The Cleveland City Council approved using the city’s general fund balance to ensure construction of a new gymnasium at Cleveland High School amid heated discussion and concerns that using the funds would negatively affect city operations.
The measure dedicates up to $12 million from a fund usually reserved for giving the city cash flow, keeping projects going and paying salaries between the beginning of the calendar year and when property taxes start coming in.
“With our reserves we fund the gymnasium not to exceed $12 million ... bids are to be taken now for the demolition and then right after school is completed the demolition (will) start and within 30 days when the building has been razed, start construction of a new gymnasium,” District 5 Councilman Dale Hughes said in his motion.
Councilmen David May (District 4) and Charlie McKenzie (District 1) voted against the motion. District 2 Councilman Bill Estes was absent.
“This is going to break our reserves,” May said. “Normally two months out of the year we are operating in the negative waiting on tax flow.”
City Manager Janice Casteel echoed May’s concerns.
“You have the authority to take that $12 million, but it’s not a good idea. It would kill our city,” Casteel said. “We cannot operate without that.”
According to Casteel, there is $12.3 million in the general fund balance. She said $6 million had been taken from the fund for the Cleveland Regional Jetport.
“If we don’t do something now, we aren’t going to open in 2015,” Hughes said.
“But you’re going to shut the city down,” May said.
“No, I’m not,” Hughes said.
“Yes, you are going to shut the city down if you spend $12 million out of your general fund,” Casteel said.
Councilman At-Large Richard Banks, who seconded Hughes’ motion, said something needed to be done because the building presented a liability.
Banks said the general fund balance could be paid back when the city school system receives its state-mandated portion of funding borrowed by Bradley County for Lake Forest Middle School reconstruction.
The Bradley County Commission has voted to borrow the funds no sooner than 2015 with the first debt payment due no sooner than July 2016. The Cleveland Board of Education has already passed a resolution saying it would give these funds back to the city to recoup money spent on the new gymnasium.
Banks said the gymnasium situation was “an emergency” and that was what funds like the general fund balance were for.
The impact on the city budget would not be drastic, Hughes said.
“It’s not a big lump sum of $12 million. It will be drawn out over time,” Hughes said.
Casteel said even if it was drawn out over the next two years, she would not recommend it as a good financial move. She said having a low fund balance could have a negative affect on the city’s credit rating.
“I see both sides of the issue,” Cleveland City Schools Director Martin Ringstaff said. “We share the same concerns; we love Cleveland and we don’t want anything bad to happen to what we are doing here … I applaud the Council members who stepped up and were willing to fund it. Hopefully, over the course of two years we will find a way to fund that back so we don’t deplete the revenue of the city of the fund balance of the city. That’s not what we’re trying to do.
“I think the students of Cleveland City (Schools) won today, I really do,” Ringstaff added.
Cleveland High School Principal Autumn O’Bryan said it was a “tough decision” for the Council.
“No question the best decision for our kids,” O’Bryan said.
She said the gymnasium was “crucial” as a facility and meeting place for the school system. She said people considering moving to a new area look at the school system as a major part of their decision.Throughout the discussion, Banks said the city could borrow money later if it was need.
Casteel recommended borrowing sooner rather than later if that was the route that would be taken.
In order to borrow money, the city must show it has ample revenue to cover the debt service payments. Creating the needed revenue can lead to a tax increase. Property taxes can only be raised during the budget process once a year.
Councilmen voting for the motion said they were not in favor of raising property taxes.
“We just had a substantial tax raise,” Hughes said.
Cleveland Mayor Tom Rowland suggested a compromise to borrow half and take half out of the fund balance.
Rowland said he does not plan to veto the motion.
Suggestions had also been made to take care of demolishing the condemned gymnasium, and addressing adding a new building later.
Ringstaff told the Council that demolition costs had been estimated at $250,000.
In the Council’s work session, parents of students spoke about the importance of the gymnasium to the school and to their children specifically.
Parent Gina Allison said the Raider Dome was a meeting place for the students that helped give them identity as a Cleveland Raider.
Parent Lakema Nalory said not having the gym had made it challenging for colleges that were coming to watch her daughter play. Nalory emphasized that since she could not afford to send her three children to college she was counting on their athletic ability to fund their way through scholarships.
“When you are talking about something as large as a gym it doesn’t just affect athletics … it affects everything,” Vice mayor Avery Johnson said.
“This is crucial timing,” Ringstaff said.
He said the city has been talking about a new elementary school for the past two years and the project still has not been funded. He did not want to see this stretched out that long.
The gymnasium project cannot begin until school is not in session.