City Considers Taking On Additional Bond Debt To Fund Aquatic Center
The city of Glenwood’s proposed $5.1 million aquatic center suffered a major setback last week when the Charles E. Lakin Foundation announced it no longer intends to provide funding for the project.
The Lakin Foundation was given naming rights to the aquatic center last year after pledging $450,000 for the Lazy River portion of the project, but the Lazy River was removed from the plans when construction bids came in nearly $1 million higher than initially projected for the entire aquatic center project. On June 23, the Lakin Foundation formally denied a request from the city to have the $450,000 be put toward general construction costs of the swimming center.
News of the Lakin Foundation’s decision came as a major disappointment to members of the city council, who put the project on hold immediately after hearing the funds were no longer available. The council voted 5-0 against a resolution that would have authorized the issuance of over $5 million in general obligation Local Option Sales Tax bonds to fund construction of the aquatic center and refinance about $1.5 million in remaining debt on the Mills County YMCA building.
Susan Hirschman, chair of the city council budget and finance committee, said the Lakin Foundation gave two reasons for withdrawing its funding from the aquatic center – complaints from Glenwood citizens who were upset the city was moving forward with the project despite a failed bond issue effort in 2014 and the fact that construction bids came in considerably over initial budget projections. Members of the Lakin family were troubled by a perceived “lack of community support” for the aquatic center, city leaders were told.
Glenwood city administrator Brian Kissel called the foundation’s decision extremely disappointing, but said other options will be explored.
“I think we need to explore all options,” Kissel said after the meeting.
On Friday, three days after learning the Lakin Foundation dollars would no longer be available, Kissel, Hirschman and city council member Kay LeFever took part in a conference call with consultant Susanne Gerlach of Public Financial Management, Inc., of Des Moines, to discuss alternative funding options. Gerlach has been consulting the city on financial matters in recent months.
Kissel said a specific proposal now being considered involves raising the amount of funds financed through Local Option Sales Tax revenue from the $3.5 million already approved by the council to at least $3.95 million.
“Basically, what the council would do is fill in the gap that Charles Lakin has left with Local Option Sales Tax dollars,” Kissel said.
On Tuesday night (June 30), the council approved a resolution to issue more swimming pool bonds up to $600,000. The city is required to have a public hearing before it can take on the additional debt. The public hearing has been scheduled for Monday, July 20, at 7 p.m., at City Hall.
Kissel said Gerlach’s previous projections were based on “zero growth” of Local Option Sales Tax revenue through the 20-year life of the bonds, but an examination of Local Option Sales Tax history in Glenwood shows that revenue has grown at a steady pace since voters put the tax in place 10 years ago. Local Option Sales Tax dollars generated in Glenwood can only be spent on recreational purposes.
“Her (Gerlach’s) calculations have shown that Local Option Sales Tax has actually increased 5 percent historically over the last 10 years,” Kissel said. “What she has done is come up with a scenario that shows 1 percent growth, which is still very conservative. She feels that is a better example of where we are with Local Option Sales Tax. With that example, she can show that we’re still going to have a Local Option Sales Tax reserve, even if we put more money into bond issuance.”
In the 1 percent growth scenario, Kissel said the city would still have over $800,000 in Local Option Sales Tax reserves to cover maintenance and upkeep costs at both the aquatic center and Mills County YMCA building. The 1 percent growth projections show the funds available to offset annual operating expenses at the aquatic center climbing from $57,000 in 2015 to $129,000 in 2035.
Should the Local Option Sales Tax revenue continue to grow by 5 percent annually, the amount of money available for both the reserve account and budget/operating expenses would be even higher, Kissel noted.
The YMCA of Greater Omaha, contracted with the city to manage and operate the aquatic center, projects an operating budget of $138,500 for the first year the facility is open. Local Option Sales Tax dollars will be needed to cover any shortfall in operating and management costs not covered through revenue generated by season passes, daily admission fees, concessions and private rental of the aquatic center.
The city has yet to provide a projection of how much revenue the aquatic center is expected to generate on an annual basis.
“We won’t have revenue projections until the council sets rates for the pool,” Kissel said. “We’re going to be sitting down with the council in August or September and determining what they’re going to be charging for the use of the facility.”