[BoulderCouncilHotline] Re: City Staff Response: Councilor Wallach questions Creation of a Library District

[Wallach, Mark]

Thank you, David, for that prompt response. I look forward to our discussion tomorrow.

From: "Farnan, David" <FarnanD at boulderlibrary.org>
Date: Monday, February 7, 2022 at 10:17 AM
To: "Wallach, Mark" <WallachM at bouldercolorado.gov>, HOTLINE <HOTLINE at bouldercolorado.gov>
Cc: Council <council at bouldercolorado.gov>
Subject: City Staff Response: Councilor Wallach questions [BoulderCouncilHotline] Creation of a Library District


Dear Councilor Wallach-



Thank you for your questions regarding the February 8th memo on Library District Formation and discussion of the Library District Advisory Committee Recommendations .  Please see staff responses to your Hotline questions below in the body of your email.  Members of the Library District Advisory Committee and staff from CMO, City Attorney's Office, Finance and Library will be available tomorrow night at the February 8th study session to respond to Council's questions and further address your concerns.





Respectfully,



David Farnan

Library Director

City of Boulder









From: Wallach, Mark <wallachm at bouldercolorado.gov<mailto:wallachm at bouldercolorado.gov>>

Sent: Sunday, February 6, 2022 3:43 PM
To: HOTLINE <HOTLINE at bouldercolorado.gov<mailto:HOTLINE at bouldercolorado.gov>>
Cc: Council <council at bouldercolorado.gov<mailto:council at bouldercolorado.gov>>
Subject: [BoulderCouncilHotline] Creation of a Library District



I have had the opportunity to read the staff memo in connection with our discussion of creating a Library District (“LD”) in Boulder and parts of the County. I  have a number of questions and a few comments, which I am going to pass on in this Hotline post.



As an initial matter, I want to express that I have no objection to the creation of an LD, and if the residents and businesses within its boundaries choose to vote for the increase in the mill levy on properties, that is the community’s decision to make. And I am happy to put it to the community for their decision. However, I have some specific questions and issues concerning the specifics of this proposal, as follows:



1) First, as an informational matter, is the mill increase for the LD included within our overall mill limits for property, or is it a separate category? If the former, how close are we to our limits, as this will greatly restrict our ability to fund any other priorities? And, if the former, should there not be some conversation about other funding possibilities that will have to be foregone?



A library district is a separate entity from the city and if formed and funded operates as a subdivision of the State of Colorado with its own taxing authority and mill levy.  It will not affect the City Charter imposed limit of 13 mills.



2) My second question regards mathematics, which has never been my strong suit. The current .333 mill levy dedicated to the library generates $1.4 million/year, which means, if I multiply correctly (not as assumption on which I would wager), that a 1.0 mill levy would generate $4.2 million and a 3.8 mill levy would generate $15.9 million. Yet page 2 of the LDAC recommendations (page 14 of the package) states that a 3.8 mill increase will generate $19.5 million. Where does the extra money come from, or is - as is often the case -my math deficient?



​The difference has to do with the geographic area included within the boundary. The current proposed district boundary includes the largest number of Boulder library card users in the funding base as possible without impeding upon the jurisdiction of any other municipality or other library district service area.  The proposed boundaries for the library district are larger than the City of Boulder and include parts of unincorporated Boulder County.  The proposed district boundary includes approximately a 20% increase overall property value and increases the the number of cardholders designated to pay for the library district by about 23%.





3) I do not know what funds we may receive under the Biden Build Back Better infrastructure bill, but may I assume that under these contemplated levels of funding that the LD will not be making any request for infrastructure funds to be received by the city, as the LD will be fully funded (including capital expenses) once it is up and running?



The library district would be separate governmental entity and need to apply to receive Federal funds on its own.



4) I am unclear as to what level of service is to be provided during the Transition Year. The City currently funds the library system at around $10MM, including the dedicated tax. What will be the funding during the Transition Year? Will it be at the current level or the $19.5MM level anticipated when the LD is fully operational? If the latter, where is the city to get the funds for that additional increment of funding?



The Library District Advisory Committee recommends that the City continue to fund the library at its current level  for the transition year [for 2023 this would include operating costs for the new North Boulder Library.]



5) What is the rationale for conveyance of the city’s ownership interest in its real estate assets? I have no problem with the city entering into long-term leases with only nominal consideration (e.g., $1.00/year, such as the Dairy), but under a lease there are protective provisions that require landlord’s consent to certain transactions, such as entering into mortgages, sale of assets, etc. I do not want the LD to have the ability or right to enter into financing transactions that could lead to default and foreclosure, resulting in private parties (think bank or hedge fund)  owning the assets that the community has paid for – including those members of the community who do not support the creation of the LD. This is one of my strongest objections to the documents we have been presented for discussion on Tuesday.



The staff recommendation and the LDAC recommendation is to convey real estate assets. The rationale is for the district to use the funding source (mill levy) to maintain the physical assets and deliver library services within those facilities. It is anticipated that a condition of the transfer of the real estate assets would be that if the property is no longer used for library purposes it reverts back to the city, and that the city would have a first right of refusal to a property if the district chose to dispose of it, to ensure the property remains in the public domain. A long-term lease is an option, and would require a detailed agreement for maintenance and capital improvements. Council will have an opportunity to ask representatives of the library district advisory committee the rationale for arriving at this recommendations and to discuss among their peers on Tuesday night.



