Study shows feasibility in Forest Lake or Wyoming
by Clint Riese
Forest Lake Times
Possible scenarios run the gamut in the wake of a feasibility study for building a YMCA in Forest Lake or Wyoming.
The implications are large. Talks could die off, as several community center discussions did locally in the last decade, or they could bring to fruition a building project costing in the ballpark of $13 million.
At a City Council workshop July 1, Forest Lake City Administrator Aaron Parrish presented preliminary options based on financial factors discussed with the YMCA at a conceptual level. No numbers are firm, and the scenarios assume interest from the City Council and YMCA that has yet to be set in stone.
Using as a base the Elk River YMCA built for $13.2 million in 2008, the contemplated model has the city committing $9 million to the project if it is located in Forest Lake. The YMCA would kick in about $4 million under that funding model.
That city’s share could be financed either through a referendum – potentially on this fall’s general election ballot – or by using tax abatement bonds, which do not require voter approval to issue. According to numbers crunched by the public finance company Ehlers, $633,200 in annual principal and interest payments would carry a tax impact of $72 per year for 20 years on a $200,000 residential property.
YMCA officials are soon expected to pick between Forest Lake and Wyoming for their preferred site.
The Forest Lake City Council has not discussed the city’s financial participation in a Wyoming facility.
If plans advance to build in Forest Lake, three city-owned sites are being considered: parcels of 9 and 117 acres near the library and Washington County Service Center and a 6.6-acre plot adjacent to Fenway Athletic Park and the Forest Lake Sports Center.
The referendum and tax abatement financing options both involve general obligation bonds with identical interest rates.
Parrish proposed schedules for financing that assume the involved parties hammer out an agreement this summer. The timelines are for informational purposes, Parrish said, and are not a result of completed discussions.
Referendum bonds would allow for community input on a large discretionary expense, but would complicate the financial and operational arrangement by requiring the facility to be city-owned during the financing term. Ballot wording would have to be approved at the Aug. 11 council meeting in order for the question to appear on the Nov. 4 ballot. If approved by a simple majority of voters, the bond issuance would be awarded and proceeds deposited for project funding in December.
The city also could hold a public hearing and adopt a resolution establishing a tax abatement project. This method, which would not require voter approval, would designate the city’s property tax revenue from a specific geographic area to the project’s debt service. This would not change the tax impacts of property owners in the district relative to other properties in the city. The abatement could be arranged so as to have the YMCA own and operate the facility. The public hearing could take place in August, with bond proceeds being deposited by Oct. 1.
No timeline was identified when the council approved the study last year. Given the topic’s local history, City Councilwoman Molly Bonnett feels the preliminary timelines showing resolution this year are reasonable.
“This isn’t a brand new idea by any stretch of the imagination,” she said.
If the city of Forest Lake ends up bonding for the YMCA’s construction, debt service will nearly match the time frame of the 20-year debt service for the Forest Lake City Center, which is currently under construction. Those debt payments are ramping up and will level off at $1.44 million annually in 2016. For that project, $22.5 million in revenue bonds was issued without a public vote, spurring a lawsuit that unsuccessfully challenged the legality of the financing method.
The council at the July 1 workshop directed Parrish to continue developing plans for the YMCA, keeping alive, at this point, the possibility of the financing method that does not require a public vote.
“That option wasn’t shut down,” said Bonnett, who has taken a leading role in the YMCA discussion.
Parrish said the council directed him to keep all doors open at this early point.
“People are interested in pursuing it,” he said. “We think it would be a valuable asset to the community, and we want to keep the conversation going with the Y.”
The YMCA is not ready to dive into a project just yet, said YMCA of the Greater Twin Cities CEO Todd Tibbits on Tuesday.
Officials of the nonprofit organization are in the middle of the due diligence process.
“There’s a desire for a YMCA, but a lot that has to be navigated as this continues onward,” Tibbits said.
“We’re certainly very interested and eager, but we also want to be deliberate and make the right decision,” he added.
Still, there is excitement on both sides of the table. Tibbits said that exploring opportunities in Forest Lake and Wyoming “has come to the forefront of projects” for the YMCA.
The interest shown in the local survey was important for the YMCA to see.
“For the YMCA to be successful, we need to have those signs and that support for community presence and partnership,” Tibbits said.
Each YMCA is different, and he said the best ones are those that stem from collaboration.
Tibbits said financial discussions would be speculative at this point.
“As we continue to have these conversations with cities and potential partners, (the scope) really will evolve,” he said.
Tibbits expects the YMCA to finish the due diligence stage “in a pretty short time frame, certainly this summer.”
A typical construction window for a YMCA, from groundbreaking to opening, is about 18 months, Tibbits said.
The feasibility study is based on a phone survey of 350 area residents conducted from March 25-April 23 by Anderson, Niebuhr & Associates Inc. Questions were developed by the four parties that funded the study: the YMCA, the city of Forest Lake, Forest Lake Area Schools and Fairview Lakes Medical Center.
Ninety-three percent of respondents want a YMCA in the area.
“The survey was certainly incredibly positive,” Bonnett said.
Revenue and membership projections indicate that a facility would be viable in either city. A Forest Lake location is estimated to attract 2,779 membership units and bring in $2.78 million in annual revenue. A Wyoming location is projected to fare better, with annual revenue of $3.32 million and 3,322 memberships.
Fifty-five percent of those polled prefer a Wyoming location. Thirty-five percent prefer Forest Lake, while 10 percent took neither side.
Thirty percent of respondents belong to a fitness facility, and 61 percent of that group indicated they would likely or definitely keep that membership.
The most desired facility amenities include an indoor pool, an indoor track and outdoor walking paths connecting to community trails.
The survey received a 73 percent response rate, which the research company indicated was high, Bonnett said.