Ballard*King Report Feasibility Study for Mount Vernon’s Proposed Wellness Center.

Ballard*King ReportBallard*King Report

Feasibility Study forFeasibility Study for

Mount Vernon’s ProposedMount Vernon’s Proposed

Wellness CenterWellness Center

Facility Components – City WebsiteFacility Components – City Website

Facility Components – p. 3Facility Components – p. 3

A preliminary program plan has been developed by Sauter A preliminary program plan has been developed by Sauter Baty Associates for the Community Wellness Center and Baty Associates for the Community Wellness Center and it includes the following possible components.it includes the following possible components.

Gymnasium with trackGymnasium with track Swimming pool (with lap lanes, zero depth entry, and Swimming pool (with lap lanes, zero depth entry, and diving)diving) Fitness equipment areaFitness equipment area Group Exercise roomGroup Exercise room Classroom (divisible)Classroom (divisible) Conference roomConference room Support spaces (locker rooms, office space, lobby and Support spaces (locker rooms, office space, lobby and storage area)storage area)

Additional documentsAdditional documents

First draft report received April 2014First draft report received April 2014

Second draft report received May 2014Second draft report received May 2014

Operations study by Ballard*King for “The Operations study by Ballard*King for “The W” at Wartburg College from year 2000W” at Wartburg College from year 2000

First and second draftsFirst and second drafts

First draft was more frank concerning the First draft was more frank concerning the problems of scaling this project to a community problems of scaling this project to a community of our sizeof our sizeSecond draft had softened in language to make Second draft had softened in language to make the project seem more feasiblethe project seem more feasibleBoth drafts and the final report rely heavily on Both drafts and the final report rely heavily on demographic data to make a case for building demographic data to make a case for building the facilitythe facilitySecond draft has “aggressive pro-forma” Second draft has “aggressive pro-forma” disclaimerdisclaimer

DisclaimersDisclaimers

Second draft – page 45Second draft – page 45

“ “An aggressive approach to estimating use An aggressive approach to estimating use and revenues from membership/pass and revenues from membership/pass sales and programs taking place at the sales and programs taking place at the facility has been used for this pro-forma”.facility has been used for this pro-forma”.

DisclaimersDisclaimersFinal draft, page 70: Final draft, page 70:

““This operations pro-forma was completed based This operations pro-forma was completed based on general information and a basic on general information and a basic understanding of the project with a basic understanding of the project with a basic program and concept plan for the center. program and concept plan for the center. As a result, there is no guarantee that the As a result, there is no guarantee that the expense and revenue projections outlined above expense and revenue projections outlined above will be met will be met as there are many variables that as there are many variables that affect such estimates that either cannot be affect such estimates that either cannot be accurately measured or are not consistent in accurately measured or are not consistent in their influence on the budgetary process. their influence on the budgetary process.

Ballard King’s “W” predictionsBallard King’s “W” predictions

Ballard*King included “The W” in the final report Ballard*King included “The W” in the final report as a comparable facilityas a comparable facilityThey were also the consultant who provided the They were also the consultant who provided the operations feasibility study for “the W” in 2000operations feasibility study for “the W” in 2000The feasibility study made predictions about The feasibility study made predictions about operational losses that are off by a factor of 5operational losses that are off by a factor of 5Wartburg currently receives a total of $600,000 Wartburg currently receives a total of $600,000 per year in TIF funds from the City of Waverly per year in TIF funds from the City of Waverly for a) $150,000 for running the City’s Recreation for a) $150,000 for running the City’s Recreation program, and b) $450,000 to cover the cost of program, and b) $450,000 to cover the cost of operational shortfall. This ends in 2016 and operational shortfall. This ends in 2016 and Wartburg will assimilate the shortfall into their Wartburg will assimilate the shortfall into their own budget.own budget.

Can anyone predict sports club Can anyone predict sports club financial performance with financial performance with

demographics?demographics?

