GUILDERLAND — The Industrial Development Agency and the town board have decided to approve an extension on the Guilderland YMCA’s $5.24 million bond.

The bond was originally granted in 2000, when the YMCA was built. The loan was made by KeyBank Corporation, but the Guilderland IDA was the conduit, because the YMCA was able to get a tax exemption on materials used in construction, and avoid a mortgage recording tax by applying through the IDA.

“IDAs are a vehicle for tax-exempt financing,” said Fred Denefrio, vice president of finance for the Capital Region YMCA.

The Industrial Development Agency was founded in 1978 to help fund two types of facilities — industrial facilities that would create jobs, and not-for-profit civic facilities, according to Donald Csaposs, the chief executive officer of Guilderland’s IDA. The YMCA legally conforms to the second category, Csaposs said.

The civic-facility provision, established in 1986, expired in 2008, but Csaposs said, since the YMCA was already being funded through the IDA, it was able to get the extension.

Financing corporations frequently issue short-term bonds, but work out monthly payments for borrowers based on long-term bonds, Csaposs said. KeyBank Corporation granted the YMCA a 10-year bond, but allowed payments based on a 20-year bond. Csaposs said there were benefits for both entities; the borrower would have lower monthly payments, and the lender would have the opportunity to re-evaluate the borrower’s credit value at the end of a shorter term.

“There was the full expectation that, at the end of 10 years, there would be a renewal. What we didn’t expect was that Keybank would grant a three-year extension rather than another 10-year note,” Denefrio said. When the first 10 years are officially up at the end of September, there will be just under $3.5 million left to pay off, he said.

“KeyBank made the decision, and didn’t share it’s thinking with the IDA,” Csaposs said. If he had to guess, he said, KeyBank most likely chose a three-year extension due to the volatility of the interest rates and the overall economic climate.

Based on the YMCA’s $5.24 million bond, Csaposs calculated that the monthly payment for a 10-year term would be roughly $58,000, and the monthly payment based on a 20-year term would be roughly $37,000. Denefrio confirmed that, with interest, the YMCA’s monthly payments are around $40,000.