Optimizing Library Funding: The Case for a Construction Bond Over Perpetual Tax updated

The current proposal to fund the new library at the Stockton site involves implementing a $300 per resident tax indefinitely. While this method guarantees continuous revenue, it places a sustained financial burden on the residents, potentially making it an unpopular and burdensome approach. A more favorable and equitable funding mechanism could be the issuance of a construction bond.

Advantages of a Construction Bond

A construction bond offers several advantages over a perpetual tax:

1. Finite and Predictable: Unlike a tax that persists indefinitely, a bond is a one-time issuance with a clear payoff schedule, making it a finite and predictable financial obligation.
2. Shared Burden: The cost of the bond is distributed across property owners through their property taxes, which may be more palatable than a direct per resident tax. This spreads the financial impact over a broader tax base.
3. Does Not Affect City Budget: The repayment of the bond is secured by property tax revenues, ensuring that the city’s budget remains unaffected. This financial structure is similar to how municipalities typically fund schools and public facilities, which has proven effective and sustainable.
4. Lower Overall Cost Impact: By financing through a bond, the total cost impact to individual taxpayers is often lower than the cumulative effect of a perpetual tax, especially over an extended period.
5. Enhances Creditworthiness: Issuing a bond can potentially enhance the city’s creditworthiness by demonstrating a structured and traditional approach to funding significant public projects.

Implementation Strategy

Implementing a construction bond would involve a few key steps:

• Feasibility Study: Conduct a thorough feasibility study to determine the total cost of the library project and the bond amount required.
• Public Consultation: Engage with the community through meetings and surveys to explain the benefits of the bond and gather public input, ensuring transparency and community involvement in the funding decision.
• Bond Structuring: Structure the bond to ensure that it meets the project’s financial needs while also aligning with the city’s long-term financial strategy.
• Approval Process: Obtain necessary approvals through city council votes and possibly a public referendum, providing a democratic approach to the decision-making process.

Conclusion

Replacing the proposed $300 per resident forever tax with a construction bond offers a financially sound and community-friendly approach to funding the new library. This method aligns with proven funding strategies for public projects, ensuring that the library can be built without imposing a perpetual financial burden on the residents. This approach not only fosters community support but also ensures fiscal responsibility, paving the way for the successful realization of the library project that serves the best interest of all stakeholders involved.

A concerned citizen made additional remarks to the editorial . Summarized

This blog offers a solid overview but could use some clarification. The funding for the library project will come exclusively from property taxpayers, through either a supplemental property tax or a construction bond, not from sales taxes. Property taxes will reflect these assessments. Additionally, property taxpayers contribute 1.5% of 1% of their property tax bills to support CCC Library operations. All library expenses are covered by property taxes and managed by the County, which employs 280 full-time equivalents (FTE) across various library functions such as IT, programs, and circulation.

The City has proposed an additional tax assessment to generate $2.4 million in tax receipts, which will service a debt of just over $21 million for building the library at the TOD BART location—this equates to approximately $1,000 per square foot. Part of this debt service will also help a housing developer finance the construction of a seven-story development. The library’s rent is included in the city’s ongoing payments for leasing and developing both the library and the housing project’s infrastructure.

A key point is determining the best approach to replace the old and historic library building. Since the city owns the current library site, there are no land acquisition costs if it is rebuilt there. The site’s optimal use would be as a library. A new 12,000 square foot library could be constructed at a cost of $12 million, doubling the current size and costing significantly less than the proposed 20,000 square foot library. This could be achieved much sooner than the library in the TOD development.

The city has been indecisive about this project for at least eight years, and the latest proposal could delay the completion by an additional three years, casting doubt on the project’s timely completion.

Here’s how you can help: 

• Attend the Financial Advisory Board meeting at City Hall on April 23^rd.
• Ask the City Council to require a feasibility study on a construction bond.

Share your voice with the Council Members, the Mayor, and the City Manager.

• Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us
  • Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us
  • Councilperson Carolyn Wysinger cywysinger@ci.el-cerrito.ca.us
  • Councilperson Tessa Rudnick trudnick@ci.el-cerrito.ca.us
  • Mayor Lisa Motoyama lmotoyama@ci.el-cerrito.ca.us
  • Councilperson Paul Fadelli pfadelli@ci.el-cerrito.ca.us