Should Knox Public Building Authority compete with private companies for business?

Should Knox Public Building Authority compete with private companies for business?

By GENE PATTERSON
6 News Anchor/Reporter

KNOXVILLE (WATE) -- Should government compete with private companies for business? A local businessman believes the answer for most people is no.

Yet, contractor Sandy Loy says it's a practice that's been going on for years. And now he's calling for changes in state law that allow this to happen. 

Loy is waging what some consider a one man crusade against the Public Building Authority. It serves Knox County and the city of Knoxville.

He says PBA's practice of competing for work outside the county with private business is wrong. 

Loy asks why an entity which operates with his tax dollars is able to turn around and compete for his business? 

"They don't have overhead problems," Loy says. "If their overhead goes up, they go to county commission and get more money. And the money they're getting is the same money that they're competing with private business for. And anybody with common sense knows that just isn't right," he says. 

The PBA was created in the 1970s to facilitate construction of the City County Building.

Since then, other PBAs have been created in Tennessee and in other states, mostly to finance bonds.

Knox County's PBA does more. It manages construction projects and, in more recent years, does facility surveys for other counties. 

"Nobody in the country allows their public building authorities to operate the way they do in Tennessee," Loy says. 

But PBA Executive Director Dale Smith says the public shouldn't worry that PBA is out chasing business. 

Smith says PBA doesn't solicit. It only works with counties that approach it. 

Smith adds, "Any fees that we garner from that type of work offset the costs that Knox County has already covered. So not only are we saving our neighbors money in terms of how much it costs for us to do the work, but we're saving Knox County taxpayers the fees that we generate from that." 

But Loy's not convinced and says others share his concerns. Those concerns, at least now, don't extend to the city or county. 

City spokesman Bill Lyons says, "The city has never indicated that this was a problem. If it helps PBA's bottom line, then it helps the city." 

Dwight Van DeVate, the spokesman for Knox County Mayor Mike Ragsdale, echoed that sentiment saying, "If PBA competing out of county helps make it more competitive in Knox County, then that's what we want because that saves taxpayers money." 

Three years ago, PBA performed a study for Loudon County Schools. County Mayor Doyle Arp says not only has the study been accurate, it's also saved the county plenty of money. 

On the front end, "Probably $100,000 to $150,000, that's a good savings for a small county, yes it is," Mayor Arp says. 

And on the back end. Mayor Arp says prior to PBA's study, Loudon County was told its school building program would cost in the range of $120 million. 

PBA's estimate was half that. "PBA came in with a study that was going to cost us about $47 million," Mayor Arp says.

He also says the school board was initially skeptical, but now, "Even the school board is down to that number."

"If we're saving our own taxpayers money and we're saving our neighboring taxpayers money, I don't see where that's a bad thing," Smith says.  

But Loy counters that, saying elected officials shouldn't confuse short term savings with long term goals.

Loy says it may not be a problem for local municipalities now, but one day it could be as fewer and fewer businesses are around to pay taxes. 

"It's not a problem for them, but it's a problem for taxpayers' businesses who they're taking food off their table. And it's a problem for middle class families who work for those businesses."

Loy does have an ally regarding this issue, former PBA Board Member David Moon. He agrees with Loy, that PBA shouldn't compete with companies that pay taxes which fund PBA's operations.

"Public building authorities can get into trouble or create problems when they expand their reach beyond their intended initial purpose," Moon says.

Knoxville State Rep. Bill Dunn has become interested in this issue. Last session, he filed a caption bill, essentially a bookmark for any future legislation.

Dunn says he isn't convinced yet that changes in the PBA's enabling legislation are necessary. But he says he's not ruling out that possibility either. 

"Current state law says they can go anywhere in the state and do construction projects and so that's one concern," Dunn says. "The second concern is how projects are bid out. Who's selected." 

Dunn says he's talking with a number of parties and hopes to come up with solutions for everyone, which he says could mean changing state law or working more closely with PBA's board.