Wet Dreams? Part 2
02 Friday Feb 2018
Written by parry034 in Budget/Financial, Parry Sound, Reflections
Tags
Archipelago, Capital Investment, Carling, Infrastructure, McDougall, Opinion, parry sound, Pool, Seguin, Taxes
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In this post I examine the likely costs of a municipal ‘pool’ for the area. I don’t discuss the impact of any costs on individual municipalities in this post. the focus is on the likely costs to build and operate a pool.
I can assure you that any numbers I present will be wrong. I am not doing an in-depth cost analysis; that is best left to an experienced consultant. My estimates are based on figures I believe to be credible and reasonable. As appropriate, I provide links. That qualification of being wrong doesn’t mean you should dismiss the analysis if you disagree with it or embrace it unquestioningly if you agree. It’s an estimate and the basis for constructive discussion. Looking at the numbers also helps identify issues that are worth discussing and digging into. There will be two more posts on this topic so assume that the more obvious questions and implications of this analysis will be discussed in a later post.
Cost Estimates – Introduction
Building and operating a pool comes with four sets of expenses. The Build. Annual Operating Costs. Programming Costs. Reserve Fund.
There is also Revenue to consider, unrelated to property tax implications. That is discussed in this post as well.
The Build
I will toss out the number of $11 million to build a swimming pool. This is based on an article from 2013 concerning a pool being considered by the community of Exeter in Southwestern Ontario. The estimate for their pool was $9-13 million. I have taken the midpoint and ignored inflationary increases over the past 5 years. This is for an indoor pool, not an aquatic centre.
This seems to be a reasonable, albeit conservative estimate, in my opinion. I note that the Town of Parry Sound will be investing $1.2 million in the Stockey Centre just for new siding and a metal roof. A replacement of the ice surface at the Bobby Orr Community Centre also comes in at $1.2 million. The Stockey Centre cost $12 million to build in 2002, about $16.5 million in 2018 dollars. The retaining wall rebuild along Bowes Street cost about $200,000. This was the replacement of an existing wall that was less than 100 metres in total length and varied from ground level to no more than 2.5 metres in height. Things are remarkably expensive when you start moving earth.
It’s possible to lowball costs and take a cheaper path, but that always comes back to bite as we have learned in Parry Sound. That $1.2 million upgrade at the Stockey Centre is required because the current roof leaks and needs to be replaced. And the siding at the Stockey Centre hasn’t held up as well as promised. In the case of the Bobby Orr Community Centre, the town was required to spend tens of thousands to repair/replace/upgrade the heating in the stands. The BOCC roof will cost thousands more to repair/replace/upgrade. It’s possible to do things on the cheap, but it usually turns out to be a mistake.
So, let’s work with $11 million to build a municipal pool. This is for a 25 metre five lane pool, no high diving area, and no separate children’s pool. Certainly no separate fitness area.
None of the local communities, certainly not the Town of Parry Sound, can afford to pay $11 million upfront for a new pool so we need a debenture. There are many considerations in estimating the cost of a debenture, but what the heck, let’s go for it.
The first thing to be decided is the length of the debenture. I understand this generally is the expected lifetime of the facility. An indoor pool is different than most other buildings. The humidity and pool chemicals have a profoundly negative impact on longevity. A pool can last longer than 20 to 30 years, but the maintenance costs rise substantially as the pool ages. For the purpose of our discussion I will optimistically assume a 30-year bond.
An $11 million, 30-year, bond will cost about $700,000 per year at an interest rate of 3.5%. This 3.5% rate seems to be a reasonable, albeit optimistic, figure. Over the length of the loan the pool would have cost $21 million, or about twice the initial cost. That’s not too bad for the privilege of stretching it out over thirty years. It’s likely that inflation will average more than 3.5% over this period. People too easily forget the 1980s and the 10-15% interest rates people paid for mortgages.
If we drop the repayment period to 20 years, the annual cost rises to about $750,000. Keeping the period at 30 years and using a 5% interest rate raises the annual payments to $870,000.
