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03.13.21 BLC PacketLibrary Commission Retreat Agenda March 13, 2021, 9 a.m. to 12 p.m. Meeting via Zoom I.Overview of 2018 Boulder Public Library Master Plan goals and funding gaps - where the library is now and what do we need to go forward – David Farnan, Library and Arts Director II.Summary of the Library Commission’s position on obtaining stable funding for the library – Juana Gomez, Library Commission Chair III.Discussion of key information from the Feb. 23, 2021 City Council study session on governance and stable funding options for the library •Majority does not support a TABOR election in 2021 •A committee was proposed to draft intergovernmental agreement (IGA) prior to a resolution IV.Library Champions strategy for forming a library district to date – Joni Teter, Library Champions V.Discussion of current Library District Strategy •Preparation for April 20, 2021 public hearing (see list of possible outcomes below) •Plan for Library Commission continued outreach to council. •Select representative from the Library Commission and Library Champions to serve on committee to draft an IGA •Will the Library Champions reinitiate a petition? Is there funding? Are there volunteers to do the work? •Should the Library Commission/Champions bring in Patrick Sweeny of EveryLibrary? •Draft timeline for next steps VI.Appreciate Commissioner Gomez for her support and service to the library and the community! Possible outcomes of April 20, 2021 public hearing: 1.Council forms a district by resolution and begins drafting an IGA a.Library Commissioner and Library Champion selected to join the subcommittee with two council members. 2.A committee (as above) is formed to investigate a district and/or dedicated city funding for the library, or draft an IGA prior to a resolution 3.Maintain status quo or further investigation of the governance and finance options 4.Council rejects library district formation by resolution or chooses to opt out of a petition by the electors 1 Example Library District IGA Background Library districts are an alternative form of public library governance, funded through property taxes voted on by people living within the district's boundaries. Library districts are not “special districts.” In Colorado, the Library Law (CRS 24-90-101) details what a library district is and how it is governed. Library districts are now the most common form of governance and funding for public libraries in Colorado. A library district can be formed in two ways: by a City or County resolution; or through a citizen petition process which places the question of forming a library district on the ballot. Once a library district is formed and an initial board of trustees is appointed, the City Council, County Commissioners and Library District Trustees work together to create an intergovernmental agreement (IGA) which addresses transition matters such as transfers of real estate, library employees, contracting for administrative overhead, facility maintenance, and the process for selection of future trustees. In 2018, the City contracted with Kim Seter, a principal in the law firm of Seter and Vander Wall who is an expert on Colorado library law, to advise Council and the Library Commission on library district formation and governance. On October 2, 2018, Mr. Seter provided a report on “Library District Formation and Operations,” followed by three further memos 1 responding to questions posed by Councilors and Library Commissioners. At the City’s request, in November 2019, Mr. Seter also provided a “Rough Draft IGA.” The following document is based on this rough draft IGA, with legal recitations omitted to focus on primary negotiation points. Recitals Identifies the mill levy, the District’s legal boundaries and the resolutions adopted by the City and County. Mill levy and district boundaries are established in the resolutions passed by Council & Commissioners. The petition created by Boulder Library Champions establishes a property tax limit “not to exceed 4 mills” to fund the district and includes a map with suggested boundaries. Funding estimates are based on the financial model created by GKBaum in the fall of 2018. District boundaries were identified to include as many library patrons as possible without impinging on the service areas of other libraries. Niwot and the foothills communities were included at the suggestion of Council members and County Commissioners. About ⅓ of library patrons live outside the City of Boulder and most would be included in the proposed district boundaries. Identifies the initial board of Library District Trustees (5 or 7 members) and notes the date of the first meeting of the District board. The initial Board Trustees is appointed by a subcommittee composed of two Councilors and two Commissioners who accept and review nominations, with Trustee appointments ratified by both bodies. Once appointed, Trustees are parties to IGA negotiations, representing the interests of the Library District. 1 October 15, 2018; November 29, 2018; and June 6, 2019. 2 Establishes the date that management and operation of the library will be transferred from the City to the District. Article I: Transitional costs Addresses reimbursement to the City and County for the District’s first year of operational expenses and for election costs. Provides for establishment of emergency reserves by the District. Provides for an annual report to the City, the County and the public to be submitted in March of each year. By statute, “the contents of the Annual Report shall include, but not be limited to, the current state of the library system, goals and projections for the coming year, a summary of the current adopted budget, status of reserve accounts, and such other statistics and information as the Board of Trustees deems to be of public interest.” Article II: Support services, public library fund and ongoing Trustee appointments Specifies administrative support services that the City will provide to the District, specifying costs for each service, timelines for beginning and ending such services, addresses applicability of City policies and procedures to the District’s administrative operations. We believe that the District would be best served by contracting with the City to continue to provide certain administrative services for an initial term of 2-3 years. Based on current contributions by the library to the city’s cost allocation system, and comparisons to costs with for services in other library districts, contracting for HR and payroll, IT, building maintenance and facilities would yield net revenues to the city of about $3.1 million per year. Establishes a statutorily required Public Library Fund into which revenues from property tax and library donations are deposited. Expenditures are statutorily limited to library purposes and require approval of the Trustees. Staff has recommended that monetary assets held by the City in the Library Fund, and any other funds that have been collected specifically for the library by the time the District is funded (e.g. Development Excise Tax and Impact fees, proceeds from the sale of the Blystat-Laesar House, and direct contributions from the Library Fund to Facilities