The Carmel City Council wrestles with a complex public-private partnership agreement to restore the city's historic library.

The terms of a unique public-private partnership agreement between the City of Carmel and the Carmel Public Library Foundation to renovate the nearly 100-year-old Harrison Memorial Library building came under intense scrutiny at the Carmel City Council meeting on Tuesday, Feb. 4. A city staff report cast doubts on the contract due to conflicts with state law and possible legal exposure to the city.

About two years ago foundation leaders offered to raise the millions needed—possibly as much as $15-$20 million—to bring the city-owned building into the 21st century. The council approved entering into an agreement for the foundation to conduct the renovation in a series of votes during that time. With an architect recently chosen by a committee and approximately $7 million pledged and raised toward the project, the foundation was seeking final approval of the partnership contract.

On Tuesday, City Attorney Brian Pierik gave a lengthy presentation outlining legal questions and potential legal exposure to the city. He recommended that the contract be amended so that the city had more authority over decisions and spending, instead of giving authority to a foundation-proposed committee made up of foundation and city representatives. Pierik argued the committee would have authority over a city capital project that's not allowed under state law.

In response, foundation leaders underscored their trustworthiness by reminding councilmembers of a decades-long track record of supporting the library to the benefit of the city. (The city owns the physical building and the Harrison Memorial Board of Trustees operates the library with the support of the foundation and the Friends of the Carmel Library.)

“We have 34 years of keeping the library open, relevant and thriving, a commitment to the city that we have never missed,” said Marci Meaux, the foundation’s president. She urged the council to approve the agreement as written.

Councilmembers emphasized their strong commitment to the project but said the contract had to make sense to both parties.

“I’m really excited about the project,” said Councilmember Hans Buder, who sang the praises of the library as a hub for the community and said he wanted the council to put its full weight behind it.

“I do love this project and can’t wait for it to be done. That being said, I do have some significant concerns about the current state of the draft legal document,” Buder said.

Most of the problems stemmed from the proposed project committee as drafted, to be made up of two members of the foundation, the mayor, city administrator, and a fifth member from the community to be agreed upon by the four. That committee would be empowered to make all final decisions regarding the multi-year project. 

Buder suggested a “carve out” situation, where the committee would have recommending authority, rather than final authority, among other changes, where the city and foundation would have “mutual approval concept,” where they would not move forward on decisions without both agreeing first.

Pierik continued to be concerned about how the funding and payments would work and where the money would be deposited. He made the point that the city would be left at risk in the case of a disagreement between the city and the foundation over paying contractors. He also said the way the committee was structured, it was weighted against the city, with only two of five members.

In the end the council said they would approve a committee weighted toward the city, mutual decision making, a segregated bank account, a higher contingency fund partially funded by the city, a 50/50 sharing of overrun costs and other amendments.

In essence, the council was offering to “put more skin in the game” in terms of funding for contingencies and overruns, in exchange for the foundation agreeing to changes in the project committee, they said.

The council voted 5-0 in favor of the changes to the contract. It’s now in the hands of Pierik and the foundation’s attorney to work out the wording. It will come back to the council possibly at its next meeting on March 4.