The decisions were made in a recent joint meeting of the LCUB board and the Lenoir City Council. All the members of the city council are also LCUB directors.
The resolution supporting land acquisition for a new headquarters building authorized the purchase of 2.7 acres from the city.
The property, located at Broadway and Hill Street, is valued at $950,000, according to an appraisal issued by Knoxville real estate consultants Woodford & Associates. The property was originally purchased by the city for use as a new city hall.
According to LCUB management, the current headquarters building, built in the late 1950s is inadequate for current and future needs.
"Were just out of space," said LCUB General Manager Shannon Littleton.
LCUB, which serves 60,000 customers, has grown considerably, with more than three times the number of employees compared to when the building was new, Littleton said. The building is also in poor condition and requires heavy maintenance.
"It's dilapidated and it costs a lot to keep it operational," he said.
The new building, which should cost about $10-$15 million, will be paid for out of revenue from the electrical utility, he said. There will be no significant rate increase associated with the new building.
"If we can't build it with no increase or anything more than a very small increase, we won't build it," he said.
The LCUB board and the city council also approved the issuance, sale and payment of three year capital outlay notes not to exceed $10 million. The electrical revenues of LCUB are pledged for the payment of principal and interest on the notes.
Although LCUB has been operating debt free, the utility occasionally runs into cash flow issues on a month-to-month basis, especially when revenue fluctuates due to seasonal demand, Littleton said.
The bonds will be issued as needed to help meet operational and some capital expenses. The debt should be paid off within three years, he said.
One large expense is the installation of automated meters throughout the customer base. LCUB is spending up to $30,000 per week to install the new meters, which can communicate wirelessly with headquarters. The new meters save money and decrease response times to outages, Littleton said.
Another project that will need funding is the construction of a new power substation on Northshore Drive in West Knox County. The substation will require a multimillion dollar investment he said.
Lenoir City also recently approved the purchase of the SunTrust Bank building for use as a new city hall. The building, for which the city paid $720,000, will be ready for occupancy early next year.