City of Port Aransas Recreation Center Feasibility Study ... Center Feasibility Study... · Port Aransas Recreation Center Feasibility Study City of Port Aransas Admin Executive Summary

City of Port Aransas

Draft Recreation Center Feasibility Study

May 2017

Port Aransas Recreation Center Feasibility Study

City of Port Aransas Admin

Index Executive Summary pgs. 2-3 Section I – Maintenance and Operation Costs pgs. 4-6 Section II – Revenues pgs. 7-8 Section III - Expenditure – Revenue Comparison pg. 9 Section IV – Membership Fees and Attendance pgs. 10-11 Section V – Hours of Operation pg. 12 Section VI – Project Recommendations pgs. 13-15 Section VII – Appendixes pg. 16

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Executive Summary The process of this study is to investigate the feasibility of building and operating Port Aransas’s first Community Recreation Center. In the 2016-2017 budget city council members allocated funding and directed staff to complete this study. The following draft report which is accompanied with a power point presentation from the hired architect firm of GIGNAC Architects is Part I of the study and will be presented at the May 18, 2017 city council meeting. Part II will be presented at the June 20, 2017 Council Summer Goals Workshop and will consist of presenting a final report in addition to a detailed review of the city’s bond indebtedness and the impact of a new bond to the city’s overall bond debt (as a bond is the most likely funding tool to be used for this facility). This collection of information should arm council with enough detail to make a decision at the conclusion of the June 20 workshop if they want to proceed with building a recreation center or not. If the decision to move forward is “yes”, the following itinerary is suggested:

1. Council to conduct multiple community citizen workshops to get input from the various user groups on their ideas and wishes of what the facility needs to provide.

2. Workshop ideas would be presented to council for them to decide on a final square footage. This would establish the bond amount.

3. Decide on a vote date. Either a November special election, or May regular election date.

4. Promotion of bond by council. 5. Citizens vote on bond

Setting: In both the 2005 and 2011 Parks and Open Space Master Plan (adopted by council as a component of the city’s comprehensive plan), a citizen polls identified an “indoor multi-purpose center” as the number one needed facility in the city. This study assumes that is still the case, and staff believes it to be so. There have been and still are limited indoor recreation facilities/fitness programs in the city, both private and city run. The school has also increased its allowances in recent times for gym use for both basketball and fitness programs. These local programs are often plagued with the “relocation blues” as they struggle to stay in the same location for any length of time and keep a consistent client base. With our city’s small year-round population larger chain fitness retailers have not ventured into the local market, and we don’t think they’re coming any time soon either. For these reasons combined, the local “indoor fitness opportunity” grade of the city is an “F”, failing. Facility Concepts: Over the past six years, staff has analyzed multiple sites throughout the city on both private and public lands and in terms of location, utilities, access, and cost, none of the

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sites make as much sense as to placing a recreation facility at our own Community Park on Ross Avenue. Though city land is limited within the park, there is a private parcel of land at the entry of the park whose owners have indicated they are willing to negotiate. This site has ample space for both the facility and associated parking as well as future expansion potential. Being within the same complex as the community pool, dog park, skate park, baseball fields, and park trails, this proposed site would be an excellent fit. Purpose of this Feasibility Study: Though an approved bond would pay for the design, construction, and furniture of a recreation center, the other significant financial burden that remains year after year is the Maintenance and Operating (M&O) costs associated with running this type of facility. These M&O fees are not Hot Tax eligible (neither is a recreation center unless we can prove the gym portion to be a qualified Hot Tax venue) and would likely be funded out of the General Fund or get some help from the Recreational Development Corporation fund (RDC). These M&O costs will naturally be offset by the recreation center generating funds in the form of membership fees, programs fees, and rental of space but typically the national standard for revenue recapture of recreation centers falls between 45% and 90%. As is the case, our revenue recapture for this facility came in at 74%. This report breaks down M&O costs in detail followed by and detailed breakdown of revenues generated including what a membership fee program might look like. It includes utility cost analysis completed by our design team’s mechanical engineers and has appendices of various Texas cities recreation membership fee programs for comparison.

