6.3. SR 05-07-2007 - Laserfiche WebLink

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minimum of 23 hours per week plus all times when the building is open and the gymnasium is not scheduled by the YMCA. Park and Recreation Director Bill Maertz is very pleased with the design of the gym and arrangement for city use of the gym. . Each resident of the city will receive a one-time waiver of the joiner's fee and each household will receive a guest pass four times per year allowing all residents to have access to all basic services at the YMCA for one day. . The city (EDA) will issue up to $12 million of bonds with debt service of the bonds to be paid one-third by the YMCA through rent payments and two-thirds by the city through a tax levy. The bonds will have a term of 25 years unless a shorter maturity is mutually agreed upon by all parties and is approved by bond counsel. . The city will provide the building site for the facility at no cost to the YMCA. . The YMCA is responsible for payment of all operating costs including grounds maintenance, taxes, insurance, and costs for operating all programs. . 'Ibe Lease spells out in detail how all future capital improvements will be funded. This item was discussed by the Council at a work session on the MOU and the Lease is consistent with the Council's comments made at that time. . The Lease as written states that the city has applied for a Sherburne County Landfill Legacy Grant for the YMCA. The Lease further states that grant proceeds will be applied to payment of the debt on prorated basis with one-third of the grant proceeds reducing the YMCA's rent and two-thirds reducing the city's tax levy. This compromise was reached after considerable discussion so that we could prepare a document to present to the Council for consideration knowing that the Council will make the final decision on how the grant proceeds are used. Our estimate at this time is that the grant amount for this project will be around $1,200,000 because the grant is based on material costs only instead of total project cost as we originally understood. Under the grant program, the city is eligible to receive up to $2,000,000 of qualifying costs for one project. If the Council approves the Lease as presented, one-third, approximately $400,000, of the grant would go to reduce the YMCA's rent payments. The remaining two-thirds would be used to reduce the property tax levy to fund the city's share of the debt. The annual debt service after YMCA payments is around $625,000. To put this in better perspective for the Council as you make a decision on this issue, below are samples of how the grant proceeds could be allocated and the resulting impact on the property tax paid by Elk River property owners. This analysis assumes a grant award of $1,200,000 paid over three years. The estimated reduction in the annual property tax to property owners would be for three years. The market value increase of the city over those three years would help to ease the tax burden in the forth year when the levy would be increased to the full amount. S:\Council\J.ori\2007\ "Yi\1CA Lease Approval.doc