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Lakeland ponders property tax hike to support construction of new high school

By Updated: May 01, 2019 11:01 PM CT | Published: May 01, 2019 7:01 PM CT

Limited financial flexibility and concern over unforeseen future expenses have Lakeland residents and elected leaders divided over whether to move forward with construction of the city’s first high school.

PFM Financial Advisors presented an analysis during a special meeting of the board of commissioners Tuesday evening, discussing the property tax needed to fund the project.

The firm estimates an increase of at least 57 cents on the current rate of $1.25 per $100 of assessed value. The increase could be as much as $.06 above that figure.

Commissioner Richard Gonzales Jr., one of those opposed to moving forward with the high school plan, attempted to thwart the presentation by leading off the meeting with a motion to adjourn. He noted that several amendments to the analysis were never presented to the public.

“It’s a sunshine rule thing and a transparency thing. That’s how we’re trying to run the city,” Gonzales said. “It’s really surprising to me that this is even a possibility. It’s going to wreck the financing of our city. The money is tight in Lakeland. It’s just a scary proposition.”

<strong>Mike Cunningham</strong>

Mike Cunningham

Mayor Mike Cunningham backed the motion to adjourn, but the motion failed 3-2.

The high school issue has been controversial. Cunningham recently called for a state investigation into alleged financial irregularities he said he has discovered, though it is not clear if the high school is connected with the request.

After the motion to adjourn failed, Lauren Lowe, PFM managing director, and Ricardo Callender, senior managing consultant, discussed the firm's assessment of a resolution adopted in February stating the city intended to proceed with due diligence on a capital outlay note of $35 million for a new high school.

The amount was lowered to $35 million from $38 million as the result of an amendment to the original resolution and was based on the assumption of reducing city hall expenditures by $700,000 annually.

Another amendment said no reserve funds would be used for a road improvement project on New Canada Road being funded jointly by the city and Tennessee Department of Transportation.

<strong>Josh Roman</strong>

Josh Roman

The analysis raised concerns about both amendments, which were sponsored by Commissioner Josh Roman. 

“By reducing city hall expenditures now, this may limit the city’s future financial flexibility in the event of a recession or other unforeseen events,” Lowe said of the spending amendment.

And on the road project, Lowe said: “It is our understanding that there may be some financial implications to the city if it does not comply with the existing TDOT contract on New Canada Road.” 

<strong>Wesley Wright</strong>

Wesley Wright

The Lakeland Schools Board of Education has pledged $700,000 for each of the first four years of the loan to help get the high school project rolling.

PFM’s analysis resulted in a funding gap of $20.76 million to construct the school. The annual debt service required on the principal and interest would be just over $2 million.

“Assuming that one penny on the property tax rate generates $36,022, the property tax equivalent to fund that amount would be 57 cents,” Lowe said.

If the city decides to use less of the unassigned general fund balance, the funding gap would be larger, resulting in as much as another 6-cent tax increase to make the numbers work, the PFM representatives said.

Commissioners who support the school construction project believe the analysis confirms their view the city can afford it.

“Now that we see the overall numbers, it’s not doom and gloom like everyone thought it would be," Wright said. "A complete school system would make us much more stable and less volatile, according to investors and builders. It completes the whole package for families.”

But Lakeland City Finance Director Kyle Wright sees the city’s liquidity and cash flow as important considerations.

“The cash flow perspective, of course, is do we have enough money each year to pay the debt service when it comes due,” he said. “The liquidity question is, if something unforeseen happens, at what point do we have enough money in the bank to cover that unforeseen circumstance.”

He also pointed out that it is unclear when money will be due to TDOT for the New Canada Road project. He said the contract with the agency is for reimbursement, so the city would not have to pay that money up front.

Lakeland resident Susan Richardson opposes building the high school now.

“The future of our city doesn’t need to be decided by a last-minute email campaign, a poll or a social media war,” she said. “We have a lot of momentum in the city in the commercial development area right now. Let’s get that rolling before we rush headstrong into debt for a high school that won’t meet the needs for our children the way that Arlington High does.”

The board could vote on the issue as soon as this month.

Topics

Lakeland Lakeland School System Mike Cunningham
Michael Waddell

Michael Waddell

Michael Waddell is a native Memphian with more than 20 years of professional writing and editorial experience, working most recently with The Daily News and High Ground News.


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