DeKALB – In order to meet a looming June 30 deadline, the DeKalb Public Library will borrow $6 million from a private bank as a part of its fundraising strategy for its planned expansion.
Library officials must raise $15.5 million by June 30 so they can take advantage of an $8.5 million library construction grant they were awarded in December by the State of Illinois. The library would repay the loan with private donations made to the expansion within the next three years.
Board President Clark Neher said they are in discussions with Castle Bank, National Bank & Trust, and Resource Bank, but no specific dollar amounts have been agreed on.
“We have gone to the banks to ask them if they will provide us with that much money so we can launch our private donation campaign,” Neher said. “It appears they are willing to do that.”
Also on Thursday, Library Director Dee Coover said she still was gathering information on the matter.
“I am working on it, but I am not going to comment at this time,” Coover said. She added that she is speaking with an “interested party” Monday about the loan.
On Monday, library officials will update the DeKalb City Council, which has the final say in whether the city will borrow $7.5 million to contribute to the effort, which would add 47,000 square feet to the 19,000 square foot library at 309 Oak St.
Assistant City Manager Rudy Espiritu said if the council decides to go forward with the borrowing, a vote could occur in March.
The state’s insistence to have the money in by June forced the library to seek a private loan, Neher said.
“We cannot launch a campaign between now and June and have the full $6 million guaranteed,” Neher said.
The library has a repayment plan in place for the city bonds. It will add 8 cents per $100 of assessed value to residents’ property tax bills for 20 years, which would cost the owner of a house with an assessed value of $200,000 who claims the homestead exemption about $50 more a year in property taxes.
Neher said he didn’t know how the library would repay the $6 million loan if it is unable to raise enough donations within the three-year time frame. Neher mentioned the possibility of scaling down the expansion so the library can pay off the loan if it can’t raise $6 million.
“I don’t want to dwell on that. I am quite confident that we will get the money,” Neher said. “We’re in the process now where we don’t have the money from these lead donors because we’re still talking with them.”
The library is technically owned by the city, which is why the City Council has the final say on borrowing. When asked if the city could be held financially liable for the library failing to back the loan, Neher said that was a last resort.
“There’s no way we would move in that direction,” Neher said.
If library officials can accumulate $15.5 million by June 30, they will have to begin construction on the expansion by Nov. 17. Portions of the $8.5 million state grant would be released to the library when the expansion to the 83-year-old library reaches certain stages in the construction.
Aside from the bond sale and the private loan, library leaders also want to use $1 million in library reserves and $1 million in tax increment financing funds. The library building is in a TIF district, and using the funds would require City Council approval.
Earlier this month, library officials unveiled the name of their fundraising campaign: “From Barbed Wire to Fully Wired.”