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Center Market and Marketing....................................................................................................- 9- TargetedCustomers.................................................................................................................-9 - MarketAnalysis.....................................................................................................................- io - Center Branding and Marketing............................................................................................- 10 - NlarketingStrategy.........................................................................................................................................- 12- SalesTools......................................................................................................................................................- 12- MarketingBudget..................................................................................................................- i3 - Center Offerings and Hours......................................................................................................- 14- PartnerUsage........................................................................................................................- i4- Services and Products Offered.............................................................................................. - i5 - Hoursof Operation................................................................................................................- 16- Center Staffing, Operations and Maintenance.........................................................................- 18 - CenterStaffing.......................................................................................................................- i8 - Center Operations and Maintenance Expenses ....................................................................- 19 - ShootingRanges Operations...........................................................................................................................- 19- AdministrationFees........................................................................................................................................- 19- FacilityInsurance ...........................................................................................................................................- 19- Other Operating and Maintenance Expenses..................................................................................................-20- HEROCenter Financials...........................................................................................................- 21- FacilityRevenues...................................................................................................................- 21- Non-Partner User Fee Schedule......................................................................................................................-21 - SalesAssumptions..........................................................................................................................................-21 - Other Miscellaneous Revenue Sources...........................................................................................................-22- AnnualOperating Budget......................................................................................................- 23 - Appendix A: Proposed Non-Partner User Fees Schedule ........................................................- 24- Appendix B:Annual Operating Budget....................................................................................- 25 - Appendix C: Facility Operations Committee Work Plan..........................................................- 26- -3- DRAFT April3o, 2019 City of Woodbury, City Council City of Cottage Grove, City Council 83oi Valley Creek Road i2800 Ravine Parkway South Woodbury, MN 55125 Cottage Grove, MN 55016 Subject: DRAFT HERO Center Business and Operational Plan Honorable City Councils: On behalf of the HERO Center Facility Operations Committee, we are pleased to present the HERO Center Business and Operational Plan as recommended by the Committee for each respective Council's review and eventual adoption per the Joint Powers Agreement. This document will serve as our guide in the operation of this joint facility and provide the assumptions and estimates that establish the budget and financial goals. Assumptions are the cornerstone of this plan. They are used to establish facility usage, facility staffing, fee schedules, sales and more. It is expected that these assumptions will change as the HERO Center starts operations and as we further learn and test these assumptions in the market. The Committee has taken significant time and effort to evaluate available market information and evaluate our own use of the facility as partners. The Committee also has a commitment to each respective Council to provide an annual report on financial, operational and performance results of the HERO Center as part of the annual budget consideration. The Committee sincerely thanks the City of Woodbury and City of Cottage Grove City Councils for their on-going support of the HERO Center and our continued collaboration as intergovernmental partners. Additionally, this report would not have been possible without the excellent efforts of Woodbury Assistant City Administrator Angela Gorall working in collaboration with the project managers Deputy Director Gregory Rinzel and Assistant Director Kris Mienert along with the respective City Finance Directors Robin Roland and Tim Johnson. Respectfully submitted, � ��� ��� �� � - ��.,�� Clinton P. Gridley Jennifer Levitt City of Woodbury, City Administrator City of Cottage Grove, City Administrator -4- HERO Center Facility Operations Committee As established by the Joint Powers Agreement between the City of Woodbury and the City of Cottage Grove,the Facility Operations Committee consists of the following members. City of Cottage Grove Jennifer Levitt,City Administr�ator Peter Koerner, Director of Public Safety Robin Roland, Finance Director City of Woodbury Clint Gridley,City Administr�ator Lee Vague, Public Safety Director Tim Johnson, Finance Director Facility Operations Committee Supporting Staff The following respective City staff have also been instrumental in the development of this plan and the overall development of the HERO Center. Gregory Rinzel,City of Cottage Grove,Deputy Director of Public Safety