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Home My WebLink About2014-11-05 PACKET 08.A. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #Q� DATE 11/5/14 Q , PREPARED BY: Parks and Recreation Zac Dockter ORIGINATING DEPARTMENT DEPARTMENT HEAD *****��******��****:��****:��*****:�****:�,�***��*** COUNCIL ACTION REQUEST Consider authorizing staff to purchase indoor turf and netting for use at the Cottage Grove Ice Arena. STAFF RECOMMENDATION Authorize staff to purchase indoor turf and netting for use at the Cottage Grove Ice Arena_ BUDGET IMPLICATION: $115,000 $100,000 BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION DATE REVIEWED APPROVED DENIED ❑ PLANNING ❑ PUBLIC SAFETY ❑ ❑ � ❑ PUBLIC WORKS � PARKS AND RECREATION 2/10/14 � � ❑ ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ ❑ � ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS � MEMO/LETTER: ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS �`. / � ' -�---- � a � i -" City Administrator Date ****�*�*********:�**:�*�**********�*****��******�* H:1Turfllndoor Turt StudylAction Form - Turf.doc Cy� Cottage J Grove � pride andP�osperity Meet To: Honorable Mayor and City Council From: Jordan Hirman, Ice Arena Manager CC: Zac Dockter, Ryan Schroeder Date: October 15, 2014 Subject: Ice Arena Indoor Turf Introduction The 2015 budget allocates $115,000 for the purchase of artificial turf at the Ice Arena. During budget workshops, Council asked for more details from staff prior to purchase. Backqround In 2014, Parks and Recreation staff worked on the development of the "2014 Cottage Grove Athletic Facilities Improvement Work Plan" and the "Cottage Grove Ice Arena Business Plan" (both adopted by the Parks Commission and City Council). Both plans identified the need for indoor turf for the youth athletics community. To meet this need, the Cottage Grove Ice Arena has identified the installation of indoor turf in its west rink as a revenue growth opportunity. Need The athletic community currently has limited space in which to conduct off-season workouts for spring, summer and fall sports. Essentially, local school gymnasiums are the only available spaces for these activities during months in which outdoor fields are unavailable (typically November through mid-April). However, most gym space is allocated solely for school programs, basketball and volleyball. This is an understandable policy since those are the "in- season" sports and all other sports should be considered secondary uses. However, that facility use policy leaves little to no availability for sports such as baseball, softball, soccer and lacrosse. And for these programs to remain competitive, some level of off-season conditioning is necessary. Currently there are over 3,000 youth from the community participating in the affected programs. When compared to the Ice Arena's resident customer base of 600, the potential increased exposure of the Ice Arena to its residents is approximately 500°k. Considering the Ice Arena is a facility built and paid for by the citizens of Cottage Grove, there is certainly some value in considering an alternate use of the facility that expands its service to the community. In comparison to peer communities, the majority of communities in the metro area do provide indoor turf options to its residents. As indoor turf opportunities become more popular, the City may wish to consider providing this type of facility in order to maintain competitiveness in recreational facilities and youth athletics. Although the significance of youth athletics can be controversial, they do inherently play a role in building community pride, building friendships (parents and kids) and keeping youth active and healthy. For a brief comparison, below are the communities nearest to Cottage Grove and the indoor opportunities provided to their residents. Hastings Indoor turf at Ice Arena Woodbury Bielenberg Sports Center — Field House SKILLS Sports Center— Private Indoor Turf Facility Inver Grove Heights Indoor turf at Ice Arena South St Paul Community Center gymnasium West St Paul WSP Sports Center— Indoor bubble Eagan Indoor turf at Ice Arena Rosemount Rosemount Community Center— Indoor Bubble Oakdale None Vadnais Heights Vadnais Sports Center — Indoor Bubble Ice Arena Indoor Turf Financial Analvsis Financial Proiection Revenue: Turf Rental Revenue $32,000 Expenses: Utility Savings ($10,000) Opportunitv Loss (3 vr avq of ice event sales) $26,000 Net profit of turf compared to ice rental $16,000 Capital Expense $100,000 Return on Investment 6.25 years The financial analysis represented above should be reviewed with the following key points in mind: 1. Revenue estimates are built upon the following assumptions a. Rental rate at the mean of comparative communities; $90 per hour b. Rental sales targeted at 85°k of prime hours and 5°k of non-prime hours. Staff believes these forecasts to be conservative. i. Prime Hours: Weekdays: 5-9pm Weekends: 8am-8pm Park High School; 330-5:OOpm (20 rental hours) ii. Prime Season: March 1— April 30 iii. Non-Prime Season: May 1— September 30 iv. Below is the matrix used to determine revenue forecast (w/target highlighted) RentalRate/hr Revenue Forecast $100 $90 $80 75%prime,0%non-prime $27,600 $24,840 $22,080 75%prime,5%non-prime $32,420 $29,178 $25,936 85%prime,0%non-prime $31,280 $28,152 $25,024 85%prime,5%non-prime $36,100 $32,490 $28,880 95%prime,0%non-prime $34,960 $31,464 $27,968 95%prime,5%non-prime $39,780 $35,802 $31,824 100%prime,0%non-prime $36,800 $33,120 $29,440 100%prime,5%non-prime $41,620 $37,458 $33,296 c. In the interest of forecasting conservatively, no revenue was added for concession or vending sales growth. However, with increased traffic in the facility one could reasonably assume residual benefit to these sales areas. 2. Expense estimates are built upon the following assumptions a. By not operating the west rink chiller system, staff conservatively estimates utility savings to be 30°k with a cash savings of $10,000 per year. These numbers are based on past utility usage experience. They do not take into account environmental changes (this analysis currently errors on the side of cool and dry temperatures), mechanical problems or rising energy costs. All of these would increase utility savings by shutting down the chiller system. b. By removing ice from the west rink, there is an opportunity loss through the elimination of ice rental sales. The three year average for ice sales during the proposed turf prime season along with tournament concession sales totals approximately $26,000 in potential revenue loss. However, iYs important to note that these revenues are almost solely derived from the AAA hockey programs and have been in decline each of the past three seasons due to decreased demand in March and April. The trend in AAA hockey is moving towards reduced ice time in March and April for players to mentally and physically recover from the winter season. AAA hockey is a privately operated industry and thus the trends are constantly changing. Conversely, the prime hockey season programs are affiliated with USA Hockey which is a much more policy driven and stable program. Thus ice sales can be relied upon and forecasted much more accurately. Although the Ice Arena has been very successful in housing AAA programs and events, the business relationships are always volatile and customers tend to come and go each season. This makes relying on revenue from any one AAA group difficult to do. Each season, Ice Arena staff will lose events and/or programs and then work diligently to attract new customers to fill those voids. Staff believes the indoor turf customer base to be much more reliable year in and year out. c. Staffing levels are projected to remain the same for turf and ice rentals. However, there is an increased opportunity for labor savings considering that ice maintenance needs are inherently higher than turf maintenance needs due to ice resurfacing and mechanical maintenance. However, with increased customers in the facility, there may be residual effects such as facility cleaning and other customer service needs that may be necessary. Thus, no labor savings are currently projected in the above financial forecast. Staff Recommendation Consider authorizing staff to purchase indoor turf and netting for use at the Cottage Grove Ice Arena. 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