Life Time Fitness is in jeopardy of losing a $460,400-per-year contract with the City of Minneapolis because it doesn't offer its employees domestic partner benefits.

A current city ordinance requires vendors that have $100,000-plus contracts to offer their employees benefits for domestic partners that are equal to the ones they offer to married couples.

Chanhassen-based Life Time doesn't, and two city committees have recently met to explore whether to grant the company an exemption and renew a contract that's set to expire at the end of this month.

Since 2006, the city has paid Life Time to provide memberships to its police officers and firefighters in order to encourage fitness-and Life Time's predecessor provided them before that. The parties renewed the contract in 2007 and the domestic partner benefits issue didn't surface at that time, which city officials can't explain.

The contract now under consideration is set to begin on April 1 and run through December 31, 2014-giving it a total value of about $1.73 million.

Life Time spokesman Jason Thunstrom told Twin Cities Business on Monday that the company's yearly benefit cycle begins on October 1-and it has no plans to immediately change its benefit offerings to meet city requirements.

“We survey our team members two times a year to gather their feedback on everything from benefits to compensation and work environment,” he said. “It's fair to say that this particular benefit . . . has not presented itself by our team members as something that they've asked for at all.”

In light of the apparent lack of interest in domestic partner benefits, and the anticipated cost of extending them, it's not something that's high on Life Time's priority list, Thunstrom said, adding that 60 percent of Fortune 1,000 companies do not offer domestic partner benefits.

Thunstrom also pointed out that the City of Minneapolis doesn't offer such benefits to its own employees-and yet it requires vendors to offer them.

City Councilman Don Samuels said Monday that a 1995 Minnesota Court of Appeals ruling struck down the city's attempt to offer such benefits-but he agrees that the city should uphold the policy with its own employees. “The city must find ways to demonstrate its rigor around this issue in spite of the state's position,” he said. “We need to elevate this item in our legislative agenda to a level that is consistent with our contract negotiations.”

The city's police and fire officials both recommended an exemption for Life Time, contending that it has the best facilities and amenities. The public safety committee, which Samuels chairs, recently moved the exemption request to the city's budget committee because it didn't have enough information to make an informed recommendation. Namely, committee members wondered whether any other fitness vendors responded to a city request for proposal and whether Life Time would even want to continue the contract knowing that it would be “somewhat mired in controversy,” Samuels said.

Samuels has since learned that Life Time is still interested and that among the fitness vendors that submitted proposals, Life Time's was the only one that met all requirements-with the exception of offering its employees domestic partner benefits.

“We had a damned if you do, damned if you don't situation,” Samuels said. The situation prompted the city's budget committee to approve the exemption on Monday afternoon. The full council will vote on the exemption on Friday-and that's the final step in the process to determine whether Life Time will win the contract.

In the meantime, the city's budget committee has asked the City Council's executive committee to put domestic partner benefits on its agenda for review. Namely, the committee will look into whether the city's requirement for vendors to provide such benefits should be factored into labor negotiations with police officers and firefighters in the future.

Meanwhile, Life Time is waiting on word about whether its contract will be renewed.

“We've enjoyed our business relationship with the city, but our human resources benefits will not be dictated by a vendor agreement with a third party,” Thunstrom said, adding that the contract “represents a very, very small portion of Life Time's memberships overall nationally.”