City Council Study Session Agenda and Packet 2004 09 13

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The Recreation/Senior Center has experienced a decline in revenue since January of 2003 and is forecasted to be below budgeted usage revenue anywhere from $100,000 to $140,000 by year -end 2004. Reasons for this decline, as noted on the attached chart, can be attributed to a number of theories. However, no exact scientific data can be proven to be the specific reason for this decline. Listed below are indications to reasons the center has declined in revenue over the last 18 months. It should be noted that the majority of these items interrelate to each other. • Price of non - resident fees were raised from 25% to 40% differential in cost from resident rates January 1, 2003. In addition, annual increases of resident fees have continued to place the Center at the financial threshold of consumer acceptance. • Phasing out of the Chamber discount program. (Non- resident memberships have dramatically disappeared in sales.) • Lunchtime workout users have dramatically declined. Statistics show we averaged approximately 140 visits between 11 a.m. — 2 p.m. Currently, we are averaging 30 visits during this time frame. • Local area competition in the market. New facilities and like services have provided the consumer a variety of choices. • Economic times. The Center has noticed that individuals who previously used the facility that have been impacted by employment losses have eliminated usage of the Center. As previously noted above, all stated reasons can be interrelated as to why a decline of revenue is occurring in usage of the Center. In 2002, the Center experienced a record in membership sales ($673,389). However, it should be noted that the average over the past 10 years has been $580,291. If the Center attempts to reach the annual average of membership sales or even come close to $684,611, which was budgeted for in 2004, immediate changes in philosophies and standards of practice will need to occur. It should be noted that historically, depending on Center expenditures, the revenue budgeted portion has been determined by the historic cost recovery data available. As general operating expenses have risen over the years, the question of whether continued historic cost recovery can be achieved should be evaluated. Expenses will continue to rise with inflation, facility maintenance, etc.; however, the population the Center serves has begun to plateau. If the Center is to strive to increase membership, usage of the Center short-term and long -term marketing must occur. In order to attempt to meet financial expectations of the Center this year as well as in the future, a plan of direction is being established to address this concern. Listed and described below is the recommended action plan for increasing usage of the Center. However, it should be noted and accepted by all that in order to generate revenue, expenditure of financial resources targeted at generating revenue will be necessary.