By a unanimous vote Monday night, the Oak Ridge, Tenn., City Council approved the issuance of $13.75 million in city general obligation bonds to pay for three construction projects, a move which may, by the city staff's estimate, lead to an 8-cent property tax rate increase.
Council's action did not, however, commit the city to this increase or directly increase the tax rate.
Mayor Warren Gooch, Vice Mayor Rick Chinn and Council members Ellen Smith, Chuck Hope, Jim Dodson and Kelly Callison approved the measure unanimously. Callison made the motion and Smith seconded. Council member Derrick Hammond was not present at the meeting because of a personal commitment.
The construction projects are for a new senior center building, a new Oak Ridge Schools preschool building and renovations to Scarboro Park. The city approved the same contractor for all three of these projects with two contracts.
One contract is $8.41 million for construction of the preschool and the Scarboro Park renovations. The park renovations are included with the preschool contract because the new preschool will occupy some space in that park and displace some of the current park's amenities.
The other contract is a $2,683,035 contract for a new senior center building in A.K. Bissell Park to replace the current senior center inside the Oak Ridge Civic Center.
With both contracts, City Manager Mark Watson may sign change orders to increase the city's commitment for up to 5% more of each price if necessary.
The contracts did not include furniture for either building. However, Watson stated in the same memo that the city recommended $400,000 in furniture for the preschool and $100,000 for furniture for the senior center.
Watson stated the estimated future property tax impact for paying back the principal, premium and any interest on these bonds will be eight cents added to the existing $2.54 per $100 of assessed property value.
City Council raised the rate by two cents this year, from $2.52 to $2.54. Watson had earlier recommended that increase in order to pay back bonds related to these costs.
Under the resolution, the city will pay back these bonds in 2043.
The resolution, rather than stating there will be an 8-cent property tax rate hike, states that the city "shall annually levy" a property tax "sufficient to pay principal of, premium, if any, and interest on the bonds when due."
Watson said in an interview that the resolution does not mean taxes will immediately go up. The city will still make tax decisions "annually during budget time." Also, he said, other sources of revenue or more people paying property taxes through the purchase of new homes might decrease the amount the city will need to raise the property tax rate. He also said the increase would be gradual rather than all at once.
Still, he predicted an increase.
"If there's no intent to raise taxes at all, then we should not go ahead with this project," he said, repeating what he said he had told the Oak Ridge Board of Education earlier.
Finance Director Janice McGinnis told The Oak Ridger the city had previously set aside a $1 million bond issue from 2017 for these projects, but now those funds are going toward fixing a roof at Robertsville Middle School.
During the meeting, Council member Callison, who is also on the city Budget and Finance Committee, spoke in favor of repairing that roof.
"I think it's money well spent," he said. "We can get it done all in this year and secure the school."
The meeting's agenda, which includes more information on the city's debt service over time, the costs related to the preschool and senior center and roofs of city buildings with issues can be found at www.oakridgetn.gov.
