The Brookfield Public Library Board of Trustees is considering borrowing money from a bank to get enough money for the building’s expansion.
The library board is considering a second-choice expansion plan to extend the library out into what is now sidewalk and parking spots on the south side of Lincoln Avenue after learning that the Brookfield Village Board was not likely to approve a previous expansion plan that would have closed off Lincoln Avenue.
The plan the board is now considering would add about 11,400 square feet to the library along the Lincoln Avenue at a cost of about $8.7 million.
Currently, the library has a little more than $5.2 million in reserves and expects to have about $5.7 million by the end of 2018.
As a result, the library board would likely have to borrow at least $3 million, probably more, if they decide to go ahead with the current plan, unless charitable contributions reduce the amount that the library needs to borrow.
“We’re considering all our options and that is one of our options,” said Linda Kampschroeder, the president of the library board. “We are seriously considering it, but we haven’t said that’s what we’re going to do.”
Last week at a special board meeting, the library’s financial advisor, Linda Matkowski, the chief operating officer of the St. Louis-based Stern Brothers, briefed the board for more than an hour about its options and what getting a bank loan would entail.
If the library got a bank loan, it would issue debt certificates. Matkowski said that banks would do an intensive review of the library’s finances before lending it money, because such a loan would not be backed by a specific source of revenue, such as a property tax levy. Instead, the library would have to pay off the loan out of general operating funds.
“Somebody’s going to have to really commit to you guys,” Matkowski told the board. “They are basically doing an unsecured loan to you.”
But the library’s strong financial condition would help the library in the eyes of banks.
“Your financial statements are super impressive,” Matkowski told the board.
One possible lender to the library is the First National Bank of Brookfield, which already has a financial relationship with the library. Matkowski said if the board decides to seek a bank loan, she would shop the loan to perhaps 10 to 20 banks.
It is possible that a consortium of banks might join together to make the loan to mitigate the risk to any one bank.
From the library’s perspective, one advantage of a bank loan is that it would not require any approval from the Brookfield Village Board and would not affect the financial situation of the village.
“The debt doesn’t even have to be discussed with the village,” Matkowski said.
Another option for the library would be to hold off on any expansion and keep socking away money until it can pay for an expansion without borrowing. However, that would take at least another six years.
The library board tabled a proposed contract to pay Matkowski and her firm $45,000 for financial advice and work to secure a loan and explore all options.
The library board has scheduled a special meeting for July 9 to consider its options and make some decisions about whether to pursue a bank loan.
“At some point we have to stop gathering information and move forward,” Kampschroeder said.
The library has also started a capital campaign to raise money for an addition through charitable donations. A non-profit foundation called The Foundation for the Brookfield Public Library was created several months ago to solicit large contributions to help pay for an expansion.
The foundation has yet to raise any money, but last week Library Director Kimberly Coughran told library board trustees that she will meet this month with a few potential donors.
“I have reached out to the library’s biggest advocates/supporters and have secured in-person appointments with them for early July,” Coughran wrote in her June director’s report.
Coughran declined to tell the Landmark how many potential donors she will be meeting with this month.
“Because the donors may wish to remain anonymous, I’m not going to say anything,” Coughran said.