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East Tennessee City pours more money into losing investment

April 29th, 2009 No comments

I must admit that the decision of the Kingsport BMA to spend over $15 million for an expansion of the MeadowView Convention Center has really raised my blood pressure.

I have written many posts concerning this issue and feel that politics is playing a big part in the decision to expand the convention center.  Good common business sense seems to be absent for the five BMA members (Phillips, Mallicote, Joh, Shupe, Munsey) who voted to expand the convention center.  It appears that there is an incestuous relationship with special interest groups

Alderman Marsh implored the mayor to get public input before the vote, but the mayor railroaded the convention center expansion to a vote.  Alderman Marsh and Shull voted to give back to the city property owners the 1/4 percent regional sales tax that was used to pay off the current convention center, but the gang of five prevailed.

The taxpayers have invested $25.7 million in the current MeadowView Convention Center and Cattails golf course.  The convention center has never made money and the golf course barely breaks even.

The City of Kingsport is spending another $15 million to expand the convention center into an executive conference center.

One needs to ask, what is the real cost to the taxpayers for Kingsport’s part of MeadowView? The combined cost of the current convention center, golf course and the new expansion would be about $41 million.

To get the true cost, the interest expense for the bonds must be added to the cost.  In the table below you will see the actual cost after applying the different interest rates.  The bond life used is 20 years.

CostInterest ExpenseReal CostInterest Rate
41,000,00018,628,46459,628,4644.00%
41,000,00017,340,21058,340,2103.75%
41,000,00016,068,03657,068,0363.50%

I would like to ask, are there any citizens in Kingsport that would invest $57 – $59.6 million in a project that did not make money for them?

It is up to you as voters to decide your future.  Mallicote, Joh, and Phillips who are running for re-election voted to spend more money on the money-losing convention center.

Alderman Shull who is also running for re-election voted against the convention center expansion and instead voted to give the regional sales tax back to city property owners.

I must warn you to beware of the spin that the city officials have been putting out concerning MeadowView.  If MeadowView has been that great for Kingsport, then why do we have a declining population, negative retail growth after inflation, and the highest unemployment rate in the Tri-Cities area.  You decide…see data

Mayor is out of control with spending in a recession

January 28th, 2009 No comments

In this recession, the City of Kingsport, Tennessee has decided to go ahead with borrowing $34.77 million to fund various projects listed below.  While companies and citizens are having a difficult time in this economy, the city is going ahead with the spending of taxpayers money.  The addition of the $34.77 million would put the total debt for the City of Kingsport around $190 million.

According to Moody’s the three bonds have been issued and are listed below.  The dollar amounts below do not include interest expense.

General Obligation Public Improvement Bonds, Series 2009A
Sale Date: 22 JAN 2009
Sale Amt: $12.31 million

The detailed spending for this bond is listed in the table below.

K Play Park and Recreation Facility Improvements (Grant Match)$400,000
Various Road Improvements listed below (items 1-5)
1. Cleek Road Phase I – This project consists of adding width to both New Beasonwell Rd. and Cleek Rd. at their intersection with Stone Drive (SR 1, US 1IW) to provide for the separation of left, thru and right turns, reduce delays and improve the alignment between left turning traffic. Also included in this project is the addition of a left turn lane on Stone Dr. westbound for traffic turning onto Cleek Rd. as well as the extension of the eastbound left turn. This project would improve approximately 500′ of New Beasonwell Rd. and 770′ of Cleek Rd. $825,000
2. Harbor Chapel Road – This project would provide a wider two lane roadway with a multi-use mobility path along Harbor Chapel Drive from just south of Skyland Dr. to Cooks Valley Rd. and also improve the alignment of Cooks Valley Road between Harbor Chapel Road and Harbor Springs Dr. At the Road Workshop this was presented as a two phase project due to maintenance of traffic, however at this time we propose that it be design as one project and we will take care of the maintenance of traffic through the contract documents. $1,680,000
3. Clinchfield / Center Intersection Improvements – This project includes the resurfacing of the intersection, mast arm traffic signal, additional right turn lanes and an additional lane in the area of the old railroad bed to align the two Clinchfield St. approaches and provide a left turn northbound. This will remove the grade problem the railroad tracks caused and provide for reduced delays and confusion. $385,000
4. Netherland Inn Road / Industry Drive / Center Street Roundabout – This project would construct a modern roundabout at this intersection, similar to the one built at the intersections of Watauga / Gibson Mill / Ravine. This would Increase safety and reduce delay and confusion experienced at the existing intersection and is an integral part of the development of the Kingsport Riverwalk Redevelopment. $935,000
5. Rock Springs Road Improvements – This project involves upgrading Rock Springs Road from the southwesterly City Limits to Rock Springs Drive (SR 347) to an improved two-lane section. It will provide wider travel lanes, shoulder and some realignments at key locations to improve safety. $1,175,000
Stormwater Management Project – Modeling Study, Land Acquisition, Pipe$700,000
Riverwalk Project – Land acquisition, engineering design studies, select infrastructure improvements$600,000
School Projects – land acquisition, expand band room, security modifications for school entrances$1,100,000
Library Design and renovations – site assessment and preliminary design$200,000
Justice Center – design and architect fees (Total cost $4,000,000)$260,000
Downtown Parking Garage – 300 space garage with retail and office space$3,800,000
Bond #1 General Improvement Bond total for above items$12,305,000

General Obligation Bonds, Series 2009B
Sale Date: 22 JAN 2009
Sale Amt: $7.15 million

The bond above is for rebuilding of the V.O. Dobbins Community Center as well as the creation of a new non-profit center.  This non-profit center will take tenants away from the private sector, which means, the City of Kingsport becomes a competitor with it’s own tax customers.  Alderman Marsh and Shull voted against this project.

