Regarding the downtown library and the operating shortfall: I want to clarify my suggestions on building the downtown library, operating budgets and organizational structure for further discussion by list members and city leaders. I haven't heard the Library Board discussing any of the concepts, nor the City Council, and I'm not sure why.
I'm talking about a sale-lease back transaction, whereby the library bonds (or similar shorter term debt instrument) are issued to build the new downtown library. When the library is completed, it is sold to a third party (i.e. an insurance company via a pre-negotiated deal) and the sale proceeds are applied to retiring a majority of the debt (bonds issued in the first place). Some of the sale proceeds could also be applied to cover the incremental library operating shortfall (over a limited period of time). This would buy some time in terms of operating cost shortfalls. The library system would still have to achieve dramatic cost savings system-wide over the next few years, bringing ongoing operating costs in line with ongoing revenues into the future-- a structurally balanced budget. But this strategy could, in effect, convert a portion of capital funds to operating funds, and save millions in debt service. We would no longer own the facility but it would be operational for everyone to use and enjoy. If the debt load can be significantly reduced- preserving city borrowing flexibility for other emergency needs-- while freeing up some operating funds, why not run some numbers for various scenarios? And, it may be that there is no way around shutting some neighborhood libraries as well, and very soon. Sale-lease back arrangements are a common method used to reduce debt levels on the balance sheet and move cash toward operating expenses. The tax situation would be a major issue of concern in structuring the bonds and the sale-lease back transaction, but that's why bond houses get the big bucks! As far as I know, there should be no reason this type strategy could not work. A variation on the theme would be to negotiate a deal with Hennepin County such that Minneapolis pays for the structure/ or a portion thereof, and the county assumes operating responsibility... yada, yada. Again, the city would want to get rid of as much debt as possible, but that's all part of the negotiation. City residents would then likely assume some tax liability to the county library system, again part of the negotiation. Neighborhood libraries would remain under city control, but everything is negotiable! There are undoubtedly many scenarios that could be discussed, but these concepts represent options that should be considered. That's the last I'll have to say about the matter. Michael Hohmann Linden Hills ~~~~~~~~~~~~~~~~~~~~~~~~~ For market research, financial analysis, business planning, and project management... www.mahohmannbizplans.com ~~~~~~~~~~~~~~~~~~~~~~~~~ TEMPORARY REMINDER: 1. Send all posts in plain-text format. 2. Cut as much of the post you're responding to as possible. ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
