07-17-2006 MEMORANDUMBRIGGS AND MORGAN
MEMORANDUM
TO: Elk River City Council
FROM: Mary Ippel
DATE: July 13, 2006
RE: YMCA Project
The City of Elk River and The Young Men's Christian Association of Metropolitan
Minneapolis (the "YMCA") are proposing that a ymca facility be constructed by the City and
leased to and operated by the YMCA. The City has indicated that it wants to obtain voter
approval for the issuance of bonds for the ymca facility. If approved by the electorate, general
obligation bonds of the city would be issued to finance the facility and the City would construct
the facility. It is proposed by the City that the ymca facility would be leased to the YMCA and
the YMCA would pay annual net rentals sufficient to pay 1/3 of the annual debt service of the
bonds. However, Minnesota Statutes, Section 471.191, Subd 1 authorizes a city to operate a
program of public recreation and playgrounds and to lease recreational facilities to nonprofit
corporations, but any such lease shall require the lessee to pay net rentals sufficient to pay the
principal, interest, redemption premiums, and other expenses when due with respect to all city
bonds issued for the acquisition or betterment of the facilities, less such amount of taxes and
special assessments, if any, as may become payable in any year of the term of the lease, on the
land, building, or other facilities leased. Unfortunately, this statutory provision conflicts with the
City's proposal of leasing the facilities to the YMCA for 1/3 of the annual debt service. Instead
of a lease arrangement, it was proposed that the City enter into a Management Agreement with
the YMCA, but certain provisions of a Management Agreement will not meet the objectives of
the City and the YMCA.
I am pleased to describe an alternative approach that may better meet the objectives of the City
with respect to the YMCA project. The alternative approach is to make the ymca facility a
project of The Economic Development Authority of the City of Ells River (the "EDA"). If the
facility is an EDA facility as opposed to a city facility the provisions of Section 471.191 do not
apply. The laws applicable to the EDA do not conflict with the City's goals with respect to the
ymca facility and the EDA can lease the facility to the YMCA and the YMCA can pay net
rentals sufficient to pay 1/3 of the annual debt service on the bonds, which is the desire of the
City and the YMCA. As an EDA project, the EDA is authorized to construct the facility, issue
bonds to finance the facility and lease the facility to the YMCA on terms and rental payments
that the EDA deems appropriate. The issuance of General Obligation Bonds by the EDA is
governed by Minnesota Statutes, Section 469.102. This statutory provision provides as follows:
• The EDA may issue general obligation bonds in the principal amount authorized by two-
thirds majority vote of its City's Council.
BRIGGS nHn MORGAN
• The bonds can be issued for any purposes in sections 469.090 to 469.108.
• The bonds must be in the amount and form and bear interest at the rate set by the City
Council.
• The last maturity of the bonds can not be more than 30 yeazs from the date of their
issuance.
• The bonds must be secured by the pledge of the full faith, credit, and resources of the
City if the City specifically authorizes the EDA to do so.
• The City must decide whether the issuance of the bonds by the EDA is proper and the
amount of bonds to be issued.
• The City shall give specific consent in an ordinance to the pledge of the City's full faith,
credit, and resources.
• The City can pledge the City's full faith, credit and resources only if approved by the
voters voting on the question of the City pledging it's full faith, credit and resources to the
EDA bonds.
• The taxes levied for the payment of the bonds are levied by the EDA rather than the City.
Assuming that the foregoing can be complied with, I see no reason why the City wouldn't
determine that the YMCA project should be undertaken by the EDA as opposed to the City. The
law applicable to economic development authorities gives the EDA the flexibility that was
missing in the laws that govern City recreational facilities.
I have prepazed a resolution which is attached hereto which authorizes the EDA to issue
general obligation bonds in an amount not to exceed $12,000,000, authorizes the pledge of the
City's full faith, credit and resources to the EDA's bonds, determines that the issuance of the
bonds by the EDA is proper and calls for an election on pledging the City's full faith credit and
resources to the payment of the EDA's bonds. I understand that there maybe some changes
made to the description of the facility described in the ballot question. The City may want to
describe the project in the ballot question as the acquisition and betterment of a YMCA and
related recreational facilities. Please let me know the final determination as to the description of
the project and I will revise the ballot question accordingly.
tfy
DRAFT
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (this "Memorandum") is made as of the day of
2006, by and between The Young Men's Christian Association of Metropolitan
Minneapolis, a Minnesota corporation ("YMCA") the City of Elk River ("Cit}~') and the
Economic Development Authority in and for the City of Ells River ("EDA").