Operating Costs
This is perhaps the weakest part of this analysis and most subject to correction. Nonetheless, the costs can be approached from a couple of different directions with results that hopefully come close.
There is some public information available regarding operating costs. The article mentioned earlier estimates operating costs at about $450,000 in 2013 dollars for a pool that should meet Parry Sound’s needs. Inflated to 2018 this number rises to about $480,000. These figures reflect post user revenue. So, the numbers need to be increased accordingly. Adding in $220,000 for user related offsetting revenue raises the annual operating costs rise to about $700,000. Looking more closely at the article the costs could be higher or lower by $100,000.
Another way to estimate the costs is to look at the cost to operate the Bobby Orr Community Centre, for which we have figures. There is a huge difference between the two in terms of costs. The BOCC only actively operates for a bit more than half the year with an ice pad. For the other months the building is maintained and available for public use, but with much lower expenses. A pool in contrast needs to be actively maintained 12 months a year. While an ice pad, once in place, mostly stays that way, a pool probably needs to be refreshed several times a year with a much higher use of water. Pools also require chemicals. But they don’t require a Zamboni type machine.
Reviewing the 2018 Town of Parry Sound budget documents I see that the BOCC has expenses in 2017 estimated at $700,000 and revenues of $180,000, for a net of $500,000 (don’t worry about the arithmetic, it only needs to be close because it certainly won’t be correct). The Stockey Centre had estimated operating costs of $1.5 million in 2017.
Okay, let’s go with $700,000 for the annual operating expenses for a municipal pool. This seems a bit low in comparison with the Bobby Orr Community Centre expenses, but it’s an estimate.
Some guidance is offered by looking at the Bracebridge 2017 Budget figures for their Sportsplex. This is a much larger operation and has annual expenses of $1.6 million, including the facility’s debenture principal and interest of about $640,000. This debenture figure is lower than I would have thought, but it may have been lowered by upper level government grants, which is also possible for a pool in the Parry Sound area. Operating expenses then were about $1 million. The two largest items were wages ($330,000) and hydro ($260,000).
Programming Costs
If you have a pool you need to offer programming. This ranges from management, to instructors, to life guards. I wanted to exclude a person to lead the programming activity as there is already such a person in Parry Sound, but if this is a joint municipality project we need to add in a programming head who also keeps an eye on the operations and makes sure things don’t screw up.
Let’s add in about $150,000 for programming costs. This would include 0.5 FTE to oversee the pool operation and programming as well as instructors and life guards. As a reference point the Town of Parry Sound spent a little more than $60,000 for their outdoor Swim Program in 2017 that stretches no more than three months.
Reserve Fund
It would only be prudent to add in another $100,000 per year to a Reserve Fund for the pool. This is what’s suggested in the 2013 Exeter article, and while a little low it’s close enough.
Total Expenses
Adding together all of the costs for a pool we end up with annual expenses of about $1.5 million. If you add together the expenses I’ve estimated in the earlier sections, you will see that I’ve rounded it down a bit. It only needs to be close and I’d rather not be seen as trying to stick a knife in the project.
But, that’s only part of the total package. There will be revenue and there are likely to be grants. We can depend on user fees, so let’s take a look at them. Upper level government grants are a different issue that are likely and not guaranteed. Local fund raising is possible, but it will represent a drop in the bucket. I have rounded down the expenses in part, so let’s forget about local fund raising being a meaningful dollar contributor. It’s more likely to be a symbolic statement of support than a financial pillar upon which to build the argument for a pool.
There is also the possibility of a partnership with the YMCA or the school board. One has expressed interest, and the other hasn’t. Neither would really change the costs, nor what we would pay in our taxes. The YMCA still needs to get money to pay their part, either grants or user fees, and the school board would probably just raise the education portion of our taxes to pay their part. I may be pessimistic, but beyond some operational efficiencies in a partnership, these groups won’t improve the bottom line in terms of tax impact. Expenses don’t just disappear, and revenues don’t just appear.
