DALLAS — Backers of a new municipal library in Wichita, Kan., will have to find another way to fund the project after the City Council rejected a plan calling for $29 million of general obligation bonds.
The Council voted Tuesday night to seek bids for preliminary architectural work for the new library, but balked at pledging new debt for the project.
Wichita has a self-imposed debt cap of two-thirds of its GO capacity based on assessed valuation. A report from the city’s financial office last week said issuing bonds for the library now would push overall debt to 92% of capacity in 2018 and 2019.
Issuing bonds for a new library at this time would endanger its bond rating, said Councilman Jeff Longwell.
“It would be criminal for us to raise our bond indebtedness to the level this library would force us to do over about seven years,” he told supporters of the project.
Wichita’s GO debt is rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s. The city has $571 million of outstanding long-term GO debt and $304 million of short-term GO debt.
Wichita issues GO bonds and notes competitively about every six months to finance its capital improvement program. The debt is amortized rapidly, with most maturing in 10 years.
Schematic drawings of the proposed facility will enable library backers to find alternative funding for the project, Longwell said.
Mayor Carl Brewer, who backed bonds for the library, said a modern library with computers and plenty of space for books is an economic development tool. With interest rates low, Brewer said, the city should fund the library now.
“We can’t say now is not the time. Twenty-five years from now will be too late. Fifteen years, 10 years will be too late,” the mayor said.
Vice Mayor Pete Meitzner said no city money should be spent on such a speculative proposal.
“We don’t even know how we’re going to fund this project,” Meitzner said.
The council adopted a 10-year, $2.4 billion capital improvement plan last year that includes $304 million of GO bonds through 2018.
Wichita’s assessed property valuation total $3.5 billion in fiscal 2009 but has remained essentially flat since then.
In 2012, city officials expected property values to grow by 1.7% in 2013 and by 4% a year through 2020. However, valuation rose less than 1% this year and is now projected to go up 1.5% in 2014 and 3% a year through 2020.
Steve Roberts, president of the library board, proposed several possible options, including a public-private partnership and a temporary 0.25% sales tax that could also help fund a fine arts center.
The current library was built in 1965 and is too small, Roberts said at Tuesday’s council session.
A two-phase effort would allow the library proposal to advance, he said. The architectural drawings produced in the first phase would enhance second-phase fund raising, he said.
Despite the rejection of the bond-financing plan, Roberts said he was pleased that planning for the project will go forward.