Local Option Sales Tax Revenue and Tax Bonds, Series 2009C
Sale Date: 22 JAN 2009
Sale Amt: $15.31 million

The above bond is for the MeadowView Conference Center Expansion.  This expansion is a very controversial subject with many citizens because of it benefiting special interest groups.  The current convention center loses money and it wishful thinking that the expansion would break even.

This new $15.31 million bond for the convention center expansion combined with the $25.7 million already spent for the current convention center and Cattails Golf Course would make it $41 million that the taxpayers will have poured into MeadowView.  The Cattails and the current convention center do not make money.  Alderman Marsh and Shull voted against this project.  See link for additional information on Meadowview

Kingsport’s water and sewer departments overcharges customers?

January 26th, 2009 No comments

The Kingsport Times-News article, Fiscal year 2008 audit OKs Kingsport financial health does some explaining on the recent audit of Kingsport’s finances.

However there seems to be some things left out or a press release issued by the city that never made it into the newspaper.

The press release below in the last two paragraphs state that the five enterprise funds had $16.3 million in cash.

Enterprise funds have to be self-supporting and we know that the Cattails Golf Course does not make any money and the MeadowView Convention Center ended the year with a $1.3 million loss

This would mean that the city is running a profit center in the water and sewer departments.  The raising of water and sewer rates each year has helped this cash position.  How else could they have gotten all of this extra cash?

If the City of Kingsport is doing so well, then how come they did not want to refund the 1/4 percent regional sales tax, back to the citizens when the MeadowView Convention Center was paid off?   Alderman Marsh and Shull tried to get the regional sales tax refunded back to the citizens but was voted down by Mayor Phillips, Vice Mayor Mallicote, Aldermen Munsey, Joh, and Shupe.

Press Release

KINGSPORT – Kingsport garnered a clean opinion of its financial statement for fiscal year 2008 from auditors Blackburn, Childers & Steagall, and rectified all four findings reported in the prior year.

“This audit represents what the citizens of Kingsport expect from their local government, transparency in financial reporting and responsibility with the taxpayer dollar,” Kingsport Audit Committee Chair and Alderman Larry Munsey said Tuesday. “I’m pleased to note that city finance staff corrected four items identified in last year’s audit, while auditors, whose job it is to go over things with a fine-tooth comb, only found three items in need of some work going forward into 2009. By any measure, our city continues to stand on firm financial ground.”

Auditors noted in their 2008 findings the need for a change in the way property purchases and sales are recorded by the Kingsport Industrial Development Board; better record keeping on the disposition of city capital assets; and better segregation of duties within payroll processing.

“We’re very pleased with this report, and already have projects underway to address the findings on capital asset recording and payroll processing,” Kingsport Finance Director Jim Demming said Tuesday. “The third finding on KIDB is just a matter of changing from net reporting to include all costs related to property acquisitions and sales.”

Demming also noted that the addition of a new internal auditor position and realignment of finance staff duties should quickly correct the findings.

Meanwhile, as of June 30, Kingsport posted $14.84 million in its unrestricted fund balance for 2008, with another $3 million to be added over the next few years as the general fund is repaid funding it advanced for the construction of Cattails Golf Course. Board policy is to maintain a minimum of $11.4 million at all times.

City Manager John Campbell said the pace of city government has quickened with regards to a number of key areas, including the development of a higher education center; greater internal support for job recruitment and retention efforts; expansion of commercial and tourism development; and implementing technology to increase efficiency.

“We have the staff in place to ensure we offer the greatest transparency possible,” Campbell said. “At the same time, we continue to operate well within the self-imposed debt limit of 10 percent of assessed property value, with new capital projects funded by the debt service roll-off as old debt is paid off.

“Without a doubt, the Board of Mayor and Aldermen is making sound investments that position our community for continued growth, which is how we keep property taxes low for everyone.”

Kingsport City Government is organized into six reporting units, starting with the general fund which covers emergency services, development services, leisure services and administration.

Five enterprise funds include the water fund, for the production and distribution of clean water, funded solely by user fees; a sewer fund, again self-supporting through user fees; a solid waste fund for garbage collection and disposal, reported separately but funded through property taxes; and two funds that cover MeadowView Conference Center and the golf course.

Collectively, enterprise funds reported $16.3 million in cash as of June 30, a strong cash position Campbell said he intends to maintain.

Meadowview Convention Center posts lost for 2008

January 20th, 2009 No comments

On page 37 of the Kingsport, Tennessee 2008 Annual Report, it shows a Meadowview Convention Center operating loss of $1.3 million for the year.

Mayor Dennis Phillip and his band of followers (Mallicote, Joh, Munsey, and Shupe) want to invest $15 million more to make this convention center larger.

Over the years the Meadowview Convention Center and Cattails golf course have been subsided (borrowed) over $3 million dollars from the General Fund.  This money needs to be paid back to the General Fund plus interest.

Can they spend more money on Meadowview?  Yes they can!  Mayor Phillips and his gang got the majority votes.  Can you vote for leaders that reflect your views and positions, yes you can.

See also the following link concerning MeadowView

Kingsport, Tennessee Code of Ethics

January 7th, 2009 No comments

It is time for the City of Kingsport Board of Mayor and Alderman officials to update their Statement of Disclosure Interests for 2009?  Has any one on the Board of Mayor and Alderman declared bankruptcy?   Has the sources of income changed?  Investments, etc?

The Tennessee Ethics Commission disclosure form seeks the following information below concerning the candidate or elected official.

  • Filer Contact Information
  • Professional Services
  • Office Held or Sought
  • Retainer Fees
  • Sources of Income
  • Bankruptcy
  • Investments
  • Loans
  • Lobbying

You can review the current “2008 Statement of Disclosure of Interests” for the Kingsport, Tennessee BMA members listed below by clicking on the name of the person below.

