Formal Contract

The type of agreement used to formalize a private/public partnership depends upon the scope and purpose of that partnership. The delineation of agreements among study participants and an explanation of each agreement category are detailed in Table 13.

While ownership of a facility or land may be assumed or preferred by the YMCA, it may also be assumed or preferred by the municipal partner. In a public/private partnership, ownership preference may be overruled by legal requirements regarding the use of public funds. As such, it is prudent to be aware of the legal requirements related to ownership.

Prior to initiating the partnership discussion, assumptions related to ownership can lead to misguided expectations. When the parameters of ownership are clearly understood by all parties, the remaining components of the partnership agreement tend to follow accordingly. Laws related to the use of public funds and ownership of capital assets varies from state-to-state.

Study participants emphasized the importance of seeking reliable legal counsel related to the options and benefits surrounding this issue. In response to the question of ownership, the majority of land and facilities were owned by the municipality (See table 14).

More than ever, YMCAs and municipalities are seeking ways to provide recreational services in communities where there is a lack of population or a
low socioeconomic demographic. Municipalities and YMCAs have both found that in situations such as these, they face the difficult choice of heavily subsidizing these facilities or not providing services at all on their own.

Long-term subsidy is often no longer a viable option for a YMCA or a municipality. Based on the severity of the subsidy required, in these types of communities, both the municipality and the YMCA recognize that an annual operating subsidy will be a reality, regardless of who provides services. This recognition is relatively new.

Historically, a YMCA/municipal partnership would place the operating risk on the YMCA regardless of the demographic situation. This new awareness has generated an emergence of partnership models where the YMCA and the municipality are sharing operational subsidy throughout the term of the agreement. The annual operating subsidy terms are clearly defined in these types of agreement (See Table 15).

During this study, participants expressed interest in identifying, benchmarking and comparing contract components. The results of this analysis are detailed in Tables 16 and 17. The tables are specific to facility-related partnerships and program-specific partnerships.

In this study, 64% of the contracts were developed and funded (written and paid for) jointly among the partners. While the timing and order of contract ratification may appear to be a significant issue at the onset (who signs first and when), study participants reported that the significance of this concern typically dissipated as the level of trust increased throughout
the partnership development process. See Table 18 for specific statistics related to contract development and ratification.

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Table 18

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Table 19

Table 19 shows the duration of the typical contract among study respondents. In this study, 50% of the agreements have a term of 20 years or more. The impact of this length-of-term increases the importance of a contractual agreement that will withstand the test of time. Every partnership evolves at a specific time with a group of likeminded individuals. However, the agreement that defines the partnership over the long term must take in consideration the passing of time and leadership. While each partnership is unique, the study participants
expressed interest in identifying the core components that should be included in every agreement. This basic “anatomy of a contract” is detailed in Table 20.

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Table 20