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<br /> <br />Item 9.2. <br /> <br />MEMORANDUM <br /> <br />TO: Mayor and City Council <br /> <br />FROM: Lori Johnson, Finance and Administrative Services Director <br />Interim City Administrator <br /> <br />DATE: November 7,2005 <br /> <br />SUBJECT: YMCA City Contribution Discussion <br /> <br />At the August 8, 2005 Council meeting, the Council requested that staff prepare estimates of <br />the tax impact of a $3,000,000 30 year lease purchase agreement for construction of the <br />YMCA. Attached is an analysis prepared by Ehlers and Associates of the tax impact based <br />on a project cost of $3.5 million and capitalized interest for two years for total bond issues <br />ranging in size from $3,920,000 to $4,425,000 based on both ten and 15 year terms. Similar <br />data based on a project cost of $3 million with an immediate payback eliminating capitalized <br />interest will be presented at the meeting. <br /> <br />Based on G.O. voter approved bonds of $3,920,000 with a 15 year term, the cost for a <br />$200,000 residential homestead is approximately $50 per year and for a $500,000 commercial <br />or industrial property the cost is approximately $126 per year. The tax impact decreases on a <br />20-year issue is to $42 for a $200,000 residential homestead and $106 for a $500,000 <br />commercial or industrial property. The amounts would decrease slightly based on a <br />$3,000,000 project with no capitalized interest. <br /> <br />The distribution of tax impacts is different for a lease revenue because it is based on tax <br />capacity and a referendum issue is based on market value. The tax impact of a lease revenue <br />bond with a 15 year term is approximately $47 for a $200,000 residential homestead and <br />approximately $217 for a $500,000 commercial or industrial property. On a 20 year term, <br />the amounts drop to approximately $40 and $185 respectively. Again, these would decrease <br />as the size of the issue decreases. <br /> <br />Finally, the City Council requested the tax impacts a 30-year repayment schedule. However, <br />the maximum term the city usually goes out is 20 years so that is how the information was <br />prepared. Given that the tax impact of a 20-year term is not unreasonable, the extra interest <br />cost associated with a 30-year term would need to be weighed against the benefit of the <br />decrease the annual tax impact. <br /> <br />S:\Council\Lori\2005\ YMCA City Contribution. doc <br />