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Community Center Child Care Review September 12, 2016 Page 2 needs. By having the YMCA assume custodial services, our staff could assume the same services at City Hall, resulting in a savings of $19,000. Another benefit to the City would include the elimination of an annual property tax payment, saving about $8,400 each year. Finally, the YMCA indicates that room rentals would increase which would increase the annual revenues shared between the YMCA and City. Estimating conservatively, the revenue share could increase by 10%, bringing in an additional $3,300. Thus, the total annual savings would be about $30,000 if the YMCA were the child care provider. The owners of Creative Kids Academy do not wish to leave the facility and believe their business provides a valuable service to the community. Rajiv Garg, co-owner of Creative Kids Academy with Sangeeta Jain, indicated that they would be willing to cover the property taxes if allowed to continue leasing the space, and encouraged the Council to reject the YMCA proposal. As stated previously in this report, the lease agreement with Creative Kids provides for a one-year notice of termination. As a public building owned by the City, the City needs to have full flexibility to make plans which are in the best interest of the community. The City’s original intent was to lease only to tenants which were public, quasi-public, or non- profit. Previous tenants in the facility included the Mounds View School District, the Chamber of Commerce and a small transportation company serving elderly and disabled residents. When the Chamber vacated its space, the YMCA repurposed the rooms for programmed activities, expressing a need for more programmed space. At the September work session, Twin Cities North Chamber President, Todd Kruse, had passed along a Chamber policy statement expressing its opposition to the City leasing space to either the YMCA or Creative Kids, and that the City should honor the full lease term with Creative Kids. The Chamber suggests that the City should not pick winners and losers, and generally speaking, staff would agree with the sentiment, especially in its capacity as the regulatory body. However, in the case where the City is the property owner and landlord, and the City desires to lease to other government entities, public corporations or non-profits, the question isn’t about picking a winner or loser but rather making a decision in the best interest of the community. Recommendation: Staff recommends the City Council review the proposal submitted by the YMCA and discuss whether it is in the City’s best interest to terminate the Creative Kids Lease early or reject the proposal submitted by the YMCA. If the Council believes the community would benefit from terminating the lease early, Resolution 8617 can be reconsidered for action. Respectfully submitted, ________________________ James Ericson City Administrator