6) With respect to a right of first refusal to purchase back any assets proposed to be sold, why is the right to sell even contemplated in these documents? In fact, I believe city approval should be required for sale of any assets above a predetermined amount ($10,000? $20,000? $50,000? Let’s discuss). This comment is ancillary to the one above in Paragraph 5.



The first right of refusal is contemplated in the speculation that if a library district were to consolidate facilities or construct new facilities and therefore vacate one of the existing library branches, the city would have the right to regain ownership of the facility for another public purpose if desired.





7) There is substantial discussion of community engagement and outreach, but little discussion in the engagement section of providing clear statements of what the mill levy increase will cost homeowners at various levels of home value. Similarly for businesses. I trust that will be part of the engagement conversation.



There will be an opportunity to discuss what type of community engagement Council would like to see.  For clarity the estimated cost given the current district boundaries and a 3.7 mill rate are; $26 per $100,000 value of residential property and $107 per $100,000 value of commercial property.



8) Why all the extras? The city is to fund the operations of the LD during the Transition Year (to be paid back over 3 years). During that time the LD will be collecting funds from the mill levy, which had been represented as sufficient for the most robust level of funding it desires. Why, then, does Section 2.3 of the IGA identify a number of additional funding sources that ought to go to the city to be an offset to its expenses, and specify that they go to the LD? In particular, I am thinking of any portion of the Community, Culture, and Safety Tax allocated to the development of the North Boulder Library, but which is not needed for that purpose. If the library is completed, what is the claim for those funds? Similarly, why are the proceeds of the sale of the Blystat-Laeser House to be turned over to a fully funded and functional LD?



The 2017 CCS tax to fund the North Boulder library are appropriated and the building is anticipated to be completed prior to the completion of the transition year if the district is funded, and those funds were specifically named in the ballot measure for the construction of the library. The sale of the Blystat-Laesar house and those funds were specifically named for funding library purposes, therefore anticipated to be transferred to remain with the library.



9) Why does the IGA obligate the city to put this initiative up for a vote, not merely in 2022, but also in 2023 and 2024? This is, to me, an overreach. If the voters do not approve of the LD and the mill levy increase, we should not be in the position of telling them that they are wrong, not once, but twice. We can approve an LD, and we can put it on the ballot, but we should not be put in the position of being required to put our finger on the scales in that fashion. Given Colorado’s permissive statute for forming library districts, its supporters are free to bring it back as many times as they desire, but that should not be the obligation of the Council and the city government.



It is our understanding that allowing multiple attempts for funding is a common practice in the creation of library districts. The Library District would put the tax measure on the ballot, not the city. This is a negotiable term of the IGA.



10) Where are the provisions to protect the city’s legitimate interests? What happens if the LD’s administrative costs run out of control, or if the Trustees decide to use these revenues to pay themselves $100,000/year? What happens if the LD begins to exercise censorship over its texts? (e.g., The Merchant of Venice and Huckleberry Finn each have racist elements, but each is a core literary text.) I expect only the best and highest behavior from the LD, its employees, and its Board of Trustees, but I also like to plan for the worst. The Board of Trustees becomes self-perpetuating after adoption of the bylaws, and is beyond the reach of any action by the City Council and, it appears, no longer has accountability to anyone. In the event of a breach of the IGA is our only remedy to file suit against the LD and its Board of Trustees?



The draft IGA is drafted so that city council and the BOCC ratify the initial appointment of the library district Board of Trustees. As currently drafted, until the adoption of the bylaws of the LD Board of Trustees, the IGA authorizes City Council to remove any member of the library district Board of Trustees for good cause as determined by the council. This condition can be negotiated should council wish to have authority to remove any member of the Board at any time following formation.  Additionally, Colorado Library Law 24-90-108 [4] prohibits compensation for library district trustees: "(4) A trustee shall not receive a salary nor other compensation for services as a trustee, but necessary traveling and subsistence expenses actually incurred may be paid from the public library fund."





11) Section 4.2.4 of the IGA is extremely problematic to me. It is one thing to create a Library District for the operation and maintenance of the library system. It is quite another to establish a legal partnership for the future development of parts of the downtown area outside of the bounds of the library property itself (the “Main Library Area of Influence,” which sounds like the divvying up of Europe during the Cold War). The LD’s opinions are always welcome on any aspect of further development of the area defined as the Area of Influence, but to create an obligation to obtain the LD’s consent to anything that goes on beyond its boundaries is a bridge too far, and well beyond the purposes of establishing a library district. While the concept may be well-intentioned it is far beyond the purposes that have been articulated to us as the basis for establishing an LD. Whether the balance of the property in the Main Library Area of Influence is left as is, developed for cultural purposes, or otherwise, is a decision to be made by the city, hopefully with the advice of the LD, and hopefully in a manner that they will support, but not requiring their consent to do so. I am troubled by essentially giving a veto over such decisions to non-elected officials. If we mess it up, there is always the next election to hold members of Council accountable. There is no such accountability for the Board of Trustees. Where does this concept come from and why is it being proposed?



The intention around the main library if a district is formed and funded would be to form a common-interest community agreement in that the library district would own the building, and the city would own the land under the building and in the remaining civic area. The area of influence concept was to acknowledge that there are areas surrounding the library that the city and a library district would need to coordinate and cooperate on the manner of funding, such as parking, snow removal, etc. The exact terms of the agreement, and who has final decision-making would need to be further articulated in the common-interest community agreement.





I look forward to a productive and robust conversation concerning the Library District, both on Tuesday and moving forward.

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