Opinion: Why Pay to Demolish our Landmark 1913 Library?

Editor,

To paraphrase the late H.L. Mencken ‘The good people of the New Canaan Library, Inc. (NCLI) have decided what New Canaan needs, and plan to give it to us good and hard’.

NCLI decided that our grand century old library is passé and that its replacement must be something shiny and new--an architectural statement--an homage to mid-century modernism– as befitting the style of our charming village as a spider on a wedding cake. It is planned to sit atop a grand presentational lawn – a back lawn made possible only by the $10 million equivalent value requisition of Town property – roughly half New Canaan’s adjacent Center School Parking lot.

You see, ostensibly at the eleventh hour, NCLI realized that its planned underground parking design wouldn’t fit within its modest, but growing $38 million budget. Rather than continue to utilize its currently sufficient parking area and sacrifice its grand back lawn, NCLI usurped nearly half of our Town’s Center School parking lot for a $10,000 per year rent (~72% of which will be paid by New Canaan taxpayers). Never mind the inconvenience of it being located on the opposite side of Maple Street a two-way thoroughfare. They know folks will be careful crossing the street going to and from the Library and handicapped parking will be kept close to the street. But in return the lawn will provide an area to relax and enjoy much needed greenery – Mead Park being too long blocks away – with a commanding view of the Morse Court parking lot and two rather awkwardly situated views of gas stations.

That’s the ‘good’ part. The ‘hard’ part is the cost, which is a bit difficult to determine precisely, since the library is part of a “public/private partnership”. While the Town of New Canaan provides 72+% of NCLI’s annual operating costs, our Town has little, if any, direct effect on NCLI board decision making. The amount of funds contributed by and to be contributed by NCLI’s unidentified generous benefactors is largely opaque. What is known it that our Town officials plan on subsidizing construction of a new library building with a $10 million grant, to be funded by a planned 20 year bond issue, bearing interest at the rate of ~2.5% per annum, requiring Town debt service beginning at $750,000 in its first year. To date, as best we know, NCLI has raised $8 million in cash, with an equal amount pledged to be contributed sometime in the future. The dangerous and clever part is that NCLI has separately arranged additional construction financing through a local bank, Bankwell—an up to $15 million first mortgage and senior secured loan at a 4.25% per annum interest rate—1.7X the Town’s expected bond interest rate. The reason our Town officials seem to blithely go along with NCLI’s proposed private loan, at commercial interest rate (72+% of which excessive interest cost will be paid by New Canaan taxpayers) is difficult to fathom.

This is where things get a bit dicey. In return for its $10 million grant and the $10 million equivalent value to NCLI Center School Parking spaces lease, the Town acquires no equity in either the structure or the property they will sit on, while our Town loses rent and development opportunity at this municipal parking lot. Bankwell’s construction line of credit term sheet provided to NCLI makes it clear that this bank will be first mortgage and first lien secured by all NCLI property and assets! One unhidden view involving NCLI is that, in the event NCLI would default its proposed Bankwell line of credit, this bank’s collateral position will be dispositive! Let’s put aside the question of whether it is illegal for a municipality to take a second mortgage/lien position behind the prime mortgage/lien position of a private entity. The Town Of New Canaan’s proposed second mortgage/lien position, in consideration of its proposed $10 million contribution to the new library building project will be useless in the event of NCLI’s default on its proposed Bankwell line of credit. Adding insult to prospective injury, NCLI believes that its ‘partnership’ gives it an indirect line to the Town’s purse should it default on its proposed Bankwell line of credit. Not without reason, the Town would find it insuperable to allow the unfinished building to sit derelict on South Ave.

Why even consider NCLI defaulting its proposed Bankwell line of credit? This begs the question: how will NCLI service the interest and principal borrowed under its proposed Bankwell line of credit, while also funding the approximately 25% of its annual operating expenses? NCLI assurers us its new library building will be extremely efficient, and that in future years it will require no more than its current $2,320,250 annual New Canaan taxpayer contribution. But this assertion does not begin to address the essential question: “from what source(s) will NCLI be able to raise moneys to fund both its diminishing proportion of its increasing annual operating expenses AND to pay its Bankwell debt? How indeed?

The funds necessary to underwrite NCLI’s $38 million building project (more on NCLI’s newest estimate in a moment) the following are required:

NCLI contributions: $ 8 million

Town contribution: $10 million

Bankwell loan: $15 million

Additional minimum of NCLI contributions: $5 million.

However, another gnawing detail lies in the likelihood that this project can’t be completed as designed for less than $40 million to $50 million. It’s hard to be more specific and detailed, in that NCLI doesn’t share its construction estimates. More than one architect consulted has expressed skepticism about NCLI’s current $38 million cost estimate. (this skepticism excludes the compounded added costs required by Covid compliant construction.)

In sum the Town of New Canaan will be expected to pay:

annually $2,320,250 + NCLI operating expenses

$750,000 first year (then modestly declining) annual debt service on the 20 year bond to be issued to finance New Canaan’s $10 million NCLI grant, AND

all, or the majority of the interest and principal on NCLI’s $15 million borrowings from Bankwell.

These expected Town of New Canaan payments do not include the $10 million equivalent value to NCLI of the “gift” of 76 Center School parking spaces. Significantly, the foregoing assumes that all of NCLI’s pledged contributions will materialize, and that the NCLI’s new building project is completed on budget. (A recent survey found that only 31% of municipal building projects were completed within budget.)

So, what does this leave the Town’s taxpayers? The loss of a splendid century old landmark. The loss of almost half of the Town’s most attractive parking lot. An incongruous (suitable for a modern college campus or corporate research park) new library building, substantially the same size as NCLI’s current facility, but one glaringly out of context with our colonial New England village.

And last, but not least, we New Canaan taxpayers will be “blessed” with a grandiose lawn, one precious few yearn for. All this for assuming or guaranteeing $30 - $40 million in new, combined expenses, debt and other obligations for an organization that has experienced a 58% decline in visits to its existing facilities over the last decade.

Should we the citizen taxpayers of New Canaan be willing to indulge the NCLI for what it plans to give us good and hard? You be the judge.

Ken Klenk

New Canaan Preservation Alliance

Finance Committee