02/08/2006 Council Packet - Laserfiche WebLink

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WS -2 In the original agreement approved in 1999, the city agreed to financial participation of $1.5 million in cash for construction, plus land and infrastructure estimated at the time to be approximately $500,000, for a total cash contribution of $2 million. The land was approximately 7 acres that had been removed from the regional park in a "land swap" that was approved by the Metropolitan Council. Through the swap the city received 14 acres for the city hall and YMCA at a cost of $300,000. In turn, the YMCA agreed to build approximately 37,000 square feet that included a "teen center, gym, indoor pools, running /walking track, cardiovascular /strength training area, aerobic studio, family program space and Child Watch. Building design will provide for future expansion opportunities. " City residents would receive discounted membership fees and "open community" days where all residents could use the facilities. The Council considered this joint venture a way to get a family oriented community center for approximately 30 cents on the dollar with no long term operations and maintenance costs. Financial Evolution of the Project In 1999 Springsted, Inc. studied the financial implications of the city's commitment and analyzed financing options. At the time of the study, the YMCA had completed market research that indicated a 46,000 - square foot facility would better serve the community, for a cost of approximately $6 million. The YMCA capital funding was to be limited to $2 million. The city's cash contribution was estimated to be $2 million total. The remaining was to be from community contributions. An updated analysis in 2004 by Springsted recommended using tax abatement, a tool that was not available in 1999, to pay for the city's $1.5 million cash contribution. The City Council established a Tax Abatement District in the southern portion of the Woods Edge development to capture the city portion of taxes generated by new development. Springsted estimated the cost to a taxpayer in a $228,000 home to be $20 /year, declining over the life of the bonds, but growth in residential tax base could offset any increase in the tax rate. The city has also benefited from the development of Legacy at Woods Edge with Hartford Group as the master developers. If the YMCA had been constructed prior to Woods Edge being underway, the city would have been obligated for the costs of construction of Town Center Parkway, including improvements to the Lake Drive intersection, plus extension of utilities, to the YMCA site. The Woods Edge development required these infrastructure improvements, which are fully assessed to Hartford Group, thus relieving the city of that obligation. Current Financial Situation The YMCA has spent years fundraising in the community, and has approximately $6.3 million available for construction. However, construction costs have risen considerably since 1999. A community capital campaign is underway to attempt to raise an additional $800,000 needed to build the full sized gym. While continuing to try to raise funds, the Y board concluded the first phase needs to be in the ground this year, and submitted for