The Indianapolis-Marion County Public Library plans to enter the market next week with a $34 million general obligation bond issue that will refund some of its $122.5 million of outstanding GOs.

The bonds are secured by ad valorem taxes levies on all taxable property within the library district.

The library, which serves most of Marion County, has reported a 2.2% growth annually in its general fund revenues for the last 12 years, largely due to gains in property tax receipts. During the same time, expenditures grew only 1.6% annually, leading to a $10.2 million unreserved general fund by 2006.

The library has a “deep and diverse economic base, consistent financial performance, and low direct debt levels,” said Fitch Ratings analyst James Hutcherson, who assigned the upcoming bonds a AAA rating.

The library, however, faces a considerable potential risk of lower revenues as the Indiana General Assembly prepares to overhaul the state’s property tax system. Hutcherson warned that the action could challenge the library’s credit.

“The library anticipates that without growth, and with the passage of circuit-breaker legislation as currently envisioned, property tax limitations would result in revenue declines in the next three years,” the analyst wrote in his report accompanying the rating.

With the December 2007 opening of a new central facility, the library’s capital plan is now complete and the library is unlikely to borrow additional money in the coming years.

Moody’s Investors Service assigns a Aa2 to the library’s outstanding GOs.

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