- Most local banks aren't able to finance a major construction project at a competitive rate.
- Libraries usually finance construction through loans or an issuance of bonds.
- In reviewing borrowing options, the library may want to consider the following items among others:
- Fixed versus variable interest.
- Early payment options.
- Amount of paperwork required.
- Determine borrowing capacity at the beginning of the process. This is a crucial element in determining what you will be able to do.
Contact a financial advisor to determine borrowing capacity.
- Contact a financial advisor at the beginning of the planning process to determine borrowing capacity.
- The bonds are issued in the library's name, but your financial advisor will oversee and guide all parts of the process.
- The library should hire a bond attorney to review all papers.
- The financial adviser can assist in hiring a bond attorney.
- The library should adopt a reimbursement resolution allowing self-reimbursement from the bond sale for hard costs such as land, demolition, etc.
- This cannot be used for architect fees.
- Items that may improve bond rating:
- Maintain a cash reserve of 10% - 15%.
- Ensure adequate revenue to cover construction loan costs.
- Practice good management in general (i.e. documentation, policies, etc.)
- Do not sell bonds before getting a firm construction bid.
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