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HomeMy WebLinkAboutMinutes - 10/1/2007 - Finance and Personnel Committee FINANCE AND PERSONNEL COMMITTEE MEETING `.. Monday, October 1, 2007 Aldermen's Conference Room, 6:30 p.m. In Attendance:Committee Members: Chairman Alderman Murgatroyd, Alderman Peterson. and Alderman Schaefer. Absent: None. Also in Attend;�nce: Mayor Low, City Administrator Maxeiner, Assistant City Administrator Hobson, Director of Finance Black, Director of Parks and Recreation Merkel, Superintendent of Recreation Witt and City Clerk Jones. Chairman Alderman Murgatroyd arrived at 6:41 p.m., explaining he was detained in traffic. He called the meeting to order at 6:42 p.m. Discussion Re ardin Recreation Center Finance Director Black reiterated to the Committee that the topic of a community recreaxion center has been discussed:�t the Council level on a number of occasions over the past decade. Funding construction of the recreation center has been an issue that continues to merit discussion because of continued increasing construction costs to build the type of facility needed in the City. Director Black informed the Committee that what the City needs to consider imtially is whether revenue sources are sufficient to incorporate operation of a recreation center into existing operations. Further, he stated it is also important to consider other benefits, such as the fact that the City has been struggling to find adequate space for existing athletic and recreational programming and the relocation of some Parks and Recreation l)epartmex�t staff would create needed space in the Municipal Center. � Analyses have r�een performed by staff detailing operating expenses, operating revenues and a potential operating deficit. Finance Director Black outlined each analysis as follows: �qerating Ezpenses Director Black c�utlined the operating budget for the Parks and Recreation Department noting the current expense and re�enue budget for the 2007/2008 fiscal year. He indicated that the Parks and Recreation Department cun ently receives approximately $1.5 million in General Fund revenues, in addition to the program revenues generated for department operations. Director Black informed the Committee that a recreation center would add appro�umately$520,000 to the Department's annual operating expenditure budget. Personnel costs would increase $316,500 for two full-time staff and additional part-time employees to staff the facility. Included in the full-time employee budget are a fitness manager and a maintenance/janitorial position. He sta.ted tha.t part-time employees would be utilized for clerical, fitness center aid and maintenance/janitorial responsibilities. Director Black stated that line items costs for maintenance and repair are based on data provided by architects Sente and Rubel and budgeted expenses for other municipally-operated recreation centers. Oaeratin�Revenues Director Black i�iformed the Committee that estima,ted additional revenue that would be generated in the first year of operations for the center would be approximately $345,300. Program revenues could be expected to increase by $80,000, with existing programs expected to increase in both the athletic and recreational pro�;rams. Other miscellaneous revenues including concessions, special events and room rentals a.re expected to generate an additional$10,000. � Finance and Personnel Committee Meeting � October 1, 2007 Page 2 Fitness Center memberships are expected to generate approrcimately $273,600. Director Black noted three different revenue estimates for membership, which aze dependent upon the typical percentage of the service area population that has purchased memberships at other public facilities. The annual membership revenue is based on 1,250 mernbers, or 5%of the City's population. Rates and membership levels were developed following the completion of a survey of other public facilities and health clubs operating in the azea. The fee structure provides for a monthly membership rate and an annual membership rate at a discounted price. Potential Onerating Deficit Director Black reiterated that the operating budget indicates an increase in expenditure of$520,000 and an increase in revenues of$345,300, leaving an operating deficit in the first full year of operation of $174,700. In an effort to reduce the deficit,the City could consider adjustmerns to the proposed operaxing expense and revcnue plan,or look at subsidizing operation of the facility with other revenues. Several options could be considered regarding the reduction of staffing costs. One possibility would be to use existing department administrative staf�, relocated to the recreation center, who would assume front desk duties during regular business hours. This would reduce the need for part-time sta.ff, reducing the wage and benefit costs. Another option that could be examined is hiring contractual janitorial staff to clean the facility, rather than hiring a full time staff person. This would result in some cost