23% of the Ballard*King report is 23% of the Ballard*King report is demographic datademographic data

Following the “service areas” methodology Following the “service areas” methodology I ran calculations using demographic data I ran calculations using demographic data tools available onlinetools available online

Comparisons were made using population, Comparisons were made using population, age distribution, and income distribution age distribution, and income distribution versus number of season pass holdersversus number of season pass holders

My demographics sourceMy demographics source

Secondary Service Area – p. 22Secondary Service Area – p. 22

SecondarySecondary Service AreaService Area

Population vs membershipPopulation vs membership

Age Distribution vs MembershipAge Distribution vs Membership

Income Distribution VS MembershipIncome Distribution VS Membership

Correlations?Correlations?

There is no correlation between the There is no correlation between the “service area” population and “service area” population and membershipsmemberships

There is no correlation between age There is no correlation between age distribution and membershipsdistribution and memberships

There is no correlation between income There is no correlation between income distribution and membershipsdistribution and memberships

Wellness Center and TaxesWellness Center and TaxesProperty tax increase to cover operation shortfalls Property tax increase to cover operation shortfalls

andand debt service shortfall from LOST III debt service shortfall from LOST III

““Aggressive” optionAggressive” option

$100,000 home – $100,000 home –

$138.88 annual increase$138.88 annual increase

$250,000 home –$250,000 home –


““Conservative” optionConservative” option

$100,000 home –$100,000 home –


$250,000 home –$250,000 home –


Should we believe the projections? We do Should we believe the projections? We do so at our own risk.so at our own risk.

Should we tax people who can’t Should we tax people who can’t afford to use the facility?afford to use the facility?

Sales tax (such as LOST) is a regressive tax Sales tax (such as LOST) is a regressive tax that pushes the tax burden unfairly onto lower that pushes the tax burden unfairly onto lower income familiesincome familiesThe cost of capital and operational shortfall is The cost of capital and operational shortfall is going to be paid by renters and lower income going to be paid by renters and lower income residents who own their homes who cannot residents who own their homes who cannot afford to join the facilityafford to join the facility

It is not morally right to put this tax on It is not morally right to put this tax on persons who cannot afford to join a luxury persons who cannot afford to join a luxury sports club.sports club.

Who can afford to join?Who can afford to join?

Property Values in Mt. VernonProperty Values in Mt. Vernon

Possible StakeholdersPossible Stakeholders

City of Mount Vernon ($2.5 million)City of Mount Vernon ($2.5 million)Cornell CollegeCornell CollegeMt. Vernon school districtMt. Vernon school districtYMCAYMCA

Stakeholders will be required to commit Stakeholders will be required to commit substantial dollars to both capital project substantial dollars to both capital project costs and the operations shortfall which costs and the operations shortfall which will continue long into the future.will continue long into the future.

Stakeholders with $$ are criticalStakeholders with $$ are criticalThe overall Secondary Service Area population is still somewhat The overall Secondary Service Area population is still somewhat undersized to support a significant public wellness/recreation undersized to support a significant public wellness/recreation center. As a result, to enhance the market, partnerships with center. As a result, to enhance the market, partnerships with other organizations (college and schools) will be important. p. 40other organizations (college and schools) will be important. p. 40

The key to having this proposed wellness/recreation center become The key to having this proposed wellness/recreation center become a reality is the establishment of equity partners with a number of a reality is the establishment of equity partners with a number of other organizations in the Mount Vernon area. p. 41other organizations in the Mount Vernon area. p. 41

It will be difficult to bring this project to a reality unless there It will be difficult to bring this project to a reality unless there are other equity partners. p. 41are other equity partners. p. 41

Part of the reason for bringing in additional partners for the project is Part of the reason for bringing in additional partners for the project is the need to have additional funding sources for the center. p. 41the need to have additional funding sources for the center. p. 41

It is expected that the college would provide capital funding for the It is expected that the college would provide capital funding for the competitive pool and other support amenities and would contribute competitive pool and other support amenities and would contribute operational funding... p. 41operational funding... p. 41

StakeholdersStakeholders

City of Mount Vernon ($2.5 million is the number in City of Mount Vernon ($2.5 million is the number in the report)the report)

The City of Mount Vernon won’t have $2.5 million The City of Mount Vernon won’t have $2.5 million for this project until FY 2018 or FY 2019for this project until FY 2018 or FY 2019

