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Council hears library financing update; $10 million CDA lease revenue bond planned, $3.1M fundraising gap
Summary
City financial advisers told the New Richmond City Council on Feb. 10 they plan to finance the new library through a Community Development Authority lease revenue bond of up to $10 million and that the project still faces an estimated $3.1 million funding gap.
City financial advisers and staff updated the New Richmond City Council on Feb. 10 about the financing plan for the library building project and urged a coordinated fundraising push to close a roughly $3.1 million projected gap.
Sean Luntz of Ehlers, the city’s financial advisor, told the council the preferred financing instrument is a Community Development Authority (CDA) lease revenue bond sized at up to $10 million, which would permit 30-year financing and is, under Wisconsin rules, exempt from both federal and state income taxes. Luntz and staff projected annual principal-and-interest payments of about $640,000 if the issue is priced at current market rates; the issue includes a one-year debt service reserve. Staff said an initial bond pricing is targeted for about March 5, with a bond closing around March 20 and developer turnover of the first floor targeted near April 1.
Rhianna (city staff) told the council the total project estimate is approximately $15.0–15.6 million in construction costs, that the city has roughly $1.7 million cash on hand plus ongoing impact fees and that naming-rights gifts, grants and donations would reduce the borrowing need. Staff identified an estimated funding gap of about $3.1 million and said the city would continue grant applications and private fundraising to reduce that gap; if cash is used to cover shortfalls before 2026, the city intends to reimburse itself by a later bond issuance.
Council members asked whether residents could buy into the tax-exempt issue; Luntz said community investors could be connected to Northland Securities, the underwriter, and that interest payments on the bonds would be exempt from federal and Wisconsin state income taxes for bondholders.
Councilors discussed organizing a small, focused volunteer fundraising group (staff, council, library board members and community volunteers were suggested) to lead outreach to local businesses, foundations and donors while staff continues larger grant applications. The council asked for candidate names to be submitted quickly so the group can meet and begin targeted outreach. Staff noted the council had already adopted a naming-rights policy with a range of donation levels; exact amounts are to be used in donor materials distributed by the proposed fundraising group.
No final financing vote was taken at the Feb. 10 meeting; the council will consider parameter resolutions and CDA lease items at a combined CDA/city meeting on Feb. 24, with final pricing expected in early March.
