Memorandum

City of Lawrence

City Manager’s Office

TO:	Mayor and City Commission
FROM:	City Manager David L. Corliss
Date:	November 2, 2011
RE:	Next Steps on Westside Recreation Center Consideration

Commissioners,

At your study session on October 25, 2011, you received a substantial amount of materials detailing the history of the City’s share of the 1994 County wide sales tax.  Those materials are again provided (internet access required).

Additionally, the Commission asked for information on the debt impact of a $15 million facility (earlier staff projections had looked at a $14 million facility).  Finance Director Ed Mullins has provided the attached analysis.

Budget Manager Casey Toomay has provided a multi-year forecast for the City’s share of the County sales tax receipts (attached).  The forecast assumes either a 15 or 20 year bond issuance.  The 20 year issuance provides for smaller annual payments.  Either the 15 or 20 year bond issuance has a few years when expenditures exceed revenues highlighting the interest to receive outside private support for the facility, to seek opportunities for cost reductions in the facility, and/or recognize that there would be a spend down in the sales tax fund balance which would be replaced when revenues exceed expenditures in future years.  

The City Commission asked about operating costs and the ability of the City to sustain the cost of operations.  The annual operating costs of a new recreation facility were estimated at approximately $500,000, representing roughly $300,000 in personnel costs and $200,000 in commodities, contractual and equipment costs.  Obviously, these are estimates, but Parks and Recreation staff did examine existing facility costs to arrive at these numbers.  The revenue estimate was placed at $255,000, which includes an admission charge which staff recommends.  The City Commission briefly discussed the admission charge or fee concept, but it may be worthy of additional Commission discussion.  This leaves a gap of approximately $250,000 between the anticipated annual operating costs of $500,000 and estimated revenues of $255,000.  Staff recommends that the City Commission reduce the amount of funding from the City share of the County sales tax currently devoted to street maintenance (2012 budget of $350,000) to make up this funding gap.  This change in funding allocation appears to be appropriate given the planned use for these funds when the County sales tax was enacted (parks and recreation facility was a key highlighted expenditure) and that the City’s 2008 infrastructure sales tax continues to provide funds for street maintenance. 

The Commission generally discussed other City projects which might be a priority for the City and the debt capacity generated as the older sales tax backed debt is retired.  Parks and Recreation staff has identified indoor gym space – as envisioned with the proposed recreation facility – as their recommendation for the top priority.  Other priorities of additional ball diamonds, hiking trails, etc. are certainly valuable to the community as well, however, the indoor recreation facility is the top priority.

It has been staff’s understanding that the Commission views the City’s share of the County sales tax to be devoted primarily toward parks and recreation facilities (after mill levy reduction per the ballot language), and not for long term commitments on other city facilities.  If the Commission would seek to use these resources for other facilities or infrastructure, there is not a shortage of possible uses:  law enforcement facility needs, providing resources for fire apparatus which are not funded under the 2008 infrastructure sales tax plan,  providing resources for street improvements which are not funded under the infrastructure sales tax plan, public works facility needs for expanded city garage or westside public works facility, airport improvements pursuant to the new master plan which the City Commission will consider soon, etc.  Many of these projects are reviewed and considered on an annual basis as we work to prioritize debt issuances for our annual $5 million debt issuance.  

Recommended Action:  Direct staff to 1) proceed with an agreement with the Assists Foundation for possible support for a new Activity and Wellness Center; and 2) develop a plan for additional fundraising support for the proposed new Center, which would include refinement of the conceptual plans for the new Center; and 3) take other direction from the City Commission as appropriate.