Country team please email Coach Kristen Van Vranken at:

kristenvanvranken@dekalbschools.net

Please make contact no later than June 15th.

June 2, 2020
By: Dwayne Page

Funding for construction of a new police department building and the creation of another paid firefighter position are among the extras included in the new 2020-21 fiscal year budget which was adopted on first reading Monday night by the Smithville Board of Aldermen.

The vote was 4 to 1 in favor. Alderman Brandon Cox voted no. Second and final reading on the budget will be held at the next meeting.

After a 25 cent property tax increase a year ago, the city apparently has ample funds in the general budget to operate for the next year. The city ended the fiscal year in June 2019 at $38,235 in the red. By the close of the 2020 fiscal year on June 30, the city is projected to finish in the black by $413,141 and by almost that much again in June 2021.

Alderman Cox expressed several concerns about the budget Monday night and questioned whether the city might be overly optimistic in the revenue projections for the coming year without taking into account the economic impact of COVID 19 on tax revenues, particularly sales taxes.

Cox said other cities are anticipating up to a 10% reduction in revenues because of the pandemic effects and questioned if the Smithville should not do the same and adjust the budget accordingly. Janice Plemmons Jackson, the city’s financial advisor, said its difficult to forecast the impact COVID 19 may have but even if Cox is correct, the city is expected to still generate a surplus of more than $300,000 by the end of June, 2021.

Although the city general fund is in good financial condition, the water and sewer fund, at least on paper, is a different story.

Water and sewer rates were last increased in 2017 yet the city is about to finish its second year operating in the red which may force the mayor and aldermen to take another look at rates again next year (2021-22) .

According to the budget, the city’s water and sewer fund finished in the hole by $72,748 in 2019 and is projected to be in the red by $162,371 come June 30, 2020. Next year the problem is expected to be even worse finishing at a deficit of $246,821 But those numbers are somewhat deceiving in that revenues are projected to actually exceed cash expenditures next year by more than $548,000 not counting depreciation. However the state requires a utility to account for depreciation even though it is a non cash expense. When the city’s water and sewer depreciation expense totaling $795,000 is figured into the equation, the department is then expected to show a loss of $246,821.

Under state law, if a utility continues to operate at a loss for more than two years and doesn’t address it, the state has the authority to force rate increases to make it solvent. The mayor and aldermen may soon commission a rate analysis to essentially give the basis for a plan of action to address the concern should the state’s water and wastewater financing board become involved.

The proposed budget keeps the property tax rate at 89.9 cents per $100 of assessed value. Current water and sewer rates will be kept at the same level. City water customers currently pay $7.25 per thousand gallons of usage. Rates for customers outside the city limits are $10.88 per thousand. City sewer customers pay $6.75 per thousand gallons.

The largest city spending project is construction of a new police department building. The Boyce Ballard Construction Company of Murfreesboro had the lowest bid at over $2.6 million for a total roofed area of 12,800 square feet which includes a 1,400 square foot sally port. Although the cost may still be trimmed somewhat the city has budgeted the full amount to be funded by a bond issue yet to be authorized with a payout schedule over 20 years at a debt service payment the first year (2020-21) at $172,310 or less.

The new budget also includes funding for:

* A 2% cost of living pay raise for city employees except for police officers stepping to a higher level on the department’s five tier wage scale

*Another paid firefighter position at $40,876 (salary and benefits)

*2 new Dodge Charger police cars: $62,000

*New chipper truck with bed for the street department: $60,000

*New pickup truck for the fire department: $35,000

*$150,000 for street paving

* State COVID-19 grant: $135,774 to be spent as follows :$70,000 for tornado warning sirens, $43,000 for 16 air bottles and 10 sets of turnout gear for the city fire department, $14,000 for city hall roof repairs, $2,000 for two in car radios for the police department, and $5,500 for office computers at city hall.

* Airport: $527,725 grant for obstruction clearing and $30,000 Airport CARES grant

* $35,000 to the U.S. Army Corps of Engineers for cost of repairs being made at Center Hill Dam. Under federal law, water utilities permitted by the Corps to draw water from lakes, including Center Hill are required to share in the costs for making repairs. Smithville is authorized to draw from the lake approximately two million gallons of water a day.

Although E911 director Brad Mullinax had requested the city up its annual contribution to the DeKalb County Emergency Communications District by $45,000 to fund another dispatcher position, the city will keep its contribution at the same level of $120,000 this coming year with no increase.

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