Renovation and Replacement (FRR)) would be transferred to the Library District’s Public Library Fund. Establishes the procedure by which Library District Trustees will be appointed on an ongoing basis. Common practice is to delegate responsibility for ongoing appointments to the Board of Trustees, subject to ratification by City Council and the County Commissioners. Article III: Library employees This section addresses transition of library employees to the library district. By law, retirement benefits (PERA) stay with employees, while the liabilities associated with paying pensions would shift to the library district. We recommend that library employees retain their current jobs, salaries & benefits, and that the district commit to continue to pay a living wage. Some library staff are members 3 of the Boulder Municipal Employees Association (BMEA) and their eligibility to continue as a BMEA members (should they choose to do so), is a question that needs research. Article IV: Library facilities Transfer of buildings In our extensive review of Colorado library districts, we learned that deed transfer or a very long lease (typically 99 years), for a token price ($1/year) was the approach taken by almost all communities for library buildings. We agree with this approach, for the following reasons: a. Boulder library facilities were paid for by the community and will continue to serve the same community going forward. All library facilities were developed, and their underlying sites purchased, with funds specifically designated for library purposes. These funds were obtained through direct citizen action; community votes; community donations and bequests; excise taxes/impact fees; and state/federal grants. Our library system was built by our community and library facilities will remain in service to our community as part of a library district. b. The first City Charter (1918) established the Library Commission, and gave the Commission responsibility to control the public library and administer gifts made to the library. Title to property obtained on the library’s behalf (by any means) was vested in the City, with the Commission to “take charge of and have the management and custody” of the property.” In the words of a 1956 city attorney opinion, library properties are “held in trust by the City for the use of the People for library purposes.” These charter provisions remained in effect until 2015, when voters approved Charter amendments (initiated by the Library Commission) reflecting the Commission’s current role as an advisory body. All of our existing library facilities were constructed/expanded before the 2015 change. c. We want to empower the library district to use creative tools to meet our community’s future library capital needs. Ownership of property puts the library district in the best position to pursue capital contributions, grants and public-private partnerships. Grantors are reluctant to give large capital gifts to leased facilities. Private and non-profit organizations need certainty when entering into facility use and revenue sharing arrangements (which city policies currently restrict). Long term control is essential if we want our library to continue its long term - and very successful - history of leveraging tax dollars with private contributions and grants If a building is transferred through a long term lease, some communities have included a lease clause requiring that the building revert back to the city, or giving the city first right of refusal on disposition of the property, if the building ever ceases to function as a library. Transfer of land Ownership and financial responsibility for exterior grounds has been determined on a case-by- case basis, depending on the location of library buildings and which entity will be responsible for ongoing maintenance of exterior grounds. For example, Fort Collins’ main library is located in a central city park. A portion of the park was deeded to the Poudre River Library District and the District assumed responsibility for maintenance of those grounds. 4 We think the “case-by-case” approach to transference/maintenance of real property makes sense for Boulder. • The George Reynolds Branch and the Carnegie Library for local history are free- standing buildings with no other municipal uses nearby. Both have exterior landscaping and parking lots that need to be maintained. Transferring ownership of all real property and placing responsibility for maintenance on the library district makes sense. • The new NoBo branch is adjacent to a neighborhood park, and the Main Branch is surrounded by the Civic Area park and municipal parking lots. Both the city and the library district will have important interests in exterior maintenance, and the IGA should clearly define who is responsible for what. The city may wish to retain ownership of real property in the Civic Area. • The Meadows Branch is a leased facility, and lease terms restrict use of the property to library use. The library does not pay rent but pays a share of taxes, insurance, and common area maintenance fees. This lease would be assumed by the District. Ongoing maintenance, maintenance backlog, renovation outlook and future capital costs Library districts typically assume financial responsibility for ongoing maintenance of library buildings, repair or renovation of existing structures and capital costs for new or replacement structures. Assuming that the library district has long term control over library properties, it makes sense to put financial responsibility for ongoing maintenance, the maintenance backlog and future capital needs on the library district. Our library buildings are aging, and heavy usage has created a lot of wear-and -tear. Following is a summary of known major deficiencies in existing buildings, along with FAM”s most recent cost estimates. These cost estimates are conservative, and real costs are likely to be higher for the following reasons: • These are “ballpark” estimates versus in depth appraisals or bids. Cost estimates are likely to increase with further analysis of building deficiencies and rising construction costs. • Estimates are based on replacement costs, rather than costs for energy saving equipment and materials (which frequently have higher initial costs but lower life cycle maintenance costs). The city’s net-zero energy policy requires energy saving measures in city buildings. Results of the 2018 rough appraisal of library facilities are also provided below. A. The Carnegie Library has structural deficiencies, an aged roof needing replacement, a failing boiler, and needs exterior masonry repairs and interior renovation and maintenance. The 2018 appraisal valued Carnegie at $1.53M. FAM’s most recent estimate of repair costs was ~$1.4 million. T. B. The George Reynolds Branch building is 50 years old and does not meet today’s building code or energy efficiency requirements. There are several leaks in the roof, cracks in the 5 south wall, and a failing boiler. Fixing the boiler and roof is expensive and will not improve the building’s energy performance or address its carbon footprint. Parts of the site are within the 100 and 500-year floodplain. The current footprint of the building has been