Council members have been looking for ways to soften the loss of money when the fire contract with Bradley County expires.
The city will lose $918,000 as of June 30, when the fire contract fully expires and the county takes responsibility for protecting property located outside the city limits. The $1.8 million contract was phased out over a period of two years.
City Manager Janice Casteel, with department heads, set the city to absorb the loss of $918,000 in the current budget ending June 30. However, city residents can expect an $18.51-cent increase in property taxes effective July 1. Each penny of residential property tax equals approximately $100,000.
The city could save between $80,000 and $84,000 annually by renewing a letter of credit on $21.2 million held by BB&T. By renewing the letter of credit, the terms would be reduced from 95 basis points to 55 basis points with no upfront fees.
John Harris, senior vice president of corporate banking, Knoxville, said he looked at the city’s fixed-rate bond debt, “But there is not really any room to do anything at this point in time and generate additional savings.”
The Council deferred taking action on refinancing until April 22. There is an underlying swap agreement that would not be affected.
If interests rates go up when it is time to renew the letter of credit again, the basis points would go back up to reflect the market rate. Conversely, he said the cost of getting out of the interest rate swap would go down.
“If interest rates go up beyond a certain point, it could actually be a benefit to the city. If it goes considerably up, then you would get a check back because of the contractual agreement,” he said. “But, before you start the party, you would be refunding those fixed bonds probably at a higher rate.”
On other agenda items, the Council:
- Approved final passage of Ordinance 2013-14 to de-annex a landlocked piece of property located behind 213 Gardenia Ave.
- Approved final passage of Zoning Ordinance 2013-15 to rezone property on Durkee Road and Old Powerline Road from Residential Agriculture (RA) to Light Industrial (IL).
- Approved final passage of Ordinance 2013-16 to amend Zoning Regulations Section 3.2 to provide for exceptions to zoning height restrictions for manufacturing and warehousing uses.
- Denied Zoning Ordinance 2013-12 to rezone lot 1 of Stephens Place Subdivision located on Stephens Road N.E. from Single Family Residential (R1) to Low Density Single and Multifamily Residential (R2).
- Denied Zoning Ordinance 2013-13 to rezone lot 4 of Stephens Place Subdivision located on Stephens Road N.E. from R1 to R2.
All votes were unanimous with all Council members present.