Bristol, Tenn., Juggles Finances To Pay For Fairmount Construction

BRISTOL, Tenn. – Increased material costs have left the city and Bristol Tennessee City Schools with no choice but to dig further into their pockets to pay for construction of the new Fairmount Elementary School. 

In February 2007, the City Council committed $12 million in bonds to fund the project. After the school system paid up-front costs for design, permits and licenses, about $10.8 million remained to pay for construction.

But when the bids were opened a few weeks ago, the price tag for construction was higher than expected – about $13.4 million.

With the bids remaining valid only through Sunday, Director of Schools Steve Dixon drew up a funding proposal approved by the Board of Education early this week. The City Council approved it unanimously on Thursday.

The plan puts $1.8 million back in the construction kitty but still leaves the board with the task of cutting costs by $375,000.

Money for construction has been in a bank accruing interest, and the board had planned to use the money to help pay for the new structure.

“We never really knew exactly what that amount was going to be,” said Todd Bailey, Bristol Tennessee City Schools’ spokesman. “We found there was about $425,000 available, but that still leaves us $375,000 short of meeting the bid price – even with the additional school and city funding – and that’s why we’ll need to make some cuts.”

Bailey said board members and a project manager have identified 29 items that could be cut out of the original plan.

“The biggest one is the geothermal heating and cooling system,” he said. “The other things being considered for omission are the dome on top of the library, the iron fence that would surround the school and the automated lighting system.” 

The city will contribute an extra $800,000 for construction – $400,000 coming from reserve funds for capital projects and $400,000 from the city’s fund balance.

The city also agreed to front the school system an additional $500,000, with the money to be repaid at $125,000 each year during the next four years.

Finally, the board agreed to kick in $500,000 in school fund reserves and to make modifications to the structure to help bring the total available money in line with the bid price. 

“Remember, when the initial costs were sized up, it was basically two years ago,” said City Manager Jeff Broughton. “When Mr. Dixon first talked with me about this, he said the board felt they could contribute by using some of their funds and by reducing costs through some design changes.” 

A few of the core construction materials that have jumped in price over the past 12 months include oil (80.9 percent), structural steel (68.5 percent) and liquid asphalt (62.3 percent), according to the U.S. Bureau of Labor Statistics.

A two-phase property tax rate hike was initiated last year to pay the debt service on the $12 million in bonds acquired by the city to pay for the new school.

A 12-cent property tax increase was approved for the current fiscal year, and the coming budget, which takes effect July 1, includes another 8-cent increase. That will bring the two-year total to 20 cents and raise the tax rate to $2.50 per $100 of assessed value.

Fairmount will be the first new school built in the city since Holston View Elementary was erected in 1971, and Councilman Fred Testa said the additional costs are well worth the long-term payoff.\

“You have to remember that with costs going up the way they are, we have to deal with this issue,” he said. “After all, the kids are our future.”

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