The purpose of this Mayor and Council Communication (M&C) is for the City Council to authorize the City Manager to amend City Secretary Contract No. 47756 with the YMCA to revise the Deed of Trust loan Agreement from a property lien to a leasehold lien. This revision to the loan Agreement will allow the YMCA to be in compliance with the financing requirements of the New Market Tax Credits program loan Agreement.
On December 1, 2015, (M&C C-27548) the City Council authorized expenditure of $2,300,000.00 in the form of a 20 year forgivable loan and execution of a loan Agreement with the YMCA for the design and construction of the Southeast YMCA Aquatics Facility. This M&C also authorized a multi-year support Agreement, including an annual operating subsidy and a long-term major maintenance reserve fund. In the executed Loan Agreement for the twenty-year forgivable loan, the YMCA is required to keep the pool open to the public for 20 years. If the YMCA defaults on that requirement, the City can foreclose on the loan and own and operate the pool.
On December 6, 2016 (M&C G-18890) the City Council approved the revision of the aquatics facility support Agreement with the YMCA so that the Agreement begins in the fiscal year in which the aquatics facility is ready for public use.
Due to the requirements of the New Market Tax Credits (NMTC) program the YMCA is using for the facility, the YMCA has discovered that the City cannot have a lien on the pool property; instead the City may have a lien on the lease the YMCA will have on the pool property, which will be owned by a separate YMCA entity formed specifically for the NMTC financing Agreement. The lease is a 25 year lease with a five year renewal option, and must have below-market rental rate at all times. The rent payment will be especially low in years 1-7, after year seven it is expected that the Agreement will be restructured so that the City can once again have a lien on the fee property. In the event of a foreclosure on the leasehold, the City would operate the pool to be open to the public for the duration of the lease term.
This M&C does not request approval of a contract with a business entity.