The math behind the proposed purchase is buried on page 1021 of a 1120 packet for Tuesday's City Council meeting.
If approved, city would buy the building (including four rental units), equipment, business and land for $2.5 million, City Administrator Bart Olson said in a memo to City Council members. The owners, Walker Custom Homes, would finance the installment contract at 6 percent interest over 20 years, so the city would pay them $17,910 a month for a total of $4,298,586.
"The contract will also contain a no-prepayment clause," Olson wrote. "The main reason the property owner was willing to sell the property for less than market value was that the property is a self-financed purchase installment contract."
A recent appraisal suggested a market value of $3.5 million.
Olson estimated the purchase payments would be about $13,000 less a year than the current rent, and the facility's operational budget could have a $35,000 annual surplus, Olson said. The annual budget savings come largely from rental income associated with the four retail spaces on the building's north side and the city no longer having to pay the property taxes.
against renewing the facility's lease when it expires in July 2013.
The city held the first of three public hearings on the potential purchase Tuesday. Future hearings will be at the July 24 and Aug. 28 City Council meetings, which start at 7 p.m. Aldermen could vote on the contract on Sept. 11.
Area residents spoke in support and in opposition of the purchase Tuesday. Resident Walt Stagner wore a shirt that said "sick of spending."
"I'm not against the REC Center," Stagner said. "Just just against paying for it."
Patrick Speciale and his wife support purchasing the facility.
"If you have to raise the rates, go ahead," he said. "But don't eliminate it. It's very important to a lot of people and their lives."