Kris Mienert, City of Woodbury,Assistant Public Safety Director/Assistant Police Chief Angela Gorall, City of Woodbury,Assistant City Administr�ator Scott Seroka,City of Cottage Grove, Communications Manager Jason Egerstrom,City of Woodbury,Communications Manager -5- ■ �s o an ac rou n The HERO Center will be a jointly and equally owned, maintained, operated and managed facility by the City of Cottage Grove and City of VVoodbury.This includes all buildings, physical structures, equipment,fixtures and furnishings. The facility is located in the City of Cottage Grove adjacent to the Cottage Grove City Hall and Public Safety Building(10125 85th Street S outh, Cottage Grove). The center was authorized for construction in 2 018 and is scheduled for completion the fourth quarter of 2019. For the first few months the center is open, it is anticipated to only be used by Cottage Grove and VVoodbury with the goal of being fully operational and available for agency and public us age the first quarter of 2 0 2 0. Foundin Documents g .,,. , -d � �t'_ �!!�.��� ��_ ������� s�� �;.: `' �wc s��.a �� ���� - � �� ��ri: �t Y':+ : , c'a_�s�.. The follow�n are ke � i �� , - g y �e LL ,,:d � _'a�C' ` � " �+3 � 1 , . �#" � , ry �y � Y "-'R'�.k 'iS'� 1"� �t���,�`.� •.�'r�^���{, ,.+; ���.J� ..:� � , . >� �y., � �R .��� .� �--'+r '� �� 1 s.,� �.-F."a!@ ``�� �`"~/^'��y� _ �' yr^'� documents that should be ��� 4--� .� �-���r} a�� ���� �r-- � �_� �, _ _ � _ k. � � � '�'�'�',� _ ' � - �� n= ��- � t �;�NM�j ,:4 �si _ referenced as necessa as �� .-� � �� �� ��� �� ; �4 = � �� � ���� �,� �# . �: � _ . found�ng documents for the �_ � w _ � . - � � �. �w t �-. . , : : _ � ,. . __.... . � ��`�_� - ��� -� establ�shment of the HERO ��� � � . �` �� � �t � � , , _ ..._ �.. , , ., .:: . , � _ , ._ . � ���r , : � . . ,..x. ,.. �'S•p.��... . ., . : �.,'....f�.e.,,yry�+y i ..;�. • �:.�.r ` . � - .. t � ��il' Center. � _ _ _ - _ ti� _ , �. :� _ _ . . _ . . � �� �� '�.. .. 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Prepared by Interact Business Group in collaboration with Leo A Daly. ■ MMB Grant Agreement between State of Minnesota and City of Cottage Grove (detailing use of$9,500,00o State bond proceeds to fund the construction,furnishing and equipping of the HERO Center) ■ Joint Powers Agreement Between the City of Cottage Grove and the City of VVoodbury for the East Metro Public Safety Training Facility;August 2018 (terminating and replacing the 2016 Memorandum of Agreement) o Term of this agreement is for 10 years, commencing in 2018,with automatic renewal for additional5-years terms. Faci I it O erations Com m ittee Y p As established by the 2 018 Joint Powers Agreement, the Facility Operations Committee consisting of six members shall coordinate the joint use and operation of the HERO Center. The Committee was charged with the development of this Business and Operational Plan to be reviewed and adopted by each respective City Council. The Committee or designees shall then be responsible for implementation of this plan and day-to-day operations. -6- The Committee's ongoing duties include,but are not limited to the following: • Meeting annually to review and recommend updates to the Business and Operational Plan. • Recommending an administrator or manager for the center. • Recommending the pay plan for employees who work at the center. • Monitoring center finances,including but not limited to,regular budget to actual expendituresforoperations. • Approve agreements for operations,care and management of the center. • Advising City Administr�ators on related financial matters as deemed appropriate. • Resolve disputes that may arise with implementation of the Business and Operational Plan. • Coordinate fees for the partner cities as well as for other users. • Bring issues or recommendations forward to the respective City for informational purposes or for approval to oversee the maintenance,management and use of the center. • Recommend and annual budget and a capital improvement plan to each City Administrator. Facility Name This facility has gone by two different names during the course of its development. As of the writing of this plan,the official name of the facility will be the HERO (Health and Emergency Response Occupations)Center.The Facility Operations Committee will continue to look for other business relationship and sponsorship opportunities that make branding and finance sense for the center. Mission Statement and Key Goals The Facility Operations Committee,in coordination with a facility manager, are recommended to further define a guiding mission statement for the operations of the HERO Center. HERO Center Mission Statement To be deueloped by Facility Operarions Committee after hiring of a facility � manager. Key Goals The following are key goals with regard to HERO Center facility operations and finances. Operation Goals ➢ To protect property,preserve peace and life through providing the latest in public safety training. ➢ To support and further build collaboration of the integrated public safety model allowing all three disciplines to work cooperatively. -�- ➢ To serve the community while reducing costs through shared services. ➢ To support and create opportunities for hosting community-based safety education and training such as CPR,firearms,and recreational vehicle safety training. ➢ To support the tr�aining needs of existing employees of each partner and utilize the facility's assets as a recruitment and retention tool for long-term public safety staffing goals. ➢ To operate a facility that is consistently focused on achieving the highest safety standards for customers, employees and partners that use the HERO Center. ➢ To provide a flexible and high quality tr�aining facility providing customer-focused services with professional staff and efficient technology. ➢ Continue to cultivate partnerships with public safety agencies to maximize the HERO Center's market share and financial sustainability. Financial Goals ➢ Continue efforts to secure additional capital investment partners,members or customers. ➢ Once fully operational,to be financially self-sustaining. ➢ To provide tr�ansparent comprehensive financial reporting,planning and analysis. ➢ To provide sustainable income for needed capital asset replacements over time to ensure the long-term high quality of the center. Performance Measurement and Annual Reporting An annual report of performance measures and financial results shall be produced and reviewed by the Facility Operations Committee. After review