Lakeland's Board of Commissioners Thursday night took the first step toward lowering the city’s property tax rate as a Department of Agriculture loan to fund a new high school nears the final stages of processing.

The commissioners amended an ordinance passed in May that raised the property tax rate from $1.25 to $1.89 per $100 of assessed valuation. The tax was raised to fund a possible capital outlay note to fund the new high school. The outlay note was a backup funding plan for the school in case the USDA funding option was not approved.

But after a long discussion Thursday, commissioners approved 3-2 a resolution lowering the tax rate from $1.89 to $1.20. That figure is even lower than the $1.25 city officials originally planned. City Manager Shane Horn and Finance and Human Resources Manager Kyle Wright recommended against the resolution. 

“The budget is built around $1.25, and we’re very comfortable where that’s at,” Horn said.

Based on his calculations, Vice Mayor Josh Roman initially brought forward the idea of a $1.14 property tax rate, but he settled on a motion to make it $1.20. The motion was supported by Commissioners Wesley Wright and Michele Dial.

Kyle Wright argued that number would not be enough to cover services needed to the community, especially considering that sales tax numbers were coming in lower than expected so far this year and a recession could be looming.

“It would be difficult, putting it mildly, for us to provide the same level of service, to continue to pay the debt service that we owe on the bonds, as well as possibly pursue any additional activities that we want to do in the future at a tax rate of $1.14,” he said. “It’s difficult to do that at $1.25. Assuming that nothing changed from last year’s budget to this year’s budget, we should say $1.25 should be the minimum in order for the city to continue to operate on any level.”

But Roman believes reworking the numbers will free up more than $1 million.

Under the USDA option, $40 million will be earmarked for the new school, roughly $16 million will be used for the refinancing of previous debt service for the 2015 loan to build the middle school and $6 million will go to public works projects.

Finalizing the property tax decrease will require a second reading at a special called meeting later this month.

USDA representatives Terence McGhee and Alyssa Armstrong traveled from Nashville to give a status update on the loan process.

“School projects are important to us because there are a few things we know about school projects. If you have quality education in the community then you’re, one, growing your workforce. That’s the investment,” said McGhee, who is one of 80 USDA agents serving 95 counties in Tennessee.

Last year, the USDA’s Community Facilities Program had about $2.8 billion in programing.

“We’re fortunate to be able to have that program in Tennessee, and we look for communities just like (Lakeland), where we can provide those resources and investments,” McGhee said. “Once we saw that we could get involved, we made the contact. And we were aggressive, just to be frank, because we know what this can do for a potential community.”

The three-pronged approach to the funding includes the financial component, the preliminary architectural report and an environmental component.

“I’m happy to tell you we’re pretty much done with all of those,” McGhee said.