Board of Finance to give library $10 million and line of credit
The library and the finance board reached an agreement Tuesday that says the town will give the library a $10 million grant for the new nearly $38.5 million library project as well as a line of credit.
Board of Finance members suggested last Thursday that the town could loan the money for the new library. Library officials were concerned about holding up the 42,642 square-foot new building project any longer to take time out to investigate financial alternatives.
The library had hoped to break ground in June, but the timetable was already pushed back due to considerations by the Planning and Zoning Commission.
In less than a week since their last meeting, the Memorandum of Understanding was revised and then agreed on between the library and the finance board .
“Thank you for expediting this process,” said Bob Butman, chairman of the library board. “It is exciting.”
Butman added that he hopes that the public will see construction starting on the site by late September or early October.
The board took two votes Tuesday — one to revise the Memorandum of Understanding and another to approve the bond offering for the $10 million. Both motions passed unanimously. Next, the Town Council will be asked for approval.
“We do have a deal. We worked very closely with our colleagues at the library to put together the best solution for both the library and the town,” Board of Finance member Chris Le Bris said.
In the revised Memorandum of Understanding, the town will give forth a grant of $10 million to the library for the project and the library will be responsible to pay the balance of the project cost. If the cost of the building project exceeds $39.5 million, “the town will have no obligation to provide additional funding for the excess cost,” the agreement states.
The town will also assist using a line of credit which will not exceed onethird of the cost of the project, have a term of 10 years from the library’s first draw, an interest rate of .25 percent and states that the library can repay without penalty, according to the agreement.
The library’s payment obligation will be secured by the agreement not to sell or mortgage the property without the prior written approval of the town bodies.
“This is between the town and the library, and I think it is important for everyone to understand there is trust and good will on both sides,” board member Colm Dobbyn said, explaining it is not consistent with an agreement between two business entities. “Under the circumstances, it is adequate to protect the town for what we want to achieve.”
The line of credit is not intended to be used for permanent financing, but rather to facilitate the processing of payments during the course of the building project, the Memorandum of Understanding states.
Last week, to explain the financial alternatives the town could tender, CFO Lunda Asmani introduced the town’s Bond Counsel, Sandra Dawson of Pullman & Comley.
Dawson explained the town could offer short-term financing “similar to a bonding issue” and “the library would be responsible for paying back that funding” in the range of $7 million above the grant.
The library would be asked to pay back the town as they would with a bank, but the town loan would cost considerably less than the four percent financing they may be required to pay by a bank.
Butman had said he worried about the “public opinion” if the library were to recieve any more money from the town than the $10 million requested through the grant.
After the two votes on Tuesday, Executive Director of the Library Lisa Oldham thanked both the library board and finance board “on behalf of all of those people who let us know everyday” that the new library is “something the community wants so badly.”
To date, the library has raised over $17 million from 250 families for the new building, which is planned to have spaces for “experiential learning” with a teaching kitchen, co-working areas. a large living room with a fireplace and a business center.
Paul Stone, a consultant for the library, last week said he feared subcontractors would start working on other projects if there was a further delay on the project, while the Board of Finance researched options. He said he just wanted a promise for the original grant request.
Chairman Todd Lavieri said that if there is a way to save taxpayers money, they should look at it.
On Tuesday, the finance board did not mention concerns regarding the appeal the New Canaan Preservation Alliance filed with the state Superior Court to overturn the town’s Planning and Zoning Commission’s approval. Last Thursday, the Board of Finance had met in an executive session to discuss the appeal.