2008 Statement of Disclosure of Interests

Mayor Dennis PhillipsVice Mayor Ben MallicoteAlderman Larry Munsey
Alderman Valerie JohAlderman Jaunty ShupeAlderman Patrick Shull
Alderman Ken Marsh

You can  report alleged violations of any law within the jurisdiction of the Tennessee Ethics Commission. See link to report violations.   Sworn Complaint (ss-8003

Note, however, that the Tennessee Ethics Commission does not have the authority to enforce local government ethical codes, nor does the Commission have any authority to regulate the conduct of local government officials except as relates to the filing of a Statement of Disclosure of Interests.

Also, see the following link:  Tennessee Local Government Ethical Standards

The Kingsport, Tennessee Code of Ethics below is from the Code of Ordinances for the City of Kingsport, Tennessee.  Use the following link to view all city codes.  CODE OF ORDINANCES

Kingsport, Tennessee Code Of Ethics

Sec. 2-97. Code of ethics–Applicability.

(a)   The provisions of this code of ethics, sections 2-97 through 2-106, are applicable to all full-time and part-time officials, officers, employees, servants, member of any board, agency, commission, authority or corporation, whether compensated or not and any officer, employee, or servant thereof of the city. This includes any separate board, commission, committee, authority, corporation, or other instrumentality appointed or created by the city as set out in T.C.A. § 8-17-102 including, but not limited to: the board of mayor and aldermen, city board of education, and employees, city industrial development board, city housing and redevelopment authority, city emergency communications district board, city regional planning commission, board of zoning appeals, beverage board, Bays Mountain Park commission, electrical board of examiners, gateway review commission, historic zoning commission, mechanical, plumbing and gas board of examiners, parks and recreation advisory committee, public library commission, senior citizens advisory board, sidewalk board, and wastewater appeals board.

(b)   In any situation in which a personal interest under this code of ethics is also a conflict of interest under state law, the provisions of the state law shall govern. In accordance with T.C.A. § 8-17-103 to the extent an issue is covered by an ethical standard addressed by a law of general application, public law of local application, local option law, or private act nothing herein shall be construed to be less restrictive than such laws.

(Ord. No. 5558, § I, 6-19-07)

Editor’s note: Ord. No. 5558, § I, adopted June 19, 2007, repealed and reenacted § 2-97 to read as herein set out. Formerly, § 2-97 pertained to free passes, tickets or services prohibited, and derived from the Code of 1981, § 2-37.

Sec. 2-98. Definitions.

The following words, terms and phrases, when used in this division, shall have the meanings ascribed to them in this section:

City means the City of Kingsport, Tennessee.

Board of mayor and aldermen means the board of mayor and aldermen of the city.

Municipal board means any board, commission, committee, authority, corporation, or other instrumentality appointed or created by the city, including those set out in T.C.A. § 8-17-102.

Personal interest means:

(1)   Any financial, ownership, or employment interest which is the subject of a vote by a municipal board or board of mayor and aldermen not otherwise regulated by state statutes on conflict of interest;

(2)   Any financial, ownership, or employment interest in a matter to be regulated or supervised by the board of mayor and aldermen or a municipal board; or

(3)   Any such financial, ownership, or employment interest of the official’s or employee’s spouse, parent(s), step parent(s), grandparent(s), sibling(s), child(ren), or step child(ren).

Employment interest means a situation in which an official or employee or a designated family member is negotiating possible employment with a person or organization that is the subject of the vote or that is to be regulated or supervised.

Official or employee means and includes any official, whether elected or appointed, officer, employee or servant, or any member of any board, agency, commission, authority or corporation, whether compensated or not, or any officer, employee or servant thereof, of the city.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-99. Disclosure of personal interest.

(a)   An official on the board of mayor and aldermen or any municipal board with the responsibility to vote on a matter shall disclose during the meeting at which the vote takes place, before the vote and so it appears in the minutes, any personal interest that affects, or that would lead a reasonable person to infer that it affects the official’s vote on the matter. In addition, the official may recuse themselves from voting on the matter.

(b)   An official or employee who must exercise discretion relative to any matter, other than casting a vote, and who has a personal interest in the matter that affects or that would lead a reasonable person to infer that it affects the exercise of the discretion shall disclose, before the exercise of the discretion when possible, the interest on a form provided by and filed with the recorder. In addition, the official or employee may, to the extent allowed by law, charter, ordinance, or policy, recuse themselvesfrom the exercise of discretion in the matter.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-100. Prohibition of acceptance of gifts and gratuities.

An official or employee may not solicit, accept, directly or indirectly, on behalf of themselves or any member of their household, any money, gift, gratuity, service, transportation, loan, loan guarantee or other consideration or favor of any kind from any person, other than the city:

(1)   For the performance of an act, or refraining from performance of an act, that he or she would be expected to perform, or refrain from performing, in the regular course of his or her duties; or

(2)   Who has, or is seeking, to obtain, contractual or other business or financial relations with any department of the city or conducts operations or activities that are regulated by the department of the city where the employee is employed or the official has authority to act;

(3)   Who has interests that may be substantially affected by the performance or nonperformance of the official duties of the official or employee;

(4)   Who has some mutual understanding that the gift will influence the official’s or employee’s decisions on behalf of the city.

(5)   That might reasonably be interpreted as an attempt to influence the action of the official or employee or reward such official or employee for past action in executing city business.

(6)   Notwithstanding anything in this section to the contrary, gifts, gratuities, services or favors, which are allowed in section 2-101 are not prohibited by this section.

(Ord. No. 5558, § I, 6-19-07)

Editor’s note: Ord. No. 5558, § I, adopted June 19, 2007, enacted provisions intended for use as subsections (a)–(f). To preserve the style of this Code, and at the discretion of the editor, said provisions have been redesignated as subsections (1)–(6).

