Tifton Gazette


February 20, 2014

Tifton officials: We’re paying off Citynet

TIFTON — During a called meeting Thursday evening, the Tifton City Council unanimously voted to pay off the telecommunications debt. Mayor Jamie Cater was absent due to illness. Vice Mayor Johnny Terrell led the meeting.

Prior to the called meeting, the council discussed the telecommunications debt during a workshop. City Manager Larry Riner presented a PowerPoint slide show indicating the total principal for the original 20-year telecommunications loan was $6 million with an interest of $4.5 million. He explained the council authorized management to go back and renegotiate these loans, which was done last year.

He said they were able to rework the loan from a 20-year note at about 5 percent interest down to a five-year loan at 3.25 percent interest. This saved the city $2.9 million. He said that enabled them to go from a 20-year note down to five years.

“That’s a good thing, but now we have a better idea,” Riner said. “We want to pay it off.”

He said in the Special Purpose Local Option Sales Tax V referendum, citizens of Tifton voted to allow $4.5 million of the referendum to go to retire the telecommunications  debt.

“By doing that, that actually dropped the monies that we were going to have to contribute from six different funds within the city by $4.5 million and that left us with a $1.5 million principal. That’s a good thing,” he said.

Management is proposing that the council allow them to use $2 million of the collected SPLOST V funds to retire part of the principal. He noted that over the years they’ve had money set aside in all the various funds, such as water and sewer, gas, solid waste, enterprise and general, to set aside this debt. He said they’ve accumulated about $1.9 million across the board in those funds.

“That is specifically to retire CityNet debt. It can’t be used for anything else,” Riner said. “So between the SPLOST monies that have been collected thus far and the monies that have already been set aside to retire the debt, what I’m asking council to do is authorize management to go ahead and retire $3.9 million of that CityNet debt. A hundred and some odd thousand of that is interest and the remainder is drawing down the principal that we have to pay. That’s part one of the plan. We want to make that payment March 1.”

He said part 2 of the plan is to continue to use the remaining $2.5 million that was authorized through SPLOST V to retire the remainder of the debt, which includes interest and principal, by March of 2015.

“That allows us in the FY15 budget, which is coming up July 1, to not have to budget any monies out of any of the city’s funds to retire the debt,” Riner noted. “Everything will be coming out of SPLOST money to retire the remainder of the debt. We asked for a five-year retirement plan of the debt, now we’re asking to shorten that to 18 months.”

Council members unanimously voted to approve the resolution providing for retirement of the debt. According to provided information on the payoff plan, the city will save more than an estimated $400,000.

According to a past Tifton Gazette article from May 2008, the city of Tifton launched CityNet in October of 1999. By mid-May of 2002, James Herring, the city’s accountant, reported a net loss of $1.2 million for that year but attributed the problem to “a lag between start-up and full operation.” In late 2005, a news conference was held to dispel rumors that CityNet was being sold to Plant Telecommunications. The city then released a statement saying that CityNet “is financially solvent with positive cash flow.” In March 2008, The Gazette again reported CityNet had lost $783,345 during the fiscal year that ended June 30, 2007, and was the only enterprise fund that owed money — more than $2 million — to other funds/departments. The article stated, “Approximately $13 million in debt, it is not known if the sale of CityNet would resolve the debt issue for the city.”

Then, in August 2009, The Gazette reported that Plant Telecommunications was planning to purchase CityNet from the city of Tifton for $3 million cash and provide the city with Internet services for 10 years. The article additionally stated the city would still owe approximately $7 million in bonds that funded the project over the years, but contended that paying the money back wouldn’t require a tax increase.

To contact reporter Latasha Ford, call 382-4321.

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John Gamble (right) is joined by John Reid at the Tiftarea YMCA Saturday.

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