Finishing the CoRec basement is a hot topic for the Council and for residents. It’s no secret that I am opposed to finishing the basement at this time, but it’s not because I don’t care about the needs of our children (I have four kids ranging in ages from 18 to 1) and it’s not because I don’t recreate. I do see the benefit of having additional recreational opportunities for our residents and I wasn’t opposed to using recreation impact fees and/or CARE tax funds for the basement. However, the recreation impact fees are now gone and we only have approximately $100,000 in CARE tax money, which doesn’t come close to the money needed to complete the basement. My concerns with using unrestricted funds for this are based on the following reasons.
1. Financial forecasting
I am waiting to receive a forecast of our financial needs for the next 5-7 years. I don’t believe in making big financial decisions without financial forecasting and I’m concerned that, as a Council, we don't have a clear idea of what needs we should be budgeting for over the next five years. Earlier this year we hired Bowen, Collins, & Associates to perform a utility rate analysis for us. In this analysis they state “based on the current plan [of increasing utility rates], the City will need to draw approximately $1.1 million from reserve funds to cover expenditures in the first four years of the plan before it is paid back in later years. It is recommended that the City verify it has adequate reserve funds to cover this need.” Recently, we’ve been told that our golf carts need to be replaced, which is not something we planned for. These are two things we know of, but what of those things of which we are not aware? What other needs does our City have over the next five years that we should be budgeting for and that we can pay for with unrestricted funds? I don’t have an answer to this question as of yet. Our financial director is working on this analysis for us. I am hesitant to spend unrestricted funds until we have a better understanding of our financial needs.
2. Profit/Loss on current programs
I am waiting to receive a copy of a profit & loss analysis for the current recreation programs and the Grill and this is something our finance team is working on. I’ve been told that our current recreation programs and the Grill are losing money, but I don’t know how much. In the 2013 budget we assumed both would break even and we will have to budget amend if either will need a subsidy due to losses. It is still early in the fiscal year and things may change; however, I’m hesitant to add more recreation programs if our existing programs are losing money. If we increase our costs (which finishing the basement will do) and continue to lose money then it stands to reason that the needed subsidy will also increase. I would prefer to first implement the suggestions from residents and the Golf Course Finance Advisory Committee on ways to increase revenue and see if we can get closer to breaking even before spending more money on something that is losing money.
3. Already over budget
From what I’ve been able to tell after reviewing agenda minutes and talking with residents, the original approval for the CoRec was to spend $2.1 million, then it increased to $2.5 million. In the end with changes and updates the total cost was closer to $2.9 million. The intent of the building was to function as a clubhouse, a recreation center, and an events center. It feels now like the message is in order to really make it work for all three, we need to spend another $300,000 - $500,000 to complete the basement and then it will be profitable and serve all three functions. We’ve already spent a considerable amount of money to accomplish this and residents were told that the current center would function as an events and recreation center. I feel we should allow more time to work out the scheduling conflicts before assuming we have to spend more money, especially as it is already almost half a million dollars over budget.
4. What is the potential?
We are told that there is a conflict between recreation and events as only one thing can be happening at the facility at a time, but if we finish the basement then we can have recreation and events occurring together. Maybe this is true and there is an opportunity cost to be considered by only having room for one or the other. However, I haven’t seen an analysis that realistically shows what the potential is. We couldn’t ask an investor to invest in our business by simply stating that we were going to have 1,000 new clients by the end of the year. We would need to show an understanding of the industry, our competitors, the market share, what was working and what wasn’t, and explain how we were going to meet that number. I’m not aware of an analysis showing what potential our CoRec has for events. How many events do other Utah County golf courses hold? How many receptions does the new center in Pleasant Grove hold each year? Are other golf courses realizing a profit when hosting events and tournaments? If we are going to be in the business of running an events center, then it’s time we start thinking like a business. I know that many businesses lose money before they begin to realize profits. However, we need to have a plan in place and an understanding of the business we are in before we are spending more money to accommodate more events.
5. Is this what residents really want?
Unfortunately, due to legal expenses we had to cut the Decisions Survey that was to be completed this year. I would’ve liked to ask about the basement as a portion of it is for a cardio room and a includes a plan for spin classes. Reading through the Decisions Survey done during FY 2011 there were two questions that stand out to me. The first was “Should the City provide adult recreation programs?” In that survey, 35% were in favor and 60% were against. The other question was “If adult programs were provided, would you participate?” 29% said yes and 65% said no. Additionally, we’ve had residents reach out to the Council expressing a desire for more park space. Our unrestricted funds can be used for anything, and after reviewing the last Decisions Survey and hearing from residents I’m not sure that the CoRec basement is something on which we should spend unrestricted funds. We did hold a townhall meeting to discuss this but there less than 20 residents who provided input during the public comment portion. It would be nice to hear from more residents on this issue.
Again, I am not opposed to recreation or the facility we currently have. As a mom, I appreciate all of the things the City does to make this a family-friendly community. I also realize that we are lucky to live near several other cities that also have recreation programs where my children can participate. I have thought over this topic for months and I’m just not at the point where I feel comfortable spending unrestricted funds without first resolving the five points listed above. I do realize I stand alone on this issue and I will support whatever is ultimately decided by the Council, but I felt it important to share my concerns so residents understand why I feel we should not finish the basement at this time.