Sec. 2-101. Acceptance of gifts and gratuities.

The following are not deemed gifts subject to the aforementioned prohibitions in section 2-100:

(1)   A personal gift from a relative or friend, if such gift is unrelated to city matters.

(2)   An item of tangible personal property with an estimated retail value of less than $50.00 from any one person or entity at any one occurrence, provided it is not solicited by the official or employee and is of limited frequency; Employees who are supervisors or acting in such capacity are not permitted to accept cash gifts in any amount when such is related to or as a consequence of such employee’s employment with the city or other entity covered by this chapter.

(3)   A foodstuff gift, plant or flower arrangement which can be shared by everyone in a work area;

(4)   A discount for meals or services that is offered to employees as a marketing strategy by business to encourage trade from a large employee base, provided the discount is not solicited by the employee and is of limited frequency;

(5)   A business meal of a type and kind ordinarily associated with normal business activity;

(6)   Food, refreshments, sports activity or transportation when they are part of an official’s or employee’s participation in a charitable, civic, political or community event that bears a relationship to the official’s or employee’s office and the official or employee is attending in an official capacity;

(7)   A promotional, business logo gift item with an estimated retail value of less than $50.00 that is given for the primary purpose of advertising the business eatery or industry providing the logo gift item; or multiple promotional business logo gift items with a combined estimated retail value of less than $50.00 during a calendar year;

(8)   A door prize that is randomly won or received and where the opportunity to win/receive the gift is random and with low statistical likelihood, and when the employee is eligible for the prize as a consequence of his/her employment with the city or other entity covered by this chapter; provided however, that a door prize with an estimated retail value in excess of fifty dollars ($50.00) that is won as a consequence of employment with the city or other entity covered by this chapter may be accepted provided agift declaration form is completed and submitted to the city manager within five business days of receipt of the gift; and provided further that the final disposition of the door prize (i.e. to be retained by the employee, assigned to city use, or disposed/refused) shall be made by the city manager;

(9)   Receipt of entertainment or athletic tickets or entry to a private or sports/athletic suite, tickets to banquets, luncheons, receptions, local area golf tournaments and such for non-business related purpose; and

(10)   A gift or thing of value provided by the city to an employee in the course of the employer-employee relationship.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-102. Procedure for return of gifts and gratuities.

A gift, or gratuity prohibited in section 2-100 shall be declined and returned to the donor. If a gift is not easily returned, the gift shall be donated to a local charitable agency or organization in the name of the donor. Said donor shall be notified of such, as well as, notified of the city’s gift prohibition regulation. In addition, the following procedures and practices are to be followed:

(1)   A copy of all letters to donors shall be copied to the city manager;

(2)   Questions regarding the acceptability of a certain gift should be directed to the city manager for clarification.

(Ord. No. 5558, § I, 6-19-07)

Editor’s note: Ord. No. 5558, § I, adopted June 19, 2007, enacted provisions intended for use as subsections (a) and (b). To preserve the style of this Code, and at the discretion of the editor, said provisions have been redesignated as subsections (1) and (2).

Sec. 2-103. Use of information.

(a)   An official or employee may not disclose any information obtained in his official capacity or position of employment that is made confidential under state or federal law except as authorized by law.

(b)   An official or employee may not, directly or indirectly use or disclose information obtained in his official capacity or position of employment, that has not been made available to the general public, with the intent to result in financial gain for such official or employee or any other person or entity or to acquire or aid another to acquire, a pecuniary interest in any property, transaction, or enterprise that may be affected by the information, or to speculate, or aid another to speculate, on the basis of the information.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-104. Use of municipal time, facilities, etc.

(a)   An official or employee may not use or authorize the use of municipal time, facilities, equipment, or supplies for private gain or advantage of such official or employee, except to the extent that such are lawfully available to the general public.

(b)   An official or employee may not use or authorize the use of municipal time, facilities, equipment, or supplies for private gain or advantage to any private person or entity, except as authorized by legitimate contract, lease or that is determined by the board of mayor and aldermen to be in the best interest of the city.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-105. Use of position or authority.

(a)   An official or employee may not make or attempt to make private purchases, for cash or otherwise, in the name of the city.

(b)   An official or employee may not use or attempt to use their position to secure any privilege or exemption for themselves or others that are not authorized by the charter, general law, or ordinance or policy of the city.

(Ord. No. 5558, § I, 6-19-07)

Sec. 2-106. Violation and penalty.

Any person violating any section of this division shall be deemed guilty of an offense and upon conviction is punishable under the city’s general penalty clause or other applicable laws. An employee who violates any provision of this division is subject to disciplinary action, including termination from employment.

(Ord. No. 5558, § I, 6-19-07)

Secs. 2-107–2-125. Reserved.

Kingsport, Tennessee citizens – Ask for your money back

November 17th, 2008 No comments

Below is a Kingsport Times-News article submitted by Alderman Ken Marsh.  Also, there is a response to Alderman Ken Marsh’s article by Mayor Dennis Phillips, Vice Mayor Ben Mallicote, Alderman Munsey, Shupe, and Joh on the same day.  It does seem strange that Mayor Phillips would know of Marsh’s letter.  An explanation could be that Marsh could have shared it with Phillips or it was leaked after Marsh submitted it to the newspaper.

Alderman Marsh’s article to me comes across as rational and logical and he was respectful of BMA members by not naming and attacking them personally, whereas Mayor Dennis Phillips and gang comes across as attacking Alderman Marsh because his views are not shared by Mayor Phillips.  Mayor Dennis Phillips’ attacking behavior  and other BMA members is also displayed at BMA meetings.  See “Mayor has hissy fit and attacks Alderman on TV”, “More hissy fits in Kingsport, Tennessee Board of Mayor and Aldermen”

Mayor Phillips talks about justifying the spending and the ability to pay.  I am sure that there are banks, auto companies, insurance firms, investment  firms, local business owners, Kingsport citizens. etc., who never thought the credit crisis would affect them.  But we all have seen what has happened with all of the bailouts.  Kingsport would be wise to back off and not be running near the ragged edge as far as debt is concerned.

