Council approves transfer of library trust funds to new nonprofit and authorizes city manager to negotiate support agreement

The Stillwater City Council on a 4-0 vote adopted Resolution CC-2025-27, authorizing the transfer of funds held by the Stillwater Public Library Trust to a newly formed 501(c)(3) nonprofit and directing the city manager to negotiate an agreement between the city and that nonprofit.

City staff said the change would create a separate legal entity to manage private donations for library purposes while preserving oversight through an agreement. Ms. Carnley, who presented the resolution to the council, said the proposed nonprofit would be organized and apply for tax-exempt status as a Type 1 supporting organization and that the trust board intends to keep the same board composition after the transition. "That agreement between the city and the new corporation would address everything from require the filing of a timely audit, and it would, clearly acknowledge that this is going to be a separate legal entity apart from the city with its own attorney, bank accounts," Ms. Carnley said during the meeting.

The presenters told the council the Library Trust had consulted outside counsel experienced with nonprofit and IRS rules after raising questions about which investment statutes applied to the trust. The staff review noted the funds at issue originated from private donations though they have appeared on the city's annual comprehensive financial report. The resolution statement in the meeting record affirms the transfer of those privately donated funds to the new nonprofit is "reasonable and proper." The resolution also authorizes termination of the existing Stillwater Public Library Trust and authorizes the city manager to negotiate the terms and conditions under which the new nonprofit will support the Stillwater Public Library.

Council discussion was brief. Councilor Hardin asked whether the board members of the trust would carry over to the new nonprofit; Ms. Carnley confirmed that was the plan. A council member asked whether other communities used this arrangement for library boards; Ms. Carnley said she did not have specific precedent to cite but that the attorney the trust retained is familiar with support organizations that serve public entities.

Formal action: a motion and second were made and recorded; the council voted 4-0 to adopt Resolution CC-2025-27.

Why it matters: the change moves donor funds into a separately organized nonprofit that will be authorized to seek tax-exempt status as a Type 1 supporting organization; the city will rely on a negotiated agreement to preserve reporting and oversight obligations rather than the trust structure alone. The resolution does not itself provide the agreement language — the city manager was authorized to begin negotiations.

Next steps: the resolution authorizes the trust's retained attorney to proceed with forming the nonprofit and applying for tax-exempt status; the city manager will negotiate the support agreement between the city and the new nonprofit. No implementation timeline was specified in the council discussion.