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Section I – Maintenance and Operation Costs

Operating Expenditures

Expenditures have been formulated based on the costs that are usually included in the operating budget for an indoor recreation facility. The figures are based on the size of the center, the specific components of the facility and the projected hours of operation. Actual costs were utilized wherever possible and estimates for other expenses were based on similar facilities in the state. All expenses were calculated as accurately as possible, but actual costs may be more or less based on the final design, operational philosophy, and programming considerations adopted by staff. A cost scenario has been developed for the facility noted below.

Proposal - Community recreation center with a large single UIL court gymnasium, teen room, tots room, movement room, weight/cardiovascular area, community multi-purpose room (with kitchen), raised stage area, lobby/lounge/vending area, locker area, adjacent outdoor courtyard, and administrative area. Approximately 23,365 sq. ft.

Operation Cost Models: Staffing Additions: New Positions Associated Cost Building Custodian (1) $35,000 Front Desk/Gym Attendant (3) $90,000 ($30,000) Babysitter (hourly) TBD Program Instructors* $15,000 Total New Staffing Cost $140,000 Note: Pay rates were determined based on current city job classifications and wage scales. The positions listed are necessary to ensure adequate staffing for the center’s operation. It is assumed that many of the existing full-time staff will have center responsibilities as well. Position cost includes required benefits. No provision has been made for a manned concession stand or Tots room operation. * Program instructors are paid at several different pay rates and some are also paid

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per class and many will be run by existing staff. This makes an hourly breakdown difficult. General programs consist of fitness, teen activities, senior classes, general

interest classes and other misc. programs. Maintenance and Operation Cost Associated Cost Office supplies 2,000 Maint./repair/mat. 7,000 Janitor supplies 2,000 Rec. supplies 5,000 Concession supplies 1,000 Uniforms 500 Printing/postage 500 Resale items 2,000 Membership ID equipment 1,500 Utilities (gas, water, sewer, elec) 69,905 Insurance 30,000 Communications 2,400 Contract services** 8,000 Advertising 1,000 Training 1,500 Dues & subscriptions 500 Trash pick-up 2,000 Bank charges*** 4,000 Total M & O Cost $140,805 Grand Total of Annual Operation Cost $280,805

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** Contract services cover maintenance contracts, control systems work, and contract

labor. *** Includes charges for credit card use and fees for electronic funds transfer.

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Section II - Revenues The following revenue projections were formulated from information on the specifics of the project and the demographics of the service area as well as comparing them to state-wide statistics, other similar facilities, and the competition for recreation services in the area. Actual figures will vary based on the size and make up of the components selected during final design, philosophy of operation, fees and charges policy, and priorities of use. All revenues were calculated using a reasonably conservative approach. Revenue Projection: Category Revenue: (based on a low/moderate fee schedule) Fees Daily Admissions 26,000 3 Month Passes 16,200 Annuals 110,000 Rentals* 9,490 Total $161,690 Programs** Sport/movement 30,000 Classes 2,500 Total $32,500

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Category Revenue: Other Resale items 2,000 Spec. events 2,500 Concessions*** 3,500 Vending 3,500 Babysitting TBD Photo ID 1,500 Total $13,000 Grand Total Annual Revenue $207,190 * Rentals Multi-purpose meeting rooms- $50/hr. x 25 rentals = $3,750 Gym- $90/hr. x 2 hrs/wk x 18 wks= $3,240 Teen Center- $50/hr. x 25 rentals = $2,500 ** Figures are based on assessing fees that are at least 50% higher than the total cost of operating the program. General programs consist of fitness, instructional classes and sports programs. *** Concession revenues are based on the city being paid a percentage of the gross sales

to cover utility costs and other expenses. Concessions could be operated by others depending on the event.

Note: No revenue has been shown from community organization use of the center, although it is expected that these groups will be charged for facility usage at the established rate.