The “gang of five” response is they do not intend to return money to the voters/taxpayers that put them in office. In fact, there seems to be an obsession with spending and they justify it as investing in the future.  If things are going so well in Kingsport now as the “gang of five” wants us to think, then what is wrong with giving back to the taxpayers?

I am sure the “gang of five” does not want you to know about where the money is going to be spent.  How about the $40,000 study for Kingsport as a wedding location or the $81,410 for a out of state firm to recommend directional signs for Kingsport (signs not included)?   Kingsport spent  $140,000 for a church with no clear use for it.  I can name many more examples and my point is that with a single BMA meeting, they can vote to spend money and use up the yearly property tax revenue that MeadowView generates.  The current MeadowView hotel generates $106,110 per year in property taxes for the city.

The “gang of five” article states “Through projects like the Center for Higher Education, the Aquatics Center, and the V.O. Dobbins renovations, we will continue to transform our workforce, improve our citizens’ quality of life, and revitalize our community. These are the kinds of projects Alderman Marsh would curtail going forward” I cannot find anywhere that Alderman Marsh voted against the Center for Higher Education.  Alderman Ken Marsh voted against the Aquatic Center because of it’s linkage with the YMCA and Vice Mayor Mallicote also voted against it.  Alderman Marsh stated that his opposition to V.O. Dobbins project began after it expanded beyond the concept originally planned and he touted this as an example of unintended consequences, in that entities already established downtown will be leaving to lease space in the V.O. Dobbins Center.

The “gang of five” response talks about the $43.8 million in September and October 2008 investments.  But they don’t tell you about the $28 million tax break they gave Eastman.

I have put links into Mayor Phillips’ response so you can see for yourself what Alderman Marsh’s vote was, that Mayor Phillips said Marsh was against.

Also, see the following link for more background on MeadowView

Enough is enough…Ask for your money back!!

Alderman Ken Marsh Article

Kingsport residents should speak up and demand tax relief

Are your taxes being well spent?  Would you like to see taxes reduced with no impact on essential city services?  Do you believe there is room for better management in city government?

Money is the “mother’s milk of politics.  We have all witnessed reckless spending in Washington. The sad results are all around us.  Our financial day of reckoning is here. Fortunately, the Tennessee Constitution requires a balanced annual state budget.  Local governments should track the state practices but, in Kingsport, we have set out on a course of unprecedented deficit spending.

It is called living beyond our means.  In a word: debt.

In 1999, when I first was elected to the Kingsport BMA, we were essentially broke.  Over the following seven years Mayor Blazier, city managers Billingsley and Griffin and the city council repaired the balance sheet, paired down debt, raised taxes, rates and fees to provide excellent services, upgraded and expanded schools and put local government on a solid financial footing. As former city manager Griffin said after the recovery plan was put in place “whoever is in my seat in 2010 is going to look like a hero.”

In 1999 any type of capital improvement, be it water, sewer, schools, public buildings, facilities – all had to be bonded. In other words, there was no cash.  We were 100 percent deficit spending on capital projects.  The recovery plan fixed that. Many capital projects can and are now funded with cash.  We have significant pay as we go. But this is changing with the current administration.

Where total local debt could and should have been shrinking toward $100 million, we are on course for $190 million next year. And this ignores new projects that inevitably surface. Should we increase deficit spending in a time of unprecedented economic crisis?  Two issues on the horizon could easily add $50 million to the $190 million the city fathers are already on course to borrow. It is possible that Kingsport will have a quarter billion dollars of debt in the next three years. Is this what we want?

Beginning in 2010 there will be a surplus of cash.  Do citizens want it back or not?  The city manager has laid out a plan to borrow and spend millions of dollars for new expensive public projects.  These are not yet identified but staff and politicians will inevitably find a convenient way to borrow and spend your money.  Cash in government creates a vacuum. Every vested interest rushes into the vacuum to seize cash for their pet project.

A current example is the Meadowview Executive Conference Center project – $15 million of new debt is planned by special interests when the money could be returned to taxpayers. After all, it was Kingsport taxpayers who voted to take the risk, tax themselves, and spend money to build, operate and subsidize the conference center. Meadowview is a resounding success. I am proud of Meadowview. However, taxpayers could now get a direct return on investment by a tax reduction.

The BMA recently refused to even consider returning the cash flow from the quarter-cent sales tax to taxpayers. Instead, in a hasty decision, the BMA, without substantive discussion of the project or attractive alternatives, voted to take taxpayer money and service the special interests who rushed into the vacuum created by paying down the original debt.

In government, unattached cash always gets spent. It is never returned to the taxpayers. Why should you accept this?

Debt paydown in FY2010 creates over $2 million annually in currently uncommitted cash, growing to over twice that sum in 2019.  Here is another opportunity to provide broad based tax relief to our hard pressed citizens through a property tax reduction.  This reduction can be accomplished without degradation of essential services.  There will still be adequate resources for reasonable capital expenses, employee compensation, full city services and debt management without using the $2 million in uncommitted cash.

At the current city property tax rate of $2.30 per $100 adjusted valuation, a homeowner could realize a seven percent tax reduction each year starting in FY2010.  When is the last time your government took less of your money? People on fixed incomes particularly benefit from tax reductions.  That is money in a homeowners or small businessman’s pocket to pay down the mortgage or provide cash for other needs.

When is the last time your government took less of your money? People on fixed incomes particularly benefit from tax reductions. That is money in a homeowners or small businessman’s pocket to pay down the mortgage or provide cash for other needs.

