Budget gap for new pool grows by 50K
October 12, 2009 · Updated 9:02 AM
LANGLEY — The park district’s new pool and recreation center will cost more to build, more to staff and will have a larger operating deficit than earlier expected, according to a revised study released this week.
In the most recent financial report submitted by district consultant Geoff Anderson of ORB Architects, building costs for the proposed project have increased $200,000 to $15.4 million, mainly due to an adjustment in the predicted value of the dollar and construction costs in 2011, plus additional parking and landscaping.
More significant, however, is the deepening pool of red ink that’s expected after the facility opens.
Anderson predicts the first year’s net operating loss for maintenance and operations will be $154,856, or about $424 every single day of the year. Eight years later, as admission revenue increases, the pool project will still operate in the red, at $114,652.
The increase in the operating deficit is roughly $50,000 for each year of the new center’s operation, from 2011 to 2020.
The new numbers are not surprising. Parks officials had asked for the study to be reworked because it assumed 11,871 visitors from north Whidbey and Camano Island in the first year after the center opens. But some said the earlier study was overly optimistic in the number of people it would draw from outside the South End.
The new report does not include potential revenues from visitors from north Whidbey and Camano Island.
The report states that revenue will be generated through public admissions — predicted to be $3.50 per visit — plus income from lessons and rental of the facility. In the first year of operations, the center will generate a gross profit of $263,000, increasing to $323,000 in 2020, according to ORB.
Expenses are much higher, however.
Operation costs fall into six categories: payroll and benefits, maintenance and repairs, chemicals and general supplies, utilities and contingencies. Total operating expenses are set at $418,000 the first year, and the costs rise to $437,000 by 2020.
The complete study can be read online at www.southwhidbeyrecord.com.
Not everyone is convinced the report is as accurate as it should be.
“I still have some questions,” said Park Commissioner Allison Tapert. “Some of ORB’s numbers are a bit confusing and I’m asking Geoff [Anderson] for clear answers.”
Her particular concern revolves around staffing.
“We know that employee total expenses, and I want them to be as accurate as possible,” she said.
In order to cover these shortfalls, park commissioners said Wednesday they plan on asking for a 4-cent increase to their current M&O levy, which is up for renewal in February 2010. The idea is to allow the park district to meet its daily admission target of $3.50.
Each penny increase in the levy will bring in $40,000 of revenue, said Park Commissioner Matt Simms.
“Four cents allows us to raise $160,000, which will more than cover the deficit,” he said. “The idea is to have the revenue kick in at the ribbon cutting, just when we open the center to the public.”
The project includes an indoor leisure pool and an outside lap pool, plus a variety of recreational facilities unconnected to swimming.
To pay for the center, the district is asking South Enders to approve a 20-year bond measure of 17.4 cents per $1,000 of assessed property value on the November ballot.
Once the center is built, all the economic variables of operating and maintaining it will kick in.
Park Commissioner Linda Kast noted that should housing values rise in the next few years, then the impact to homeowners would be less.
“The bottom line is to have the levy on the Nov. 4 ballot so people can make a choice,” she said. “This is the most accurate survey we can make, and the vote total will offer irrefutable data. One way or the other.”
District officials are also concerned about the dismal economy and how voters will react to increased taxes. Even so, they stood by their decision to put it on the ballot.
Simms said that putting the aquatic and recreation center to a vote is the right thing to do.
“We’ve collected a great deal of public input over the years, but the only way to see how residents really feel is with a vote,” he said.
At an earlier meeting, Jim Nelson, the district’s bond- fund manager, laid out what the 20-year bond will cost South Whidbey taxpayers.
“For an owner of a house worth $318,000, the yearly payment will be
$82.14, or $6.85 a month,” Nelson said.
The expected M&O increase in 2010 would add another $12 a year.
The number is based on a 4-percent growth rate, below the historic average of 6-percent growth in Island County.
“Growth here has averaged from 4 percent to a high of 16 percent over the years, so these numbers are realistic,” Nelson said.
Simms said the numbers are fiscally conservative. “This is an appropriate scenario for us, and if construction picks up in the next few years, our interest rates will go down,” he said.
Tapert said she was reassured to hear Nelson’s review of the expected economic recovery.
“In looking at the state of the economy, especially in Snohomish County, it’s clear land prices are going down,” she said. “There’s a significant drop in new building, but the economy is cyclical and when it goes up, the levy rate will decrease.”
In the last five years, the district’s assessed value has grown at an average rate of 14.96 percent, Nelson said.
Upon passage of the bonds, the district will have three years to spend the bond proceeds to build the recreation center.
Voters will also decide the fate of other proposed property tax increases next month.
The park district will compete on November’s ballot with the Port of South Whidbey’s 9-cent levy lift to pay for the new marina in Langley.