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Section III - Expenditure - Revenue Comparison This represents the anticipated operating budget for the second year of operation. Category Expenditures $280,805 Revenues $207,190 Difference -73,615 Recovery % 74% This operation pro-forma was completed based on the best information available and a basic understanding of the project. However, there is no guarantee that the expense and revenue projections outlined above will be met as there are many variables that affect such estimates that either cannot be accurately measured or are not consistent in their influence on the budgetary process. Future Years: Expenditure - Revenue Comparison: In most recreation facilities the first three years show tremendous growth from increasing the market share of patrons who use such facilities, but at the end of this time period revenue growth begins to flatten out, however in Port Aransas, with such a small fitness market, this “market share” growth will be negligible. Additional revenue growth is then spurred through increases in the population within the market area, a specific marketing plan to develop alternative markets, the addition of new amenities or by increasing user fees.

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Section IV - Fees and Attendance Projected Fee Schedule: The fee schedule has been figured utilizing an approximate 25% fee differential between city residents and non-residents*. Revenue projections and attendance numbers were calculated from this fee model. Category Daily 3 Month Annual Res. / N Res. Res. / N Res. Res. / N Res. Adults $5.00 $8.00 $60.00 $75.00 $200.00 $250.00 Youth $2.00 $3.00 $30.00 $38.00 $100.00 $125.00 (3-17yrs.) Senior $3.00 $4.00 $40.00 $50.00 $125.00 $155.00 (65+) Family** N/A $75.00 $95.00 $250.00 $315.00 *Since second home owners (not classified as “city residents”) are paying the vast share of the bond debt, perhaps they should get the “resident” rate??? ** Is defined as parents or legal guardians and their dependent children living in a single

dwelling. Note: Annual passes require a monthly automatic withdrawal option from the holder’s bank account to encourage sales.

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Attendance Projections: The following attendance projections are the basis for the revenue figures that were identified earlier in this report. The admission numbers are affected by the rates being charged for residents and non-residents, the facilities available for use and the competition within the service area (which did not factor in the final rate structure). The figures are also based on the performance of other similar facilities in other areas of the State. These are averages only and the yearly figures are based on 310 days of operation. Fee Type Daily Passes 3-Month Passes Annual Passes Youth Resident 1,800 25 150 Youth Non-Resident 720 20 24 Adult Resident 1,800 17 209 Adult Non-Resident 720 30 32 Senior Resident 720 15 97 Senior Non-Resident 720 200 40 Family Resident N/A 5 63 Family Non-Resident N/A 5 25 Total fees generated $26,000 $16,200 $110,000 Total Yearly Fees $152,000 Note: 15% participation was used in projecting all four “resident” categories. This report weighs annual passes more likely to be purchased by residents and reverses the trend for non-residents placing their highest passes purchased in the “Daily” column. The report also places a high number on the senior non-resident 3-month pass indicating where we anticipate Winter Texans falling into. The non-resident projections are very difficult to predict so a low conservative number was used. We do think the non-resident adult numbers will be much higher than this study projects. Though the Daily Pass annual numbers seem like a high target to hit, in actuality, only $84.00/day is required to hit the target number so we think it a reasonable target. Attendance fees for other events, programs, and spectator functions is more difficult to predict and has not been included in this study.

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Section V – Hours of Operation The projected hours of operation of the community recreation center used in this study are based on 310 days of operation, and are as follows: Monday - Friday 6:00am to 9:00pm Saturday Noon to 9:00pm Sunday Closed Hours open per week: 84 Hours usually vary some with the season (longer hours in the winter, shorter during the summer), by programming needs, use patterns and special event considerations.