carefully shaped to remain outside the floodplain, but any future additions will need to be either of flood-resistant construction or restricted to the 1,500 sq. ft. of open space land outside the flood zones. Within the next 10-15 years, a decision will be required whether to gut and renovate the Reynolds building, replace it, or relocate the branch library to another nearby site. The 2018 appraisal values Reynolds at $3.83M. FAM’s most recent estimate of costs to bring the building up to current energy performance requirements was $8M to $12M. Costs to replace Reynolds with a new facility are estimated at around $15M. C. The Meadows Branch currently receives higher visitation than any other branch, serving southeast and east Boulder, including Gunbarrel residents. The branch is undersized for its usage. Future relocation of this branch into a larger, more visible space may be investigated, inn concert with evaluation of the Reynolds Branch. A 20-year lease is in effect through 2029. The lease would be assumed by the District and it is included in the mill levy calculations. The 2018 appraisal found that Meadows has no market value because lease terms restrict the property to library use. D. The Main Library’s south building was renovated in 2015. The Automated Materials Handling system will be due for replacement in 2027 at an estimated cost of $500,000. The Main Library’s north building has functional deficiencies, needs upgrades in critical areas (including mechanical, electrical, and energy systems) and faces significant regulatory renovation/redevelopment hurdles. The north building and its site present a variety of redevelopment challenges, including: flood constraints; limits on developable bulk and footprint due to the interplay of height restrictions, flood requirements and zoning setbacks. The Canyon Theater is underused because its fixed seating and fixed stage limit possible uses. Converting the auditorium to a flexible, multi-purpose space could open opportunities for a variety of community uses, and the 2018 Boulder Public Library Master Plan identifies upgrading or reconfiguring the Canyon Theater as a priority within +five-years. The 2018 appraisal assigned a value of $6.8M to the real property underlying the south building and plaza. Property on the north side was not included due to significant redevelopment obstacles. The Main building was valued at $17.3M. FAM has identified unfunded major maintenance items estimated at more than $2.4 million for Main. These maintenance items include but are not limited to: HVAC upgrades, roof repairs, electrical and lighting improvements, fire alarm/detection system upgrades and associated plumbing, water heater, exterior door and flooring replacement, exterior wall and soffit repairs. A study to determine the feasibility of renovating the north building was funded in the 2019 budget at $105,000 from the Library Fund Reserve, but the study was dropped in the 2020 budget cuts. E. The North Boulder Branch is planned for construction in 2021. The current construction cost estimate is in the range of $10.5 to $12 million dollars. Costs on the higher end of the range are driven by construction cost escalation, green building requirements, climate commitments, and costs for street and plaza improvements that may be required and will be determined during development review. Approximately $1.2 million of one-time funds is 6 estimated to pay for furniture, fixtures, technology and equipment, and an opening day collection. Current available funding is approximately $9.2 million dollars from the following sources: • $5 million from the 2017 Community, Culture and Safety Tax ballot measure, designated specifically for the NoBo branch library. • $3.5 million from Development Excise Tax (DET)/Impact fees and Library Fund Reserves. • $700,000 from the General Fund, added by Council in the 2020 budget. The NoBo branch faces a funding shortfall of approximately $1.8M. This shortfall would be assumed by the Library District. F. Future Gunbarrel Branch. The city first promised a branch library to Gunbarrel residents in 1977, as part of a flag pole annexation that incorporated nearly 400 acres of industrial and commercial land (including IBM, the King Soopers shopping center, Leaning Tree and other existing local businesses). The 2018 Library Master Plan identifies provision of a corner library in Gunbarrel in 3-5 years. Based on experience with the NoBo Corner library costs to provide a corner library are estimated at $500K in one-time capital costs and approximately $350K in annual operating expenditures. 7 Notes below are from the Colorado State Library, “Library Districts The Basics … and More. A Colorado State Library Workshop” APPOINTMENT OF THE BOARD OF TRUSTEES (CRS 24-90-108) 1. The “management and control” of the library is vested in a board of “not fewer than 5 nor more than 7 trustees.” 2. Appointees must live in the library district. 3. “Each legislative body” appoints 2 people to a committee to appoint the first board of trustees. Thereafter, there are 2 methods: • Continue this committee OR • The city or county delegates to the board the authority to recommend new trustees who are then ratified by a 2/3 majority of the city council or county commissioners. Failure to act in 60 days is considered ratification. 4. Vacancies are filled the same way. 5. Terms are staggered. Term lengths and the number of terms are specified in the library district bylaws. 6. Trustees may be removed only by a majority vote of the city council or county commissioners, “but only upon showing of good cause as defined in, but not limited to, the bylaws adopted by the board.” 7. Trustees may not receive a salary, but expenses can be reimbursed. 8. Immediately after appointment, the board meets to elect officers. POWERS AND DUTIES OF THE BOARD See CRS 24-90-109. Note especially (e) (II), which clearly gives library districts appropriation powers not given to city or county libraries. THE MONEY FOR A LIBRARY DISTRICT (CRS 24-90-112) 1. If the tax is approved by the voters, the board of county commissioners is authorized to levy a tax for the library district “upon real and personal property.” 2. You can go to a vote any November. 3. “Upon request” of the board of trustees, the board of county commissioners “shall submit to a vote...a proposition....” (See both 24-90-109(4) and 24-90-112 (1)(b)(III).) 4. The treasurer of the county is the custodian of all moneys for the library, which is transferred into a special fund called “the public library fund.” This fund, including all its interest, can be used for library purposes. It is expended upon “warrants” signed by the president of the board of trustees. 5. If the board of trustees requests it, the treasurer may transfer the money into the custody of the board, with the stipulation that the board must “carry a bond” for this purpose, make a monthly accounting to the treasurer, and perform an annual audit. (The “bond” 8 carried by the Arapahoe Library District is a performance bond on each trustee for $10,000 each, for a total premium of $245/year.) 6. Other revenue sources: Specific ownership tax, interest, grants, fines, fees, contracts, gifts, Friends or Foundation donations to the library. EXAMPLES OF OTHER PRIVILEGES, LAWS AND LIMITATIONS 1. Library districts can hold bond elections and issue bonds. (CRS 24-90-112.5) 2. The Budget Law and the statutory 5.5% revenue limit apply. (CRS 29-1-101+) 3. The Sunshine Law applies. (CRS 24-6-401+) 4. The Election Law applies. (CRS 1-45-101+) 5. The constitutional provisions of Gallagher apply. 