Our Funding Plan

We understand that the City of Madison issued its RFP for a new library with a "budget in mind" of $30 million. This cost was to be funded with:

• $16 million of City financing (tax-exempt municipal bonds)
  $ 4 million proceeds from sale of existing library site
  $10 million from private section donations
  

However, both new library proposals are in the neighborhood of $40 million - well over the simple cost estimate. And to further complicate matters, the Madison Public Library Foundation seems to be unsure about its ability to raise more than $10 million in donations in order to contribute to this gap.

We have suggested a plan to the City of Madison that would bridge the funding gap by utilizing federal financing subsidies. Our alternate financing plan utilizes two different subsidies: 1) New Markets Tax Credits and 2) bond financing using Recovery Zone Economic Development Bonds or Build America Bonds.

In simple terms, this financing structure would allow the City to get $25.5 million of building for the same annual cost (or less) that would be incurred for $16 million without these federal programs. The New Markets Tax Credits would be structured to provide $8-10 million of "equity" to the Library - meaning that only $15.5 to $17.5 million would need to be repaid by the City.

Block 66 - the library block - is within a high-priority Qualifying Census Tract for New Markets Tax Credits. To learn more about New Markets Tax Credits, please visit www.cdfifund.gov/what_we_do/programs_id.asp?programID=5.

The Recovery Zone Economic Development Bonds are authorized under the American Reinvestment and Recovery Act of 2009. The Federal government will subsidize 45% of the interest on these bonds. Recovery Zone Bonds may only be issued until December 31, 2010.