The Maryville city council voted unanimously on Tuesday to apply for a federal $20 million loan to build the Coulter Grove Intermediate School on Sevierville Road.
The city and school board have until Friday at 4 p.m. to apply for the American Recovery and Investment Act funds that could be used to complete the Sevierville Road school. Construction on the project was halted in November 2008 because of how the economy had affected the bond market.
City manager Greg McClain said council members needed to understand that if the city, which will be competing with other municipalities for a part of $120 million in stimulus funds, receives the money, city property taxes would have to be raised to open the facility in August of 2012.
“If we get $20 million, we are getting a tax increase. There’s no way to open (the school) without it,” he said.
McClain said the city would only get $20 million and would need another $5 million to open. “We would have to hold back on furniture and other accessories,” he said.
There would be a residual effect because of raising taxes. “If the tax rate goes up, it’s hard to bring in other businesses,” he said of the tax rate, which he said would probably increase another .25 to .32 cents per $100 of assessed value. “Just be mindful of the tax rate. It’s important to all of us.”
The federal program allows municipalities to apply for $2 to $20 million in funds at zero to low interest rates. The program is administered by the Tennessee state School Board Authority. The money has to be spent in three years and repaid in 15 years, schools director Stephanie Thompson said.
Thompson said the system learned about the opportunity three weeks ago. “The application is due Friday. Obviously timing is an issue. We have been working on this and feel we can meet the timeline,” Thompson said.
Thompson said Maryville has a shovel-ready project in the Coulter school project that would create jobs quickly. “That should be an advantage,” that would make the project attractive to those approving the loans, she said. “We think this zero-interest $20 million bond paid off in 15 years will be an advantage to the taxpayers and the city.”
The estimated cost of the project is $25 million. “We’ll do what we can to get the cost of the project down,” she said. “We feel it’s a good deal for us and the city, and we would like approval to apply for the bond.”
Board chair Christy Sayles said there is a good chance Maryville could get funds because it had to suspend construction on the Coulter School because of the economy. “In East Tennessee, there’s no one else who had a school construction project that had to be stopped because of the bond situation,” she said.
Councilman Tommy Hunt voiced concern that the city should ask for a lesser amount and tend to repairs at existing facilities, such as the leaking roof at the middle school, rather than applying for the larger sum to build the new intermediate school.
“I do not think it is fair that we are going to spend $20 million for a new school when you have teachers with garbage cans catching rain in their rooms,” he said. “Yes, it’s a great deal for savings. The rub is, we don’t know the terms of the loan, we don’t know the rate, and we know we have to borrow more to finish it. There are too many weaknesses to commit to borrowing $20 million.”
Councilman Andy White said the council could wait until 2012 or possibly later to raise taxes to open the school once it’s completed. “You’re looking at $15 million to $20 million in savings,” he said. “That’s $15 million to $20 million in taxpayer money you save. I say go for it. We’ve got a unique opportunity.”
School board member Denny Garner said he wanted the city to apply for the $20 million to build the new intermediate school because that was the priority the public expressed when crafting the system’s master plan for construction and renovations. “We spent three years doing a study that showed this was our priority,” he said. “We still need that school first.”
In the end, the council voted unanimously to send documentation applying for the loan.