(Leitchfield, KY) – Mayor William Thomason found himself breaking yet another tie between a split council Monday evening. The vote this time was not to repeal the Restaurant Tax imposed in Leitchfield, but to approve the 2nd Reading of the Bond Ordinance for the proposed Aquatic Center the revenue from the Restaurant Tax will be used to bankroll.
The $4.9 million bonds sparked a debate among a few of the council members, as others choose to predominantly stay silent on the issue and just cast a vote.
Councilman Jerry Schlosser began the conversation by saying: “I looked through that packet we had the other day and if you amortize it out for over 25 years; you know I’m looking at this thing and I’m thinking we will be using this thing three months out of the year. I’m basing it on how we use the one we have now. Let’s see, so over the next 25 years we will be using it 75 months. If you take the payback of $6.8 million and divide by 75 months, the interest costs, just the interest costs for the three months the pool is open would be $92,000 a month, just the interest costs. I would like for us to slow down, I guess is what I’m going say. I don’t think we’re ready to make motions, I don’t think we are ready to vote on this. This is a very important thing and our children are very important in the future and what we do for them is important, and we also have to be financially responsible. I don’t know about the rest of you all but I’m going to be gone, I’m 67 years old, I’m not going to be here when these bonds are paid off but my children and grandchildren are going to be. I’m not saying I am going to be against it, I’m just saying let’s take a really good look at this thing; this is a lot of money and a big obligation. And it also really bothers me when I listen to the language and it says to ‘Propose a tax to the extent that is necessary,’ did you all catch that when you read it? I wonder what that means, what will be necessary? So again, there may be a really good answer for this and may be something well within our means to afford it, but I think we need to look into it and find out before we vote because this is a big decision.”
Councilman Steven Elder said he would speak to Schlosser’s concerns by saying, “It’s no secret that the restaurant tax will provide the revenue for this bond. The revenue (restaurant) tax provides almost $600,000/year; it’s (the pool) less than half of the budget of making the bond payment. I think the language is there because if the restaurant tax is removed. They are general obligation bonds which means you will have to raise taxes some other way. As far as costs on the bonds, I made something up to show everyone how inexpensive it is to really borrow this money. If you’ll look on the very first page you see our borrowing rate of 3% and my understanding is that we never borrow money for 3%. Our firehouse bonds in 2006 were at 4%. So if you look at this rate, let’s just flip one page, let’s say the interest rate went up to 4%, instead of paying $281,000, we would be paying $313,000 (bond payment) or at the bottom there that interest costs goes from $2.1 to $2.9 in interest costs, so $800,000 more for 1% change. So if we wait, if we sit on this, rates are only going up, they cannot go any lower, they will not go any lower in our lifetime.”
Councilman Schlosser agreed verbally that the rates would only increase.
Elder continued, “Now 4% would be a good rate; if it goes to 5%, look at our interest costs then, we are at $3.7 million, that’s $1.6 for the exact same thing, the exact same thing! Utilities purchased bonds not so long ago at 7.5%, which is on this final page I printed out. If we did that we would payback $6 million dollars in interest. Today we can borrow money at 3% and payback $2.1 million. They way I look at it is, forget this is a pool, cause we borrow money for many, many things, this is truly an investment into the community, that’s a good thing. I would say ‘Yes’ to an investment into your community. The second thing, we have a dedicated revenue source. When we built the firehouse we didn’t have a dedicated revenue source, we just built the thing and borrowed the money. But we have a dedicated revenue source for this money. The third and final thing is money’s cheap. My answer would be yes.”
Councilman Harold Miller responded, “I’ve battled within myself over this for the past couple of weeks and to be honest with you, the number in the bond issue caught me by surprise at the last meeting. Where I’m at with the issue is I think we appointed a tourism commission and we’ve put good people on there and we trust them to make the right decisions. On that end, it’s out of line a little bit for us to say we are going to put you in a decision making position but then we’re going to tell you what you can and cannot do. So, with that said, the number $4.9 million caught me by surprise because, if I understand correctly, that was the number we were talking about earlier for an indoor pool, I think, I may be a little off on that. So, weighing both those things, the commission who I fully trust, but the numbers look excessive to me for this project. I would like, before I make a decision, I would like to sit down with the whole commission and ask some questions, because I have some questions, and get their thoughts on some things. I’m not against the pool per say, but I want to make the best decision possible in my mind and that’s where I’m at with it.
Tourism Director Ilsa Johnston replied saying, “I want to say that I respect that and first of all yes you did hear that number $4.3 million and that was for an indoor pool but we can’t afford to build an indoor pool, we can’t based off of the feasibility studies afford to operate it. That’s the difference in the indoor/outdoor pool. And that number is the max. That’s where we are with that. What I really want to stress to you guys is to come in and see me, I’ve talked to you guys, I’ve called you, I’ve asked you to please come in and see me if you had any questions. Jerry you came in to see me and you loved it…LOVED IT. I know that you (Harold) are new and I do respect you, I invite you to come to my meetings, we’ve been working on this for a long time. Steven comes so that’s why he has a little bit more knowledge about it.”
