Deluged with Splash

Well we did ask for it. In fact there's so much information, we'll present it without (much) comment. Most unlike us, we know. It's worth reading through all this waffle, because it answers a lot of questions that have been arising in comments. The highlighting in what follows is ours:

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ANNUAL PLAN

The Splash extension and the riverfront development will be funded from the sale of nonperforming Council assets. The footpath upgrade will be funded from rates.

The capital funding allocated in the LTCCP for 2005/06 for the Splash Centre extension has been excluded from this Annual Plan, as it will be funded from the sale of non-performing or under-performing Council assets (land and property).

The Council intends to fund the Splash Centre extension and the city waterfront development from the sale of non-performing or under-performing Council assets (land and property). These properties were advertised concurrently with the annual plan.

The Splash Centre and riverfront development will be funded from future asset sales. Neither the asset sale proceeds nor the capital costs are included in this Annual Plan.

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DECEMBER 7 COMMUNITY COMMITTEE MINUTES

Discussion

The Chairman welcomed Denis McGowan, Danny Jonas and Eric Sim to the meeting and invited them to present their information on the Splash Centre Extension project. Mr McGowan tabled a report providing drawings, a history of the extension project, information on the project team and the current status of the project. Mr Sim then elaborated on the operating costs for the current Splash Centre and costs forecast for an extended Splash Centre. The overall operating cost if the proposed development proceeded, would be 147% of the current cost leading to a projected community facility’s charge for each ratepayer under Swimming Pools of $57.25. Mr Sim addressed funding issues. $500,000 was in hand received from the Powerco Community Trust. Wanganui District Council had identified $1.5 million of borrowing for the project. The outstanding balance of $2 million would be raised from the community through sponsorships or borrowing.

Mr Jonas addressed the Sport Wanganui contract which managed the Splash Centre. He said that through extending the facilities it was expected patronage would increase by 50% but it was fairly certain that costs would increase by 100%. A customer survey undertaken in 2003 suggested 65% of current users would use an extended Splash Centre more often. The preferred family reason for using the Splash Centre was recreation. At present there was low satisfaction with recreational facilities available and ‘personal water space’ at the Splash Centre.

In summary Mr McGowan said the current status for the project was that as of December 2004, the design in programme was now established and the level of expenditure now required confirmation. There were two options:

• Confirm the project to this stage and confirm the next stage to working drawings and tenders. This would allow corporate and community fundraiser to occur with confidence, or:
• Replan the extensions to the Splash Centre on a reduced basis.

Mr McGowan thanked the Council for its support of the project to date.

In response to a Councillor’s questions Mr Hindson said that the Splash Centre extension project would be further considered by the Strategy Committee at its meeting to be held on 15 December 2004. He said that the Council could commission McGowan Associates to develop a staged response programme and costings to enable the project to proceed to public consultation.

Strategy - Splash Centre Extension Update

Eric Sim, Recreation and Culture Co-ordinator, reported as follows:

“Following a presentation on the Splash Centre Extension project (Ref A) to the Community Committee meeting held on Tuesday 7 December 2004, it was recommended that the Splash Centre Update be forwarded to the next meeting of the Strategy Committee for discussion.

History
An Aquatic Working Party was formed in 2002 to look at the future swimming needs for the community, in terms of facilities.

The Working Party developed an initial concept plan and presented it to the Council in February 2003, this resulted in the concept going to the community for consultation. Following the public consultation exercise, a revised concept plan was prepared in July 2004 that included a number of extra facilities at the Splash Centre, which the community had identified as priorities. A quantity surveyor costed this plan in October 2004 and Significance Policy Statement – The decision required as a result of this report is not considered significant in terms of the Significance Policy, however funding issues have the potential to become significant but will be addressed through the 2005/06 Annual Plan process.

Activity: Swimming Pools File Ref: 5/22/5G
Officer: Eric Sim LTCCP Ref: PP77 - 80
Designation: Recreation and Culture Co-ordinator
Date Written: 15 December 2004 WDC Minutes
Report back: Yes

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COUNCIL, DECEMBER 2004 MINUTES Page 279
Strategy Committee 15 December 2004

Strategy Committee provided an initial estimate of $4,000,000, all inclusive. These costings have been peer reviewed and the reviewer is comfortable with the figures.