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Section VI - Project Recommendations The following section details specific recommendations for the Port Aransas Community Recreation Center project. Remarks are grouped by areas of interest. Programs and Facilities: The design, image and quality of the community recreation center has a direct impact on its ability to attract and keep customers. Thought should be given to the building layout as it pertains to crowd control and access, during the final design phase of the project. A visible open design, which highlights the different activity areas and encourages participation from the user as well as the non-user, is essential to generating community excitement and revenue. As much natural light as possible needs to be incorporated into the design while not compromising safety and promoting and maintaining energy efficiency in every way possible. The intent is to build a "smart building" that gives the city the most for its money and the user a sense of quality and value. Programs- Special events are an important aspect of any facility but they are difficult to base consistent revenue on. They can be very disruptive to users and care must be taken to evaluate the benefits and problems caused by such activities. The revenues generated from these programs are not always worth the time and effort to put them together. The center should not be designed specifically to handle the once a year event or activity but should have the versatility to adapt to these needs within reason. Long term programming and facility needs of the school district, community, businesses, and other institutions should be identified and integrated into the operations plan for this facility. The success of indoor community recreation centers is dependent on developing a broad based appeal to the general public. The needs of youth, adults, seniors, and families must be considered and their individual concerns and issues addressed. Programs that are intergenerational in nature and those that are specifically oriented towards certain population segments will both need to be developed. The needs of the business community must also be considered if this market is to be developed and served. It is important to realize that the center must have a balance between program and drop-in use of the various components of the facility. The gym and weight/fitness area are of particular concern. If these areas do not have substantial times set aside on a daily basis for drop-in use then revenues generated from daily use and annual passes will be in jeopardy. For example: A weight lifting class should be limited in size to run concurrently within a time opened for drop-ins also. Budget and Fees: The success of this project depends on a number of budget factors, which need special consideration. An operational philosophy must be developed and priorities for use must be clearly identified. The revenue figures contained in this document are based on the principal that the facility will have a balance between drop in use and programmed activities. A goal of consistently covering 74% of operational expenses with revenues should be attainable but there is little to no possibility of

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recovering all the operating expenses through facility revenues. It must be realized that most of the recreation centers around the nation that have been built in the last ten years are not covering their operating expenses with revenues. Maximizing revenue production should be a primary goal. Care must be taken to make sure that a fees and charges policy is consistently followed. No form of revenue production should be given away. All uses by organized youth sports groups and other community organizations should include a market driven user fee (or rental fee) to help offset the cost of operating the center. Fees- The revenue projections were based on the concept of having a resident and non-resident rate. The difference between resident/non-resident fees is approximately 25%. A non-resident fee that is more than 50% tends to exclude these individuals from participating in the facility or its programs. It is estimated that 25% to 45% of all users could be non-residents of the city. To adequately administer a resident/non-resident fee program a resident photo ID program needs to be put into effect. This requires a resident to buy a photo ID to speed identification and resident verification at the check-in counter. The costs and revenues of such a program have been figured into the operations budget. Consideration will need to be given as to how to classify second home owners. Fees paid for individual programs do not allow the user to utilize the center on a drop-in basis. A method of combining program fees and drop in use allows an annual pass holder to purchase a "fitness rider" for $150.00, which gives them unlimited access to any fitness class during the time their pass is valid. Some centers actually include “free” fitness classes as part of the benefits of having an annual pass. Other centers give a discount to all annual pass holders (usually 15% to 20%) for programs and services. A similar rider may need to be developed for drop-in baby-sitting and/or a baby-sitting punch card introduced. The payment of the drop-in fee should allow the user access to all areas of the center that are open to drop-in use. There should not be separate fees for different portions of the building (such as the gym or weight room). A senior discount fee schedule was developed for the center, but it should be considered as a marketing tool rather than a discount based on need. Another option is to offer a limited morning or daytime discount rate that would be available to anyone using the center during this slower period of the day. This would work much like a senior discount without having to label it as one. With the fee structure that has been proposed, it will be necessary to develop a scholarship program for those individuals that cannot afford the basic rates. An established criteria such as eligibility for the school lunch program should be utilized to determine need rather than spending the time and aggravation of developing and administering a new system. To promote the sale of annual passes it is absolutely essential that a system be set up that allows for the automatic withdrawal from the pass holder’s checking account of a monthly portion of the annual pass payment. Without this option, it will be nearly impossible to meet the projected sales of annual passes. In addition, charge cards need to