savings, but would require monitoring by existing maintenance staff. � Director Black indicated that revenues could be increased significantly by adjusting membership rates and utilization of initiation fees (i.e., the City could choose to utilize only a monthly rate and charge an initiation fee). This option would generate an additional$100,000 in revenues not including initiation fee revenue. Tlus type of structure is often used in private fitness centers and YMCA facilities. He noted the issue of rates could be sensitive because the cerrter would be municipally-operated and higher rates would likely reduce the number of inemberships. Director Blacked noted subsidizing operations of the facility with existing General Fund revenues could also be considered. He stated the recreation facility would provide a long-term financial benefit by provided neec3ed office space for Parks and Recreation Departmeut staff, which in turn allows the Police Department to expand within the Municipal Center, rather than potentially requiring construction of a new facility. However, Director Black noted in the short-term the City is limited by property tax caps and faces some reductions to its sales tax base. He noted that currernly the Parks and Recrea.tion Department is looking to adjust its fees for Parks and Recreation programs, which could potentially generate an additional$40,000,to be used to fund the recreation center's operations. Director Black summarized, stating staff is seeking direction from the Committee regazding how to proceed with the Recreation Center project. Some of the questions posed by staff are: • Does the Committee want staff to further consider operations costs, such as sta,ffing levels and other variable costs? • Should the membership fee structure be revised, including the types of inemberships and the amount of fees? • Does the Committee want sta.ff to look at other sources of revenue, whether existing or new, to address a potential operating deficit? � Finance and Personnel Committee Meeting `, October 1, 20C�7 Page 3 Responding to Chairman Murgatroyd's inquiry, City Administrator Maxeiner stated the $520,Q00 does not address construction costs or debt payment; it pertains only to operations. Superintendent of Recreation Witt informed the Committee that revenue and expenses were factored into the$80,000 amount relating to new programs. Responding to further inquiry from Chairman Murgatroyd, Superintenderrt Witt stated that figures relative to access to the fitness center or gym only were a11 over the board. Therefore,the initial figures submitted to the Committee are an attempt to keep the information as general as possible. Superintendent Witt opined she believes athletics and fitness will increase the cunent figure by 50%. Director Black informed the Committee a service area would have to be determined to better ascertain revenue. Inquiries were made by the Committee regarding conservative calculations and resident versus non- resident fees. Superintendent Witt stated that during the research it was discovered tha.t the difference in resident and non-resident fees was approximately 25%. Responding to an inquiry from Alderman Peterson regarding the school district boundary population, Chairman Murgatroyd indicated he was unsure, but would guess the figure to be between 35,000 and 40,000 individuals. � Alderma.n Peterson inquired if the burden on existing Parks and Recreation Department staff would be too onerous with additional da.y-to-da.y clerical duties associated with the fitness center. Chairman Murgatroyd suggested it was too early to become concerned with the minutiae regarding administration of the center. He requested the Committee focus on whether there is sufficient revenue to move forward with the proposed project or, altematively, is the deficit small enough that the City can support the project. Responding to an inquiry from the Committee, Director Black stated the figures presented were a best estimate based oa projections. Responding to an inquiry from Alderman Peterson regarding a recreation center without a fitness center, City Administrator Maxeiner stated the fitness center is the driving force of the project. Alderman Peterson expressed concern regarding the number of fitness centers in the vicinity. City Administrator Maxeiner informed the Committee that the research conducted by staff was done in communities with comparable competition. Chairman Murgatroyd requested staff refine the numbers, quantify some of the details and retum to the Committee at a future date with the information. The da.tes of October 29, 2007, or the following week, November 5, 2(N�7 at 6:30 p.m.,prior to the regular Council meeting were suggested. � Finance and Personnel Committee Meeting �, October 1, 2007 Page 4 Adiournment Motion by Peter�on, seconded by Schaefer,to adjourn the meeting at 7:27p.m. Aye: Murgatroyd,Peterson, Schaefer. Nay: None. Absent: None. Motion carried. Respectfully submitted, ,�� � � - Steven C. Murgatroyd, Chairman � \...