by the Committee,the report shall then be presented to each respective partners governing body as part of the annual budget process. - 8- Center Market and Marketing With the financial goal of operating the HERO Center as an operation that is financially sustainable, it is critical to ensure there is a solid understanding of the existing market (competitors) and users of similar facilities. The establishment of the HERO Center is not creating new customers or bringing new services/products to the market. Essentially,there is a defined set of customers and agencies for these facilities and the HERO Center will need to define its unique value proposition to establish its own customers. Targeted Customers The following graphic provides a visual representation of the expected and targeted customer opportunities for the HERO Center. i • Agencies that have existing needs that aren't being . met by existing providers and are therefore being underserved. • Agencies that are having their needs met at other existing, but fully utilized, facilities. Taking market � share from those facilities to HERO. � � • Agencies that expand their training and education . requirements or standards due to HERO's offerings. . � • Educational institutions that offer public safery � training and education and their use of HERO to � complement or supplement their offerings. • ' • Public, non-profit and community use of the � facility. As soon as feasible, it is recommended that a targeted customer directory be established. This directory would include potential customers for further marketing of the facility through the methods noted in the Center Branding and Marketing section that follows. - 9- MarketAnalysis As detailed to the right,there are four other training facilities, all of , � , � �• which are located in the west `�e�«saFET` • ., . : . metro. Shooting ranges are also •' � ceNTeR— available at the Ramsey County / .o,• �` ' . Sheriff s Office and at an outdoor NORTH METRO location in Hudson,Wisconsin. , � . / HENNEPIN TECH � . '� Users of private for-profit , � ��'�"�'� clubs/ranges are also potential SOUTH METRO � , � - / customers for the public usage :� � / component at the center. $CALE � � � , Location and drive time to a s facility is anticipated to be a ' ' �,,,��, � primary market factor for both _ _ _ _ public and agency users. It is - -- - - estimated that a reasonable geographic market for the HERO Center is 3o minutes and possibly up to 45 minutes in driving time for those seeking the highest quality and a newer facility. In addition to the shooting range,the HERO Center will offer other opportunities for training for agency users. At this time, a more detailed analysis on market availability for other training uses has not been completed. It is anticipated,however,that the HERO Center's classroom spaces, particularly during the weekdays, may be challenging to rent since many agencies currently have available classroom space at their respective agencies. As was available,pricing provided to customers at these other locations was gathered and reviewed in development of the pricing strategy and fee schedule for the HERO ____-_ _ - ___ - Center. -�'� Center Branding and ��� ' Logo,so��ai � Marketin Customer Website g Service, Products, � As noted earlier in this plan,the official � sel`�i�es name of the facility will be the HERO �_ Center. However,it should be noted that Personal Experience, this may be subject to change should ' word of sponsorships and naming rights to the Mouth facility be negotiated in the future. The ��j name of the facility is a crrtical component of branding and marketing � and if changed at a later date would require a significant financial investment - � with a sponsor that enhances our brand. � The Communications Managers for both HERO Center Brand partner municipalities have been involved - 10- in furthering communications, marketing and branding of the center to date. It is anticipated that in the formative years of the center, staff resources from partners would continue to be relied upon for these efforts until they can be transitioned to center management staff. As shown in the graphic to the right,the HERO Center brand includes many components in addition to its name. Each of these brand components will need to be continually evaluated over time for their effectiveness in achieving the center's overall business str�ategy and goals. The following components are planned to be part of the HERO Center branding and marketing at this time. Implementation status is noted as well as any recommendations. Items listed are in general order of priority. • Branding Elements and Logo: The facility branding process and logo development is in progress by staff. Potential visual brand guidelines that include details on use of a logo and required colors,fonts, etc. when visually representing the center have been drafted. Branding elements will be used throughout the marketing str�ategy and in further promotion of the HERO Center. • Website:A page dedicated to the HERO Center has been established on the Cottage Grove parent website. However,this page provides only basic information about the proj ect and is not yet designed for sales or marketing of the facility. • Recommendation (IN PROGRESS): Complete a full review and website upgrade providing branding,sales materials and any information as may be necessary for customers. As of the writing of this plan,a separate stand-alone website is in development for the center(herocentermn.or�.As feasible the website should provide for online sales and reservations (at least for public gun range sales), likely linked to a separate online provider. • Recommendation fGoogle+/Search En '�ne Optimization): Steps are planned to be taken as necessary to ensure search engine optimizations for customers to find the HERO Center website.A current Google search results in media stories regarding the HERO Center. Customers need to be able to easily search and find the correct webpage for the HERO Center to advance marketing and sales efforts. • Social Media Presence: A social media presence,in addition to the website,will provide further exposure and recognition in the market for the HERO Center. o Facebook and'I�vitter: Identified as the higher priority for establishing a HERO Center social media presence. • Recommendation (IN PROGRESS): Staff is currently working on establishing a HERO Center Facebook and'Itvitter presence. o Video (YouTube):A HERO Center marketing video has been completed and has