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City Council Minutes July 10, 2006 Page 6 6.8. YMCA Update and Ballot Question Language Review . City Administrator Lori Johnson reviewed with Council the funding proposal for the YMCA. The voters would be asked if they want the city to pay two-thirds of the construction of a YMCA. If approved, the City will issue general obligation bonds to fund the entire project. The YMCA will fund one third of the annual debt service on the bonds. The City will be the owner of the building and the YMCA and City will enter into an agreement defining the arrangement whereby the YMCA will operate programs out of the facility. One of the items to be decided is the amount that will be included in the bond question for the construction of the facility. The question will include financing for the entire project, even though the YMCA will repay one third of the debt service over the life of the bonds. The YMCA is estimating construction costs to be $12 million. The $12 million excludes the cost of energy efficiency improvements and the additional cost to use recycled products. The City would pay $8 million of the $12 million plus the energy efficiency and recycle cost. These additional costs may be eligible for the County's Landfill Abatement Public Building Grant that is being considered by the County Board on July 11. Since the City has had concerns with the draft memorandum of understanding, it was agreed that it is in the best interest of all parties to ensure that an agreement complies with state law. To alleviate the Y's concern that the City's legal advice may be too conservative, it was agreed that the City and the YMCA will put together an outline of the proposed agreement and submit it to Kennedy and Graven for an independent review and analysis of the legality of the proposed agreement. Attorney Beck reviewed the outline of the proposed agreement asking for council input. . It was the consensus of the council to put the following into the agreement that will be submitted to Kennedy and Graven for their review and analysis. 1. Form and term of agreement - to call it a management contract explaining the reasons. 2. Term and termination - can be terminated for lack of pcryment; the period of time for cancellation after initial term is 6 years. 3. How much would the YMCA get back if the city terminates the agreement prior to 30 years - 100% to Year 25; thereafter 50% up to Year 30; and zero after 30years. 4. How much would the YMCA get back if the YMCA terminates the agreement prior to. 30 years - nothing. 5. Need to consider - what penalties for early default during the initial term? 6. City control over design, construction and operation - Council wished to ask Kennecfy & Graven if thry can delegate the design, construction, and operation of this facility to the Yl\1 C4 and/ or have a five member commission consisting of three council members and two representatives from the Y who would make discretionalfy decisions but recogniifng that the Y has been doing this for years. 7. What level of oversight to ensure the facility is properly maintained - Commission meets for capital improvement purpose and over a certain dollar amount council would have to approve. This monry would have to be from reseroes not tax le1!Y portion of the bond; there would have to be a process with the Y coming to CounciL Need to establish a list separating out capital improvements that affect structure of the building. 8. Capital Improvements - Ms. Johnson and the yj attornry will continue to work on this. The Council revised the proposed ballot language. .