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The Reston RECenter: Forecast Usage and

Implications for Operating Recovery Rates and Reston Homeowner Taxes
Terry Maynard, Co-Chairman
RCA Reston 2020 Committee
June 5, 2014
A comparison of B&Ds June 2013 forecast annual usage of a new Reston RECenter
(Option B, 84,929SF) with the real-world usage experience of the Countys nine
existing RECenters suggests that future annual usage circa 2023 would actually be
about half of what Brailsford & Dunlavey (B&D), consultants to the Reston Community
Center, forecasts. This comparison is based on official County data on usage of FCPAs
nine RECenters reflected in service contacts and admissions projected to 2023 and
adjusted for the somewhat smaller size of the Option B Reston RECenter proposal.
B&Ds major over-statement of projected Reston RECenter usage seriously affects the
post-phase-in period operating recovery rate. B&D states,most of the successful
recreation facilities are able to cover 80-90% of operating costs with the remaining
expenses subsidized by various public monies. In the case of Fairfax County, all of the
recreation facilities operate at break-even or better. Our analysis indicates that the
reduced forecast usage means a Reston RECenter would only recover 51% of its
operating costs.
Moreover, the RECenters projected $534,000 annual operating loss combined with the
fixed $2.9 million in debt service and replacement reserve costs B&D calculates
mean Reston taxpayers can reasonably expect their local property tax rate to increase
from $0.047 per $100 valuation to $0.061-$0.068 per $100 valuationa 30%-45%
increase in the tax rate to cover the cost of both the existing Reston Community
Center and the proposed RECenter. The average Reston special tax district bill would
more than double to $545 as RECenter phase-in ends in 2023.
Projected Reston Special District Tax Rate @ Alternative Average Annual
Growth Rates (AAGR) in Property Value after RECenter Phase-in (2023)
Reston Property Value
Growth Rate (AAGR)
Total Reston Property
Value in 2023 ($ Millions)
Projected Reston Tax per
$100 Valuation
6% $23,575 $0.061
4% $19,487 $0.064
2% $16,047 $0.068
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Introduction
An important justification offered by the County officials for building a County recreation center in
Reston paid for only by Restonians through the Reston Special Tax District (STD#5) is that there is large
demand for such a recreation facility. The community has certainly heard from local and other
swimmers that we should build a rec centercomplete with a 50-meter pool and other fitness
facilitiesbut just how many people would actually use a Reston RECenter if it were built?
One way to try to understand the usage of a Reston RECenter is to compare the usage forecast prepared
for the Reston Community Center (RCC) Board of Governors by Brailsford & Dunlavey with the real life
experience of Fairfax County RECenters, specifically the Park Authoritys nine operating recreation
centers.
Brailsford & Dunlavey Usage Forecast
Brailsford & Dunlavey (B&D) have provided several RECenter development scenarios to the Reston
Community Center (RCC) Board of Governors since 2009 when they conducted their first study. In their
June 2013 updatetheir last complete analysisthey examined two Reston RECenter options: a small
option (Option A) comprising 52,182 square feet (SF) and a larger option (Option B) comprising 84,929
SF. For both of these options, B&D conducted a comprehensive market and financial analysis, breaking
down potential users in a variety of ways and examining their propensity to use a new Reston rec
center. In the end, they generated tables for each showing utilization rates in a number of ways and
culminating in forecast total usage as shown in the two tables below (page 5 of Appendices C & D):
B&D Forecast of Reston Recreation Center Usage, Option A
B&D Forecast of Reston Recreation Center Usage, Option B
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Usage at FCPA RECenters
The Fairfax County Park Authority (FCPA) provides some comparable usage data for its experience a the
Countys nine RECenters in its annual budget submission (Park Revenue Fund, Fund 80000, formerly
Fund 170) and in its 2011 strategic plan, Great Parks, Great Communities.
As one of FCPAs performance measures, it tracks service contacts in its annual budget submission, a
broader term than users as applied in the B&D analysis, including both actual results for recent years
as well as estimates and goals for the immediate future. As displayed in the table below, these actual
results can be compiled over a number of years by examining the appropriate budget submissions.
