The Little Rock board of directors this week will consider a proposal by the Central Arkansas Library System to issue $28 million of 15-year library construction and improvements bonds in May.
The bonds, approved by voters in December 2007, have been held up since May 2008 by a lawsuit challenging the collection of a dedicated property tax.
The bonds are rated AA by Standard & Poor’s. Stephens Inc. is the underwriter, and Wright, Lindsey & Jennings LLP is bond counsel.
Four Little Rock residents challenged the tax in Pulaski County Circuit Court, seeking a refund on the grounds that the tax was approved too late to be included in the 2007 property tax rate. The four said the first application of the tax should have been in the 2008 tax bills.
However, Circuit Judge Tim Fox ruled last week that the 2007 tax-year assessment and collection of the increased library tax was constitutional and legal. The plaintiffs are expected to appeal the case to the state Supreme Court.
Fox said the higher taxes were legal because residents repealed the old, lower rates at the special election.
If the library system had lost the lawsuit, it would have had to refund up to $4.5 million of the $10.2 million in 2007 taxes collected from Little Rock property owners in 2008.
In December 2007 voters approved by 65% a 20-year, one-mill increase to support up to $32 million of bonds and a separate 15-year, half-mill increase for operations and expanded children’s programs. The library tax went to 3.5 mills from two mills.
The temporary one-mill increase to support the bonds will be removed when the bonds mature. It will raise about $2.8 million for debt support. The operations tax will generate about $1.4 million a year.
The library issued $4 million of bonds in 2008 to finance land acquisition for a new branch facility, but delayed the remaining $28 million until it received tax revenues for 2008, when collection of the tax was not in question.
Proceeds will finance a new branch library, a new children’s library, the completion of the main library’s fifth floor, and the acquisition of books and other materials.
The library tax adds $45 to the annual property tax on a $150,000 house.
