Brentwood City Manager Mike Walker

By SUSAN LEATHERS
Brentwood Home Page
The Brentwood City Commission on Monday authorized the issuance of two bond measures.

The first, a General Obligation Public Improvement Bond, Series 2011 not to exceed $5.1 million, will be used to complete the purchase of Marcella Vivrette Smith Park. The purchase of 320 acres of the historic Ravenswood Farm for $10 million was announced in November 2010. The sale closed in late December 2010. The city paid $5 million cash and announced at that time it would sell municipal bonds to finance the balance.

In addition, the city’s financial advisor, Rick Dulaney of Morgan Keegan, recommended to the commission that the city refinance portions of up to $7,850,000 in current outstanding debt at present low interest rates which would save the city a projected $493,000 over the course of the next 12 years.

In response to the commission’s actions as well as the current national financial climate, Brentwood Home Page sat down with City Manager Mike Walker for clarity on the city’s financial picture and what effect the nation’s current economic status might have on the city.

Brentwood is one of only three cities in the state, and Williamson is one of only two Tennessee counties, that have AAA ratings from Moody’s Investors Service and Standard and Poor’s. What does this mean for the city, specifically in regard to the Monday’s authorizations?

In these uncertain financial times, investors are seeking the safest places to place their funds. Having an AAA credit rating makes our tax exempt bonds very attractive for the long term investor.  Only 199 cities and less than 4 percent of the local governments in America have AAA credit ratings, so we expect there will be much demand for our bonds, with a very low interest cost to the city. The true interest cost for selling 20 year, fixed rate bonds is projected to be less than 3.5 percent.  

Who purchases municipal bonds and how?

Our bonds will be sold competitively so we expect investment banks from across Northern America and possibly Europe will submit bids. We could have 10 or more financial institutions interested in buying our bonds. That said, our bonds will be very attractive to Tennessee investors because they are not only exempt from federal income taxes but the Tennessee Hall Income Tax too.  

In a nutshell, what direct impacts, if any, does the downgrade of the nation’s AAA rating have on our local economy?

While I cannot speak on the global impact, the downgrade is not expected to have any impact on the City of Brentwood’s credit rating or our ability to sell bonds. We have a diversified employment base and a balanced revenue structure that is not heavily reliant on either property taxes or sales taxes. More importantly, we are not dependent on federal grants or employers that are funded by the federal government.     

The city’s financial position is in excellent shape due to the overall budgetary direction of the Board of Commissioners and our conservative management practices. We compare very favorably with other AAA rated cities in the core measurement areas such as General Fund balance as a percent of revenues, debt service as a percent of operating expenditures, and median family income as a percent of the state and USA. Our residents have benefited directly because the City of Brentwood has operated with the same effective property tax rate for 21 years in a row.

Williamson County’s debt service has been in the news in recent months as some members of the County Commission have sought to have it reduced. What is the City’s outstanding debt today and annual debt service obligation?

The City of Brentwood has General Obligation debt effective June 30, 2011 totaling $27 million and $23 million in water and sewer improvement debt funded separately through the monthly utility bills. By practice, the city limits its new GO debt issues to $5 million every other year. We have reached the point where we are able to issue new bonds for road and park improvements, the library, etc and not incur any significant increase in the annual debt service payment of $3.1 million due to the retirement of existing debt.

Brentwood weathered the recession reasonably well. What’s the outlook, both on the commercial and residential side, as far as revenue growth?

The Brentwood economy is definitely improving regardless of the national events of the past month. Our local sales tax collections increased in the fiscal year ending June 30, 2011 by 8.4% compared to the overall increase for the State of Tennessee of 4.7 percent. New housing starts for 2011 are expected to reach 200 which is in line with the historic average since 1990 of 250 annually.

The 4 percent of the land in Brentwood that is zoned commercial generates almost 60 percent of the General Fund taxes – money that essential for paying for the quality of life that we enjoy in the neighborhoods and for keeping our city property taxes low.

With new office development anticipated off Virginia Way, the recently approved Bristol at Centerview project, and possibly other redevelopment projects in the future, the Maryland Farms/Town Center/North Brentwood commercial area is posed to remain competitive in attracting and retaining business and generating new taxes in the years ahead.