What this table shows is that, on average, the number of service contacts across the countys nine
RECenters peaked in FY 2010 at 261,449. The Park Authoritys budget submission even accounts for the
reduced service contacts since 2010 by noting the reduction in programs caused by cuts in the park
budget.
Fairfax County RECenter Service Contacts (Actuals), FY2008-2013
Fiscal Year
RECenter Service
Contacts
Average Annual Use
Per RECenter
2006 2,224,733 247,193
2007 2,213,913 245,990
2008 2,194,563 243,840
2009 2,297,479 255,275
2010 2,353,041 261,449
2011 2,300,176 255,575
2012 2,258,277 250,920
2013 2,289,492 254,388
Source: FCPA Park Revenue Bond Budget Submissions
The FCPAs strategic plan, Great Parks, Great Communities, published in early 2011, uses a slightly
modified version of the service contacts metricannual attendancewhich is much closer to the
concept of usage in the B&D forecast. The results for the four years that overlap with the data on
service contacts run consistently 20% below the earlier data. In short, the peak average recorded
attendance at the Countys recreation centers is less than half that forecast by B&D for an 85,000SF
recreation center in Reston.
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Fairfax County RECenter Attendance, FY2006-2009
Fiscal Year
RECenter Annual
Attendance
Annual Attendance
per RECenter
"Attendance" vs.
"Service Contacts"
2006 1,780,616 197,846 80%
2007 1,773,519 197,058 80%
2008 1,774,924 197,214 81%
2009 1,847,341 205,260 80%
Source: Great Parks, Great Communities, FCPA, 2011, Figure 8, p. 20
These two county-wide metrics suggest that a Reston RECenter would have substantially less usage than
the 424,623 B&D forecast for Option B in June 2013.
We need, however, to project these values forward in time to understand how a newly-built Reston
RECenter might be used after its phase-in period in, say, 2023, which we offer as Year 4 of RECenter
operations. We can project these values forward with some confidence using Fairfax Countys 2013
Demographic Report (Section 4, Table 4.1, p, IV-4). That report puts the countys 2013 population at
1,111,620 and growing 4.9% to 1,166,033 in 2020. By 2023, County data indicates population will grow
7.6% to 1,196,080.
Extrapolating the 2013 service contacts forward to 2023, we estimate that about 269,984
people would use a Reston RECenter. This number is less than two-thirds (63.4%) what B&D
forecasts would be the annual usage for its Option B recreation center.
We can use the 2009 admissions data and the 2009 Demographic Report calculation for
county population that year at 1,051,990 as the basis for a projection. Interpolating from the
latest County population forecast for 2020 and 2025 we anticipate a 13.7% growth in RECenter
admissions from 2009. That would put the expected annual usage at about 233,374 people to
use an average RECenter. That value is little more than half (55.0%) the value B&D puts on the
forecast usage of a Reston RECenter.
And, as mentioned above, recreation center size also matters. Based on the B&D forecasts, we can
project that usage slips less than proportionately as the size of a prospective RECenter diminishes. In
fact, using the B&D data mentioned above, we can hypothesize that usage will slip 0.61 times as fast as
square footage declines, other things generally being equal.
Great Parks, Great Communities notes that Fairfax Countys nine RECenters had a total of 956,044 SF in
2010 (Table 2, p. 22) or an average size of 106,227SF per RECenter. B&Ds proposed Option B is only
84,929SF in size, some 20% smaller than the average County RECenter. That suggests that the Reston
RECenter would be used about 12.2% less than the average for the County. Using the two metrics
described above, we calculate:
Based on projected 2023 service contacts above, an Option B Reston RECenter would be used
by about 244,263 people per year.
Using the 2023 admissions forecast above, an Option B RECenter would be used by 208,263
people per year.
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In brief, this processbased on Fairfax County RECenter experience and forecastssuggests that a
Reston RECenter would generate somewhere between 49%-58% the annual usage that B&D forecasts
for its Option B (84,929SF) recreation center in its June 2013 Market Analysis Update: Reston
Community Center.
