Proposal suggests Loudon get loan for school program
By Hugh G. Willett knoxnews.com
LOUDON - The Loudon County Commission this week began to move forward with funding a long-awaited school building program.
During budget discussions last month, the commission declined to provide additional money for school operating expenses so that the money would be available for the building program.
Commissioner Austin Shaver presented a plan at Monday's commission workshop to generate a maximum of about $40 million to build new schools without the need for a property tax increase.
Shaver's plan starts with authorizing the county finance director to seek the best available rate for a 30-year loan. Based on his research, Shaver said that rates would range between 3 percent and 5 percent.
A 30-year loan would offer maximum flexibility in financially lean years, he said.
"We can always pay it off early," he said.
The loan would be paid for out of an education debt service fund, which currently contains about $4.5 million in reserves.
Getting the best rates on a new loan will require paying down some existing debt from reserves, Shaver said. The debt service fund is currently paying down three existing debts, which will require about $2 million to pay off or maintain service, leaving $2.4 million in reserves.
The fund will receive about $3 million per year in additional revenue from property taxes, which should be more than enough to maintain service on the $40 million loan, he said.
Commissioner Don Miller said that he basically agrees with the numbers presented by Shaver but wants to take a more cautious approach before committing to a long-term loan.
"I think it's too early to do that," Miller said. "We should go out for bids first."
Miller proposed allocating $1.5 million to take the building plan to the bid level.
"The main thing is to keep the project moving," he said. "The best way to do that is to do the necessary engineering work and get actual bids."
Some school board estimates for the building plan have come in close to $50 million. Miller said he is concerned that if the bids come in above the $40 million available, the school board will have to split the project up into several stages.
In such a situation, $40 million will be not enough to do the entire plan, but more than is needed to do part of the plan, Miller said.
Shaver said he feels that it is more important to give the school board a limit in advance so that the architects will have those limits in mind when they are preparing the plans.