6. The constitutional provisions of Taxpayer Bill of Rights (TABOR) apply (Article X, Section 20). These include: • All tax rate increases must go to a vote. • The ballot question must start with the amount of the increase. • Requires emergency reserves of 3% of the fiscal year spending. • Imposes spending limits and revenue limits. • Includes a provision of local growth. • 30 days before an election, you must mail a notice to increase taxes. This must include 2 summaries, up to 500 words each (one for and one against), of written comments filed by 45 days before the election. The “election officer” maintains and accurately summarizes all comments. This mailing is often handled through a “consolidated election” process by the county clerk, paid for by the library. 9 Library District FAQS January 26, 2021 Since the Boulder Public Library Master Plan, Council has held five study sessions 1 focused around sustainable funding for our library. A Council meeting with public hearing, scheduled for March 17, 2020, was cancelled 5 days before the meeting date when the COVID 19 pandemic forced suspension of City services. Since the summer of 2018, City staff, financial consultants and legal advisors 2 have prepared extensive memos focused around the following questions: From the Library Commission’s Memo to Council, November 14, 2018 There are four key questions to address in finding a long-term sustainable funding solution for our library 1. What does it cost to run the library? 2. What options are available to fund those costs? 3. What are the relative impacts to taxpayers under different funding scenarios? 4. What are the relative impacts and benefits to the library and the city’s budget under different funding scenarios? From the Staff Memo to Council, November 27, 2018 •Can the City of Boulder operate the library and meet master plan goals with the current financial structure/resources? •Should BPL users with property outside the city limits be asked to contribute to library funding on a more equitable basis? This document summarizes questions and answers posed by Council members over the last three years. Answers are drawn from staff, Library Commission and consultant memos drawn and materials developed by the the Colorado State Library. 1.How do library districts differ from special districts? A library district is a local entity other than a county, municipality, township or school district that is authorized by state law to establish and operate a public library as defined by the National Center for Education Statistics. It has sufficient administrative and fiscal autonomy to qualify as a separate government entity. While special districts such as fire and water and sewer districts are grouped together and governed by title 32 under Colorado law, libraries are a distinct form of district and governed in 1 Council study session dates: November 27,2017; July 24, 2018; November 27, 2018; May 7, 2019; February 11, 2020 2An in-depth financial analysis was conducted by the George K. Baum & Company (GKB), presented to Council in the November 17, 2018 study session packet and presentation materials. Council also requested information on governance, process, structure, and asset allocation related to the formation of a library district. A legal analysis was conducted by Kim Seter, of Seter & Vander Wall P.C., who specialize in library district formation, governance and operation. (Memo October 2, 2018). Staff and the Library Commission submitted questions about the legal analysis which the law firm answered in two additional memos (October 15, 2018 and November 29, 2018). 10 Colorado by title 24. Fiscal autonomy of libraries requires support from local taxation dedicated to library purposes (e.g., a library tax).3 The library district Board of Trustees are an appointed board, so governance is not totally given away (in contrast to special districts, which are governed by an elected board).4 2.How are library services provided across Colorado? In 2018, the Colorado State Library identified the following forms of governance for library services across Colorado: •39 municipal libraries serving 1.86M Coloradans [1/3 of which is Denver] •57 District libraries serving 3M Coloradans. •11 County libraries serving 672K Coloradans [575K of which are Jefferson County.] 5 3.What are the primary steps to form a library district by resolution? We have utilized both the petition and the resolution/ordinance process. The petition process is adequate for smaller rural communities; but, we have always used the resolution/ordinance process for larger library districts. A library district can be formed by resolution or ordinance of one or more existing governments (i.e., the city, the county, or both) (the “establishing entities”); or, by initiative of citizens through a petition process. Establishing the library district by resolution or ordinance is cost effective and allows greater control of the process by the establishing entities. The establishing entities determine the appropriate boundaries of the district in the resolution. The resolution or ordinance must identify and provide that the electors must approve the proposed mill levy. A public hearing or hearings is held by the establishing entites after published notice to discuss the purpose of the district, its powers; and the financial and other obligations of the establishing entities, if any.6 4.How are library district boundaries determined? The geographic boundaries of the district are determined by the establishing entities or in the citizen-initiated petition. Boundaries should provide sufficient tax base to support library services and include the area actually utilizing those services.7 The City Council and Library Commission would consult the Boulder Valley Comprehensive Plan and work with Boulder County commissioners to identify district boundaries which would include areas of unincorporated Boulder County that do not have adjacent areas with other entities providing municipal or district library services.8 Library district boundaries recommended by the Library Commission were identified to include as many library patrons as possible without impinging on the service areas of other libraries. Niwot and the foothills communities were included at the suggestion of 3 11/17/18 Staff Memo to Council 4 11/27/2018 Council Study Session: Kim Seter Responses to Councilor Question 5 2/11/20 Staff Memo to Council 6 10/2/2018 Legal Memo from Kim Seter. 7 10/2/2018 Legal Memo from Kim Seter. 