already been used to promote and market the center. • Recommendation: HERO Center should establish its own unique YouTube presence for posting of the marketing video and any future videos created. Creation of a second video is also recommended once the facility is fully constructed and operational that highlights the actual facility rather than just renderings. - 11 - Marketing Strategy The marketing strategy for the HERO Center is essentially to focus on our value proposition to potential customers and use the branding and marketing efforts as noted in the previous section to do sa The unique value proposition of the HERO Center includes the following What Customer factors: Unique Needs and Value ■ East metro location Cares About proposition ■ State of the art quality new facility ■ Competitive pricing What ■ Safe, security conscious What HERO Competition facility focused on health and Center poes Does Really safety of the user Really Well Well ■ Virtual simulator exceeding quality and customer experience expectations when compared to other available facilities ■ Providing public safety employees access and use of this facility as a recruitment and retention tool, supporting their training needs and expectations with the highest quality facilities ■ Flexible spaces allowing for complex and diverse training experiences with associated flexible pricing to meet customer needs ■ Facility offering multi-disciplinary and collaborate training spaces to provide realistic training simulations and experiences Sales Tools The following are sales tools that are anticipated to be used for achieving HERO Center sales goals in additional to the on-line marketing strategy: ■ E-mail marketing: General information and promotion, events, facility availability, etc.to the established targeted customer directory. ■ Facility tours/open houses: In-person promotion of the facility highlighting features and quality. Visits may also be facilitated by the hosting of regional training events attracting attendance from a larger geographic area. ■ Direct mailings: May include promotional materials and brochures or direct offers for tours or presentations to individuals or groups. ■ Conferences/events: A booth or presence at public safety events or conferences. o A HERO Center booth will be present at the Executive Training Institute and Law Enforcement Expo in St. Cloud in April, 2oi9. - 12 - • Print or digital advertising: Public safety related periodicals or professional association materials with a regional presence. o A featured article on the HERO Center was included in the Minnesota Police Chief Online magazine in March, 2oi9. • Presentations: Staff presentations to agencies or groups (use of marketing video and website availability should limit the need for this sales tool). • Phone calls: Cold calls to targeted customer directory. Marketing Budget Provided in the annual operating budget are funds estimated to be required for marketing. Higher up-front costs are anticipated for 2oi9-2o2o to address the marketing and branding needs of the facility as noted in the previous sections. - 13 - Center Offerings and Hours With the identification of the market for the HERO Center and potential customers,the next evaluation in the business plan process is determining how the facility will generally operate and what services it will have available to partners and customers. Partner Usage As of the writing of this plan,the City of Woodbury and the City of Cottage Grove are the only partner users of the HERO Center.As a partner, this gives priority use of the facility to the public safety employees from both cities. As designed in this plan currently, assumptions have been made on the usage requirements from each City for each major component of the center. For example, how many days or nights per year is required and/or requested in the virtual simulator by each City was calculated. As the business model was then built, the annual blocks of time needed from the partner Cities on the virtual simulator was excluded from the available capacity. Therefore resulting in the remaining available time blocks for sale on the virtual simulator.The following graphic details this example further, note that figures used are for illustration only and may be subject to change. Example of Partner Usage of HERO Center Virtual Simulator in 2020 •Total numUer of Total of i 920 1'entalUlocks � availaUle for zozo Rental Blocks •Not ln�luaing Available nights or weekends •Minimum rental \ Ulock of i hour .. � i,28o Rental I•Figure equals rentalblocks Blocks for available after Sale Pa�"e`°Se subtracted ' •Assumption that � 32o Rental oniy 25� of Blocks available rental blocks for sale Actually Sold �11 be sold in I Zo2o - 14- Services and Products Offered As a tr�aining facility,it is important to explicitly identify what tr�aining services and/or products will be offered at the HERO Center. This listing is also important as software is utilized for the reservation,scheduling and sales process. There is a set available quantity of each available product and it can't be oversold without negative impact to customers. Similar to the example of overbooking a flight,the customer experience can be significantly harmed if tr�aining spaces or services at the center are not efficiently managed consistent with available capacity. The following is a defined list of such services that will be offered at the center and have been modeled for this business plan: • Classroom Space A(5o seats) o Weekday,Weeknight and Saturday usage • Classroom Space B (5o seats)� o Weekday,Weeknight and Saturday usage • Shooting Range (large i2-lane) and Classroom o Weekday,Weeknight and Saturday public usage • Shooting Range (sma114-lane) o Weekday usage • Virtual Simulator o Weekday and Weeknight usage • Reality Based Training Space and Mats Room o Weekday and Weeknight usage • Mats Room ONLY o Weekday usage (only if reality based tr�aining space is not used) Again,estimated partner usage on each of the above listed center features has been calculated into the business plan. Partners will also have access to the center for time periods not shown above as a privilege of being a partner. For example,the sma114-lane shooting range will be sold to customers during weekdays only at this time. Partners have access to use this small range on an unlimited basis on weeknights or weekends as desired. It is anticipated that there will be additional sales opportunities and special requests received from customers on use of the facilities at HERO. It will be critical to utilize a scheduling system or software to identify each service and ensure a positive customer experience planning for adequate set-up,take-down and transition periods. 