Borrowing authority for municipalities approved

Cities and towns in Nebraska have the express authority to borrow funds to purchase property or construct improvements under a bill given final approval April 23.

LB152, introduced by the Urban Affairs Committee, allows municipalities to borrow from state- or federally-chartered banks, savings banks, building and loan associations and savings and loan associations.

The bill authorizes direct borrowing by resolution as well as ordinance and municipalities may use direct borrowing to refinance loans at a lower rate. Funds may be borrowed for any purpose for which a municipality is authorized by law to purchase property or fund improvements.

The ability of municipalities to borrow directly from financial institutions is limited to cases in which financing the purchase of property or construction of improvements would be impractical, could not be completed within the time restraints facing the municipality or would generate taxpayer savings over traditional bond financing.

The bill also includes public notice requirements for direct borrowing from a financial institution and caps the total amount of indebtedness from direct borrowing to 10 percent of the municipal budget for a city or 20 percent of the municipal budget for a village.

LB152 passed 46-0.