RECITALS
A. The City owns certain real property (the "Site") adjacent to Lake Orono located
within Elk River, Minnesota. The EDA proposes to construct on said Site an EDA
owned building of approximately 51,000 square feet for the operation of a YMCA
(the "Building").
B. The EDA is interested in entering into a lease (the "Lease") with the YMCA,
whereby the YMCA will design and the EDA will construct the Building, which
will then be leased by the EDA to YMCA for the operation of a YMCA.
C. The City will remain the owner of the land.
D. The EDA, with approval of the City for a Referendum, will provide financing for
the Building in an amount not to exceed $12 million. The YMCA will make lease
payments to the EDA in an amount equaling 1 /3 of the annual cost of the financing.
E. The YMCA and the EDA will cause the design and construction of the Building to
incorporate reasonable architectural appeal, quality building materials, and durable
finishes that comply with City standards.
F. The YMCA will operate the Building using standard YMCA designed cumculum,
practices and guidelines designed for youth, adults, and seniors associated with an
aquatics center, fitness center, kids adventure zone, and gymnasiums.
G. The YMCA will use memberships that entitle members to services as a part of the
membership fee and access to additional programs on a fee basis. The YMCA will
offer a package of services and programs similaz to other suburban YMCAs. The
YMCA will also provide Elk River residents benefits such as a one-time waiver of
up to $79 ofinembership joining fee, periodic family events at a nominal cost and
four guest passes per household per yeaz.
H. The YMCA will offer to the community who are not members, fee-based
programming such as, but not limited to: senior programs, youth development
programs such as day/resident camping swimnung lessons, Youth and
Government, teen nights, NYPUM.
I. The YMCA shall be solely responsible for all programming at the YMCA, and all
interior and exterior maintenance and operation of the Building, including all
related staffing.
The YMCA will have a volunteer boazd made of community members and leaders.
K. This Memorandum is dependent on the City, the EDA and the YMCA determining
that it is feasible to financially meet the programming needs of both entities and
provide cash flow adequate to operate, staff, maintain and make capital
improvements to the Building, and to provide the services and programs intended.
NOW, THEREFORE, in consideration of the foregoing recitals, the parties hereto agree as
follows:
I. The EDA and the YMCA will enter into a Lease pursuant to which the YMCA will design
and the EDA will construct an approximately 51,000 square foot Building which will be
leased to the YMCA for the operation of a YMCA in accordance with the following terms
and conditions:
A. Design and Construction. The YMCA and the EDA will cause the design and
construction of the Building to incorporate reasonable architectural appeal, quality
building materials, and durable fmishes that comply with City standards.
B. Programming. The YMCA will operate the Building using standard YMCA
designed curriculum, practices and guidelines designed for youth, adults, and
seniors associated with an aquatics center, fitness center, kids adventure zone, and
gymnasiums. The YMCA will use memberships that entitle members to services as
a part of the membership fee and access to additional programs on a fee basis. The
YMCA will offer a package of services and programs similar to other suburban
YMCAs. The YMCA will also provide Elk River residents benefits such as a
one-time waiver of up to $79 of membership joining fee, periodic family events at a
nominal cost and four guest passes per household per yeaz. The YMCA will offer
to the community who are not members, fee-based programming such as, but not
limited to: senior programs, youth development programs such as day/resident
camping, swimming lessons, Youth and Government, teen nights, NYPUM. The
YMCA shall be solely responsible for all programming at the YMCA, and all
interior and exterior maintenance and operation of the Building, including all
related staffing. The YMCA will have a volunteer board made of community
members and leaders.
C. Lease Term. The initial term of the Lease shall be 30 years from the date of
commencement of the Lease. At the expiration of the initial term, the lease shall
remain in effect unless and until terminated by either party as provided below.
D. Lease Payments. The YMCA will make lease payments to the EDA in an amount
equal to the amount required to amortize one-third (1/3) of the total amount
financed by the EDA. Once the EDA's debt on the Building has been repaid in full,
the lease payments shall be $_ per year.
E. Management and O erp ation. The YMCA will assume all management and
financial responsibility of operating and maintaining the YMCA, including related
staffing. The YMCA will collect all membership fees and program fees and pay all
costs of operations for the YMCA, including the lease payments to the EDA. Any
shortages between the amounts collected and paid will be funded by the YMCA.
