City approves restructuring of debt

By Julie Fann
Star Staff
jfann@starhq.com

  
The Elizabethton City Council on Thursday approved that $11.5 million of water and sewer debt be re-financed and extended for 10 years by using short-term and long-term bonds. City finance director Brad Moffitt explained that restructuring the debt was necessary to get the city in compliance with state mandates. Otherwise, there would have been a large increase in expenses during the next five years.
   The re-financing will decrease the expenses in the short-term and extend them over the next 30 years. Rick Dulaney, managing director of public finance for Morgan Keegan and Company, based in Nashville, presented the plan to council members. He said one of the perks of the plan is that it uses capital appreciation bonds that allow the borrower to manage cash flow.
   Council member Richard Sammons was concerned over the high interest rates involved. Sammons said he believed the re-financing would mean taking advantage of lower interest rates, and he didn't think that was going to happen.
   "What we are doing is buying time, and paying a high price for it," he said.
   Mayor Sam LaPorte explained that the re-financing involves consolidating old and new debt, which includes the Big Springs Project. He said it is also driven by the expected loss of nearly $200,000 each year from the closing of the Alcoa plant in June.
   Also at Thursday's meeting, The American Legion's local Korean War veterans, Post #49, donated $1,000 for the construction of the Veteran's War Memorial. The memorial will be built at the corner of Elk Avenue and Pine Street in Elizabethton to remember all veterans who died in combat in all wars.
   "On behalf of those who made a supreme sacrifice for our country, we thank you and your organization," said Dave Ornduff, Director of Planning and Development for the city.
   Prior to discussing new issues, City Manager Charles Stahl discussed a letter from the state Department of Transportation requesting that Lynn Avenue to G. Street be repaired. The city also received a letter requesting that Elizabethton Airport Road and Highway 91 be improved.
   Ann Rogers, guidance counselor for Elizabethton High School, informed the council that April 19 will be Student Government Day, the first since the 1970s. On that day, students work with City Council members to create their own "mock" city government.
   The City Council also:
   * Approved the Doe River Rehabilitation Project to repair the Elk Avenue Bridge. The city will pay 20 percent of the project, and the state will pay the rest. Right now, $2,660 will be deposited to secure engineering.
   * Approved a resolution for the State Highway Maintenance contract for the fiscal year 2002-2003.
   * Authorized the State of Tennessee 2002 Library Services Technology Act Grant to provide $1,200 toward computers in the Elizabethton Public Library.