Sno-Isle Libraries Board Policy

Purpose

To establish guidelines for financing capital expenditures through the incurrence of debt in accordance with Washington State law.

Scope

The Sno-Isle Libraries (Library District) Board of Trustees (Board) recognizes that the use of debt financing may be an effective tool for the acquisition, construction, improvement, or enlargement of library facilities.

As described in Washington State RCW 27.12.222, the Library District is permitted to incur indebtedness as follows:

• The issuance of nonvoter approved limited tax general obligation bonds (LTGO Bonds) for any purpose. The aggregate principal amount of the LTGO Bonds, together with the principal amount of all other outstanding nonvoter approved indebtedness, will not exceed 0.1% of the total assessed value of the taxable property within the Library District.
• The issuance of voter approved unlimited tax general obligation bonds (UTGO Bonds), for capital purposes only. The aggregate principal amount, together with the principal amount of all other outstanding voter approved and nonvoter approved indebtedness, will not exceed 0.5% of the total assessed value of the taxable property within the Library District.
• The execution of nonvoter approved executory conditional sales contracts for the purchase of real or personal property (e.g. land and buildings, or furniture, fixtures, and equipment). The entire amount of the purchase price specified in such contract will not result in a total indebtedness in excess of 0.75% of the total assessed value of the taxable property within the Library District.

The Library District may choose to structure any such indebtedness such that the interest paid to the entity, investor, or holder of the debt will be tax exempt or will be taxable under federal law.

In addition, the Library District may initiate the voter approved establishment of, and the incurrence of either tax exempt or taxable indebtedness and the issuance of UTGO Bonds by, a library capital facility area (LCFA), as an independent taxing district, separate from the Library District, to finance the capital costs of acquiring, constructing, furnishing, and equipping of a library facility to be operated by the Library District within that LCFA.  The aggregate principal amount of outstanding UTGO Bonds of an LCFA may not exceed 1.25% of the total assessed value of the taxable property within the LCFA.

Implementation

The Board will consider debt financing in conjunction with the review and adoption of the Library District’s annual budget. The Board will authorize the incurrence of debt only by resolution during the calendar year of the adopted annual budget. The Board resolution will also authorize the Executive Director and appropriate Board officers to approve and execute such agreements and all other related documents for the purpose of incurring such debt and issuing any bonds.

The Library District will obtain financing only when it deems necessary and will endeavor to do so at the most favorable interest rates and reasonable issuance costs.

The Finance Director shall develop and be responsible for ensuring the Library District’s compliance with procedures and guidelines for the incurrence of debt and the issuance of bonds by the Library District that comply will all applicable Washington State and federal laws. In particular, but without limitation, the Finance Director shall be responsible for post-issuance compliance with applicable relevant federal tax laws regarding arbitrage, arbitrage rebate and the use of bond-financed assets, and applicable relevant securities laws regarding ongoing disclosure of material information about the Library District, including, without limitation, audited financial statements.

Associated Policies and Laws

• Washington State chapter 21.20 RCW Securities Act of Washington
• Washington State RCW 12.170 Powers of board—Procedures
• Washington State RCW 12.222 General obligation bonds—Excess levies
• Washington State chapter 27.15 RCW Library Capital Facility Areas
• Washington State RCW 30.010 Executory conditional sales contracts for purchase of property—Limit on indebtedness—Election, when.
• Sno-Isle Libraries Board Policy. Library Facility Ownership
• Sno-Isle Libraries Board Policy. Site Selection and Acquisition
• Sno-Isle Libraries Board Policy. Purchasing and Public Works

Process

This policy is reviewed every four (4) years by the Executive Director (or designee), who makes recommendations to the appropriate Board committee. The committee reviews the recommendations, revises the policy as necessary and appropriate, endorses, and advances the policy to the full Board for approval.

Policy History

Date approved: July 24, 2023
Next review date: 2027
Adopted: July 24, 2023