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Council hears library financing update; city seeks donors to reduce a $3.1 million gap
Summary
City staff and financial advisor Sean Luntz outlined a plan on Feb. 10 to finance the new library using up to $10 million in CDA lease revenue bonds and identified an approximate $3.1 million funding gap that the city aims to fill with donations, grants and other sources.
City staff and financial advisor Sean Luntz of Ehlers updated the New Richmond City Council on Feb. 10 about financing for the library building project and outlined a plan centered on a $10 million Community Development Authority (CDA) lease revenue bond.
Luntz said the CDA lease revenue bond was selected because it allows 30-year financing and is exempt from both federal and Wisconsin state taxes, which can produce lower interest rates and does not count against the city’s general-obligation borrowing capacity. He said the city expects the bond issue to be priced in early March, with a possible March 20 closing and funds available in time for building turnover around April 1. Northland Securities was selected as the underwriter after a request-for-proposals process.
Staff and the council said the total construction cost estimate is roughly $15 million for shell and interior completion. The planned 2025 financing package would include a bond issuance slightly under $10 million in 2025 (to retain bank-qualified/tax-exempt status), approximately $1.7 million in cash on hand, impact fees, and anticipated naming-rights donations and grants. Staff reported a current funding gap of about $3.1 million.
Luntz explained financing details: the $10 million CDA lease revenue bond would carry fixed interest over a 30-year schedule with estimated annual principal-and-interest payments of about $640,000 starting in 2026; a one-year debt service reserve would be included. He noted IRS rules require that interest earnings on the debt reserve be used to pay debt service, reducing the levy need by the amount of earnings.
Council members discussed fundraising options and asked staff to organize a small volunteer group (including council members, library board members and community volunteers) to lead outreach to local businesses, foundations and donors. Several council members urged forming a focused fundraising team quickly; council staff asked for names by the next work session to begin targeted outreach. Staff also said they would continue to pursue larger state and federal grants and naming-rights donations to lower the required borrowing.
The presentation included procedural next steps: a Feb. 24 combined CDA/city council meeting with a public hearing on the CDA lease and parameters resolutions, final pricing targeted the first week of March, and an estimated bond closing around March 20.