'Classroom space A and B can be combined for a single ioo seat space.Currenfly,this usage or potential sales were not modeled in this plan. - 15 - Hours of Operation The following are the established hours of operations for the HERO Center. A more limited hours of operation schedule may be implemented in the first and second quarter of 2020, however a full operations schedule (as shown below)is planned for mid to late 202o and later. These hours may be subject to future changes based on use of the facility and demand from non- partner users. It is understood that for many users there will be required preparation, set-up and take-down time required for some rentals and this time is included as part of the schedule for the facility. It is also anticipated that there will be some seasonal demands,particularly for the shooting range,which may be in the best interest of the facility to be flexible with hours of operation. Operations and agency sales may also be lighter in December and peak summer months. HERO Center Facility Operating Hours Summary Regular Weekday Saturday Operating Hours Sunday OperatingHours �orviYOPErv7'oPr�sirqforuse Operating ofrangeandclassrooms) HOUP9 730 AM-8:00 AM Facility opening/AM Training set-up 8:OOAM-9:OOAM 9:00 AM- 10:00 AM AM 4 hour block" AM 4 hour block" 10:00 AM- 11:00 AM 11:00 AM- Noon Noon - 1230 PM AM Training clean-up/take down 1230 PM- 1:00 PM PM Training set-up 1:00 P M-2:00 P M Facflity 2:00 P M-3:00 P M Closed 3:00 P M-4:00 P M PM 4 hour block" PM 4 hour block" 4:OOPM-5:OOPM 5:00 PM-530 PM PM Training clean-up/take down 5:30 PM-6:00 PM Evening Training set-up 6:00PM-7:00PM 7:00 P M-8:00 P M Facflity Closed 8:00 P M-9:00 P M Evening 4 hour block" 9:OOPM- 10:OOPM 10:00 PM- 1030 PM Evening Traning clean- up/Facflity closing *Actu sa es may e in sm er time oc s t an s own, epen ing upon e portion o t e aci ity eing so used. Note: When the facility is closed,it may be accessed and used by facility partners only if required training,safety and security measures are met. The hours of operation for the center on a day to day basis will significantly impact sales and thus the models used for providing revenue projections. Center hours also significantly impact staffing and thus expenses. While it may be advantageous to be as flexible as possible with - 16- center hours,clarity on set hours for customers,potential customers and staff will be required over time. For example,it may be challenging to retain staff if hours are based strictly on sales or are too inconsistent. - 17- Center Staffing, Operations and Maintenance Staffing of the HERO Center with day to day operational staff as well as necessary management oversight will be the most significant expense, in terms of operations, particularly as center usage increases as expected over the years. Staffing is expected to include at least one full-time position as well as several part-time staff and contracted services. The expenses related to staffing the HERO Center will be attributed to HERO, however the City of Cottage Gove would be the employer of any HERO Center employees. Any necessary administration expenses associated with being the employer would also be expensed to the center. Establishing necessary human resources,benefits and payroll functions separate from either partner is likely far less efficient than having a partner be the employer which has in place all the necessary functions and requirements for administering human resources. Center Staffing As currently planned in the annual operating budget,there are two staffing plans. One includes start-up/initial operations staffing expected in 2oig through early 202o and the second staffing plan includes expected necessary staffing at full operations. Both plans include the following three primary positions,with brief descriptions of each as listed. - - , , � - � - - - - - - - �1".i � _ _ _ - • Overall facility • Staffed almost • Customer manager exclusively at services • Supervisor of all firing range • Phone and/or staff • Ensures range on-line • Accountable for safety for all scheduling of sales goals users customers • Leads marketing • May conduct • Contributes to strategy some instruction day-to-day • Contributes to for customers operations& day-to-day • Assist as customer care operations& directed in day- customer care to-day operations The Center Manager would be the first position hired, ideally in mid-late summer of 2oig. It is anticipated that other positions will be hired in an incremental manner so that staffing is consistent with booked use of the center.Assumptions have been made in modeling staffing expenses based on the amount of full-time equivalent(FTE) staffing that is estimated to be required for each position. Range safety staffing will ideally be employees that have past experience in firearms safety, range operations, or are former law enforcement. While some training will be expected for this position(s), it will ideally be limited just to the details on HERO Center operations and range - 18- facilities. It should be noted that overall estimated range safety staffing was reduced by 30 percent for safety monitoring during the weekdays and weeknights when the range is in use by public agencies. The majority of law enforcement agencies using the ranges will be experienced with range safety and staffing is not planned to be provided just by the center,but largely by the agencies themselves. Front desk/scheduling specialists will not only be primarily focused on customer services,but will be well-tr�ained on the center's scheduling software. While some turnover is expected with any part-time position,a wage rate commensurate with the skills necessary for this position is planned to provide staffing consistency needed to maintain a positive customer experience. Center Operations and Maintenance Expenses The following section provides further details as shown in the annual operating budget with regard to HERO Center maintenance, operational expenses and planned or potential contr�acted services. Shooting Ranges Operations The operation and management of the shooting ranges will require special care and attention when compared to the other portions of the center. Expenses specifically required for the ranges is therefore itemized separately within the budget. As needed, additional