BREAKING: City council to consider $500K investment in YMCA, backstop 10-year lease

The City of Sault Ste. Marie is considering an investment of over a half-a-million dollars toward improvements to the YMCA and proposes backstopping a 10-year lease on the property on behalf of a potential mystery buyer who remains anonymous.

If the deal moves ahead, the Sault Ste. Marie YMCA will continue to be the operating entity for the McNabb Street facility and its on-site and off-site daycare operations.

A report will go before city council on Monday with a proposal to make a significant investment into the organization that, less than a month ago, was on the verge of financial ruin and slated to close for good.

City CAO Tom Vair said if the deal is approved, the yet-unnamed charitable foundation will pay $2 million for the building — about two-thirds of the $2.99 million asking price. The YMCA will then enter into a $100,000-a-year, 10-year lease that will be backstopped by the City of Sault Ste. Marie.

The city will ultimately be responsible for those payments and its involvement comes with some risk, said Vair.

"There is financial risk of approximately $1 million over the ten-year lease term to the City in the event the YMCA cannot make any of these payments," he said. "There is also the risk for any unknown, additional capital repairs that may be required."

In a members meeting held last month, YMCA interim CEO John Haddock said the organization owed about $1.5 million on its mortgage, with monthly payments of about $17,000 — or about $204,000 per year.

In return for its involvement, the City of Sault Ste. Marie will gain participation on the Sault YMCA board of directors and have regular communication between city staff and YMCA leadership. 

"Should the YMCA begin to encounter financial difficulties, the City will seek the ability intervene and appoint a new Board of Directors and take other steps to ensure operations can be sustained and maintained," Vair wrote in the report.

The organization has submitted a funding application to the Northern Ontario Heritage Fund Corporation (NOHFC) for $495,000. That funding requires matching dollars to undertake capital upgrades of nearly $1 million to the McNabb Street building.

The report suggests the city provide $505,000 in funding for those upgrades, which will include replacement of the aging boilers in the building. Vair proposes that money should come from the city's 2023 budget surplus within the contingency reserve.

"This funding will enable capital repairs including the much-needed replacement of boilers in the building," Vair said in the report. "Any repairs made to the building will be made to minimize investment and examine opportunities to relocate equipment to a new facility in the future (should a new facility prove feasible)."

The city will also go to bat for the YMCA in case the change of ownership affects the property's tax-free status.

"The City will work with the YMCA to ensure the tax exemption continues to be in place moving forward if the property becomes taxable as a result of the Organization becoming the landowner," Vair wrote.

For the framework to be successful, Vair said the YMCA would require commitments from multiple stakeholders, including the general public, businesses and the community to achieve a goal of 4,500 YMCA memberships within the next 60 days.

In the members meeting, Haddock said the YMCA currently has about 2,800 members, much lower than the 7,000 or so in the 1990s when he was CEO for the first time. For the framework to be successful, Vair said the organization would need membership levels to return to the 4,500 it held pre-pandemic.

"It should be stressed that the ultimate success and continued operation of the YMCA is now in the hands of the community," Vair wrote in the report. "Should the community support the YMCA with its membership drive, the YMCA can continue to operate."

Vair said planning for the future of the organization must also be a part of the framework.

"The current building is aged and a determination will need to be made as to whether a new build is the best option or if a significant refurbishment is required to position the YMCA for long-term success," he said. "Once this analysis is complete, a significant capital campaign will commence to support future facility requirements of the community and YMCA."