Concerned About Added Debt, Library Board Politely Turns Down Village Loan Offer, Ensures Public It Will Remain Open
By Michael Romain
MONDAY, Maywood — Maywood Public Library Executive Director Stan Huntington cited the fear of piling more debt onto the already indebted institution’s balance sheets as the primary reason for why the Maywood Public Library’s Board of Director’s elected to turn down an offer from the Village of an intergovernmental loan of no more than $150,000 to be disbursed in monthly increments of no more than $30,000. The Board communicated its decision through a letter that Mayor Perkins said she received on Friday.
One element that affected the Library’s decision was Seaway Bank’s offer to extend for another 12 months the terms of repayment on about $500,000 the Library owes on a short-term tax anticipation note. In addition to the extension, Seaway also lent another $150,000 to the Library that, along with the Village’s $150,000 loan, was supposed to be enough to continue operations through the spring of 2014. At that point, the Library would receive the first distribution of tax revenue from the County.
However, Mr. Huntington noted that, after reviewing the Library’s financial status, he and his staff determined that Seaway’s extension and loan–particularly in light of the severe austerity measures they’ve recently taken–would be enough to see the Library through the Spring.
“We’ve been on a very lean budget since we reopened and it will probably be late spring or early summer time until we catch up with all of our bills, but the board made a decision to take the cautious approach, rather than incur this extra $150,000 debt,” said Mr. Huntington.
“There was a time when we didn’t think we could do it, but we have taken a look at our operations and re-calibrated our operations and our hours at this point and for a while to come and we made a determination that we could do it. Since we reopened, we’ve really tightened down. We’ve been cutting staff hours since 2006, so we found we could [refuse the Village’s loan offer] and still operate.”
Although Mr. Huntington was careful to emphasize that the Library’s decision was motivate primarily by its concern about future debt, Library Board President Rose Mosley also noted that the terms of the Village’s loan also factored into it.
“I have never in my life seen a document written in this manner,” Mrs. Mosley said, referring to the intergovernmental lending agreement that the Village drafted.
“One thing was the lien against the property next door to the Library. Secondly, when someone loans me something, their concern is when I’m going to pay it back, not who is going to pay it,” she said. “They were also not willing to [allow the Library to use the money to pay down past debts]. It would be all current debt. My understanding is that the Mayor had to look at our submission, make a decision and forward it to the finance manager, who would then make a payment. I couldn’t see where we would be a priority….If money was strained [at the Village], then we may not have gotten any payments….Another thing was that this loan would’ve been done in April….We would have incurred this debt, our past due bills would’ve been still due and we would’ve still had a second lien over our heads.”
According to the Resolution and Intergovernmental Agreement, the Village would’ve required the Library to effectively post as collateral its “share of the personal property replacement tax received by the Village in calendar year 2015.” In addition, as Mrs. Mosley noted, the Village would also have taken out “a lien on the vacant land owned by the Library District, which is immediately north of the Library building.”
In order to obtain the monthly disbursements from the Village, the Library would have been required to go through a bureaucratic maze (which the Village Board of Trustees found necessary due to the Library’s financial condition). According to the Resolution:
“The Library shall file a written request for Loan funds using the form attached to this IGA. At the time of submittal, the form shall be fully completed, executed by the President of the Library, or the Executive Director, and shall contain supporting documents to justify the amount of payment requested and the specific, actually incurred Library Operations and Program Expenses for which the payment is sought. Each Request for Payment filed by the Library shall be certified as to its accuracy and completeness in regard to the accompanying bills, invoices, timesheets, program specifications and other evidence as the Village shall reasonably require to verify that the payment of Loan funds under this IGA is warranted because the Library Operations and Program Expenses are an eligible Library operational activity or program that is set forth in the Budget.
“The Village Manager would forward each Request for Payment, or portion thereof, that receives the Finance Director’s approval to the Village Board at the next available Regular Village Board Meeting for approval. Payment shall be made by the Village directly to the Library, unless the Village, in its sole discretion, decides to make a direct payment to a contractor or vendor of the Library.”
Referencing the complicated maneuvering required to retrieve the money from the Village, Mrs. Mosley said, “There were too many things tied to this loan….anything we wanted to do with the money had to be run by them. Our access to the money was contingent on them signing off on each and every invoice up to $30,000 a month….that’s assuming the business department even got them, because they would’ve had to be forwarded and if the decision was made not to pay the invoices, they wouldn’t be paid. I have never seen anything like this.”
Mr. Huntington said that the Village loan would’ve only been an added hurdle in the Library’s quest to become debt free.
“The conditions were very, very stringent, but quite apart from that, it’s 150K more debt. The quicker we’re free, the quicker the library is ours and can be brought back up. The nonperforming real estate and low tax receipts will make it a slow go, but the only way we get back on our feet is not to have debt.” VFP