more detailed maintenance plans or guides may need to be developed that are outside the scope of this document. Administration Fees As noted previously,the City of Cottage Grove is planned to be the employer of any HERO Center employees. As the employer,Cottage Grove will have expenses related to human resources management and administr�ation to be billed to the center. In addition,Cottage Grove would be the fiscal agent of the facility incurring expenses related to fiscal management,payroll and annual auditing. Additional administrative services that may be provided by Cottage Grove include Information Technology(IT) services and occasional legal expenses. These four areas (HR,finance,IT,legal)will be billed to the center at an agreed upon annual rate by the partners as shown in the annual operating budget. It has also been determined that Cottage Grove (through contractors or City staft)will provide exterior maintenance including snow removal and landscape maintenance. This is currently identified as a separate expense in the annual budget allowing for actual billing for services from Cottage Grove to the center. At this time,interior custodial services and basic internal building maintenance are planned to be provided by the City of Cottage Grove. As shown in the annual operating budget,building maintenance services are planned to be provided by City staff and are therefore included in the "Staffing"section of expenses. Custodial services are expected to be contr�acted for and are shown with other operating expenses. Facility Insurance The City of Cottage Grove shall procure and maintain policies of insurance for the center naming the City of Woodbury as an additional insured. Estimated costs for insurance are identified in the annual operating budget. - 19- Other Operating and Maintenance Expenses As detailed in the annual operating budget,there are several other operation and maintenance expenses anticipating for the HERO Center not identified previously. While care was taken in providing a cost estimate for these items they are subject to change once the center is operational and further experience is gained. -20- HERO Center Financials The City of Cottage Grove will serve as the fiscal agent of the HERO Center. At this time,it is planned that the HERO Center would be a designated special fund allowing for segregation of revenues and expenses from other City of Cottage Grove activities while also allowing for annual auditing similar to other City funds. Facility Revenues There are two primary revenue sources for the HERO Center including revenue from sales(both public and agency usage) and from other miscellaneous sources. Non-Partner User Fee Schedule Appendix A includes the draft proposed fee schedule for non-partner facility users.A three percent per year fee increase has been applied to years 2o2i and later.The establishment of these fees are partially based on fees currently in place at the South Metro Public Safety Training Facility and the North Metro Range(competition based pricing).The intent being that HERO Center fees are competitively attractive to users currently at those facilities. The new and high quality facilities at HERO may warrant a pricing strategy that is more aggressive due � � ., to the high quality(customer value- based pricing); however,this is not the pricing strategy being proposed at this time. _ It is recommended that packaged pricing should also be evaluated and considered to attract usage from � additional agencies. For example, rather than charging the fees as � � shown for range time one time block '' '" ' �, . �. at a time,the Center Manager would be able to provide packaged pricing with a potential percentage discount. Critical to such packaged discounts would be the need to also schedule the use of the facilities for such sales to ensure those customers'needs and expectations are met. The fee schedule and selected pricing strategy is under the purview of the Facility Operations Committee. Pricing as currently proposed is subject to further analysis and may change as approved by the Committee. Sales Assumptions As detailed in the Center Offerings and Hours Chapter,the center will have a set established listing of available uses it can sell to customers.Assumptions were modeled using this listing to build the estimated revenues as shown in the annual operating budget. It is not anticipated that the center will be able to sell ioo percent of its available capacity to customers. Therefore, for each of the services that can be sold a utilization percentage was applied. These percentages -21 - have significant impact on the overall revenue estimates. In general, conservative utilization percentages were used. However,if sales are more positive and if more aggressive marketing or sales techniques are applied then a positive revenue impact would occur. By year 2o2i,the center is expected to be staffed as if full operating hours were required. Therefore,increasing sales should not impact expenses required to staff the facility. The following chart details the utilization percentages for year 202o and 2o2i. For years 2022 and beyond,the same figures as used for 2o2i were applied to the budget model. Utilization: Percentage of Total Capacity Sold to Non-Partners, 202o-2o2i Center Service 2020 2021 Weekday Classroom Space A 4% 9% Classroom Space B 4% 9% Shooting Range and Classroom 42% 53% 4-I.ane Shooting Range 35% 44% Reality Based(inside/outside) and RTR Mats 36% 40% �rtual Simulation 17% 23% Weekend (Saturday only) Classroom Space A 35% 40% Classroom Space B 35% 40% Shooting Range and Classroom 65% 80% Weeknight Classroom Space A 15% 15% Classroom Space B 15% 15% Shooting Range and Classroom 38% 47% Reality Based(inside/outside) and RTR Mats 30% 30% �rtual Simulation 14% 29% Utilizing the figures above,the remaining capacity of each center service is either therefore utilized by partner members or going unsold. Other Miscellaneous Revenue Sources The following are other miscellaneous sources of revenue expected for the HERO Center: • Miscellaneous Sales (ammunition,targets, other): These might be sales for facility usage that is currently unplanned or not included on the fee schedule as well as potential sales of items used on the ranges such as ammunition,targets, eta There is currently very limited revenue planned for this line item as further research and investigation is necessary on profitability of such items and any potential restrictions on sales. _ZZ_ • Vending Sales: It is anticipated that by