YMCA recreation contract with city runs into trouble

Diana Sahagun

Thursday, Dec. 13, 2001 | 10:57 a.m.

An experiment by the city of Las Vegas to learn whether a private firm could save money by running a city recreation center could end up costing taxpayers up to $600,000 over the next three years.

The city hired the YMCA in 1999 to run a northwest recreation center, the first and only time the city has allowed an outside organization to compete with city departments for a contract to provide government services. Facing escalating staff costs and the opening of two other city centers at the time, the council approved a five-year agreement as a potential cost-saving measure, in which the YMCA agreed to run the $7 million facility and set aside a portion for the city's use.

Now, the city could be faced with subsidizing the YMCA for the last three years of its five-year contract. The organization is asking for help to pay rising utility costs at the Northwest Leisure Services Center at Cheyenne Avenue and Durango Drive.

At Wednesday's council meeting, the YMCA will ask the city to subsidize its utility bills for the remainder of its three-year contract, said Steven Houchens, deputy city manager.

Reportedly, those costs could be as high as $200,000 per year, city sources said.

Mike Lubbe, president and chief executive officer of the YMCA, said the subsidy is needed to cover soaring utility costs so that programming fees can be kept affordable for the more than 10,000 users.

The YMCA, he said, has invested $750,000 into the building since it opened and has created a successful venture.

The request has some city officials, who were already opposed to a subsidy the council narrowly approved in February, on edge. The request also comes at a time when the city is faced with a shrinking budget and the realization that programs may have to be cut.

Houchens said if the request is approved, the money would come out of the city's general fund.

The city contracted with the YMCA in September 1999 to run the center. The organization is obligated to pay expenses, including utilities. The city receives 1 percent of the center's gross annual profits. This year, Houchens estimated that the city would receive $15,000 to $16,000.

A year after the partnership was formed, the YMCA in February asked the city to pay one year's utility bills at the recreation due to rising energy costs, for $136,500.

The subsidy was needed, officials said, because of unforseen construction problems and other safety issues that were no fault of the YMCA.

By a narrow vote, the council agreed to pay the bill, with Lawrence Weekly, Lynette Boggs McDonald and Michael McDonald voting against the move.

Councilman Larry Brown, who was a proponent of the partnership, could not be reached for comment.

"The city has been very supportive in the past, and we're going to ask them to continue," Lubbe said. McDonald said he had concerns about next week's request, especially with the city in the middle of a hiring freeze and continuing negotiations with firefighters for a new contract. He added that city staff morale is on the decline because positions have been frozen.

With numerous capital projects occurring in several wards next year, McDonald questioned whether the city could afford to spend additional general fund money that was not budgeted.