Kentucky attorney general rules library bonds don't need lawmakers' approval.

ATLANTA Kentucky's attorney general has ruled that legislative approval is not required for an unusual $41 million municipal bond issue planned by the Lexington-Fayette Urban County Government to help finance a new library at the University of Kentucky.

The ruling, released last week by Attorney General Chris Gorman, is important because it removes a potential roadblock to the planned borrowing, which would be the first sold by the county for the university. Earlier this year, the Kentucky General Assembly denied the university's request to fund the project through a state debt offering backed by direct legislative appropriations.

Assistant attorney general Ross Carter said yesterday that Gorman's opinion came in response to an inquiry from state Rep. Mark Brown, D-Brandenburg. Brown asked Gorman whether Kentucky's Capital Construction Financing Act applies to the library financing.

Under provisions of the act. state capital projects must first be approved by the General Assembly's Capital Planning and Bond Oversight Committee.

University officials have argued that the bond issue would be privately funded because debt service would be covered by $3 million in annual payments transferred from the school's Athletics Association to the University of Kentucky Alumni Association, a private corporation.

The attorney general agreed.

"We found the act does not apply because funding of the project does not involve state funds," said Carter, who prepared Gorman's opinion.

Gorman's three-page brief cited an earlier ruling involving funding of renovations at the Louisville Fairgrounds Stadium.

"We were asked the precise question presented here and our answer was: since the contemplated construction is to be accomplished by a private corporation with private capital, the provisions of [the Capital Construction Financing Act] do not apply," the brief said.

County officials said yesterday that they hope to sell the bonds within the next few weeks despite a request last week by the university to delay approval of the issue.

The Urban County Council was prepared to approve the financing last Thursday, but put off the vote when the university asked. No new meeting time has been set.

Municipal market sources said yesterday that the delay came as the university sought to nail down credit enhancement for the borrowing.

University officials were not available for comment.

In a public hearing on the library Nov. 1, two speakers told the council that they opposed the building of the library, according to county records.

One speaker, retired geologist Ed Wilson, said the library would be built on two large sinkholes, a claim disputed by a geologist for the university.

Another speaker, community activist Don Pratt, expressed concerns that the project would disrupt surrounding neighborhoods.

County officials familiar with the project said that despite the speakers' comments, local support for the proposed library remains strong. The university, located in downtown Lexington, is one of the largest employers in the area.

The council agreed to sponsor the borrowing on the condition that none of the county's funds be pledged to the issue. The project will cost $57 million, with private donations providing funding not covered by bond proceeds.

Gov. Brereton Jones had pushed for approval of state bond funding for the library, but was rebuffed by cost-conscious lawmakers in a regular session in April and in a Special session in June.

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