New London council approves moving forward on $3.9 million library grant despite federal funding caveat

The New London Common Council and the New London Public Library Museum Board voted to proceed with the city's library renovation work and to authorize execution of the State of Wisconsin Flexible Facilities Program grant agreement despite a newly added clause saying federal funding availability could affect final payments.

City staff opened the Oct. (date not specified) joint meeting by saying the city had been awarded a $3,900,000 Flexible Facilities Program grant for the library renovation and that the council previously voted to accept the award and authorize the mayor to execute grant documents. Miss Hurst, city staff, told the board that the final grant agreement recently returned from the state contained new language: "The funds awarded under this agreement are dependent upon the availability from the funding source, including federal funding sources, and termination of this agreement for lack of available funding shall be without penalty. The department shall have no obligation to reimburse or compensate grantee for expenses due to award funds not being provided by those funding sources. Federal funds under this agreement are provided by the U.S. Department of the Treasury Capital Projects Fund, flexible facilities program."

That clause led staff to brief the council on how the program operates. Miss Hurst said the state acts as a pass-through: the city submits reimbursement requests to the state, which then seeks reimbursement from the U.S. Department of the Treasury. She said the Treasury has told the state to proceed with the program as planned and that, to date, the Treasury has not indicated these specific funds are being withheld. "So the U.S. Treasury has not given any indication that these funds are in jeopardy at this point in time," Miss Hurst said.

Council members and board members pressed staff on timing, risk and contingency options. Staff said the project must begin construction by June or July (year not specified) and be completed by 2026 under program deadlines. Staff also said the program reimburses expenses rather than providing a lump-sum advance. A city financial summary presented to the board showed the city's statutory debt capacity figure in round numbers of about $26,000,000, with the city's outstanding general obligation debt at roughly $12,500,000 at the end of 2023. Staff warned that taking on the remaining project costs as city debt would be a significant addition to the city's obligations and could affect bond ratings and other priorities.

Several members said they did not want concerns over federal actions to cause the city to decline the award. One member urged caution but supported moving forward and noted a referendum could be used later if federal funds were ultimately lost and local taxpayers needed to cover remaining costs.

Council discussion also addressed the project's estimated overall cost (presented as roughly $5.3 million to $5.5 million, not finalized), the status of bid solicitations (bids were to be issued but the city had been waiting for the signed grant agreement), and options the city should avoid, such as drawing down the unassigned fund balance or short-term borrowing that could harm ratings.

After discussion, Mr. Dorsey moved to proceed "as planned" with the grant and with the revised wording in the agreement; Ms. Groy seconded the motion. A roll-call vote was taken and recorded as 10 yes, 0 no. The presiding official announced, "The motion carries 10." The council and board did not authorize a specific alternate funding source at the meeting; staff said they would continue to submit reimbursement requests and monitor federal and state guidance.

Why it matters: The Flexible Facilities Program award covers the majority of the estimated renovation cost for the long-discussed library project. The newly inserted clause in the final grant agreement clarifies that payment of federal funds is contingent on federal availability and shifts reimbursement risk onto the grantee if federal payments are not made. By voting to proceed, the council accepted the project timeline and the reimbursement model while acknowledging a contingent funding risk tied to federal disbursements.