Citizens, speak up. Ask for your money back. If you do not, the cash vacuum will simply result in more special interest projects. Do you want government spending more of your money or do you want to spend it yourself?

The choice is up to each of us. Speak up or pay the government.

Alderman Ken Marsh

Mayor Dennis Phillips Response

City government must maintain ability to invest in our future

What Alderman Marsh portrays as a painless cut in spending is actually a debilitating strike at our ability to invest in Kingsport’s future. The projects at which he aims his hatchet are long-range capital projects – projects that enable us to address our most crucial needs, and capitalize on our greatest opportunities.

Kingsport has made a stand with strategic investments that are diversifying our economy, creating jobs and recapturing business that once left for other areas.

Through projects like the Center for Higher Education, the Aquatics Center, and the V.O. Dobbins renovations, we will continue to transform our workforce, improve our citizens’ quality of life, and revitalize our community. These are the kinds of projects Alderman Marsh would curtail going forward.

At least in part due to initiatives supported by a majority on this board, Kingsport just recognized its seventh straight month of sales tax growth, up 7 percent since April, and at a time when the state is seeing dramatic budget shortfalls.

That is the kind of growth that keeps property taxes low for all of us.

We have other clear signs that we are on the right track – two straight years of record investment in our community,43.8 million in September and October 2008 alone.

We have 96 new single family housing starts for the year, and a new industrial facility that positions our manufacturing sector for success with an important new product.

New retail?   We’ve added a sparkling new Food City, Panera Bread, Ulta, Decorator’s Warehouse and Best Buy this year alone.

Downtown development? The new Regional Center for Health Professions has nearly 400 students studying in areas of solid job growth – nursing and medical technology. At the same time, those students help support downtown restaurants and businesses.

Meanwhile, steel is rising on a new Higher Education Center that will raise Kingsport’s competitiveness yet again by helping our own earn a college degree.

Our citizens’ homes are the biggest investment most of them will ever make, and the only way we can protect that investment is to continue improving Kingsport.

And, while homeowners in other major metros are worrying about depreciation, Kingsport continues to rank at the top for housing appreciation.

Through prudent investment, the BMA has helped set the stage for expanded private investment. Meadowview – where Alderman Marsh opposes any further investment – is a perfect example: Since that facility was built, the surrounding property value has increased by approximately $80 million (and counting). That’s new jobs and a level of national recognition that never would have been possible before. On every front, we have received an outstanding return on the taxpayer’s investment.

Alderman Marsh also ignores basic economic theory in his comments on debt. In and of itself, debt is neither good nor bad. The key is how one uses debt.

Both in the public and in the private sectors, debt is used to accomplish strategic objectives that could not be accomplished if they had to be funded solely from available cash. To operate on a cash only basis would require punishing levels of taxation.

And, by every measure, including those by national firms that rate the quality of our city’s debt, Kingsport is in a very comfortable position to repay. At the same time, we ensure quicker repayment by utilizing 15 and 20 year instruments, instead of longer term options.

Every member of this board is extremely mindful of family budgets worked out around the kitchen tables of Kingsport.

And, despite Alderman Marsh’s protestations, we are and will remain well below the board’s conservative debt benchmark, 10 percent of the assessed value of the city.

As Alderman Marsh points out, the entire five year capital investment program fits within the existing budget, while debt service as a percentage of our overall budget will shrink every year going forward, providing flexibility for future boards.

As for our property tax rate, the combined city-county property tax burden remains reasonable, falling between Bristol and Johnson City, and 11 percent below the most comparable city in Tennessee, Oak Ridge.

That one board member might, at last resort, suggest tax cuts as a way of stopping projects he voted against in the minority is regrettable.

If we pull back, as advocated by Alderman Marsh, we will stop growing, and rest assured, any tax cuts would be short lived – to say the least.

Let’s reject the tombstone mentality of the past and cast our lot with those who choose to move forward.

Mayor Dennis Phillips
Vice Mayor Ben Mallicote
Alderman Larry A. Munsey
Alderman Jantry Shupe
Alderman Valerie Joh

Kingsport, Tennessee BMA refuses to rescind Regional Sales Tax after it had served it’s purpose

November 11th, 2008 No comments

Alderman Marsh presented a resolution at the October 21, 2008 Kingsport Board of Mayors and Aldermen to eliminate the quarter percent sales tax that voters approved in 1992 to fund the Meadowview Convention Center.  The quarter percent regional sales tax had served it’s purpose and the convention center debt was paid off in 2008.

The resolution was to use a portion of the regional sales tax to reduce the property tax rate for citizens. The citizens of Kingsport could have received a reduction in their city property tax, but the resolution was quickly voted down by the “gang of five”. (Mayor Dennis Phillips, Vice Mayor Mallicote, and Aldermen Munsey, Joh, Shupe)  See Kingsport Times-News article  “Marsh urges scuttling MeadowView expansion

The decision of the “gang of five” showed their true colors by voting against the citizens for a property tax refund and instead voting for special interest groups.

Alderman Shull and Marsh have in the past tried to discuss the future of the regional sales tax, but Mayor Phillips would always table the discussion.  It is my feeling that Mayor Phillips had no intention of ending the regional sales tax and had plans to use it for MeadowView Convention Center expansion.

The October 21, 2008 BMA meeting got a little heated with Vice Mayor Ben Mallicote going on the attack, Alderman Joh stated that Aldermen Shull and Marsh were just sore losers.  Mayor Phillips stated that without MeadowView the city would have to raise taxes.  He also made a statement that MeadowView is needed to keep from reducing police and fire protection and doing trash pick-up every two weeks. Mr. Mayor, stop the spin, it may be news to you, the convention center has been operating at a loss and the taxpayers are in fact keeping the convention center in business.  The voters of Kingsport are smarter than you think, Mayor Phillips.

