2025 3 18 Packet 2

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FINANCE DEPARTMENT

MEMORANDUM

TO: Randy Dowling, City Manager
FROM: Mike Keith, Director of Finance
DATE: March 5, 2025

SUBJECT: City Schools Proposal to Reduce $700,000 Annual Payment to $450,000

| have reviewed the request by Athens City Schools to reduce the $700,000 annual payment to
the City toward the debt payment for the new school building. Page 2 of the request lists a total
of $1,998,000 and the second page lists a total of $2,450,000 for projects and neither of these

amounts include kitchen equipment, sprinkler system or various items needed for the classrooms
or library.

The Schools provided $500,000 in June of 2023 to go toward the building costs. | would
recommend that we return this amount to them to go toward Westside. | am also going to
request that we provide $500,000 out of our Capital Fund. In 2015, the Council and the Schools
agreed that the property tax would be increased to generate $425,000 per year to pay the debt
to be issued for upgrades to the existing facilities. Shortly after the tax rate was increased and
the tax bills mailed out, the Schools came back and said the original amount requested was not
sufficient and this led us down the road toward the new school building. We have held these
funds in reserve to go toward the building project and we were planning to transfer them to the
School Debt Service Fund this year to go toward the debt. Since this $425,000 has been sitting
in the Capital Fund since early 2016, | think increasing to $500,000 is reasonable since it earned
interest during this time. Many of these years it was very little because of the very low interest
rates but the past two years have been around 5% in the LGIP account. This will take care of at
least 4 years of the $250,000 request. At the end of the 4 years, it can be looked at again. This
would involve no change to the agreement approved in August of 2020.