8 11/17/18 Staff Memo to Council 11 Council members and County Commissioners. About ⅓ of library patrons live outside the City of Boulder and most would be included in the proposed district boundaries. The Library Law utilizes the phrase “legal service area” instead of legal boundary. Petitioners or establishing entities may draw any legal service area for the library district they deem appropriate. Statutes define the library’s legal service area as the geographic area for which a public library has been established to offer services and from which, or on behalf of which, the library derives income. The area in which the district will offer services and the area needed to derive sufficient income are the considerations that should determine the library district boundary.8F 9 5. How are library districts funded? Structurally, the library district is a quasi-municipal corporation and political subdivision of the State and not a branch, department or service of the establishing entities. It obtains its own financial support through an ad valorem property tax levy authorized and approved in a TABOR Election. Library districts are funded by a mill levy approved by the electors within its boundary. 10 The primary funding mechanism is the mill levy. The District may also receive specific ownership taxes, apply for grants etc. The statutes also provide that a “dedicated mill levy” of the establishing entity[ies] can be transferred to the library district. I have legal concerns about this process but it is provided for in the statutes. {Following library district establishment} The Board of Trustees of a district have the authority to request that an election be held to alter the maximum tax levied to support the district, in which case, the County Commissioners {BOCC} shall cause the vote to be held. The BOCC action is a ministerial act that does not permit the BOCC to exercise discretion whether to place a mill levy increase question on the ballot. The district is subject to TABOR as an autonomous government and subdivision of the state. The district must submit its own ballot question to De-Bruce its own revenues. The proposed District may “De-Bruce” upon the passage of an election question authorizing same. We would likely draft the initial debt authorization question to include the language to “De-Bruce.” Under most conditions, the district will not assume the voter authorizations of its establishing entities and its mill levy, revenue and TABOR concerns have no affect on those of the city or county.10F 11 6. When does the library district funding vote occur? When formed by petition, January 1 following the election is the deadline to fund a district after a successful formation election. This is easily accomplished because a mill levy question would be included in the November election. When forming by resolution or ordinance, the legislative bodies shall establish the public library and provide for its financial support beginning on or before January 1 of the year following the adoption of the resolution or ordinance or…following elector approval of that levy. Therefore, there is not a deadline in the statute to hold a TABOR election to set the mill levy. However, the law seems to imply that establishment and funding should be accomplished within a reasonable timeline, where possible. We have interpreted this to mean that an establishing entity may “provide for its financial support” by certifying a mill levy election for the library district. he district board can request a mill levy election. We have addressed a reluctant board of 9 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 10 10/2/2018 Legal Memo from Kim Seter. 11 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 12 commissioners in the past and it was determined that the certification of the mill levy question is a ministerial act that must be performed by the commissioners. It is not within the board’s discretion.12 7. How are the library district Board of Trustees appointed? Following adoption of the resolution, the establishing entities appoint the first board of trustees (5 or 7 members) to the library district. By statute, the initial Board Trustees is appointed by a subcommittee composed of two Councilors and two Commissioners who accept and review nominations, with Trustee appointments ratified by both bodies. Once appointed, Trustees are parties to subsequent IGA negotiations, representing the interests of the Library District. Library law and the IGA establish the procedure by which Library District Trustees will be appointed on an ongoing basis. (See Appendix A) Common practice is to delegate responsibility for ongoing appointments to the Board of Trustees, subject to ratification by the establishing entities.13 If a library district is formed to include the city limits, the city council would appoint a library district board. If a library district’s boundaries would include areas outside of the city limits, city council would likely also need to appoint at least one at-large member to a governing board.14 There is no difference in the appointment process or composition of the Board of Trustees, whether it is formed the city/county or by petition. A petition, like the establishing resolution, must identify the establishing entities. The establishing entity or entities then have the duty and authority to appoint the Board of Trustees.15 The library district is a quasi-municipal corporation and political subdivision of the state of Colorado. It is not a component unit of the establishing entity or entities. A combination of the city council and county commissioners cannot be established ex officio as the board of trustees. There is nothing in the Library Law or Colorado law that prohibits an individual resident of the district who is also a commissioner or city council member from being appointed to the library board. However, the appointment process established in the Library Law would not allow the establishing entities to provide that any trustee position is filled by a commissioner or city council member by virtue of holding (ex officio) that county or city office. Caselaw is being developed to provide best practice standards for appointment/removal. There have been some attempts by County Commissioners to politicize library boards. The district governance model is intended to provide a buffer agains politicization, and the developing caselaw supports this.16 8. What are the responsibilities of the library district Board of Trustees? The powers, duties and responsibilities of library district governing boards and their relationship to city and county governments is set forth in the Colorado Revised Statutes.17 (See Appendix A for a summary of Trustee responsibilities.) {The Board of Trustees] would then function independently of the city government, with primary responsibilities of hiring a library director, approving expenditures and overseeing all district strategy and accountability for operational efficiencies. The district would assume 12 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 13 10/2/2018 Legal Memo from Kim Seter. 14 11/17/18 Staff Memo to Council 15 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 16 11/27/2018 Council Study Session: Kim Seter Responses to Councilor Question 17 10/2/2018 Legal Memo from Kim Seter. 