Athens City Council reconsiders funding for Cain Center project

(UPDATE: Information added regarding what would happen to the Certificates of Obligation if a bond election is called.)

By Michael V. Hannigan/HCN

A change of direction by the Athens City Council could send the Cain Center rehabilitation project to the voters for approval, Mayor Monte Montgomery told area reporters Monday afternoon.

According to Montgomery, during a workshop meeting last week council members discussed concerns over the budget impact of not only the ongoing cost of running the Cain Center, but also the cost of the debt for the construction.

Because of those concerns, members of the council asked staff to explore partnering with another entity — either the hospital or the county — to defray the cost. If that doesn’t work, they would like to explore putting the Cain Center question to the voters in the form of a bond election instead of paying for the project with the previously planned Certificates of Obligation (COs).

The change from COs to a bond would be significant because while both are repaid through taxpayer funds, a bond would come with a corresponding tax rate increase while the COs do not. Also, if a bond was defeated it would likely mark the end for the Cain Center.

If a bond were approved by voters, the council would have a few options for dealing with the existing COs. The money could be sent back or it could be used for a limited number of projects, including on the water system.

It is unclear what direction the City Council will take at this time, but Montgomery felt the possibility of a bond election being ordered is strong enough that he called a rare meeting with the local press to explain the issue ahead of Monday night’s regular City Council meeting. Councilman Ed McCain also joined the meeting.

So, why is the council considering such a major change two years into this process? That’s a complicated question.

The Cain Center’s problems — both in need for maintenance and funding — have not been secret.

During the budget process in 2015, the City Council tried to cut some funding to the Cain Center but a public outcry caused it to change its mind.

That moment was important because it highlighted the Cain Center’s needs, with members of the Cain Center Board saying even with the City’s money there was a budget shortfall.

When the 2016 budget cycle rolled around and the Cain Center budget looked the same, the City Council and Cain Center Board came up with a radical solution. In August 2016, it was announced the City would take over the Cain Center and it would become a combination of public recreation and municipal offices, including the police department.

In October 2016, the City Council agreed to issue up to $12.5 million in Certificates of Obligation, with $10.5 million of that for the Cain Center and municipal buildings project.

The Cain Center closed its doors on January 1, 2017 as scheduled — but that is last time anything with the project went as planned. Questions about the design and rising costs have been issues from the beginning, and plans to use the building for municipal offices went out the window with the discovery of a deed restriction forbidding such use.

Montgomery and McCain, the two remaining members of the 2016 council, have been vocal about being misled about the Cain Center details by the former city manager, Philip Rodriguez, who spearheaded the project before he left in September 2017.

In a November 2017 interview, Montgomery said, “The numbers given to the council by previous staff were not a true reflection of the costs that the Cain Center remodel could actually cost.”

Now the City has a much better idea of the cost of rehabbing and then running a new Cain Center, and the price tag is high.

According to Councilman Aaron “Bubba” Smith, the combined cost of paying back the Certificates of Obligation and what the City would have to contribute to run the Cain Center will be about $700,000 a year.

“If you add up the figures over a 23-year amortization that it’s going to have, it’s a big figure,” said Smith.

In arguing for a bond election he said, “I just believe people ought to have a chance to say, ‘Yes, I want you to do this. Yes, it is going to raise my taxes and I understand that.’”

As for taxes, Smith and Councilman Robert Gross agreed that the Cain Center project would make them go up.

“It will raise taxes,” said Smith, “Robert was right earlier. Yes, they probably issued the COs and that probably didn’t raise taxes, but the subsidy and everything that we’re going to see that comes with … is going to raise taxes.”

With that reality in front of them, council members Monday night decided to push pause on the project. They are expected to take up the question again in an upcoming meeting.

While council members have differing ideas on how to move forward at this point, they have all been at pains to say this isn’t an antagonist process and that everyone wants what’s best for the City.

“Everyone of us has agonized about this,” said Councilwoman Toni Garrard Clay. “Whatever side of the issue you come down on this, we are really trying to do what’s best.”

McCain said, “What I would ask the citizens to believe is that the City Council wants to do everything it can to save the Cain Center and all of our actions, from the original conceiving of this idea to (today) is in that path — trying to save the Cain Center.”