City Council Approves Debt Purchase, Votes Down Referendum

galesburgPurchasing $2-million in debt certificates aims to keep the Galesburg Public Library in the running for a potential state grant.

The Galesburg City Council tonight approved a memorandum of understanding for the transaction which will ultimately lead to the purchase.

Members of the Library’s Board of Trustees have explained repeatedly in past months they are seeking the assistance to prove they are in possession of 25-percent matching funds for the grant.

By being able to prove the match, the Library would be ensured a position on a list of possible grant recipients. If not, they would need to reapply and potentially move down the list of applicants.

Mayor and WGIL Owner John Pritchard says receipt of the state grant will play a big role in any future decisions.

“It just makes sense to take the small risk that it’s going to take with provisions that allow us to reach in and grab that money back if some disaster happens and we need it,” says Pricthard. “And the benefit of that risk is we have the opportunity to keep the library in the game for a 16-million dollar grant.”

The Library’s Board of Trustees came to the City Council during a special work session meeting in past weeks to officially propose the solution.

Initially, the Library Board requested the City purchase $5-million in debt certificates, but the City of Galesburg’s Administration recommended a more comfortable $2-million in addition to a slightly higher interest rate.

From tonight’s discussion, the Library’s Board will now borrow funds from the Library Foundation to complete the $5-million match. First Ward Alderman Ken Goad says the City of Galesburg is not a bank.

“Who’s the next group that’s going to come to the City and want to do the same thing or something similar?” says Goad. “What are we going to do then? Say if the Orpheum comes, or whatever other group. What are we going to do then?”

Last night’s City Council agenda was altered slightly to make sense of several moving parts.

The City first approved an investment policy that allowed them to make the transaction with the Library; meaning, the City could “purchase other types of investments that are not referenced in the Public Funds Investment Act.”

A status as a home rule unit allows the City of Galesburg some flexibility in this respect. That measure was approved 5-2. Even after the previous work session meeting, Aldermen still had many questions to ask of the Library Board.

Third Ward Alderman Russell Fleming was displeased with the wording in City documents that may allow the Library to use tax dollars to repay the debt.

“This is creative financing at its best,” says Fleming. “This little section here is real simple, two pages, would obligate the City to loan to the Library 2-million dollars, which the Library, the only way they have to pay it back is through taxation.”

The Library is allowed to change the scope of their building project, but is not allowed to change the square footage of any design submitted to the state.

Although an application has been submitted, the state of Illinois has not allocated any funds for proposed construction or renovation projects. Library Trustees have, however, expressed optimism that any new capital bill proposed by the Governor’s office contain provisions for libraries.

Responding to criticism they will have difficulty returning the money to the City, Library board member Guy Cahill says there are several avenues they would first pursue before resorting to the use of tax revenue to make the payments.

“We have no plan to have a separate tax to build this library,” says Cahill. “We don’t have a plan b I think people keep asking us if we had a plan b and I guess we could consider something like that, but we’ve never discussed that. Our plan has always been to rely on the state grant and the generosity of the community in raising the funds through our separate fundraising campaign.”

The City Council approved the transaction by a vote of 5-2 with Aldermen Goad and Fleming voting against the measure.

Aldermen tonight, still needed to decide whether they should take the decision to build a new library to the voters in November. Initially, the City Administration proposed the referendum as advisory, but the Library board expressed interest in seeking a binding referendum.

Seventh Ward Alderman Jeremy Karlin says the referendum, worded as “shall the Board of Library Trustees of the City of Galesburg construct a new library”, was misleading.

“The question, in reality, is that: if the state of Illinois gives us 16.1-million dollars, should we then build a library?” says Karlin. “That’s the real question. Because ultimately whether or not we build a new library is going to be answered by the state, and not by us. Because if we get the 16.1-million dollars, then we’re building a library, it’s a no-brainer.”

Aldermen voted down the resolution putting the referendum on November’s ballot 3-4 with Aldermen Goad, Fleming, and Allen voting in favor of the motion.

The library now anticipates to meet its state mandated deadline, but has said it could be years before dollars are allocated for the construction of a new library.

Included in the agreement between the Library and the City is a prohibition on spending funds available through the purchase of debt certificates until a state grant has been received. Should the library fail in its endeavor to receive the funds, the money would simply be returned to the City.

In other business, the City Council approved a new contract with City Manager Todd Thompson. The three year agreement would be renewed automatically after each subsequent year. Thompson will receive $132-thousand in compensation annually with several benefits.

The City has designed a severance package into the contract indicating a minimum four months salaries would be paid in the event they do not wish to continue with Thompson in his current position.

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