year 2o2i vending machines will have either been installed at the center and/or machines will begin producing minimal revenue. With the public and agency usage expected at the center as well as the presence of employees, modest sales of beverages and snacks is anticipated. • Naming Rights: There is currently no revenue planned for this line item,however,this is an active revenue source option that will continue to be pursued. • Interest/Investment Income: There is currently no revenue planned for this line item. • Grants: There is currently no revenue planned for this line item. Over the life of the center,it is anticipated that there will be various opportunities to receive further grant funding that may be directly allocated to operations or capital purchases. • Donations: There is currently no revenue planned for this line item. It is anticipated that there may be occasions where small donations are provided to the center to support operations,most likely from community organizations or groups seeking to support public safety in the community or region. Annual Operating Budget On or before June 3ot''of each year,the Facility Operating Committee shall approve and submit an annual operating budget to each City Administrator for the estimated revenue and operating costs of the center for the upcoming calendar year. Each partner's share of the operating costs shall be determined by dividing the authorized number of full-time sworn peace officers as of April3oth of the previous year. Therefore,the sworn officer count for the partners is a critical figure in segregating expenses and/or revenues. The following estimated figures were used for this analysis and are subject to change. HERO Center Sworn Officer Count Estimate Year Woodbury Cottage Grove 2020 72 43 2021 73 44 2022 74 44 2023 75 45 2024 76 45 2025 77 46 2026 78 46 Appendix B includes the estimated annual operating budget for the HERO Center. -23 - Appendix A: Proposed Non-Partner User Fees Schedule (NOT INCLUDING SALES TAX) Mmimum Rental Block Time 2020 2021 2022 2023 2024 2025 2026 General Public Fees' Resident�-Shooting Range&Classroom(Saturday ONLY) Per i hour block/per lane(45 min est.shooting,i shooter) 1.00 $18.00 $18.54 $19.10 $19.68 $2028 $20.89 $21.52 Per i hour block/per lane(45 min est.shooting,z shooters) 1.00 $29.00 $29.87 $30.77 $3170 $32.66 $33.64 $34.65 Non-Resident-Shooting Range&Classroom(Saturday ONLY) Per i hour block/per lane(45 min est.shooting,i shooter) 1.00 $20.00 $20.60 $2122 $21.86 $22.52 $2320 $23.90 Per i hour block/per lane(45 min est.shooting,z shooters) 1.00 $31.00 $31.93 $32.89 $33.88 $34.90 $35.95 $37.03 Public Aeencv Fees-Per Minimum Rental Block Shooring Range&Classroom(Weekday) 4.00 $430 $443 $457 $471 $486 $501 $517 Shooring Range&Classroom(Weeknight) 4.00 $430 $443 $457 $471 $486 $501 $517 4-Lane Shooting Range(Weekday) 4.00 $240 $248 $256 $264 $272 $281 $290 VirtualSimulator(Weekday) 1.00 $70 $73 $76 $79 $82 $85 $88 VirtualSimulator(Weeknight) 1.00 $70 $73 $76 $79 $82 $85 $88 Virtual Simulator(Saturday) NA Aom7able to parMer agencies on1y. Classroom A,So Seats(Weekday) 4.00 $150 $155 $160 $165 $170 $176 $182 Classroom A,So Seats(Saturday) 4.00 $175 $181 $187 $193 $199 $205 $212 Classroom A,5o Seats(Weeknight) 4.00 $125 $129 $133 $137 $142 $147 $152 Classroom B,So Seats(Weekday) 4.00 $150 $155 $160 $165 $170 $176 $182 Classroom B,So Seats(Saturday) 4.00 $175 $181 $187 $193 $199 $205 $212 Classroom B,5o Seats(Weeknight) 4.00 $125 $129 $133 $137 $142 $147 $152 Classroom A&B,ioo Seats 4.00 TBD TBD TBD TBD TBD TBD TBD Hosted Regional Couraea Charged renial rotes os lisiedfor faciliries used RealiTy Based(inside/outside&RTR Mats Room)(Weekday) 4.00 $200 $206 $213 $220 $227 $234 $242 RealiTy Based(inside/outside&RTR Mats Room)(Weeknight) 4.00 $150 $155 $160 $165 $170 $176 $182 Reality Baaed(inaide/outaide&RTR Mata Room)(Saturday) NA Aom7able to parMer agencies on1y. RTR Mats Room ONLY(Weekday)-Not Available if Reality q.00 $80 $83 $86 $89 $92 $95 $98 Based Rented RealiTy Based(inside/outside&RTR Mats Room)&Simulator Charged renial rotes as lisiedfor faciliries used 'Classroom fees for public usage same as fees charged to public agencies. �Fees applied to residents of the Cities of Cottage Grove and Woodbury o�ily. The fee schedule and selected pricing str�ategy is under the purview of the Facility Operations Committee. Pricing as currently proposed is subject to further analysis and may change as approved by the Committee. -24- APPENDIX B: HERO Center - Annual O eratin Bud et DRAFT NOTES:zozrzoz6 projections do not account for any increased par[ner facility usage.Nl figures modeled after zozo. zozz-zoz6 projections do not accountfor changed assumptions in eapected sales. FSgures modeled after zou Sales. 2019 2020 2021 2022 2023 2024 2025 2026 Ooerating Revenues PublicSales Usa e � Range Rental(Saturday ONLY,Assumes all single shootersand8o%areresidents) $0 $59,690 $75,675 $77,959 $8Q323 $82,767 $85,259 $87,830 2 ClassroomA(Saturda ) $0 $6,300 $7,421 $7,667 $7,913 $8,159 $8,405 $8,692 3 ClassroomB(Saturda ) $0 $6,300 $7,421 $7,667 $7,913 $8,159 $8,405 $8,692 a Dedicatedrenhl(Colle e) $0 $0 $0 $0 $0 $0 $0 $0 5 Hostedre ionalcourses coursere �strarions $0 $0 $6,000 $1Q000 $15,000 $15,000 $15,000 $15,000 e Saleofbrass $0 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 7 en Sales Usa e e Shoolin Ran e&Classroom(Weekda ) $0 $86,000 $112,079 $115,621 $119,163 $122,958 $126,753 $13Q801 e Shoolin Ran e&Classroom(Weelmi t) $0 $39,130 $5Q059 $51,641 $53,223 $54,918 $56,613 $58,421 90 Four-LaneShoorin R e(Weekda ) $0 $4Q320 $51,832 $53,504 $55,176 $56,848 $58,729 $6Q610 �� Vir[ualSimulator(Weekda ) $0 $22,400 $32,485 $33,820 $35,155 $36,490 $37,825 $39,160 92 Vir[ualSimulator(Weelmi t) $0 $9,660 $2Q002 $2Q824 $21,646 $22,468 $23,290 $24,112 93 ClassroomA(Weekda ) $0 $3,120 $6,355 $6,560 $6,765 $6,970 $7,216 $7,462 9a ClassroomB(Weekda ) $0 $3,000 $6,355 $6,560 $6,765 $6,970 $7,216 $7,462 95 ClassroomA(Weelmi ht) $0 $4,375 $4,386 $4,522 $4,658 $4,828 $4,998 $5,168 9eClassroomB(Weelmi t) $0 $4,375 $4,386 $4,522 $4,658 $4,828 $4,998 $5,168 �� Reality Based(inside�outside&RTR Mats Room) (Weekday) $0 $34,200 $38,934 $4Q257 $41,580 $42,903 $44,226 $45,738 1e Reality Based(inside�outside&RTR Mats Room) (Weelau t) $0 $9,000 $9,145 $9,440 $9,735 $1Q030 $1Q384 $1Q738 9e RTRMatsRoomONLY(Weekday) $0 $1,760 $1,826 $1,892 $1,958 $2,024 $2,090 $2,156 2o SWATTeamRentalFee $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 z� OtherMiscellaneousRevenue 22 Miscellaneous