6.3. SR 05-07-2007 - Laserfiche WebLink

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Use of Grant Fund project costs over $12M Prorated to pay city debt and YMCA rent Reduce city debt Allocation of Grant Proceeds Ci1;y YMCA 0% 100% 66.67% 33.33% 100% 0% Estimated Reduction in Annual Property Tax 800,000 1,200,000 $250,000 home $ $ 36.82 $ 55.22 $1,000,000 CII Reduction in Tax Levy $ $ 147.25 $ 220.86 Estimated Annual Net Tax used fOr &ftrendum $ 86.28 $ 345.10 Assumes grant proceeds of $1,200,000 paid over three years with $400,000 of grant proceeds received per year. Annual city debt levy is approximately $625,000 C / I is commercial and industrial property Financial Impact Entering into this lease requires the city (EDA) to issue up to $12 million of bonds to finance the facility for the YMCA. The financial impact of that bond issue is carried one-third by the YMCA through rent payments and two-thirds by the property owners in Elk River through a property tax. However, the city is liable for the entire debt if the YMCA does not make the rent payments as scheduled. The estimated tax impacts of this project were provided as part of the information presented prior to the September referendum election. A copy of that information is attached. For example, the tax impact on a $250,000 home is estimated to be approximately $129. After being reduced by the YMCA rent payment, the net tax increase is $86. The estimated increase on a commercial or industrial property valued at $1,000,000 is $515 or a net of $345 after a reduction for the one-third rent payment due from the YMCA. Grant proceeds received by the city would further reduce the property tax levy in the first few years depending upon when the grant proceeds are received. The extent of the reduction depends on the amount of the grant and the allocation of grant proceeds approved by the Council as part of the Lease. The total financial assistance from the city to the YMCA is the $8,000,000 (two-thirds of the $12,000,000) as approved by the voters last September and donation of an approximately seven acre parcel of prime property adjoining Orono Park with highway 10 visibility. This is a very generous offer that staff feels the YMCA will not turn down. In fact, staff is not aware of any other city providing this much assistance to the YMCA. Any grant proceeds the Council provides to the YMCA are over and above the assistance listed above. Steve Bubul, Kennedy and Graven, Peter Beck, and I will be at Monday's meeting to go over the Lease in more detail and answer questions you may have regarding the Lease. Representatives from the YMCA will also be present at the meeting. Following approval of the Lease by the City Council and the YMCA, a proposed construction manager contract will be presented at the following meeting. It was originally our intent that both of these be presented at the same meeting; however, due to the length of time it took S:\Council\I..ori\2007\ YMCA Lease Approval.doc