13 responsibilities for all administrative functions (human resources, finance, facilities management, insurance, employee benefits and retirement, etc.) or choose to contract with the city or other entities to provide these services. All library employees would become employees of the district.18 As an autonomous political subdivision of the state it will have complete control over legal spending of its tax revenues. However, some control and mutual financial benefits can be determined and fixed in the IGA. The establishing entities may not place restrictions on the library’s use of funds, so long as the funds are being used legally and in the interest of the library. However, the establishing entities The district is required to file an annual report with the establishing governmental entities and the Colorado State Library.19 The board of trustees is required to publish an annual report detailing budget expenditures, and providing metrics on library performance during that calendar year.20 9. What issues does the Intergovernmental Agreement address and how long does it take to create an IGA? The negotiation of the IGA will essentially determine whether and how the district formation will go forward. The participating entities here will be the Library Commission, City Council and governing body of any other establishing entity. Once all of the issues that need to be addressed are determined, it has been relatively easy to obtain consensus in the past. We have always taken the lead in the process incorporating all of the establishing entities. This will be a 6-7month process.21 Governance concerns and operational parameters should be established in the IGA at the time the library district’s first board of trustees is appointed and prior to the district obtaining its own mill levy funding.22 Q: Are there examples of cases where control over mutual financial benefits are shared? A: We are not certain what “mutual financial benefits” might mean; however, several of our libraries obtained their own mill levy which then reduced the burden on the city/county budget. In addition, some districts pay the city/county for services like janitorial, building maintenance, personnel, accounting, procurement etc. Each of these arrangements was negotiated with knowledge of the cost of obtaining the services from other sources and was deemed beneficial to all parties. Some of these arrangements were temporary and in others they have endured for 15-20 years, so far.22F 23 18 11/17/18 Staff Memo to Council 192/11/20 Staff memo to City Council 20 See C.R.S 24-90-109(q)(2). 21 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 22 2/11/20 Staff memo to City Council 23 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 14 10. Library District Transition: Administrative services Administrative costs necessary to operate the library system. This category includes communications/marketing; legal services; finance ’risk management/insurance; payroll administration; human resources; staff support to Commission & Council; IT; and ongoing facilities maintenance. The [11.27.2018] memo titles this category as “cost allocation” and assigns a cost of $3.38 million to this category (based on the 2019 budget).23F 24 As for administration, Poudre River continues to utilize and pay the city for many administrative and contracting services, janitorial and maintenance, personnel (until very recently), financial services etc. Rangeview (Anythink) and Poudre River continue to contribute to the county and city retirement programs despite the fact that they are independent in many other ways.25 11. Library District Transition: Transfer of library assets The library’s community assets (including facilities and library collections) remain in service to the community, directly maintained and invested in by the district at the direction of the library board.26 The distribution of assets is the subject of negotiation. Almost all of the establishing entities have conveyed real and personal property to the library district without charge. (See Appendix C for details.) However, some buildings have been leased by the district and some have had title restrictions that require payment if the property ceases to be used to provide library services, or upon sale. The statutes do not preclude the parties from negotiating a long-term purchase option.27 The community’s library building and property assets include the Main Library, the George Reynolds Branch Library, the Carnegie Library for Local History, and upcoming North Boulder branch library. The Meadows Branch Library is a rented facility. Other community assets include the book and media collections; computer, business, and materials handling equipment; furnishings and fixtures. There are options (below) regarding how library assets could be transferred from the city to a library district. The options selected would be part of the IGA. • Deed library buildings, properties, and other assets to the library district at no cost, minimal annual cost, or one-time cost. • Lease library buildings and properties to the library district at a determined rate such as, fair market value, original cost, or a different rate set by council.28 Library monetary assets in the Library Fund and any other funds that have been collected for the library (e.g. Development Excise Tax, Impact fees, proceeds from the sale of the Blystat- Laesar House, and direct contribution from the Library Fund to Facilities Renovation and Replacement (FRR) would be transferred to the library district.29 Costs [associated with library facilities include] the substantial backlog of deferred maintenance in library facilities. Funding for the facilities backlog is represented as an annual cost in the [GKBaum] model, with large repairs and small capital projects spread out over 15 years. The model includes $3.9 million in backlog for the next five years (based on a list identified by FAM 24 11/18/2018 Library Commission Memo to Council 25 10/2/2018 Legal Memo from Kim Seter. 26 Library Commission Forward to the 2018 BPL Master Plan 27 10/2/2018 Legal Memo from Kim Seter. 28 2/11/20 Staff memo to City Council 29 2/11/20 Staff memo to City Council 15 during the course of the master plan), allocated as $778, 000 annually between 2020-2024. There are additional costs in facilities backlog in subsequent years ranging from $200,000 in 2020 to $1.3 million in 2023. Beginning in 2026, the model assumes an average annual cost of around $600,00 to address the backlog. The library's portion of deferred maintenance is 25% of the City's total, as reported by FAM.30 12. Library District Transition: Library employees If a library district is formed, City of Boulder employees could be transferred from the city to the library district. If the library district contracts for services with the city, library district employees may retain identical benefits as they had as city employees. Staff discussed with Public Employees Retirement Association (PERA) the impacts on employee retirement benefits if a library district formed. The conclusion was no changes are required to the employee or employer status and employees would retain all their vesting and coverage rights. Proper timing of the transfer is necessary to insure no break in service. Staff also researched impacts on employee benefits with the Social Security Administration. The conclusion was neither the employer (the library district) nor the employee would be required to contribute to Social Security.31 In the most efficient process we have used, the