Maybe, I will in the future do a post about the wasteful spending in the City of Kingsport by Mayor Phillips and his gang.

Famous Quotes from the Kingsport Board of Mayor and Aldermen

Mayor Dennis Phillips – ‘We need MeadowView to keep from reducing fire, police protection, and reducing trash pick-up to every two weeks.” October 21, 2008

Mayor Dennis Phillips –“We need to annex so we don’t have to raise taxes”  February 5, 2008

Alderman Munsey – “We need to do the MeadowView expansion to keep from raising taxes” September 15, 2008

Alderman Munsey – Debt is neither good or bad,”   June 3, 2008

Vice Mayor Mallicote – “I do not believe all of the doom and gloom about the economy”.  June 3, 2008

Mayor Dennis Phillips – “If the taxpayers wanted the city to cut the spending, then we could collect garbage every other week”  June 3, 2008

Mayor Dennis Phillips – “If there were no money to spend, then you would not need politicians”  October, 2007

On September 16, 2008, the Kingsport, Tennessee Board of Mayor and Aldermen voted to spend $819,000 for an architect to design the $15 million expansion at the Meadowview Conference Resort and Convent Center.  This was brought quickly to a vote without much detailed discussion or input from the public.  There were discussions on using the regional sales tax to fund the convention center expansion.

Again, this vote was another example of railroading a vote.  Alderman Marsh expressed concern that this was voted on within 24 hours and that there had not been ample time to study the the financial numbers.  He also asked what is in it for the citizens of Kingsport.  He said that this is more for the special interests of certain people.  He attempted to defer the vote to the latter part of October, but Alderman Marsh’s and Alderman Shull’s votes were not enough to postpone the vote.

Simply put, this is an example of the City of Kingsport catering to special interest groups and there seems to be no value to the citizens of Kingsport.  See posts Kingsport, Tennessee incestuous relationship with special interest groups, Convention Center issues plague cities, and More hissy fits in Kingsport, Tennessee Board of Mayor and Aldermen for more background information.

What are you views on the action of the BMA to not give back to the taxpayers the regional sales tax?  Leave a comment.

Kingsport, Tennessee Board of Mayor and Aldermen 2009 Election

November 7th, 2008 No comments

I am sure that most of you have had enough of elections lately, however there will be an election to elect members of the Kingsport, Tennessee Board of Mayor and Aldermen whose terms expire June 30, 2008.  The BMA members with expiring terms are listed below.

The election will be held in May, 2009 and candidates should be making their announcements sometime in the first quarter of 2009

Mayor Dennis PhillipsVice Mayor Ben Mallicote Alderman Valerie
Joh
Alderman Pat
Shull

Below, are the results of the last election for the City of Kingsport, TN. The number of people voting in this election has a lot to be desired for a city that has a population about 45,000. In the chart below, Dennis Phillips was elected as Mayor and Marsh, Munsey and Shupe were elected as Alderman. It is quite apparent that people are not getting involved in local politics, but do have an issue with the local politicians when things don’t go their way

There are a total of seven BMA positions that are determined by local elections. The BMA members choose the position of Vice Mayor. There are a five Alderman, Mayor, and Vice Mayor that make a total of seven votes on the Board of Mayors, and Alderman.

If you are happy with the current direction that the current BMA is going, then that is fine. But, if you have concerns, then you need to get involved and cast your vote.

East Tennessee city continues big spending while taxpayers suffer

October 12th, 2008 No comments

Kingsport, Tennessee – With the economy the way it is now, one thing is certain that the citizens are asking, how did this happen?  The finger is pointing at the elected government officials and the financial community as the culprits.

Families are having a difficult time surviving this crisis and there is much anger when one’s retirement saving disappear.

The bottom line cause of this is GREED!

One would not know that there is an economic crisis in Kingsport in the way that the city is spending money.  It appears that it is business as usual spending the taxpayers money.

Lately, the City of Kingsport has approved and will spend  $15 million for the Aquatic Center, $8.7 million for V.O Dobbins Renovation, and $12.5 million for the MeadowView Convention Center.  Also, the Kingsport Board of Education is on a land grab kick by buying up properties around schools.  I could list many more examples of out of controlled spending, but I think you get the point.

The five BMA members below are the BIG Spenders of taxpayers money (gang of five)

Mayor Dennis Phillips *Vice Mayor Ben Mallicote *Alderman Larry MunseyAlderman Valerie Joh *Alderman Jantry Shupe

Alderman Marsh and Shull below have shown the most restraint in spending the taxpayers money.

Alderman C. Ken Marsh, Jr.Alderman Pat Shull *

* Term expires June 30, 2009

Express your views to the BMA if you have a concern with the spending.  Should we have a petition to remove certain BMA members from office?  You can leave a comment on this blog, write letters to the local newspapers, tell your friends, go to BMA meetings and express your concerns on TV, etc.

Kingsport, Tennessee incestuous relationship with special interest groups

September 26th, 2008 No comments

The citizens of Kingsport, Tennessee need to be aware of the decision by the Kingsport, Tennessee Board of Mayor and Alderman to use the taxpayers money to build an executive conference wing onto the City of Kingsport MeadowView Convention Center. The Board of Mayor and Alderman railroaded this to a vote at the September 15, 2008 BMA meeting without public input. It is estimated that the expansion will cost $14 to $15 million dollars.

Alderman Shull and Marsh voted against the expansion, while Mayor Phillips, Vice Mayor Ben Mallicote, and Aldermen Valerie Joh, Larry Munsey, Jantry Shupe voted to proceed with the expansion. See More hissy fits in Kingsport, Tennessee Board of Mayor and Aldermen.

BMA members below that voted for the expansion at MeadowView Convention Center (gang of five))

Mayor Dennis PhillipsVice Mayor Ben MallicoteAlderman Larry MunseyAlderman Valerie JohAlderman Jantry Shupe

I am very passionate about this expansion and feel it is the worst decision the Kingsport BMA has made lately.