Revenues
This is a bit trickier, because it assumes a price structure for pool use. The only indirect experience I have is with the Sudbury Y. It offers a full family membership, including pool use, for $1,200 per year. The Bracebridge pool offers family pool use for a specified 45-minute period each Saturday for 3 months for about $60. That adds up to about $240 per year. And that is for one 45-minute period on one defined day per week. In Barrie it’s $17 per family per visit. Once a month would be $200 per year, once a week would be $900 per year.
Okay, let’s go with the annual use fee from that Exeter 2013 article of $1,000 per year per family. What that offers in terms of pool access is not clear. The article also mentions a total of 300 memberships, and $300,000 in revenue. All of those numbers carry much more baggage than I want to discuss in this post. I’ll get to that in the last of this four-post series. For now, we’ll assume $300,000 in revenue, the equivalent about 20,000 family days of use at $15/day.
The Net/Net
Add the numbers together and we end up with a net cost of $1.2 million per year for a municipal pool, not an aquatic centre or recreational complex. That is before any upper level government grants.
If the Town of Parry Sound was to shoulder the full expense Town taxes would increase by about 12%. It would be a one-time increase that would carry forward, but unlike the infrastructure reserve expense it would not be increased each year.
Next
In the next post I’ll take a look at the various municipalities, their assessments, their tax rates, their ‘demographics’ and the local political issues that might impact any decision or support for a municipal pool. The last post will be the most interesting in my opinion as I consider some of the human aspects of a municipal pool, particularly how it might impact different segments of the community.
Hang tight Ryan. The next post should be up by the middle of this coming week.
No comments
February 2, 2018 at 7:43 pm
A plus factor to building a recreational Pool for the area populace would to be have Wausauksing and Shawanaga First Nations to be fully involved.
There has been no mention of this yet? These two entities could have a huge impact with their ability to arm wrestle ‘Federal’ Grants towards the building and maintenance of an Aquatic Center.
I say Aquatic center similar to the one in Bracebridge, not just a plain stand alone Pool, as we have some of those available to the Public now at area Hotels. If you are going to build it, don’t go on the cheap.
Also, the Board of Education ‘must be involved’ and the Aquatic Center ‘must be’ attached to that Super School to be built to make it fully usable by area youth.
If and when a Complex is built, it would not affect me one bit as this old geezer will not be here to pay for it. So my comments are just a lot of ‘fluff’ but worthy of consideration I would hope.
In any case, it would be shameful to saddle the town with another Stockey Center to shoulder on it’s own.
February 3, 2018 at 7:27 pm
1) Letters were sent to all First Nation Communities
2) There is NO space at the new school, http://www.pscomplex.com/pages/faqs
February 4, 2018 at 8:26 am
Thanks for the input.
February 4, 2018 at 10:45 am
Jo,
First off, I think this was a very interesting post. I’m impressed with the numbers you pulled together, and I’ll be honest, I didn’t anticipate the yearly operating costs to be quite that high, but now that we look at it, I’m sure you’re probably closer to correct than not.
I do think, though, that your analysis presumes one of two mistakes that I’m hoping are not made. Well, mistake is much too strong a word. Either of the ones I have in mind are not necessarily mistakes, they can be, in the right circumstances, perfectly valid ways of thinking. I just don’t think they are the best course of action here.
