The city of Crossville is moving forward with refinancing $48.6 million in debt. Financial advisor Larry Kidwell hopes to have the sale of bonds ready to close in November.
“You’re going to have level debt service,” Kidwell told the council during its audit committee meeting prior to the council’s regular meeting Tuesday. “In restructuring debt in the water and sewer system, and adding new indebtedness is taking your maximum debt service requirement from about $2.475 million down to about $1.45 million.”
The bonds will include payments on various city improvement projects, like street lighting in downtown, various water line upgrades around the city, relocating utilities for state highway projects, and a sewer system project to prevent rainwater from infiltrating the sewer system.
It will also ensure the city has the capacity to borrow more for some projects on the horizon, like raising the dam at Meadow Park Lake.
“You should be able to add that additional indebtedness, and the debt you would have then, the max annual (payment) would still be less than you’re paying now,” he said.
“That’s a wonderful exercise in planning and resilience. There’s so many communities who don’t think out that far and plan for sustainability.”
The state has approved the city’s bond issuance. Next, the city will have a call with Standard and Poor’s, a credit rating agency. The city earned a AA- rating in 2012, and Kidwell thinks it’s possible the municipality may qualify for an upgrade.
“They look at economic factors and financial management factors,” Kidwell said. “I think it would have been a lock without COVID … In the general fund, averaged over the past five years, growth has been over 10%, and that’s strong. You’ve got strong operating balances.”
The rating should be set in the next couple of weeks. The city’s bond rating impacts the interest it will pay on the debt.
Councilman J.H. Graham III moved to approve a resolution authorizing the issuance of bonds and a initial resolution authorizing the issuance of bonds, required to move the bond sale forward. The motion was supported by Councilman Art Gernt and unanimously approved.
“We look forward to a good sale and something that will be good for the city for years to come,” Kidwell said.
In other business, the council approved the following items:
•amendments to the U.S. Department of Agriculture Rural Development loan for $419,500 for construction of a water tank for the Catoosa Water Department
•contract with GRW Engineers Inc. to provide engineering services for a Community Development Block Grant sewer system improvement project
•contract with Community Development Partners for administrative service on the city’s CDBG sewer system improvement project, at a cost of $39,000
•contract for engineering and professional services with Hussey Gay Bell for utility relocation on two phases of the Hwy. 127 N. road improvement projects, from Potato Farm Rd. to near Hollow Lane and from Hollow Lane to near Lowe Rd.
•second reading of a budget amendment recognizing $30,000 in additional grant funding for operational expenses at Crossville Memorial Airport
•change order for the Miller Ave. sewer line project to rebore Miller Ave. with a new sewer line casing, at a cost of $10,750
•$210,000 budget amendment to purchase and install a master meter at Meadow Park Lake water treatment plant
•bid of $194,000 for installation of master meters at Meadow Park Water Treatment Plant submitted by Ironwood Construction and Engineering, LLC. City Manager Greg Wood told the council the low bid, $174,000, was submitted by a company that did not complete its last project with the city, resulting in additional costs for work and legal fees
•contract amendment with the Tennessee Department of Transportation for section 3 of the Northwest Connector for additional surface transportation block grant funding, increasing the amount of the right of way acquisition phase to $1.2 million with a 20% local match
•purchase of drum screens for the sewer treatment plant at a cost of $7,287