Operational Cost to Council

The current cost to the Council for the Splash Centre is $334,000 per annum. This includes the management contract, repairs and maintenance, associated property costs and interest payments etc. The forecast cost to the Council to operate the original pool and new extension in today’s dollars is $825,000. This includes $100,000 of interest repayments on the $1,500,000 capital funding identified in the Long-term Council Community Plan (LTCCP), a doubling of the property and maintenance costs as the facility will double in size. The management contract would rise from the current $243,000 to $556,000. The interest repayments for the Splash Extension have been included in the LTCCP starting in the 2006/07 year. An allowance has been included in the LTCCP for increases in operational expenditure in 2006/07, however there is still a shortfall of $329,000 which needs to be addressed.

Patronage

The projected increase in patronage is 50%. However, Sport and Recreation Wanganui are targeting a 100% to 120% increase in patronage as new markets become available. It must be noted that these forecasts are based on the existing entry fees. Increases in entry charges have not been considered at this stage, but it is a decision the Council may need to consider in the future as means of reducing the Council contribution towards the operational cost of the facility.

It is interesting to note that respondents to a public survey in 2003 undertaken by Sport and Recreation Wanganui indicated that 65% would use an extended Splash complex more often.

Discussion

The current concept plan for the Splash Centre extension is the result of extensive public consultation, which resulted in the community identifying what facilities should be included in the Splash complex extension. This resulted in the anticipated cost rising from $2,000,000 to $4,000,000. At present there is a $2,000,000 shortfall in funding which will need to be raised before work can be commenced.

The timeframe for the project is six months for finalising the design and 12 months for the physical works until the doors are officially opened to the public. Whilst the management contract appears to have more than doubled, this needs to be taken in the context that with a complex twice the current size, logically the expenditure will also double but the anticipated increase in patronage is only 50%. The current contractual arrangement is that the contractor retains all patronage revenue to supplement the Councils contribution, but there is a shortfall between a 100% increase in operating costs and a 50% increase in patronage. The management contract figure would reduce should the entrance charges be increased.

COUNCIL, DECEMBER 2004 MINUTES Page 280

Review of Capital Expenditure

The Mayor has stated that all non-essential capital expenditure will be subject to a public referendum. It is anticipated that this review will form part of the Councils 2005/06 annual plan process. That being the case, subject to the community confirming the Splash extension as their first preference, the Council will be in a position to commission the working drawings in July 2005. This will mean that the extension should open its doors circa January 2007 subject to all the funding being in place.

There is a feeling that the community want the extension to be opened as soon as possible. To progress matters, the Council may wish to commission the working drawings concurrently with the referenda. Subject to the Community confirming the Splash extension as their first preference and all the funding being in place, the Council will be in a position to accept the lowest tender from July 2005 and the extension should open its doors as early as July 2006.

There is a risk associated with commissioning the working drawings concurrently with the annual plan process in that the Community may say that either its too expensive, its not their first choice or not all the funding is in place. If it is too expensive the Council will have to instruct the architect to redesign the pool to suit the budget constraints. This will cost the Council up to an additional $100,000 and set the opening back some six months to January 2007.

If the community decide its not their first priority or all the funding is not in place. This will mean that the architect will have to retender the work when the project is either next in line for commissioning or when the funding is in place. The cost to the Council will be an additional $2,000 - $3,000 with corresponding delays in the opening.

Summary

Given the information on the capital and operational costs the Council needs to decide whether it wishes to commission, ahead of the referenda, the next stage of the process, that being to develop working drawings and tender documents or to await the outcome of the referenda. The benefits of proceeding now is that an accurate cost will be gained from the market place which will in turn allow corporate and community fundraising to occur with confidence, this can reduce the project timeline by up to six months.

If the $4,000,000 overall project budget is an issue, an option is to revisit the plans for the extension with a view to reduce the number of facilities available for the public. While this sounds simple, it will take some time and may not achieve the anticipated savings.”

The Chairman welcomed Mr Denis McGowan and Mr Danny Jonas, members of the Aquatic Working Party, in attendance to clarify any issues for Councillors.

