Legal representation for the City of Lakeland will be in court at 10 a.m. tomorrow morning (12.13.17) for a hearing regarding a lawsuit filed against the City.
Link to court hearing: https://apps.shelbycountytn.gov/CourtApps/casesDC.xhtml
The lawsuit, filed Friday (12.8.17) by Cary and Lillie Melton, asks the court to stop efforts to fund school capital improvements, require a referendum to let voters determine whether to proceed on bonds to fund the school projects and address alleged violation(s) of the Tennessee Open Meetings Act.
Representing the City will be attorneys A C Wharton, former Memphis Mayor, and Van Turner, Shelby County Commissioner.
The Board of Commissioners and its legal team appear to be confident they will prevail against the lawsuit designed to halt a high school expansion to the current middle school.
Link to story about lawsuit: https://lakelandcurrents.com/lawsuit-filed-against-city-idb-by-lakeland-residents/
At tomorrow’s hearing before Chancery Court Judge Walter Evans, the City’s lawyers will likely request that the suit be dismissed as frivolous, but bond experts would still not be able to go to market until the thirty day option to appeal has expired or the lawsuit is withdrawn.
Changes to tax law affecting bond refinancing under the Trump tax plan prompted Lakeland officials to pursue lease revenue bonds through the Industrial Development Board (IDB) instead of general obligation bonds. The Mayor and Commissioners have expressed concerns in multiple meetings over impending changes to the law as well as potential interest rate increases experts predict may occur in the near future.
City leaders’ commitment to complete the high school without increasing taxes appears to hinge on their ability to complete the deal prior to the tax law changes and/or any significant uptick in interest rates. During last week’s meeting Mayor Bunker said, “a tenth of a percent increase on a $50 million dollar issuance is significant.” He explained that substantial increases created by delays could cause costs to exceed projections the City used to determine affordability.
The Mayor and Board of Commissioners have cited the abbreviated timeframe required to take lease revenue bonds to market as their reason for choosing that particular funding mechanism. Experts have advised that delays caused by that the general obligation bond process would prevent them from going to market before January 1st when tax law changes are expected to go into effect.
Information presented by Public Financial Management (PFM) at last week’s meeting indicated that interest rates were approximately 3.5 percent if the bonds went to market at that time. They also provided their analysis of both funding paths which showed that the lease revenue bonds would end up being approximately $1.3 million less expensive than general obligation bonds when all factors were considered.
If the lawsuit filed by the Meltons is resolved in tomorrow’s hearing, the bonds could go to market in plenty of time for the school to open in 2020 as originally planned.