First of all, I do know a thing or two about hotels, meeting facilities, conventions, and trade shows. I have literately stayed at many thousand overnight stays at hotels and have participated in setting up meetings, conventions and trade shows across the Untied States. I have worked with events planners from major corporations to set up meetings. I have also worked with major corporate hotel owners to help them promote their hotels and conventions facilities in many cities.

The current MeadowView Convention Center was paid for using the sales tax that voters voted on some years ago. However, the convention center debt is paid up, but the City of Kingsport is still pouring money into it because it is not a profit maker.

Now the city wants to expand it and build a plush executive type facility that could cost up to $15 million dollars. The risk is upon the citizens of Kingsport who as taxpayers will be footing the bill. The city is proposing to pay for the expansion out of the regional quarter cent sales tax rate that the voters approved in 1992 for the construction of the original convention center.

If this expansion is such a great idea, then why not share with the citizens of Kingsport the business case or economic justification for the expansion.

It appears that this expansion will cater to the special interests of firms/people who desire this expansion, but are not at risk, because it is not their money. The incestuous relationship by Mayor Dennis Phillips, Vice Mayor Mallicote, and Aldermen Munsey, Joh, Shupe with special interests groups should be of concern to the citizens of Kingsport.

With the glut of similar available facilities that Kingsport wants to build, it is beyond me how Kingsport can justify this expansion.

Kingsport, Tennessee is not the easy to get to if traveling by airplane. Companies look at how long it takes to travel to a convention site. The small size of the TriCities airport and the available airlines servicing it makes it undesirable. Flying into Knoxville is better, but again the available flights are limited and the Knoxville airport is two hours away.

Companies also look at the attractions that the convention site area has to offer. Kingsport does not have the attractions that are needed for diverse convention attendees. Sorry Kingsport, golf does not appeal to everyone. Also, the smell from Eastman makes undesirable for out of town people.

Companies will ask for deep discounts on hotel rooms or convention facilities. Will Eastman Chemical Company, the owner of the hotel give the discount or will the taxpayers absorb the discount for the it’s convention facility use?

I would propose that Kingsport sell the current convention facility to Eastman. It appears that they benefit the most from the convention facility. The Kingsport Chamber Of Commerce operates Kingsport Convention and Visitors Bureau and their members also will benefit. If there are others that feel that the expansion of the convention center is needed, then let them build it with their money.

Kingsport have stated that they have talked to companies about this type of executive conference center. What Kingsport needs to do is ask for advice from the CEO’s of companies they have talked to. Tell the companies that about twelve years ago, the City of Kingsport invested $19.5 million dollars to build the Meadowview Conference Center, but the conference has not been a money maker and the city has to put money in to keep it going. Tell them that Kingsport is going to make it better/bigger and put up to $15 million dollars into a expansion. Also, tell them that the city owns the adjoining Cattails golf course, that cost $6.2 million dollars and is not a money maker. Tell them that the convention center helps line the pockets of Eastman by driving sales to the Eastman hotel next door. Based on the above, ask them if they would invest in the expansion considering the competition in the convention business and the glut of conventions centers. If they say that they would invest, then ask if they would build it.

If building a new convention center in Kingsport is such a wonderful way to make money for our community, why isn’t some wealthy business person or company telling the city, “I’ll build the convention center and let you use it (at a cost of course).”

Since this is such a brilliant idea, don’t you think that some venture capitalist would seize upon the opportunity and run with it?

The simple answer is it’s not worth the risk.

Venture capitalists are in the risk/reward business. The bigger the risk, the bigger the reward. But successful venture capitalists weigh the risk before they make an investment, and if the risk is too big they won’t do the deal. It seems to me that the lack of any real business people putting their own money into this project is a clear indication that the risk is not worth the reward.

With all of the down-side associated with this project, no business person in their right mind would put their own money into this thing. So why in the world are our elected officials willing to do this project?

The simple answer is that it’s not their money they’re playing with, it’s ours.

And that’s why it’s worth the risk.

Express your views to the BMA if you have a concern with this expansion. Should we have a petition to remove certain BMA members from office? You can leave a comment on this blog, write letters to the local newspapers, tell your friends, go to BMA meetings and express your concerns on TV, etc.

Below is some background information from the Brookings Institution.

Space Available: The Realities of Convention Centers as Economic Development Strategy

Heywood Sanders

The Brookings Institution

To cities the lure of the convention business has long been the prospect of visitors emptying their wallets on meals, lodging, and entertainment, helping to rejuvenate ailing downtowns.

However, an examination of the convention business and city and state spending on host venues finds that:

  • The overall convention marketplace is declining in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community, contrary to repeated industry projections. Moreover this decline began prior to the disruptions of 9-11 and is exacerbated by advances in communications technology. Currently, overall attendance at the 200 largest tradeshow events languishes at 1993 levels.
  • Nonetheless, localities, sometimes with state assistance, have continued a type of arms race with competing cities to host these events, investing massive amounts of capital in new convention center construction and expansion of existing facilities. Over the past decade alone, public capital spending on convention centers has doubled to $2.4 billion annually, increasing convention space by over 50 percent since 1990. Nationwide, 44 new or expanded convention centers are now in planning or construction.
  • Faced with increased competition, many cities spend more money on additional convention amenities, like publicly-financed hotels to serve as convention “headquarters.” Another competitive response has been to offer deep discounts to tradeshow groups. Despite dedicated taxes to pay off the public bonds issued to build convention centers, many—including Washington, D.C and St. Louis—operate at a loss.

This analysis should give local leaders pause as they consider calls for ever more public investment into the convention business, while weighing simultaneously where else scarce public funds could be spent to boost the urban economy.