There are some financial variables and some tentative estimates included in the proposal to move the Parmly Billings Library a block and a half west into the Gainan’s Flower and Garden Center building, but for voters it will come down to a bond issue of about $13.7 million.
That’s if the City Council votes to move forward with that proposal.
There are two parts to the cost of moving the library into the Gainan’s building — $4.5 million for a lease-to-buy agreement on the building and $10.25 million to renovate and expand it to accommodate the new library.
The total cost would come to $14,749,000, but that would be reduced by the use of $1 million from the library’s reserve fund, meaning the bond issue would be for an amount not to exceed $13.749 million.
When the library unveiled the Gainan’s proposal, there was some talk of $15 million in construction costs and an $8 million purchase price for the building, for a total cost of $23 million.
Library director Bill Cochran said those figures were generated in an attempt to give the full financial impact of the project over the 20-year life of the building lease and the interest payback on the bonds.
As with all such bond issues, however, the library bond as it would appear on the ballot would include only construction costs, not accumulated costs of debt payments.
By way of example, Cochran and the city finance division worked up the long-term cost of Dehler Park, the new baseball field that was built with a bond issue passed by city voters in 2006.
The cost of the ballpark was originally estimated at $12.5 million, but the bond amount was lowered to $10.7 million because the project attracted donations of $1.8 million.
Interest payments on the 20-year bond would have raised the construction figure to $16.3 million. And because the donations were all designed to come in over 10 years, the donated portion of the project also had to be covered by bonding, with debt costs of $400,000, or a total of $2.2 million for the bonds. That made for a total cost of $18.5 million over 20 years for Dehler Park.
Even that was not the end of the story, however. Because the city’s taxable value has grown, this year the city levied only 5.33 mills to retire the Dehler Park bonds, rather than the 6.7 mills levied at the outset.
At any rate, even since Cochran first disclosed the full, 20-year cost of the project, that estimate has gone down slightly, to $22.1 million.
The tax burden for the Gainan’s deal, assuming the City Council allows it to be put before the voters, could also conceivably go down. One big variable is the cost of the Gainan’s building. The tentative buy-sell agreement puts the price tag at $4.5 million, to be paid over 20 years, after which the city would own the land and the building.
But that is only the maximum price. An appraisal still has to be done, and the city can’t pay 5 percent more or less than the appraised value of the property. If the price comes in lower that $4.5 million, the bond would be reduced accordingly.
The tax burden could also be reduced in the future if donations were made to fund the project, or if the city sold the existing library property and applied that money to the bond payments.
The city is trying to move quickly on the Gainan’s building, because if it acts before the end of the year, it can use federal stimulus funds to realize a 45 percent rebate on interest costs on the bonds. That reduction, city officials say, would make the interest rate on the bonds 3.7 percent.
One wrinkle in the deal is that bonds cannot be used to finance lease payments, only construction or the outright purchase of property. But Gainan’s wants to lease for 20 years, not sell outright, which means that the bond will cover only the costs of construction.
The lease-purchase costs will appear on the ballot as a separate mill levy, probably of 3 mills, Cochran said. Like the bond itself, the mill levy would expire after 20 years. If the bond issue were approved by voters, the city estimates that taxes on a $200,000 house would increase by $17.81 a year for 20 years.