Report to: Committee of the Whole Date of Meeting: April 11, 2006

SUBJECT: Funding for Markham YMCA

PREPARED BY: Jennifer Nelson ext 2640

RECOMMENDATION:

THAT the report titled “Funding for Markham YMCA” be received;

AND THAT Council authorize the CAO to finalize the negotiations on the Town’s one third contribution toward the cost of the YMCA facility in Markham Centre, to a maximum of $7,500,000 contingent upon final construction cost and fundraising contributions;

AND THAT the Town’s maximum contribution be comprised of the following:

Land (4 acres)	$2,000,000
Present Value of Land Lease (2 acres)	$ 800,000
Building (1/3 of 60,000 sq ft)	$4,500,000
Excess Fundraising (per agreement)	$ 200,000
Total	$7,500,000

AND THAT the previously authorized development charge exemption and waiving of fees not be provided;

AND THAT the recommendations of this report be conditional on the reconfirmation of the principles of the Community Access Agreement between the Town and the YMCA to the satisfaction of the CAO and the Commissioner of Community Services;

RECOMMENDED

BY:

_______________________ ________________________

Barb Cribbett Andy Taylor

Treasurer Commissioner, Corporate Services

EXECUTIVE SUMMARY:

On June 8, 2004 Council authorized a one third contribution toward the cost of constructing the YMCA facility to a maximum of $6 million. The Town’s contribution was comprised of the following:

Funding Source	Amount
Land	$2,000,000
Present Value of Land Lease	$800,000
Capital Contribution	$2,700,000
One Third Development Charge Exemption	$142,554
Residual – Waiving of or Grant equivalent to Fees, charges, and expenses	$357,446
Total Contribution	$6,000,000

In June 2004, the total estimated capital cost of constructing the YMCA was $18 million. As the facility nears completion, the capital costs are now estimated between $21.9 and $22.5 million. The YMCA has requested that the Town continue its commitment of contributing one third towards the facility. Based on the revised construction cost estimates, this would require the Town to contribute an additional $1.3 to $1.5 million for a total of $7.3 to $7.5 million.

As a result of the fees imposed in the Development Charge By-laws, adopted in the fall of 2004, the recommended funding sources have been revised to minimize the impact to the existing taxpayer. The revised funding source recommendations are described in detail further in the report, but are summarized as follows:

Funding Source	Maximum of
Land	$2,00,000
Present Value of Land Lease	$800,000
Capital Contribution	$4,500,000
Excess Fundraising Contribution	$200,000
Total	$7,500,000

The increased contribution to this facility not only benefits the YMCA but also the Community and the Town. The increased contribution: provides the YMCA with necessary funds to minimize their funding shortfall; meets the needs of the community as identified in the Draft Recreation, Culture and Library Indoor Facility Master Plan; and provides the Town with recreation space at a lower capital cost than recent experience has shown.

FINANCIAL CONSIDERATIONS:

Land

The value assigned to the land in the June 2004 report was $2.8m and was based on $500,000 per acre for 4 acres of land ($2.0m) and the present value of land lease payments over a twenty year period ($0.8m) for parking purposes. There are indications that land within the Markham Centre area has substantially increased in value. In agreeing to fund one third of the construction cost, the Town will be able to include one third of the value of the land in the calculation of the service level for development charge purposes. The service level determines the amount of development charges that will be collected in future periods to fund new facilities. The land contribution to the YMCA, at the increased value, will benefit the Town’s development charge service level.

Capital Contribution

The Town’s capital contribution of $2.7 million was originally determined on the premise that the Draft Recreation, Culture and Library Indoor Facility Master Plan contemplated construction of a 20,000 square foot satellite facility in the Markham Centre at $135 per square foot. The Town’s recent experience indicates that the cost to construct a recreation facility is upwards of $300 per square foot. Increasing the capital contribution to a maximum of $4.5 million would provide the Town with recreation space at a cost per square foot of approximately $225 ($225 x 20,000 sq ft = $4.5m). This is lower than our experience, and has no operating impact. The maximum increase of $1.8 million ($4.5m - $2.7m) will be funded 90% from Development Charge Reserves and 10% from the 10% Non Growth DC Reserve. The 20,000 square feet of space is also eligible for inclusion in the development charge service level, and will assist in ensuring that service levels are maintained.

One Third Development Charge Exemption

The June 2004 recommended that one third of the development charges otherwise payable by the YMCA be exempt, on the basis that the facility would be used for municipal purposes. It was estimated that the total development charges assessed to the YMCA would be approximately $427,000 and the Town’s one third portion approximately $143,000. Subsequently, new development charge by-laws were implemented that imposed a sub area specific charge within Markham Centre. The YMCA is located in the new East Precinct sub area that had a development charge of $531,497 per hectare. This resulted in the total development charges payable exceeding $1.8 million.

The sub area specific charge that was imposed on the East Precinct Area is primarily to cover the cost of local services in the absence of a developers group. The exemption of one third of the development charge would require approximately $630,000 to be funded from non development charge sources. The loss of revenue resulting from the exemption can not be recovered from Developers and would ultimately impact existing taxpayers. Staff are therefore not recommending that the one third exemption be granted to the YMCA, but rather recommend increasing the capital contribution as an offset to the exemption.

Excess Fundraising

The Purchase and Sale and Facility Construction, Use and Disposition Agreement states that “all contributions from the community fundraising campaign that are in excess of the campaign’s one-third fundraising target shall be applied equally to a reduction of the YMCA’s one third funding contribution and the Town’s one third funding contribution”. The YMCA was successful in exceeding their fundraising target in the amount of $400,000. In accordance with the agreement, the Town will reduce its one third contribution by $200,000.