COUNCIL, DECEMBER 2004 MINUTES Page 281

Mr McGowan tabled a proposed floor plan for the Splash Centre additions.

Discussion

In response to a question Mr Jonas confirmed that Sport Wanganui’s contract for managing the Splash Centre expired in June 2006, prior to the projected date for commissioning the Splash Centre Extension.

Denis McGowan reiterated his comments made at the Community Committee’s meeting held on 7 December 2004. In discussion it was noted that the public had been consulted and that a very informative Strategy Report had been presented to the Council during its previous term. Cr Westwood commented that the updated estimate of $4M was considerably more than the $2.3M established as the cost of the extension in the Long-term Council Community Plan. She believed that the public needed to be clear about this capital expenditure requirement for the Splash Centre Extension.

Committee’s Recommendations

Proposed by Mayor Laws, seconded by Cr McGregor:
THAT detailed working drawings are finalised and final costing estimates sought for the Splash Centre Extension
AND THAT the Council’s financial commitment to the Splash Centre Extension be referred to the 2005/06 Annual Plan process.
CARRIED
ACTION: Keith Hindson/Eric Sim

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29 APRIL EMAIL, written on instructions of the Mayor

In response to your specific enquiry re operating expenditure the following is provided:

"Mayor Michael Laws says that the information provided is sufficient. The additional operating expenses of the two major projects (i.e. the Sarjeant Gallery and Splash Centre Extensions) would need to be borne by the organisations responsible for running the facilities and not by the Council.

Council's contribution is the capital funding and proponents of some projects may need to cut their cloth as a consequence".

Ian McGowan
Deputy CEO

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So, it seems clear that:

• The cost of capital works has risen from $2.3 million to $4 million - and the shortfall of $2 million will need to be found from sponsorships or borrowing.
• It's Council's intention to fund capital expenditure on the Splash Centre from the sale of non-performing or under-performing Council assets (land and property).
• If the $4 million figure proves to be too expensive, the architect will have to redesign the pool to suit the budget constraints. This will cost up to an additional $100,000.
• Operational expenditure will double but the anticipated increase in patronage is only 50 percent (though Sport Wanganui think that, somehow, patronage will magically increase by 120 percent, despite only 65 percent of people indicating they would use an extended Splash complex "more often" (and just how often is more often?)).
• The operating cost would be 147% of the current cost, leading to an increased community facility charge for each ratepayer of $57.25.
• Update (8.25 pm) Oh yes, and - while not on the immediate agenda - increases in entry charges may need to be considered in the future as means of reducing the Council contribution.

Meanwhile in this article from our friends at River City Press (1.26Mb pdf file) the man in charge of the project, John Unsworth, sounds incredibly optimistic that there's a way through this financial miasma (but then, it is the Good News paper):

Discussing funding, John said the Powerco Community Trust’s contribution of $500,000 had been a tremendous start, and the Wanganui District Council had committed $2.5 million over two years, with $1.25 million available from July 1. So he hoped the project would be kicked into life this year.

The extension was a council asset and project and the Wanganui Splash Centre Development Committee would work with council to find the necessary funding. Work on the extension could begin by the end of the year, John said, “and by 2007, hopefully, it will be operational."

"Kicked into life"? Interesting choice of words, John. While we've been accused by one very odd commenter of having a horse fixation, we can't but wonder if "kicking into life" is what one may try to do with a deceased member of the equine species.

Now that the post-referendum euphoria has worn off, and promises made under its influence are starting to look distinctly silly three months down the track, perhaps Mr Unsworth might like to answer these questions (we'll email him a copy, in case he's one of the few Wanganui-ites who don't visit the blog):

You were quoted in the River City Press on June 9 saying the WDC had committed $2.5 million to the Splash Centre project, with $1.25m by July 1.

1. On what basis did you make that claim?
2. Can you confirm that that money has not been made available to the project?
3. How much money is actually in hand at this point?
4. What is your understanding about the sourcing of funds for the (a) capital works involved and (b) the ongoing increased running costs?
5. How do you see your role and that of your fellow “promoters”?
6. Is the project running to the schedule you envisaged when you made your comments in June?
7. Do you feel you have been misled about the nature and timing of council funding?

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