F. Maintenance and Capital Improvements. YMCA shall be responsible for
maintaining the Building to an appropriate standard for such a facility, including
making all capital improvements necessary to ensure the structural integrity of the
building and to support any changes in programming necessary to keep the
programming current and consistent with the programming at other YMCAs
operated by the YMCA.
G. Termination.
At End of Initial Term. The Lease may be terminated by either party by
providing 10 years written notice to the other party beginning on the 21st
anniversary date of the agreement and on each anniversary date thereafter.
2. For Cause. The EDA shall have the right to terminate the Lease for cause,
upon 90 days' written notice, with the opportunity to cure, i£
a. The YMCA fails to make lease payments;
b. The operation of the YMCA, including the fees charged, is not
consistent with the standard YMCA curriculum, practices,
guidelines, and fees charged for other YMCAs operated by the
YMCA;
c. The YMCA ceases operations; or
d. YMCA fails to maintain the Building.
H. Access. The City will be responsible for providing access to the site for the YMCA
Building.
II. The YMCA's Hours of Operation:
A. The YMCA may operate from 5 a.m. until 11 p.m. Monday through Sunday.
B. Holidays:
The YMCA will be closed on Christmas and Easter.
III. Risk Management Principles
A. The YMCA will carry casualty and liability insurance customary for such a facility.
Insurance policy will include the City and EDA as named insureds.
B. The City and EDA as Owners will carry casualty, property and liability insurance
as the City and EDA determine necessary. The insurance will include the YMCA
as named insured. The City and EDA's costs for insurance shall be added to the
Lease payments due from the YMCA.
This document represents a framework of principles expressing the current understanding between
both parties and does not constitute a legally binding agreement. The parties agree to utilize the
principles expressed in this document as a framework for all subsequent legally binding
documents between the City, EDA and the YMCA.
CITY OF ELK RIVER
By:
ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF ELK RIVER
Its:
YOUNG MEN'S CHRISTIAN ASSOCIATION OF
METROPOLITAN MINNEAPOLIS
Hazold Mezile, Jr.
Its: President and CEO
GP:i9~zas9 ~z
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EXTRACT OF MINUTES OF MEETING OF
THE CPfY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: July 17, 2006
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Elk River, Minnesota, was duly called and held at the City Hall on July 17, 2006, at 6:30
o'clock p.m.
The following members were present:
and the following were absent:
Member introduced the following resolution and moved its adoption:
RESOLUTION #06-
RESOLUTION CALLING FOR AN ELECTION ON PLEDGING THE CITY'S
FULL FAITH AND CREDIT AND RESOURCES TO $12,000,000 OF BONDS TO BE
ISSUED BY THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK
RIVER
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
1. Proiect. This Council has investigated the facts and does hereby find, determine
and declare that it is proper, necessazy and expedient that the Economic Development Authority
of the City of Elk River (the "EDA") issue bonds in an amount not to exceed $12,000,000
secured by the pledge of the City's full faith, credit and resources to defray the expense of the
acquisition and betterment of a community center/YMCA.
2. Election. The proposition of pledging the City's full faith, credit and resources to
the bonds of the EDA shall be submitted to the qualified electors of the City at a special election
to be held on September 12, 2006. Said election shall be held between the hours of 7:00 a.m.
and 8:00 p.m. The polling places for said election will be as follows:
Precinct Po11inQ Place
lA City Hall
1B United Methodist Church
2A River of Life Church
2B Meadowvale School
3A Ivan Sand School
3B Lion's Park Center
4A Twin Lakes Christian
Assemblies of God Church
4B The Church of St. Andrew
Address
13065 Orono Parkway
1304 Main Street
21695 Elk Lake Road
12701 Elk Lake Road
1232 School Street
1104 Lion's Pazk Drive
18912 Twin Lakes Road NW
566 4`h Street
3. Notice and Ballot. The Clerk is hereby authorized and directed to post and
publish according to law a Notice of Special Election and Ballot, and to prepare ballots for the
question for use at said election, which notice and ballot shall be in substantially the following
forms:
CITY OF ELK RIVER, MINNESOTA
NOTICE OF SPECIAL ELECTION
Tuesday, September 12, 2006
NOTICE IS HEREBY GIVEN that a special election will beheld in and for the City of
Elk River, Sherburne County, Minnesota, on September 12, 2006 between the hours of 7:00 a.m.
and 8:00 p.m., at which time the following question will be submitted:
"Shall the City of Elk River, Minnesota, be authorized to pledge its full faith,
credit and resources to bonds to be issued by the Economic Development
Authority of the City of Elk River in an amount not to exceed $12,000,000 to
defray the expense of the acquisition and betterment of a community
center/YMCA?
