07-17-2006 EDSR REQ.FOR ACTION - Laserfiche WebLink

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cnr or / Elk ---_~ River City of Elk River REQUEST FOR ACTION (EDA & Council) Item Number Agenda Section Meeting Date Prepared by ul ~ 17, 2006 Lori ohnson, Ci Administrator Item Description Reviewed by Consider Financing YMCA Facility Through General Obligation Bonds issued by the EDA/Consider EDA Resolution Calling for an Election on the issuance of $12,000,000 of General Obligation Bonds fox the Construction of a YMCA/Consider City Resolution Calling fox an Election on Pledging the City's Full Faith and Credit in Resources to $12,000,000 bonds to be issued by the Economic Develo ment Authoxi fox the Ci of Elk River Introduction The city and YMCA have been working together refining a structure to allow the City to partially finance the construction of a YMCA if the voters approve such action. At the July 10, 2006, City Council meeting, staff was directed to get additional legal input from Kennedy and Graven on this project. City Attorney, Peter Beck has been working with Steve Bubul of Kennedy & Graven on this issue. As a result, a new option to finance the YMCA is being presented to the Council and EDA. Under the new proposal, the EDA would become the YMCA's partner in this project instead of the City. This structure potentially alleviates most, if not all, of the legal issues associated with the previous management contract concept. Discussion Attached is a memo from the city's bond counsel, Mary Ippel, detailing the new proposal fox financing this project. In summary, the YMCA would be financed through the issuance of General Obligation Bonds through the EDA upon voter approval. The EDA would levy for the payment of the bonds and the EDA would enter into a lease with the YMCA. If the EDA concurs with serving in this capacity, the Council may act on the resolution calling fox the election. There has been additional discussion about the wording of the question so the Council should review that again before taking action. Alternate language is suggested in the last paragraph of Ms. Ippel's memo. Additionally, Peter Beck prepared a draft of the proposed b4emoxandum of Understanding between the EDA and YMCA that is attached fox your review. This has not been reviewed by the YhICi1. Because a lease will now be entered into instead of a management contract, some of the provisions axe different from those discussed at the July 10 meeting. The term is proposed to be 30 years with a ten year written notice to terminate unless it is terminated fox cause. The YMCA will be responsible fox all maintenance and capital improvements. Lease payments will be one-third of the debt plus the cost of property insurance fox the term of the bonds and the cost of property insurance thereafter. S:\Council\Lod\2006\Y:v(CA Bond Rcsolution.doc