Implications
These results have two clear implications for the June 2013 B&D market update: a much lower
operating cost recovery rate and a moderately increased operating loss that generate increase Reston
tax district rates and bills.
Operating Cost Recovery Rate
As B&D has stated in virtually all of its reports and presentations, a successful recreation center is
expected to recover the vast major of its operating expenses. Here is an excerpt from the June 2013
update report (p. 3.8; the reports summary shows lower recovery rates) on this issue and the results it
foresees for the two options it assesses for a Reston RECenter:
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The key takeaway from this brief passage is that, even at market rates, the cost recovery for an Option B
(84,929SF) Reston RECenter barely reaches the lower boundary of what B&D considers a successful
recreation center after ten yearsand fails in comparison with the rest of Fairfax Countys RECenters.
With projected usage running about half of what B&D forecasts, cost recovery drops sharply. In general,
we expect operating revenues and expenses to both decline less as a percentage than usage declines,
but operating expenses tend to decline less than revenues. Using Option B (the more economically
feasible of the two options) and assuming it would begin operations in 2020 (Year 1), we made three
significant adjustments:
We prorated the change in operating revenues and operating expenses based on the change in
usage between Option A and Option B.
We adjusted operating revenues and expenses to achieve B&Ds forecast 81% recovery rate.
We discounted B&Ds forecast annual usage by ten percent to allow for a shift from the low
pricing model discussed in the Option B financial model to market (Fairfax County) pricinga
generously limited price elasticity of demand.
As displayed below, the results indicate that operating deficit increases by $104,000-$182,000 for the
year and the operating recovery rate slips by about 37%.
Projected Post-Phase-in (Year 4, 2023) Operating Results for Option B Reston RECenter in
Different Usage Scenarios at Market Rates
B&D 6/13 Forecast "Service Contacts" "Attendance"
Annual Usage 382,161 281,003 233,374
Percent of B&D Usage Forecast --- 74% 61%
Daily Usage (B&D method) 1,273 936 778
Operating Revenues $1,638,000 $589,394 $509,472
Operating Expenses $2,028,915 $1,162,450 $1,004,821
Net Operating Income -$390,915 -$573,056 -$495,349
Recovery Rate 81% 51% 51%
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Reston Special Tax District Impact
Annual operating losses increase by $114,000-$192,000 to an average of about $534,000 in the more
limited usage we project, add significantly to the other costs B&D projects Reston taxpayers will have to
pay for a Reston RECenter. These costs include:
Amortized debt service costs of $2,811,241 per year
Replacement Reserve additions of $63,000 per year
It does not include any other capital improvements that may be required.
As shown below, the projected annual Reston tax burden from a new RECenter would be about $3.4
million.
Projected Post-Phase-in (Year 4, 2023) Reston Special Tax District Burden for Option B Reston
RECenter in Different Usage Scenarios at Market Rates
Unfunded RECenter Costs B&D 6/13 Forecast "Service Contacts" "Admissions"
Operating Expense Loss -$381,071 -$573,056 -$495,349
Replacement Reserve -$63,000 -$63,000 -$63,000
Debt Service -$2,811,241 -$2,811,241 -$2,811,241
Total Reston Tax Burden -$3,255,312 -$3,447,297 -$3,369,590
The RECenters cost will require an addition to the current $.047 per $100 valuation Reston special tax
district rate of between $.014-$.021 per $100 valuation, depending on the growth rate of Restons
commercial and residential property values to 2023. In total, we expect that the average Reston
homeowner would see his/her Reston special tax bill more than double from $235 to $545 dollars in
2023 as phase-in is completed for the Reston tax-funded RECenter.
Projected Reston Special District Tax Rate @ Alternative Average Annual Growth
Rates (AAGR) in Property Value after RECenter Phase-in (2023)
Reston Property Value
Growth Rate (AAGR)
Total Reston Property
Value in 2023 ($ millions)
Projected Reston Tax per
$100 Valuation
6% $23,575 $0.061
4% $19,487 $0.064
2% $16,047 $0.068