City councils in Carlisle and Pleasant Hill were asked this week whether they wanted to help convert a large chunk of bank financing for the Wellmark YMCA into low-interest bonds.

The Carlisle City Council voted Monday to approve $5 million in what are called “bank-qualified revenue bonds.” The Pleasant Hill City Council voted Tuesday to approve the issuance of $3.5 million in bonds.

Late last year, the city of Norwalk approved $6 million in bank-qualified revenue bonds to help the YMCA of Greater Des Moines reduce its interest debt on a $25.5 million construction loan for the conversion of the former Polk County Convention Complex at 501 Grand Ave. into a state-of-the-art YMCA.

In all, the communities will have approved $14.5 million in bonds for the project.

YMCA President and CEO Vernon Delpesce said the request to certain cities is part of an overall plan to convert its bank debt, with its higher interest fees, into low-interest bonds. 

Under a 29-year-old tax law, municipalities that carry no more than $10 million in bond debt per calendar year can issue the bonds. The government bodies are not responsible for the repayment of the bonds. Banks receive a tax break on the deals.

The only risk to a city is that the issuance counts against the $10 million in bonds that it can issue during a calendar year. In Pleasant Hill’s case, there is little likelihood the city will be asked to issue more than $6.5 million in revenue bonds for the remainder of the year. Carlisle City Administrator Andrew Lent said issuing the bonds will not threaten his city’s debt limit.

Sandor said it is not unusual for communities such as Pleasant Hill and Carlisle to be asked to issue the bonds as a way to lower debt for special projects.

Last year, Pleasant Hill approved bonds for Valley View Village nursing home in Des Moines, he said.

Tim Oswald, a managing director who specializes in public finance for PiperJaffray in Des Moines, said nonprofit organizations have become skilled at monitoring the bond limits of smaller cities and asking them to issue bonds as a way to reduce debt.

Sandor noted that a city such as Des Moines routinely exceeds the $10 million limit.

Oswald pointed to a long list of Greater Des Moines nonprofit organizations that have used the funding mechanism for capital projects, including the Science Center of Iowa, Drake University and the Des Moines Art Center.

The bond issue will not help defray the $6.5 million shortfall the YMCA is facing in financing a swimming pool at the Wellmark YMCA, Delpesce said.

“I have a lot of asks out for that,” he said.

One of those is to the Iowa Economic Development Authority’s Community Attraction and Tourism Committee, which will take up the YMCA’s request for $1 million toward the cost of the pool when it meets Wednesday. The YMCA also is waiting to hear whether it qualifies for federal New Market Tax Credits after being turned down on an earlier request.

“Eventually, it will all come together,” Delpesce said of total financing for the Wellmark YMCA. “These projects are big and they are complex. … There are a lot of moving parts.”