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.