07-17-2006 EDSR REQ.FOR ACTIONcnr 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
Attachments
Memorandum from Mary Ippel, Briggs and Morgan.
Draft Memorandum of Understanding between the Elk River Econoxxuc Development
Authority and the YMCA.
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 Development Authority
for the City of Elk River.
EDA Resolution Calling for an Election on the issuance of $12,000,000 of General Obligation
Bonds fox the Construction of a YMCA. This resolution will be handed out at the meeting on
Monday night.
EDA Action Requested
The EDA is asked to consider Resolution Calling fox an Election on the issuance of $12,000,000
of General Obligation Bonds fox the Construction of a YMCA
City Council Action Requested
City Council action if the EDA approves the above resolution is to consider the 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 Development Authority for the City of Elk River.
Council Action Motion by _ Second by _ Vote
Follow Up
5:\Cound\Lori\2006\YMCA Bond Reso]udon.doc