library district made employment offers to all city/county library employees that offered the same benefits and salary, accumulated leave and vacation pay. Simultaneously, the city/county issued notices of termination.32 13. Library District Formation and Transition: Examples from other library districts The law firm compared library district formation by ordinance and by petition and provided information about the Poudre River Public Library District (Fort Collins), the Berthoud Public Library District and Jefferson County Public Library. (See Appendix B.)33 The petition process is adequate for smaller rural communities; we have always used the resolution/ordinance process for larger library districts. Arapahoe Library District, Rangeview Library District (Anythink), and Poudre River Regional Library District utilized [the IGA] process to move from county and city service to the district model. Under the terms of IGAs, Rangeview (Anythink) separated from Adams County within approximately 5 years; however, Poudre River has maintained a close relationship under its IGA with Fort Collins since 2005. Both of these arrangements have been beneficial to the parties involved. In short, all of the transition items have been worked out in other districts and, because of the mutual benefits available, some “transitions” continue after more than thirteen years. Q: Are there libraries in Colorado that have determined a district was not in their best interest and maintained as a municipal library? A. The Jefferson County Public Library explored the possibility of forming a district, but the board of county commissioners chose to keep the library as part of the county. There have been enquiries from other entities but JCPL was the only entity we are aware of that formally determined not to convert the county library to a district.34 14. What financial benefits would accrue to the City with formation of a library district? 30 11/18/2018 Library Commission Memo to Council 31 2/11/20 Staff memo to City Council 32 10/2/2018 Legal Memo from Kim Seter. 33 11/17/18 Staff Memo to Council 34 10/15/18 Legal Memo from Kim Seter, responding to Council questions. 16 In sum, if a library district were formed the city could realize savings to the current General Fund budget approximately $7.5 to $8.7 million with the potential for other indirect savings over time and would reduce the city’s unfunded capital needs. Additionally, if a library district was formed, the city could provide support services to the library and receive revenue from the district to cover those costs. If a library district were formed, council could consider whether to apply those savings to other high priority unfunded needs or reduce taxes.35 15. Should the City fully fund the library using dedicated city revenues? We believe that dedicated funding for staffing, facilities and core services is a necessity. The library simply cannot compete against the priorities that drive Council elections. Because of the way these bigger issues dominate Council agendas and City priorities, it is difficult for library needs to be “heard” by City staff and Council. As evidence of this challenge, we note that our library system has seen no growth in operational funding and staffing for more than 16 years. The library’s operational funding today (adjusted for inflation) is exactly what it was in 2002, when the City last had to cut services to match declining revenues. In that same period, City funding overall has outstripped inflation, keeping pace with the City’s growth in population and property values. Library staffing has decreased 16% since 2002, while City staffing has increased 12%. Unfortunately, while the City budget as a whole has recovered and increased since the City’s last fiscal downturn, the library has not been included in this recovery. Property tax is preferable to sales tax. Revenues from property taxes are generally more stable than sales tax (especially in a highly desirable community like Boulder). Sales tax revenues have been declining in the City of Boulder for some time, a trend that is likely to continue. We should avoid mixed funding. Boulder’s current small increment of property tax (0.33 mill) was dedicated in 1917. However, as revenues from property taxes have grown over the years, the general fund contribution to the library budget has been correspondingly reduced - yielding no net benefit to the library from its dedicated property tax. The Commission seeks to learn from history and avoid relying on a mix of dedicated property taxes and general fund contributions. Districting offers the most equitable, reliable and accountable approach to funding. Districting offers a better match between the patron base and the funding base. Staff’s analysis shows that while most households in Boulder have library cards, nearly 40,000 of our library’s cardholders live outside the Boulder city limits. No other library system of Boulder’s size has a similar, disproportionate number of cardholders living outside the library’s boundaries. Districting provides a means to establish boundaries that better reflect the patron base - an approach now taken by every other Colorado library similar to Boulder in size and patron base. Funding is more reliable in a district because it is secured directly from dedicated tax revenues rather than competing with other city departments. Changes in funding decisions can be made quickly, and unspent dollars can be retained for future years. 35 3/17/20 Staff Memo to Council 17 Library districts are now the most common form of governance and funding for Colorado libraries.36 The Charter of the City of Boulder, Colorado, section 94 caps the total property tax mill levy at a maximum of 13 mills, and the city’s mill levy is currently 11.981 mills. The difference between the total city mill levy and the maximum allowed in the charter is 1.019 mills. If council chooses to dedicate the mill levy increase to the library, charter, section 134 would need to be amended.37 36 Library Commission Forward to the 2018 BPL Master Plan 37 37 11/17/18 Staff Memo to Council 18 Appendix A Notes below are from the Colorado State Library, “Library Districts The Basics … and More. A Colorado State Library Workshop” APPOINTMENT OF THE BOARD OF TRUSTEES (CRS 24-90-108) 1. The “management and control” of the library is vested in a board of “not fewer than 5 nor more than 7 trustees.” 2. Appointees must live in the library district. 3. “Each legislative body” appoints 2 people to a committee to appoint the first board of trustees. Thereafter, there are 2 methods: • Continue this committee OR • The city or county delegates to the board the authority to recommend new trustees who are then ratified by a 2/3 majority of the city council or county commissioners. Failure to act in 60 days is considered ratification. 4. Vacancies are filled the same way. 5. Terms are staggered. Term lengths and the number of terms are specified in the library district bylaws. 6. Trustees may be removed only by a majority vote of the city council or county commissioners, “but only upon showing of good cause as defined in, but not limited to, the bylaws adopted by the board.” 7. Trustees may not receive a salary, but expenses can be reimbursed. 