Opinion: The City Council should not give away our library buildings

Boulder city staff’s memo for the City Council this Thursday discusses what should happen to the City’s publicly owned library buildings once the Library District is operational. So it’s clear, the voter approval of the District in the November 2022 election decided nothing with regard to the fate of these library buildings, which include the Main Library (on Canyon, east of 9th Street), the Carnegie Library (on Pine, west of Broadway — which is our library of Boulder history, not the District’s), the new North Boulder branch building (on North Broadway), and the George Reynolds branch (on Table Mesa Drive across from King Soopers). The other two are leased.

Our situation is unique in Colorado; no other large library system has made such a District conversion. And library commissioners are appointed, not elected, so the voters have no direct recourse.

In the March 15, 2022, study session prior to the November vote that created the Library District, all eight council members present opposed any transfer of ownership of the main library, and they were split on leasing vs. transfer of the branches. Thus, the context for the November vote was that the City would continue to own the main library and possibly the rest of the buildings and that the District would get permission to use them.

Now, in what was a surprise to some council members and many citizens, City staff is “suggesting” that the City convey full ownership of all these properties to the District, rather than leasing them and retaining ownership control. In my opinion, the staff’s arguments are both one-sided and seriously flawed.

Here are the staff’s arguments (in quotes), and the problems I see in them:

• “Historically, the land and buildings have been funded by taxpayers. This will continue with the District.”

So what? Taxpayer funding will continue, whether the District owns them or leases them from the City.

• “The District will be responsible for insurance, upkeep, maintenance, and improvements to the properties.”

Again, irrelevant. Having the District be financially responsible does not require transfer of ownership, and can easily be accomplished with a lease. It is done all the time in the private sector using “triple-net” leases.

• “Avoids a landlord-tenant relationship. A clear separation also results in unnecessary entanglements for the city and the District.”

Some sort of entanglement is essential, if the City is to prevent the District from selling the buildings off, converting the buildings to other uses (how about a homeless shelter?), or allowing them to deteriorate.

• “Allows the District to set its own building, maintenance, and service standards.”

This is exactly what the City should not allow. Suppose the District’s standards are inadequate, or the District commissioners neglect to keep things up? The City could end up stuck with a huge repair bill if we got the buildings back.

• “Allows city Facilities staff to focus on other core city services.”

If the City staff is unable to do the simple job of managing the leases, the City can hire one of the many excellent local property managers for a tiny fraction of the current library budget, which the City will no longer be spending. Or just require the District to pay rent adequate to cover this service.

• “Allows the District to have assets that can be leveraged for bonding purposes or certificate of participation financing for future projects.”

This reveals the real problem with giving away the buildings. If the District uses the buildings for collateral for any sort of loan, then, under a default, the lender would call the debt and take over ownership in order to get their money back through sale or reuse. Obviously, the lender would not accept the building being restricted for use only as a library, since that has almost no financial value. So, the City could not restrict the District from allowing the buildings to become high-end office space or expensive condos!

• “The city owns all of the library properties that are not leased in fee simple. This means the city has the absolute right to use the land with the freedom to dispose of it at will. There have been some discussions about what happens when one of the fee simple properties is subsequently no longer needed by the District.”

The situation is more complicated than this simplistic description. The library system has been partially funded for decades by the City’s library tax, which is “dedicated” to the City of Boulder library system. This creates legal complications and should give the citizens a direct say in any change of ownership, like through a citizen vote.

• “Right of first refusal. This has been proposed by the District. If a fee simple property is no longer needed by the District, the District would offer the city an opportunity to purchase the property before it would be sold to a third party. The city would be expected to pay market value for the property. The thought is that these properties are presently put to library use and that any revenue generated by the sale of a property would continue to be used for library purposes.”

This “right of first refusal” is completely unworkable, as discussed above. For example, the main library’s unencumbered “market value” would be huge and the City could not afford to buy it back, so the buildings would end up in private hands.

• “City to retain some type of reversionary interest. The city has explored the reversionary approach to conveying the fee simple properties to the District. In this scenario, the city would retain property rights necessary to have a property returned to the city if it is no longer needed by the District. This would allow a property to continue to be used for public purposes without paying for a property a second time or allow the city to waive its reversionary interest after a community conversation.”

Again, the only financial value of full District ownership is that the buildings could be used as security against a loan to the District. But no one would loan a dime with such a reversion clause in place since they could never take possession. So, what would be the point?

I could go on detailing the “what if” scenarios ad nauseam, but the outcome would be the same. Giving away the buildings doesn’t make sense. The City should just lease the buildings to the District and retain ultimate control to keep the buildings for us citizens in case the District fails to operate in an appropriate and agreed-upon manner.

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