And this is true under the following assumptions:And this is true under the following assumptions:No more spending on infrastructure projectsNo more spending on infrastructure projectsNo costly emergencies, lawsuits, etc.No costly emergencies, lawsuits, etc.Economic conditions remain the same or Economic conditions remain the same or improveimprove


Cornell CollegeCornell College

Cornell’s strategic plan Cornell’s strategic plan includes attracting includes attracting hundreds more students hundreds more students which meanswhich means

More classroomsMore classroomsMore dormsMore dormsMore professorsMore professorsMore parkingMore parking

““We need to know what we need to We need to know what we need to support the additional number of support the additional number of students we expect to come, and students we expect to come, and the additional academic the additional academic programming and co-curricular programming and co-curricular programming, and in what order programming, and in what order we need to improve and modify we need to improve and modify facilities to integrate all of these. facilities to integrate all of these. We have to figure out how we’re We have to figure out how we’re going to deploy our monetary going to deploy our monetary resources carefully in order for resources carefully in order for the deployment to go in the deployment to go in conjunction with how the college conjunction with how the college changes over the next 10 years.” changes over the next 10 years.” ~ Jim Brown, leader of Cornell's ~ Jim Brown, leader of Cornell's Master Planning Group from Master Planning Group from Cornell eReport, Fall 2013Cornell eReport, Fall 2013


Mt. Vernon school districtMt. Vernon school district

Mount Vernon public schools have stated their Mount Vernon public schools have stated their priorities to be priorities to be A new multisport complexA new multisport complexA new auditoriumA new auditorium

This was discussed, along with the possibility of a This was discussed, along with the possibility of a $10 million bond, in the July 31 Mt. Vernon-$10 million bond, in the July 31 Mt. Vernon-Lisbon Sun newspaper.Lisbon Sun newspaper.


YMCAYMCA

I have sent a copy of the Ballard*King report to I have sent a copy of the Ballard*King report to Bob Carlson, President and CEO of the Metro Bob Carlson, President and CEO of the Metro YMCA.YMCA.

I also invited Bob to this meeting and to submit I also invited Bob to this meeting and to submit comments to me for this meeting if he could not comments to me for this meeting if he could not make it. make it.

There still may be an opportunity with the Y as a There still may be an opportunity with the Y as a stakeholder and that should be pursued.stakeholder and that should be pursued.

To summarize…To summarize…

Demographic information is not a valid predictor Demographic information is not a valid predictor of the financial performance of a sports clubof the financial performance of a sports clubAs proposed, there would be people who are As proposed, there would be people who are taxed to pay for the sports club who cannot taxed to pay for the sports club who cannot afford to join itafford to join itThe budget of the sports club would add more The budget of the sports club would add more than 50% onto the total City budgetthan 50% onto the total City budgetIt is quite possible that the predicted financial It is quite possible that the predicted financial performance of the Wellness Center will be performance of the Wellness Center will be significantly worse than stated in the report, significantly worse than stated in the report, based on past predictions and the performance based on past predictions and the performance of the comparable facilities in the reportof the comparable facilities in the report

Summary, page 2Summary, page 2

Public sports clubs with pools tend to lose a lot Public sports clubs with pools tend to lose a lot of moneyof moneyThe City cannot be a stakeholder in this project The City cannot be a stakeholder in this project until FY 2018 or FY 2019until FY 2018 or FY 2019It is unclear at this time if there are any other It is unclear at this time if there are any other stakeholdersstakeholdersThe proposed facility will lose between $300-The proposed facility will lose between $300-$500K per year long into the future$500K per year long into the futureOperating the Wellness Center at a loss will Operating the Wellness Center at a loss will cause a significant and permanent property tax cause a significant and permanent property tax increaseincrease

For further information and For further information and discussion please visitdiscussion please visit

billniemi.orgbillniemi.org

Ballard*King Report Feasibility Study for Mount Vernon’s Proposed Wellness Center.

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Transcript of Ballard*King Report Feasibility Study for Mount Vernon’s Proposed Wellness Center.