Expected budgets and operating finances
- Projected hire income levels are based on applying occupancy of the theoretical maximum of 26 weeks between October to March (inclusive) with the facility being closed over the winter months.
- Total operational hours are projected as 1,014.
- Visitor projections are estimated at 20,332 based on 2 visits per head of population
- Projected daily users of 107 per day based on visits per head of population target over 190 days of operation.
- Income expectation will increase by a minimum of 3% annually to support inflationary costs and any increased cost of operation.
- Entry charges will be $5.00 per adult, $3.00 per child, inclusive of GST. In this model, there is no discounting for older adults, disability, visits, pre-schoolers and families. Many of these may receive a discounted rate but that will be negotiated later. It would impact on total revenue.
- Pool hire income projected estimated on 1 lane per day at $30 over 190 days of operation. This increases to two lanes and eventually three over the coming years of operation.
- Lane hire estimation based on MSC having block booking (4 days a week for 1 hour)
- Other (aqua jogging etc.) estimated at 20 per day, with a charge of $5 each.
- No allowance made for LTS income
- Projected availability for public use.
- Projected TDC Subsidy (see Table 14) plus annual increase of 3% for inflationary purposes.
- Operations are assumed at 7 days a week outside of term time (excluding Christmas Day and New Year's Day holidays).
- Bookings, hires and casual use can be available from term time 5.00pm-8.00pm Monday to Friday. With no allowance for weekends. Note: MSC will have a block booking for 6 lanes (1 hour per day for 4 days a week between 4pm-5pm).
- In terms of future demand indication from GSM is that MSC would be willing to commit on a 'block booking' of 1 hour per day for 4 days per week (Monday-Thursday) for the duration of the extended season. This would be a total seasonal allocation of 104 hours assuming 26 weeks of operation. The hire charge has been estimated at $30 per lane per hour with 6 lanes been allocated therefore a daily charge of $180.00 per day. Based on these pricing estimations and level of demand the MSC would face an annual charge of $18,720 per annum compared with the current hire costs of $3,300 per annum, an increase of over $15,000 per annum.
- Hire charge for any aquatic based clubs e.g. swimming, surf lifesaving, water polo and underwater hockey has been set at $30 per lane per hour or $180 for 6 lanes.
- The hire charges are set at the levels to attract new users to the facility and will be increased at 5% per annum to meet increasing operational costs.
- It is assumed that once patronage levels are better understood there is likely to be the introduction of concessions to 'incentivise' targeted users e.g. family pass, regular users.
- Sponsorship has been estimated at $2,000 initially based on four companies paying $500 to advertise around the pool. This is set to increase by one sponsor per annum over the next two years of operation to a maximum of 6.
- Availability of the pool could potentially be negotiated for use earlier in the mornings or later evenings for training purposes but would be additional sources of income not factored into these assumptions.
- Motueka has limited recreation options during poor weather conditions and the enclosed pool could become 'the go to place' for families and increasing revenue opportunities when the pool would previously have been closed or have limited appeal to users.
Based on the assumptions used in the budget modelling process the first year of operation of the facility is projected to have an operating deficit of $19,852. This is projected to decrease in year 2 to a deficit of $8,690 and shows a small surplus of $3,173 in year 3 of operation. The main reason for this is that income projections mainly from admissions have been estimated to increase by 10% each year for the first 3 years as the pool facility grows in popularity then plateaus.
The level of financial success has assumed that TDC subsidise the management and operation to the
projected pro rata levels. The level of subsidy required could be reviewed after the first three years of operation. However, if the pro rata subsidy were not received from TDC, a loss of approximately $39,000 would result in Year 1 and in Year 3 a reduced loss of approximately $29,000.
- Budget estimations on staffing have two lifeguards on duty to cover the total community use hours i.e. outside of school use (total 1028 hours). This cost has been estimated at $20 per hour per lifeguard but may be negotiated at a higher level for someone qualified to carry out water tests and maintain water quality. Additional hours (190 hours per annum) have been added to the total operational hours so that the required opening and closing procedures can be undertaken. Assumption has been for one hour per day (30 minutes per staff member) for opening and closing the pool including pool covers, water tests, till float and general preparation.
- The costs of training and development for staff, recruitment costs and uniforms will be met by the operator of the pool.
- Additional costs for an administrator for two hours per day (Monday-Friday) have been included to ensure financial records, marketing and promotion and any ordering of stock can be completed. This role may expand over time to include programme development but a clear business case will be required to ensure programmes are self-financing.
- The use of energy will increase significantly as usage of the facility grows. The cost of electricity and maintenance is estimated at approximately 20% of the total expenditure.
- Maintenance has been calculated with a median cost of $26.44m2 per annum (compared against 15
other community pools).
- Pool chemicals have been estimated at $25.00 per m2 per annum when compared against other pools but this can fluctuate dependent on bather load and plantroom handling capabilities (e.g. turnover rates).
- Increased programmes, bookings and other operational activity means an annual increase of 3% has been projected on expenditure costs with energy being increased annually by 5%.
- GSM will meet the costs of security, on-going repairs and maintenance (including any vandalism damage). However, minor repairs may be identified in a contract (booking agreement form) as the responsibility of the user organisation such as damage to internal doors including locks and handles. Building maintenance and repairs would be carried out by contractors at cost to GSM.
- Monthly bacteriological tests are carried out by an approved independent laboratory. The tests are to be completed in accordance with NZS 5826:2010 or any superseding standard. These have been estimated at $500 per month (or $3,000 per annum) on the assumption that tests would be for one body of water.
- Depreciation is estimated at a rate of 2% per annum which is the ‘write off cost’ of the enclosing structure asset (estimated at $16,000 per annum on $800,000 capital cost spread over 50 years). Inflation per annum has been calculated at an additional 3% per annum. No allowance has been made for depreciation of the pool in ground structure.
For full details, download and read the 45-page Feasibility Study here