Sales(lea tar ets other) $0 $100 $300 $300 $400 $400 $500 $500 23 Vendin Sales $0 $0 $250 $250 $400 $400 $400 $400 2a Nami Ri ts $0 $0 $0 $0 $0 $0 $0 $0 25 Interest InvestmentIncome $0 $0 $0 $0 $0 $0 $0 $0 26 GPants $0 $0 $0 $0 $0 $0 $0 $0 27 Donations $0 $0 $0 $0 $0 $0 $0 $0 2e TOTAL $0 $336,730 $441,911 $460,006 $479,431 $494,120 $509,307 $525,110 ze Ooerating Costs 30 Staffn 39 CenterMana er $42,500 $89,675 $94,607 $99,811 $105,300 $111,092 $117,202 $123,648 32 Buildin Maintenance $11,250 $18,200 $18,746 $24,135 $24,860 $25,605 $26,373 $27,165 33 RangeSafety(duringnon-partrieragencyuse) $0 $34,913 $54,886 $56,533 $58,229 $59,976 $61,775 $63,628 3a Ran eSafe (Saturda onl ) $0 $9,975 $1Q274 $1Q582 $1Q900 $11,227 $11,564 $11,911 35 FrontDesk Schedulin Asst(weekda onl ) $0 $32,400 $65,180 $67,135 $69,149 $71,224 $73,360 $75,561 3eFrontDesk/SchedulingAsst(Saturdayonly) $0 $9,113 $9,386 $9,667 $9,957 $1Q256 $1Q564 $1Q881 37 Sub-Total $53,750 $194,275 $253,079 $267,864 $278,395 $289,379 $30Q838 $312,793 3e FICA $4,112 $14,862 $19,361 $2Q492 $21,297 $22,138 $23,014 $23,929 3e pERA $2,763 $5,829 $6,149 $6,488 $6,845 $7,221 $7,618 $8,037 ao Health DentalBenefits $9,482 $18,965 $18,965 $18,965 $18,965 $18,965 $18,965 $18,965 a� OtherBenefits(life EAP disabffi ) $0 $500 $500 $500 $500 $500 $500 $500 az Workeis Com $200 $800 $800 $800 $800 $800 $800 $800 a3 Em lo eeClottrin rainin Membershi s $250 $500 $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 44 Shooting Range Ooerations a5 Consumables eneralsu lies $0 $5,000 $5,000 $5,000 $5,500 $5,500 $5,500 $5,500 ae Maintenance(simulalion ven tar etin s tems) $7,000 $5Q000 $5Q000 $5Q000 $5Q000 $5Q000 $5Q000 $5Q000 47 General Ooerations&Maintenance ae Marketin e enses materials website $8,000 $5,000 $2,000 $1,500 $1,000 $1,000 $1,000 $1,000 ae Cotta eGroveAdminFee(IT HR Finance Le al) $3,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 5o Eacteriormaintance(snowremoval landsca in ) $3,750 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 59 Custodial $4,500 $18,000 $18,000 $18,250 $18,250 $18,500 $18,500 $18,750 52 Pro e Liabffi insurance $2,250 $9,000 $9,090 $9,181 $9,273 $9,365 $9,459 $9,554 5a Miscsu lies officesu liesande ui ment $500 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 5a Creditcardfees(a liedonl forSat. ublicrentals) $0 $1,446 $1,810 $1,866 $1,923 $1,982 $2,041 $2,104 55 Schedulin software $11,100 $4,800 $4,848 $4,896 $4,945 $4,995 $5,045 $5,095 56 Center maintenance professional services(HVAC,roof, com ressor) $0 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 57 Securi firemonitorin $250 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 5e Wastedis osal Hazdis osal $0 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 5e Utiliries $1Q361 $41,442 $41,856 $42,275 $42,698 $43,125 $43,556 $43,992 eo Mockurbanvilla emaintenance $0 $1,000 $3,250 $5,000 $5,000 $5,000 $5,000 $5,000 e9 Re ato ermits $0 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 e2 General0&ME enseContin enc (5%) $3,376 $11,170 $11,444 $11,648 $11,737 $11,842 $11,937 $12,049 e3 Ca ihlInvestmentAccountContriburion $0 $1Q000 $1Q000 $1Q000 $1Q000 $1Q000 $1Q000 $1Q000 sa TOTAL $124,643 $438,838 $503,403 $522,474 $534,878 $548,061 $561,524 $575,817 65 RevenueOver(Under) F.�cpenditures $ (124,643) $ (102,109) $ (61,491) $ (62,468) $ (55,447) $ (53,942) $ (52,217) $ (50,707) 66 partr�ers Authorized Peace Officers s7 Ci of Woodb 72 72 73 74 75 76 77 78 ee Ci of Cotta e Grove 42 43 44 44 45 45 46 46 ee Total PartnerAuthorized Peace Otficers 114 115 117 118 120 121 123 124 70 partriers Percenta e Authorized Peace OHicers 71 Ci of Woodb 63.2% 62.6% 62.4% 62.7% 62.5% 62.8% 62.6% 62.9% 72 Ci ofCotta eGrove 36.8% 37.4% 37.6% 37.3% 37.5% 372% 37.4% 37.1% 73 Partr�er(CosU Revenue 7a Ci ofWoodb $ (78,722) $ (63,929) $ (38,366) $ (39,175) $ (34,654) $ (33,881) $ (32,689) $ (31,897) 75 Ci ofCotha eGrove $ (45,921) $ (38,180) $ (23,125) $ (23,293) $ (2Q792) $ (2Q061) $ (19,528) $ (18,811) 76 Partr�er(CosU Revenue Per OtY"icer for Ooerations 77 Ci of Woodb $ (1,093) $ (888) $ (526) $ (529) $ (462) $ (446) $ (425) $ (409) 7e Ci ofCotha eGrove $ (1,093) $ (888) $ (526) $ (529) $ (462) $ (446) $ (425) $ (409) 79 Partr�er(CosU Per OtY"icer for Debt Service eo Ci ofWoodb $ (4,505) $ (4,505) $ (4,444) $ (4,384) $ (4,325) $ (4,268) $ (4,213) $ (4,159) e9 Ci ofCotha eGrove $ (3,176) $ (6,590) $ (6,422) $ (6,400) $ (6,231) $ (6,311) $ (6,134) $ (6,091) Annual Opeating Budget Appendix C: Facility Operations Committee Work Plan In the course of the development of the HERO Center Business and Operational Plan, a number of additional work items have been identified for the Facility Operations Committee. • Adoption of HERO Center Business and Operational Plan 2019-202o by each respective City Council. • Confirm Center Manager hiring timeline and key details such as a job description,salary, benefit levels, eta It also needs to be determined who shall serve as the direct supervisor of the Center Manager. • Establish targeted customer directory. • Finalization of marketing str�ategy components and recommendations,particularly launching of the new website (herocentermn.or�. • Finalize agreement for City of Cottage Grove Administration Fee. • Implementation of scheduling software providing for customer tr�ansactions. • Establish parameters for packaged pricing or premier pricing for public safety agencies. Providing parameters on sales for when discounts could then be applied. For example,if an agency purchases 4o hours of range time then a percentage discount could be applied. In addition,parameters on sales and pricing for agencies that desire priority scheduling. A packaged price for full facility rental should also be established. • Additional sales opportunities to be investigated include sales of ammunition,targets, cleaning materials,logo apparel,etc. or rental of firearms and hearing protection. • Approve a HERO Center mission statement. Approve key operational and financial goals for the center. o Identify key performance measures or indicators for evaluation in reaching operational and financial goals. • Identify a timeframe for presentation of an annual report to partner governing bodies that includes financial results and performance measures. • Annually review several key assumptions as included in this plan for changes and updates. Key assumptions include: o Partner sworn officer count o Facility hours of operation and related staffing hours o Fee schedule o Utilization percentages and sales goals -26-