The Greater Wichita YMCA's plans for a new downtown facility leaped forward Tuesday when the City Council voiced its intent to finance the project with $23 million in industrial revenue bonds.
The Y plans to raise money through donations and memberships to pay off the bonds, and the city will own the land and buildings until the Y has paid the entire $23 million.
Since the city holds title, it has to support the Y when it seeks property and sales tax exemptions from the state.
The nonprofit status and tax-exempt bonds add up to a lot of savings for the Y.
But they also amount to an unfair advantage over private health clubs, said Rodney Steven II, owner of Genesis Health Clubs.
Steven, who has railed against the Y before and clashed with the city, told council members that in the past decade more than 35 private health clubs that paid property and sales tax have gone out of business while the tax-exempt Y has grown its revenues.
That's tax money the cash-strapped city could use, he said.
"Continuing to shrink the tax base in the face of severe spending cuts really makes no sense," he said.
In 2004, Steven asked the city for industrial revenue bonds that would be used in part to build a new club and later sued, saying the city reneged on a deal to issue the bonds. Genesis lost the case.
Greg Ferris, a former City Council member who helped Steven lobby for the revenue bonds in 2004, also criticized the plan.
He questioned how charitable the Y is and cited the Y's 2010 membership report, which reported that 15 percent of the downtown Y's members received subsidies intended for low-income people.
He said only about 17 percent of the Y's spending is on charitable assistance, and that much of that comes from the federal government.
"You have a right to know that this doesn't do for the community what you think it does," he said.
Ferris suggested that the Y should pay something in place of the property taxes.
The Y's president, Jim Hattan, said the Y provides services that help low-income families. And he said the new building will be a flagship property that fits the city's goals for downtown redevelopment and provide 50 new jobs.
Hattan said the new downtown Y at Third and Market will serve 20,000 more people, including 10,000 kids, many of whom couldn't otherwise afford a gym membership. Half of those kids will have some sort of financial scholarship, he said.
Dennis Schoenebeck, general executive of the Y, said the nonprofit serves more than 245,000 people, including 65,000 who receive some financial assistance.
The existing downtown branch is more than 50 years old and no longer fits the Y's needs, and the new Y will better serve families and improve its services overall, he said.
The former owner of the property recently acquired by the Y for its project paid about $52,000 in taxes, Schoenebeck said.
"So I think the question is, is a $23 million investment serving that many people and the benefits it has to this community worth $52,000?"