The polling places for said election will be the following locations within the City, at
which places all of the qualified electors of the City residing within such precinct may cast their
ballots:
Precinct Polling Place
IA City Hall
1B United Methodist Church
2A River of Life Church
2B Meadowvale School
3A Ivan Sand School
3B Lion's Park Center
4A Twin Lakes Christian
Assemblies of God Church
4B The Church of St. Andrew
Dated: July 17, 2006.
Address
13065 Orono Parkway
1304 Main Street
21695 Elk Lake Road
12701 Elk Lake Road
1232 School Street
1104 Lion's Park Drive
18912 Twin Lakes Road NW
566 4th Street
BY ORDER OF THE CITY COUNCIL
City Clerk
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CITY QUESTION BALLOT
SPECIAL ELECTION
CITY OF ELK RIVER
SHERBURNE COUNTY
MINNESOTA
September 12, 2006
INSTRUCTION TO VOTERS: If you wish to vote in favor of the following proposition,
completely fill in the oval O next to the word "YES". If you wish to vote against the
following proposition, completely fill in the oval ~~ next to the word "NO".
CITY QUESTION NO. 1:
ACQUISITION AND BETTERMENT OF COMMUNITY
CENTER/YMCA AND RELATED FACILITIES.
"Shall the City of Elk River, Minnesota, be authorized to pledge its
full faith, credit and resources to bonds to be issued by the
Economic Development Authority of the City of Elk River in an
amount not to exceed $12,000,000 to defray the expense of the
acquisition and betterment of a community center/YMCA?
The maximum amount of increased levy as a percentage of mazket value is %.
The maximum amount that would be raised by the new referendum tax rate in the first
year if it were to be levied is $
NOTICE: BY VOTING "YES" ON THIS BALLOT QUESTION,
YOU ARE VOTING FOR A PROPERTY TAX INCREASE. The
Economic Development Authority of the City of Elk River anticipates
entering into a lease with The Young Men's Christian Association of
Metropolitan Minneapolis (the "YMCA") pursuant to which the YMCA
will pay one-third of the debt service of the bonds to be issued by the
Economic Development Authority of the City of Elk River.
YES ( )
NO ( )
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4. Election Judges. Election judges will be appointed at least twenty-five (25) days
prior to said election.
5. Manner; Canvass. Said election shall be held and conducted in accordance with
the statutes of the State of Minnesota applicable, and the Council shall meet as required by law
for the purpose of canvassing said election and declaring the results thereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof:
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have cazefully compazed the attached and foregoing
extract of minutes with the original minutes of a meeting of the City Council duly called and
held on the date therein indicated, which are on file and of record in my office, and the same is a
full, true and correct transcript therefrom insofar as the same relate to a special election on the
pledge of the City's full faith, credit and resources to bonds to be issued by the Economic
Development Authority of the City of Elk River.
WITNESS my hand as such Clerk on July 17, 2006.
City Clerk
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[City Letterhead]
Sherburne County Auditor
[address]
Dear County Auditor:
Pursuant to Minnesota Statutes, Section 205.16, Subdivision 4, this letter is to formally
advise you that the City of Ells River, Minnesota, will be holding a special city election on
September 12, 2006, between the hours of 7:00 a.m. and 8:00 p.m. at the following polling
places:
Precinct Polline Place
lA City Hall
1B United Methodist Church
2A River of Life Church
2B Meadowvale School
3A Ivan Sand School
3B Lion's Park Center
4A Twin Lakes Christian
Assemblies of God Church
4B The Church of St. Andrew
Address
13065 Orono Parkway
1304 Main Street
21695 Ells Lake Road
12701 Elk Lake Road
1232 School Street
1104 Lion's Park Drive
18912 Twin Lakes Road NW
566 4~' Street
The following question will be submitted to the voters at that election:
"Shall the City of Elk River, Minnesota, be authorized to pledge its full faith,
credit and resources to bonds to be issued by the Economic Development
Authority of the City of Ells River in an amount not to exceed $12,000,000 to
defray the expense of the acquisition and betterment of a community
center/YMCA?
Please see attachment for the final ballot layout.
Very truly yours,
CITY OF ELK RIVER, MINNESOTA
Its City Clerk