8. Immediately after appointment, the board meets to elect officers. POWERS AND DUTIES OF THE BOARD See CRS 24-90-109. Note especially (e) (II), which clearly gives library districts appropriation powers not given to city or county libraries. THE MONEY FOR A LIBRARY DISTRICT (CRS 24-90-112) 1. If the tax is approved by the voters, the board of county commissioners is authorized to levy a tax for the library district “upon real and personal property.” 2. You can go to a vote any November. 3. “Upon request” of the board of trustees, the board of county commissioners “shall submit to a vote...a proposition....” (See both 24-90-109(4) and 24-90-112 (1)(b)(III).) 4. The treasurer of the county is the custodian of all moneys for the library, which is transferred into a special fund called “the public library fund.” This fund, including all its 19 interest, can be used for library purposes. It is expended upon “warrants” signed by the president of the board of trustees. 5. If the board of trustees requests it, the treasurer may transfer the money into the custody of the board, with the stipulation that the board must “carry a bond” for this purpose, make a monthly accounting to the treasurer, and perform an annual audit. (The “bond” carried by the Arapahoe Library District is a performance bond on each trustee for $10,000 each, for a total premium of $245/year.) 6. Other revenue sources: Specific ownership tax, interest, grants, fines, fees, contracts, gifts, Friends or Foundation donations to the library. EXAMPLES OF OTHER PRIVILEGES, LAWS AND LIMITATIONS 1. Library districts can hold bond elections and issue bonds. (CRS 24-90-112.5) 2. The Budget Law and the statutory 5.5% revenue limit apply. (CRS 29-1-101+) 3. The Sunshine Law applies. (CRS 24-6-401+) 4. The Election Law applies. (CRS 1-45-101+) 5. The constitutional provisions of Gallagher apply. 6. The constitutional provisions of Taxpayer Bill of Rights (TABOR) apply (Article X, Section 20). These include: • All tax rate increases must go to a vote. • The ballot question must start with the amount of the increase. • Requires emergency reserves of 3% of the fiscal year spending. • Imposes spending limits and revenue limits. • Includes a provision of local growth. • 30 days before an election, you must mail a notice to increase taxes. This must include 2 summaries, up to 500 words each (one for and one against), of written comments filed by 45 days before the election. The “election officer” maintains and accurately summarizes all comments. This mailing is often handled through a “consolidated election” process by the county clerk, paid for by the library. 20 Appendix B Library District Formation and Transition Case Studies Provided by Seter & Vander Wall POUDRE RIVER PUBLIC LIBRARY Poudre River Regional Public Library District was originally a municipal library. A petitioner’s committee was formed to promote a district to increase funding and services by spreading the cost over the entire user base, extending far outside the city. The committee worked with library user data, library service need information, voter data and demographic data to develop a proposed district boundary. The city and the county commissioners were approached at the same time with a request to form the district by resolution to simplify the campaign and election process. The city and county chose to establish the district by resolution with a condition that it would be dissolved if it did not obtain funding from the voters by a specified date. An interim intergovernmental agreement was entered into with the city to ensure that representations to the voters in a mill levy campaign as to the future of the library facilities was accurate. The mill levy was approved by the voters within the proposed district which was much larger than the city boundaries. An intergovernmental agreement (“IGA”) was entered into that included a process for transferring real and personal property to the library district along with employee rights and obligations, retirement funds, etc. The IGA provided for the district to purchase many services from the city including personnel, training, building and grounds maintenance, contracting, contract administration, procurement and accounting. Some these services have been taken over by the district but others continue to be provided by the city on an hourly or annual fee basis. The IGA remains in place for these services. The District has remodeled and expanded its facility in Library Park in downtown Ft. Collins, added to its collections and services, purchased and remodeled an administration building, entered into an agreement with Front Range Community College for a shared library facility and constructed a new library on the south end of the city. It is engaged in a facilities study to determine a fourth branch location to be constructed in the next two years. BERTHOUD PUBLIC LIBRARY Berthoud was formed through a petition process utilizing the city boundary as the district boundary. The formation and the mill levy questions were asked at the same election. After some confusion it was determined that the district formation had been approved but mill funding had failed. The library district successfully sought funding at a subsequent election. The city continued to fund and operate the municipal library until district revenues were realized from the new mill levy. There may have been some repayment to the city thereafter, but I do not recall. A simple IGA was utilized to transfer the single library building and assets to the library district, and it then began operations on its own. 21 The city council continues to ratify appointments to the library district board. JEFFERSON COUNTY LIBRARY We have been asked to comment on the failed attempt to form a library district for Jefferson county. This comment is solely from our perspective. We are not aware of the discussions that may have taken place outside meetings in which we were involved. The county library board of trustees requested the formation of the district by resolution. The County already had a mill levy dedicated to the library. I believe it is approximately 3.5 mills. However, the election question that approved the dedicated levy said the county could use “up to” 3.5 mills solely for library purposes. Accordingly, the dedicated levy was part of the aggregate county levy and part of its TABOR calculation for levy and revenue limitations. The expectation was that the dedicated levy would support the library district until it obtained its own levy at which time it would lapse or continue to be paid to the district. In either event, it was solely available to the county for library purposes. Library Trustees believed the library portion of the county levy was utilized by the county as the variable to adjust for TABOR limitations. The ability to utilize the library levy in this way became an issue in the formation of the district and appeared to be the greatest concern about the formation of a district. There was no effort to form the library district through the petition process and the county commissioners declined to approve a formation resolution. 22 Appendix C Summary of Library Asset Transfers, from the Colorado State Library 23