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Upper St. Clair
Community Recreation Center
Fee Structure Task Force Report April 30, 2007

Fee Structure Task Force Report with Exhibits 1 - 7(pdf)

EXECUTIVE SUMMARY

The CRC Fee Task Force was formed in September 2006 to answer two specific questions posed by the Upper St. Clair Board of Commissioners to help them in their assessment of building a community recreation center. These questions are as follows:

1. Develop a resident and non-resident fee structure which, including other programming revenues (income), will essentially cover 100% of the operating costs. Include assumptions on the projected number of memberships to be sold.
2. If the resident fee structure were set at a lower level:
   1. Would we attract a significantly higher number of memberships?
   2. If so, what exactly would that fee level be?
   3. What would the effect be on operating income?

The March 2006 Ballard King report titled, "Community Recreation Center and Aquatic Center Feasibility Study" serves as the primary basis for the work of the CRC Fee Task Force. To address these questions, the Task Force held meetings in October 2006 and April 2007 supported by an extensive email dialogue between meetings.

The answer to Question 1 can be found in Exhibits 1 to 6. There are two key assumptions from the Ballard King report used in these exhibits are:

• Information is based on a 60/40 non-resident-to-USC resident participation ratio.
• The non-resident rates are set 25% higher than the USC resident rates.

The second question is addressed in Exhibit 7, which is a potential alternative rate structure whereby USC indoor membership rates are lowered by 33% from the initial structure. This structure uses a 50% rate differential between USC resident and non-resident rates.

Based on our extensive review and discussion of the Ballard King report, following are the key findings of the CRC Fee Task Force:

• The Ballard King report shows that it is feasible to develop a membership fee schedule (along with other programming revenues) that could generate enough revenue to cover operating costs while being competitive within the market.
• The Task Force has developed some refinements to the Ballard King projections that could potentially result in 12% lower membership rates while covering operating costs. This was achieved based on incorporating the two assumptions below:
  1. 15% lower utility costs savings associated with the green design features of the building.
  2. Apportioning 15% of the operating costs to the Township for the portion of the indoor facility that will be considered community area (approximately 22% of the indoor square footage) affording access to all USC residents without a daily fee or membership
• This revised rate schedule developed by the Task Force maintains a 25% differential between USC residents and non-residents, and compares favorably to the fees charged by selected indoor recreation and outdoor aquatic benchmark facilities in the area.
• When the tax impact, either from earned income tax or property tax, is considered, the proposed USC vs. non-residential fee differential could drop from 25% to less than 10% based on specific assumptions. The differentials can vary substantially under different scenarios.
• Using projections provided by Ken Ballard, an alternative structure could increase the number of USC memberships by 20%, but decrease the number of non-resident memberships by 5% to10%. Operating income projections would decrease but remain positive. These projections depend on successful marketing and sales efforts of USC memberships.

Conclusions

The task force concludes that based on the projections, estimates and assumptions in the Ballard King report, it is feasible to develop a fee structure that covers operating costs. It is also reasonable to conclude that a lower fee structure could be adopted when considering lower utility and indoor operating costs.

In addition, it may be feasible to develop a greater non-resident fee differential, but only to the extent that it does not drive away non-resident members, leading to an overall revenue decrease. This would burden USC residents with a greater share of the operating costs and could eventually result in higher membership fees.

The fees contained in the exhibits are estimates to help the commissioners in the decision making process. The particular fees shown in the rate schedules should be subsequently reviewed and may need to be adjusted based on factors other than those considered by the CRC Fee Task Force.

CRC Task Force Members
Paul Besterman
Tom Burke
Michael Geraci
Karen McElhinny
James Miele
Preston Shimer