According to a Cash Flow Analysis over a five-year period, the Discovery Bay Community Center is expected to operate at a deficit of over $199k per year which will be funded by the Landscape and Lighting Zone 8 tax assessments.
The analysis also states that the level of unconstrained funding for the Community Center, the Zone 8 ending fund balance will become negative in Fiscal Year 2016/17. The expected FY2014/15 expenses include $254k while staff salaries are expected to hit $142,000 (56% of community center budget).
Not happy with the five-year plan, the Discovery Bay Community Center committee worked on a third option before Wednesday’s meeting (not available in time for the report–however, we included it below), Table 3A and 3B highlights a constrained five-year budget with full staffing. However, this model also does not include capital projects within the community center, inflation for staffing such as salaries and benefit increases. Mark Simon stated that under its current form, these tables were not “realistic”.
It should be noted, this project does not include $400,000 in community center funds.
Provided below is a cash flow analysis of the Town of Discovery Bay Community Services District’s (District) Community Center. The Community Center is currently operated on a limited basis and the District is evaluating options for expanding operations to better serve the residents.
The following sections describe the revenues, expenses, and financial planning assumptions used in the analysis. This memorandum includes only operating revenues and expenses. BWA understands that the Community Center may have capital outlays in the future and is expecting some grants and capital reimbursements. BWA did not include these capital expenses and revenues in the cash flow projection.
The major funding source for the Community Center is the Landscape and Lighting Zone #8 tax assessments which collect about $460,000 annually. Budgeted for FY2014/15, the Community Center will increase occupancy and programming resulting in increased revenues and less reliance on the tax assessments as a source of funding. New and expanded revenue sources include food sales, facility rental fees, and programming. The District expects increased occupancy with Water and Wastewater staff offices and District Board meetings being hosted at the Community Center in the foreseeable future.
In calendar year 2014, the District anticipates offering a number of classes, sports, and fitness programs including Zumba, ballroom dancing, yoga, art classes, soccer, tennis, and continued public access to the swimming pool. The FY2013/14 budget assumed a 5-month operating period spanning from January 1, 2014 to June 30, 2014 (winter/spring period). The District estimates program revenues ranging from $8,400 to $19,500 for this period based on low and high participation, respectively.
For FY2014/15 and beyond, the District will offer programming on an annual basis consisting of three 4-month periods (fall, spring, and summer). BWA scaled the District’s 5-month programming estimate to a 4-month period. BWA estimates that each period will generate between $6,400 and $14,600 in revenues. Assuming moderate (average) participation for each of the three annual periods, the District is estimated to collect $31,400 in FY2014/15. Beyond FY2014/15, BWA estimates programming revenues to increase by 5% per year as the District promotes and advertises the Community Center.
Rentals and Goods Sold
The District estimates revenues of $4,200 in FY2014/15 from facilities and grounds rentals and goods sold (concessions). BWA estimates that these revenues will increase in the coming years as the Community Center expands operating capacity and increases advertising.
One other potential revenue source for the Community Center is reimbursements for office space for Water and Wastewater staff and for the hosting of Board of Directors’ meetings. BWA estimates a reimbursement of $50 per meeting and 24 meetings per year. BWA estimates the Water and Wastewater office space reimbursement at $250 per month based on about 165 square feet of office space rented at a cost of $1.50 per square foot. The Community Center is also anticipated to collect a utilities reimbursement of $100 per month. In total, BWA estimates reimbursement revenues of $5,400 annually
For FY2014/15, the District estimates operating expenses of $254,200 for the Community Center reflecting a full year of expenses. Staff salaries and benefit costs are $142,000 or about 56% of the Community Center budget. Other expenses include repairs, maintenance, facilities upkeep, utilities, and other costs.
The FY2014/15 staffing cost of $142,000 (full time staff, part time staff, and benefits) includes a new employee and extended hours to fully operate the Community Center.
Repairs, Maintenance, and Facilities
BWA understands that the District has recently conducted a minimal level of capital improvements and that the Community Center is in generally good condition. In the future, major maintenance issues will be conducted as capital outlays. BWA projected facility upkeep costs to remain relatively stable over the next five years assuming the existing building continues to remain in use.
The utility expense reflects water, power, and garbage service to the Community Center. These expenses are expected to increase by 4% reflecting approved water rate increases and assumed inflationary increases for power and garbage service.
BWA projects increases of 10% in training costs for the first two years of the cash flow projection. This increase reflects recruiting, training, and retention of volunteers under the expanded operating capacity of the Community Center. Volunteers are a less stable workforce with high turnover rates that can result in high training costs.
Cash Flow Projection
The Landscape and Lighting Zone #8 budget is shown in Table 1A and the projected revenues and expenses of the Community Center are summarized in Table 1B. BWA expects the Community Center to operate at a deficit of over $199,000 per year which will be funded by the Landscape and Lighting Zone 8 tax assessments. At this level of unconstrained funding for the Community Center, the Zone 8 ending fund balance will become negative in FY2016/17.
Tables 2A and 2B show a constrained budget option with lower operating costs for the Community Center. Under the constrained option, the Community Center deficit is projected at over $160,000 per year. As Table 2A shows, the constrained budget option can be absorbed by the net revenues of Zone 8.
Another hot topic for the evening was the fact the community center committee revisited six-options as to the future of the community center. Ultimately, staff was pushing for Option 5 where they would allocate $30,000 to facilitate a January 1, 2014 opening.
This option was presented at the most recent Community Center Committee meeting on September 10, 2013. This option calls for the basic renovation of the existing facility, paint of the front facade, the installation of walls to create up to two additional offices, the removal of the exercise flooring in the exercise room, and the purchase of tables, chairs, and basic equipment to conduct a minimum level of programming and rental opportunities. This is estimated to be approximately $15,000.00 to $20,000.00 and could be accomplished relatively soon. This option would meet the short term goal of adding programming, relocating parks and landscape staff to the site providing a day-time presence, and the ability to have a functional Community Center at a nominal cost while long term site and facility options are vetted.
Committee President Kevin Graves stated the purpose of the $30,000 was to make the community center functional.
“We are making it a functional building so we can move forward with programming we have had much interest in. It might be a good time; you guys have put a lot of hard work into the activity guide. All these programs in the guide are actually committed by people who want to do it, these aren’t just filling in space there are actually programs people have committed to in order to be successful but we have to have a building in order for these programs to move forward and the public to engage in the community center. To engage in the community center, we have to have programs,” stated Graves. “It’s a circle…. We have spent close to a million dollars on this project; we want people to use it.”
Mark Simon proclaimed that he is 100% for the community center but that he doesn’t like surprises–such as the pool where costs increased and delays occurred.
“There is nothing I hate worse than to vote on something, the pool just sticks with me more than anything else. You vote on something, then 30-days later your look at it again, and 30-days later you are looking at it again. And then 45-days later you are voting on it again. I want to avoid that. I would like for just once someone to look at this, and say it’s going to cost $29,685 give or take 10% I am a happy camper,” said Simon. “I am just tired of surprises.”
The committee ultimately decided to increase the $30,000 renovation to a “Not to exceed $80,000 budget” for renovations and furnishing so they can open on January 1, 2014.