02/27/2006 Council Packet - Laserfiche WebLink

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• • AGENDA ITEM 2A STAFF ORIGINATOR: Mary Alice Divine DATE: 2/27/06 TOPIC: Public Hearing: Consideration of Resolution No. 06- 34 approving a Tax Abatement and Business Subsidy for the Chain of Lakes YMCA VOTE REQUIRED: BACKGROUND: 3/5 In 1999 the City of Lino Lakes entered into an agreement to partner with the YMCA to bring a facility to Lino Lakes. The city committed $1.5 million toward construction of the facility, plus 6.7 acres of land and the cost of infrastructure to the facility. On July 25, 2005 the City Council approved a Tax Abatement District, using the mechanism of tax abatement as a source of funding for its commitment of $1.5 million toward construction of the facility. This Tax Abatement District encompassed the southern portion of the Legacy at Woods Edge development. Tax abatement is not an actual abatement of taxes. It is a financial tool that allows a city to allocate the city portion of taxes levied from a specific area of the city as the source of revenue to pay for bonds that have been issued for development purposes. Any source of revenue chosen by the city to meet its commitment to the YMCA will require an additional tax levy. Because a specific source of revenue for meeting the bond obligation has been allocated, the city can get a better interest rate on the bonds using the tax abatement tool. The YMCA has been fundraising in the community for approximately seven years. Together with the city's $1.5 million commitment, the YMCA's commitment of $2.5 million in debt financing, and local fundraising, the YMCA was able to raise approximately $6.3 million for construction of the facility. The YMCA determined that additional fundraising was not keeping pace with rising construction costs and it needed to build this year. In January, the city council approved a facility that did not include a leisure pool in the first phase of construction. The YMCA is anticipating beginning construction this spring in the Legacy at Woods Edge development, with a completion target in the winter of 2007.