Miller questioned Johnston about a real number and City Treasurer Erin Embry gave a breakdown saying, “Right now the bonding cost is at $4.8 million, roughly, we are still looking at a second analysis and everybody thinks that is the maximum number and there are plenty of contingency that can back that down a little bit. I think time is one of the issues, we are going to try to be open by May 2014, the bond sale is scheduled for April 9th, and we are going to open the bids on the 30th (March). One of the big discrepancies between the indoor/outdoor facilities is the $4.3 (indoor costs) is just construction costs. This number that we’re bonding ($4.9 outdoor costs) is also adding architect fee, construction costs, construction management firm, engineering fees; it’s a much different number and it’s not comparing apples to apples. So the construction costs is the $4.3 for indoor and the construction fee for this pool is lower, it’s not $4.9.”
Elder said, “If you really want to get mad, be mad about the prevailing wage, it’s killing us on this project. It’s probably adding $1 million on to this project. Not sure why people don’t get onto the state to change this, it’s killing the building of schools and other projects across this state.”
Councilman Billy Dallas said, “I think you’ve improved your drawings and blueprints since we started talking about this. At first when you were talking about an indoor pool you were just talking about a pool (only) you know, and having to run it 12 months of the year, the operating costs would be astronomical and I think feasibly you could run the outdoor pool for almost five months. I mean you could run it to the first of Sept. But you’ve changed it a lot, you’ve changed the outdoor, it’s not just a pool. I think you’ve tried to hit more people with it and draw people with it from surrounding counties.”
Elder named the Tourism Commissioners: Jeanna Carnes, Sue King, Kelly Stevenson, Randy Pawley, Mark Smith, Lyndel Sharp and Ryan Bratcher. He called them smart and dedicated to the community who unanimously voted for this project.
Schlosser reminded Elder that, even though they were great people, not to forget the council was elected by the people and the commission was not. He threw out a “four letter word: DEBT.” He said he would like to do this on a smaller scale or at a later time. He was also concerned that if this amount of money was bonded for the aquatic center would there be anything left to spend on other projects.
Mayor Thomason asked the council to attend the commissioners meetings and said they deserve the councils support, “They come here and spend their time making these decisions and are not paid to be here.” He called the aquatic center something for all ages and good for community health.
As the mayor called for a vote Councilwoman Margaret Fey said, “Just some more time Mayor, just some more time.”
Mayor said, “The time is running out, the bond issue has to be done.”
Elder said, “I don’t understand, time for what? I don’t understand if $4.9 million is too much this month, it’s going to be too much in a month. What questions do you have?”
Schlosser said, “I just don’t feel like I have enough information.”
Mayor Thomason said, “If you come down there and meet with the tourism; they will meet this coming Tuesday.
“What time?” – Fey
“8:30 a.m. Tuesday morning,” – Mayor Thomason
“8:30 a.m. in the morning on Tuesday?” questioned Fey, who went on to ask Johnston if she had any idea on how many employees it would take for the facility.
Elder said, “They gave us feasibility studies for all the employees, what the director would make, if we had an assistant director, they had all that in there. All of us were welcome to get one, if we really wanted to get one, she has them. You can check my phone bill, I call Ilsa all of the time.”
A reporter in the audience questioned the council if they were just learning of the project.
An offended Schlosser responded by asking, “Are you saying I am not prepared?”
The reporter went on to say, “If you need more time I want to know why.”
Schlosser said, “Well, I’ll explain to you because I do want to be prepared. I want to take time; this may not be much to Mr. Elder but when you spend $4.8 million of the people’s money; it’s not my money, it’s not Mr. Elder’s money it’s the people’s money, and I want to take time to be sure that we are doing it right and it has nothing to do with saying I am not prepared. I want to be better prepared.”
Miller responded saying, “The first I had seen of this bond ordinance was the last council meeting we had; that’s the question you had, right?”
Mayor Thomason reminded the council that the bond issuance was mentioned months ago and everybody knew it was coming and it should have been “check out.”
Dallas said, “That was the last time I saw the numbers was the last meeting but I knew it was coming.”
Elder stated, “Anytime you spend over $2 million you are going to bond money. We knew a bond ordinance was coming.”
Schlosser said, “Now I want to take the time to study it; how feasible it is, how does it track with the rest of the economy? One thing I spent a lot of time on last week, I wasn’t down there at one of the meetings but here’s what I did, I spent a lot of time looking at the budget committee on the other; we’ve got a bond outstanding on a new firehouse and I believe two fire trucks under bond.”
Mayor and Elder agreed the fire trucks were not under bond but were an interest payment.
The two went back and forth about repealing or keeping the restaurant tax before Mayor Thomason called for the vote.
Councilmen Dallas, Elder, and Cottrell voted in favor and Councilwoman Fey, Councilmen Miller and Schlosser voted against the bond ordinance. Mayor Thomason voted to break the tie.
The 2nd reading of the bond ordinance for the Leitchfield Aquatic Center was approved.