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be accepted for all programs and services offered by the city. A computerized registration process must also be introduced to speed registration transactions and improve annual pass management. Pre-selling annual passes – Approximately 3 to 6 months before the center opens there must be a program in place to begin the pre-sale of “charter passes” with a savings incentive to promote sales. A goal should be to pre-sell between 25% and 50% of all budgeted passes prior to opening the center. Marketing plan- A marketing plan for the facility and its programs is essential. This document should target specific markets, programs, facilities and user groups. It needs to be an active document that is utilized by the Facility Director to guide all marketing efforts. This plan should be updated yearly. Special emphasis must be placed on promoting the sale of annual passes to establish a strong revenue base. The business market should also be a major focus of the marketing effort as well. Staffing- Staffing costs are the biggest single operating expense and alternative options need to be investigated if costs are to be significantly reduced. The use of volunteers, trading facility use for labor and other similar ideas, deserve consideration as methods to reduce staffing budgets. The pay rates for both part-time and full-time personnel are based on current city employee wages for similar positions. It is important to budget for an adequate level of staffing in all areas. One of the biggest mistakes in operations comes from understaffing a center and then having to come back and ask for more help later. Maintenance/cleaning staffing is of particular concern and is most often where cuts are made. Detailed job descriptions should be written for all staff and areas of responsibility need to be clearly defined. An adequate training fund is essential to a well-run center. An emphasis needs to be placed on the importance of image and customer service in all training programs. The key to opening a community center and have it operate smoothly is hiring the necessary staff well in advance and having them well organized, properly trained and comfortable with the buildings features. They need to be ready to hit the ground running with policies and procedures in place, and a marketing and maintenance program under way.

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Section VII - Appendixes Pg. 17 New Staff Hours Pg. 18 Programs and Facility User Groups Pg. 19 Current City Bond Debt Model Pg. 20 Bond Tax Impact Analysis Pg. 21 Electric and Gas Cost Pg. 22 Open Format Utility Calculation Pg. 23 – 24 City of Clute facility rates Pg. 25 City of La Porte facility rates Pg. 26 City of Plano facility rates Pg. 27 City of San Marcos facility rates Pg. 28-29 City of College Station facility rates Pg. 30-31 City of Conroe facility rates

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New Staff Hours: Time Hours Employees Days Total Hours Per Week Facilities Attendant Mon.-Fri. 6am – 10am 4 2 5 40 Mon.-Fri. 5pm – 9pm 4 2 5 40 Mon.-Fri. 10am – 5pm 7 1 5 35 Sat. 1pm - 9pm 7.5 2 1 15 Total 130 hours Note: This two-person team would always have a person stationed at the front reception desk and a “rover” staffer that patrolled the entire facility providing oversight and cleaning as needed. Existing P&R staff would supplement this team during normal work hours M-F 8am – 5pm. Custodian Attendant Mon.-Sat. (time varies) 6am - 4pm 3 2 4 30 Total 30 hours Grounds Maintenance (will be covered by existing crews) Grand Total New Staff Hours 160 hours

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Programs and Facility User Groups General Programs (not including “open gym/weights”) League Basketball

League Volleyball League Indoor Soccer Movement Fitness (Yoga, Stretching, Palates, Aerobics, Dance, Gymnastics, Cheer)

Personal Trainer Weight Training Teen/Youth/Senior Activities (classes, games, movies etc.)

General Interest (Arts & Crafts, Classroom) Rentals (Birthday, Reunions, Weddings, etc.) Before/After School Program Summer Camp Program Sports Clinics Sports Camps Misc. (tots room, martial arts, etc.) Note: Many programs and classes will be on a contractual basis with the center, where the facility will take a percentage of the revenues charged and collected. These programs have not been shown in this budget as a result.

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Documents

City of Port Aransas Recreation Center Feasibility Study ... Center Feasibility Study... · Port Aransas Recreation Center Feasibility Study City of Port Aransas Admin Executive Summary