The first mistake – and to get the boring one out of the way, I’ll start with the one that’s unrelated to your post – is what I would call “playing it safe.” And by “safe” I mean “politically safe.” I’ve seen in other towns, too many other towns, this mistake happen. On the one hand you’ll have those who want the pool. On the other hand you’ll have those who think it’s an extravagant luxury that the town cannot afford. The politicians want to please both groups as much as possible – or at least lose as few votes from each group as possible – so they try to play it safe by, yes, building the pool, but they try to blanket it in as much politically safe insulation as possible: so first off, there will be absolutely no extravagance in this pool. None of that fancy, hollywood rockstar stuff, no siree, we will have just a plain jane, regular pool. It will be square, it will have proper lanes because – and here’s a great piece of safe political insulation – this pool is about health & fitness! Who can criticize health and fitness!? That’s why they couldn’t just build a trail, no, it had to be a “fitness trail” complete with random exercise stations that have, as far as I can tell, only ever been used by drunk teenagers on a lark. So, yes, this pool is about health and fitness, it’s very serious stuff you know, no extravagance here. So we’ll have proper lanes and dividers and a lap clock on the wall. It will only ever be used by one pudgy middle aged white guy trying vainly to regain the abs of his youth, but that’s ok, it all gives great political cover. So they’ll paint the walls a good, neutral colour – something really institutional, like grey. The change rooms will be straightforward. If they don’t confine themselves to merely putting hooks on the wall, then they’ll get those insert-a-loonie pay-per-use lockers, because that’s a responsible revenue stream, right? See, no waste here! Maybe, just maybe, they might put in a hot-tub, but they could never call it a “hot tub” because that sounds too much like decadence and extravagance, so instead they’ll call it a “therapy pool” and try to pretend like it’s only for people with strained sciatica.
Health and fitness isn’t the only safe cover they’ll use. Education and The Children are two other good ones – not even the most curmudgeonly critic can attack the children, right? (unless, of course, the children are all deaf and you’re a rich cottager who regrets building near an ATV track, but that’s another rant). So they’ll do things like build the pool onto or beside the school, and that way they can say this is a good responsible facility whose primary purpose is educating the children! They can talk about all the swimming lessons that are offered there, they can talk about rates of drowned children, they can baptise the whole enterprise into the noble cause of education.
All of that type of political safe-playing reminds me of my first year in residence at a private, donor funded school. The showers in the residence were typical institutional showers. They worked, they sprayed water, how much more could you want? They were the type of showers that the original builder could construct and still assure all the donors and fundraisers that their money was being spent reasonably and prudently – no extravagance here! The thing is, I’ve always had a massaging shower head. They really don’t cost that much more than a standard shower head, and I, for one, enjoy it a lot more. It’s not some health thing, I don’t do it because I have a bad back, or whatever, no, it is purely a hedonistic thing: I enjoy it. I thought some other students in the residence might enjoy it too, so I conducted a successful petition to the Dean, signed by the majority, to use some of our “student life” budget to replace the shower heads with massaging shower heads. When the Dean went for it, I couldn’t believe our luck! I shouldn’t have believed it, in any case. First off, they decided only to change-out half of the showers, because what if some guys still want plain shower heads? the Dean asked. But when the plumbers left after changing out the half they did do, we rushed in excitedly and our disappointment came on like a flood: they weren’t massaging shower heads per se, but rather those special disabled shower heads! As such, they did have a couple different pattern and flow settings just like massaging shower heads do, but they also came with pressure and temperature regulators (I guess being disabled means you’re also too stupid to not scald yourself!) and were mounted lower on the wall to be at better wheelchair height! When you used one of these, it felt less like a massage and more like someone peeing on you half way up your back. When I met with the Dean and explained that this wasn’t quite what we had in mind, she explained quite frankly that the donors would never forgive such extravagant spending as “massaging shower heads” and so covering it under the noble cause of “disabled accessibility” was the only way she could safely get it done. Safe for her, maybe, but for us it just resulted in facilities that no one really liked, no one enjoyed, and so as a result, no one used. Do we want to see that happen with the pool too?
There are three private pools within town range, and they do work perfectly well: they hold water, you can get wet. The reason parry sounderss still drive to bracebridge though is because the bracebridge complex offers more enjoyable amenities – and less ashamedly so! People want the extravagant. They want to be able to soak in a hot tub that is a hot tub. They want the luxury of a steam room. They want a taste of the high life in a real cedar lined sauna. They want to be able to relax on the deck an enjoy quality bistro fare – real drinks and food, not crappy arena coffee in a white Styrofoam cup! If we build a facility that meets these wants and desires, then people will come and spend their money on it. But no one’s going to pay to go to a dark dank institutional place so that they can swim a lap or two between schedule school classes and feel like they themselves are back in gym class again.
So that’s the first mistake I hope they can avoid. I’ll get back to the second one later.