Johnson City manager: School capital funding agreement with county likely to bring $12.5 million over 25 years


JOHNSON CITY, Tenn. (WJHL) – A compromise related to the new K-8 school planned for Jonesborough is likely to bring $12.5 million over 25 years to the Johnson City schools from Washington County funds.

Johnson City City Manager Pete Peterson revealed that during a Thursday meeting between the local legislative delegation and Johnson City commissioners. Because Washington County isn’t funding the school through a standard method — by bonding the project itself — the normal proportional share that would have to be raised and given to the city school system is not required.

Based on a $32 million school project, the normal share would total nearly $30 million. That’s a bit more than enough to fund construction of a new Towne Acres Elementary, which Peterson told Senator Rusty Crowe and representatives Matthew Hill and Micah Van Huss was sorely needed to deal with growing enrollment.

Peterson and Washington County Mayor Joe Grandy have been working to craft an interlocal agreement through which the county would pay some portion of what the city school system would have gotten traditionally. Grandy has said he hopes to see a final proposal go before the Washington County Commission at its January meeting.


“Is the amount sufficient for your needs that you all are discussing?” Hill asked.

Those needs are centered around putting fifth graders back in the elementary schools and turning Liberty Bell middle and Indian Trail intermediate into two 6-8 middle schools. Currently Indian Trail serves all the system’s 5th and 6th graders and Liberty Bell all 7th and 8th graders.

Peterson said the city has other funding for $10 million worth of expansion work at Woodland, South Side and Lake Ridge schools. Peterson said the estimated cost to replace the 50-year-old Towne Acres with a 750-student school is about $25 million.

“What we don’t have is the money to do Towne Acres,” Peterson said. “Over the length of the agreement what we’re talking about now would be $12.5 million over 25 years.

“You’re going to have to debt service a school anyway, so that’s going to debt service probably half the cost of what it’s going to cost us to do a new Towne Acres to meet the needs that we have for our students.”

Peterson said if the city begins a building project within about four years, “we’ve got a $12.5 million hole to fill. If we have to wait eight or 10 years before we have the financial ability to do a Towne Acres school, that $25 million school’s probably a $30 million school.”

If the city does end up with a $500,000 annual contribution from the county and borrows $25 million over 25 years — which is longer than a normal term for a school — the annual payment (at 2 percent interest) would be about $1,250,000. City and school board leaders have not publicly discussed how they might fund the $750,000 annual gap.

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