Cash flow quirk helping library projects in Naperville

  • The children's area at Nichols Library is one area set to be improved next year as the library conducts $2.3 million worth of renovations.

    The children's area at Nichols Library is one area set to be improved next year as the library conducts $2.3 million worth of renovations. Daily Herald file photo November 2013

  • Nichols Library is in store for $2.3 million of renovations in 2016, pending city council approval of the library's portion of the spending plan. The city is set to vote on a proposed $436.3 million budget during a meeting at 7 p.m. Tuesday, Dec. 1.

    Nichols Library is in store for $2.3 million of renovations in 2016, pending city council approval of the library's portion of the spending plan. The city is set to vote on a proposed $436.3 million budget during a meeting at 7 p.m. Tuesday, Dec. 1. Daily Herald file photo December 2005

 
 
Updated 11/25/2015 9:30 AM

Projects to renovate the Nichols and 95th Street libraries in Naperville appear on track despite a couple of wrenches in the process caused by a new city budget cycle.

The downtown Nichols Library is in line for $2.3 million of renovations in 2016 to improve space use, safety and seating, while 95th Street is planning to spend $2.2 million for carpet, furniture and other upgrades in 2017.

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But first officials had to figure out the logistics of paying for the improvements while the city is switching Jan. 1 to a calendar-based budget cycle instead of a fiscal year that ran May 1 to April 30. Since the library is funded by taxes the city collects, the change affects library operations, too.

The library has to seek reapproval of its renovation projects, which the city could grant Dec. 1 when council members are set to vote on the $436.3 million proposed 2016 budget. Library officials also have to gain approval of the funding mechanism they plans to use: taking advantage of a quirk in cash flow timing to make the Nichols and 95th Street projects a reality.

Executive Director Julie Rothenfluh said the library plans to use $5 million in taxes it already received that were to cover the remainder of the fiscal year until April 30, 2016.

"Even though the fiscal year was shortened to eight months, we've received all of our funding for a 12-month year," Rothenfluh said. "That funding is left over now."

                                                                                                                                                                                                                       
 

The money won't be needed for operations in 2016 because fresh funding will kick in Jan. 1 as the first calendar-year budget begins. Using the temporary surplus prevents the city from borrowing for library renovations or delaying the work, Finance Director Rachel Mayer said.

But the library did have another option with the extra $5 million -- use it to decrease property taxes.

Mayer said the smarter move is keeping the tax levy steady and using the money in hand to prevent the need to borrow. A tax cut would only be for one year and it wouldn't be sustainable, she said. Plus, the city is trying to reduce its $120 million debt by 25 percent in eight years, so avoiding any loans will help.

Mayor Steve Chirico was the only one to question whether the library should be taking advantage of the extra money.

"Could taxpayers make an argument that they'll be taxed twice for the first five months of 2016 for the library system?" Chirico asked during a budget workshop Monday.

"The honest answer is yes," Mayer said.

But City Manager Doug Krieger said he sees it as a cash flow timing discrepancy rather than a situation of double taxation.

                                                                                                                                                                                                                       
 

Property taxes fund the library. That hasn't changed. And property taxes are due twice a year. That also hasn't changed. All that's changed is when the city cuts off and begins each new year for financial planning purposes.

Chirico said he was comforted by the explanation of the situation as a cash flow oddity, but he wondered if spending too much of the library's 2016 and 2017 money on renovations will lead to a shortfall in early 2018, before the first round of property tax payments come in that year.

Mayer said she doesn't anticipate having to increase taxes for the library later to cover costs. The library is asking the city to collect $14.2 million for 2016 expenses in the property tax levy that's up for approval Dec. 15. That's less than the $14.7 million levied for fiscal year 2016 and $14.5 million for fiscal year 2015.

At Nichols, Rothenfluh said renovation plans include updating the main staircase to bring it up to safety code, improving lighting, rearranging shelving to open a broader view of the Riverwalk, moving the computer lab to the upper level to free more program space, renovating the children's programming room and replacing the main entrance doors on Jefferson Avenue to make them more energy-efficient.

"We're excited to be moving the computer lab up to the upper level. It'll be located right outside of the NaperLaunch (business startup) area so it'll be a nice relationship for people who are using NaperLaunch and also need to use technology," Rothenfluh said. "It'll be a very new look."

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