HomeMy WebLinkAboutItem 06.e
Date: Item No.
REVIEW OF PROPOSED 2017 LAKEVILLE ARENAS BUDGET
Proposed Action
Staff recommends adoption of the following motion: Move to review and provide no additional
comments to the Lakeville Arenas Board for their proposed 2017 budget.
Overview
According to the terms of the Lakeville Arenas Joint Powers Agreement, the Arenas Board must
adopt a budget for the upcoming year by July 1st. The attached budget is being distributed to both
the City of Lakeville and ISD 194 for review and comment.
Staff has reviewed the proposed budget and does not see any issues that warrant further
comment by the City of Lakeville.
Primary Issues to Consider
• Does the proposed budget adequately address the needs of the City of Lakeville?
Supporting Information
• Proposed 2017 Lakeville Arenas Budget
Financial Impact: $ Budgeted: Y☐ N☐ Source:
Related Documents: (CIP, ERP, etc.):
Envision Lakeville Community Values: A Sense of Community and Belonging
Report Completed by: Shayne Ratcliff, Arenas Manager
June 6, 2016
1
Proposed 2017 Budget
2
Table of Contents
Page
Letter of Transmittal 3
2015 Summary 3
General Fund 7
Revenues 7
Program Budget Descriptions and Expenditures 9
Debt Service Funds 13
Fund Balance 14
Capital Reserve Fund 15
Supplemental information 17
Statement of Revenues and Expenditures 17
3
April 8, 2016
Lakeville Arenas Board members
The Joint Powers Agreement requires the Board to approve an annual budget on a calendar
year basis. The budget must set forth projected expenditures and revenues necessary to
finance lease payments, fund the capital maintenance reserve and to maintain, operate, and
manage the Arena Complex. The budget must be submitted to the City and School District
prior to June 1st. The Board must approve the budget prior to July 1. As such the proposed
2016 budget is hereby presented to the Board for their consideration and approval.
The budget is comprised of the following funds in order for the Lakeville Arenas to
effectively manage its financial resources.
General (Operating) Fund. The General Fund accounts for the overall operations
of the Lakeville Arenas.
Capital Reserve Fund. The Capital Reserve Fund was established to provide the
financing of future equipment replacements and major facility programs.
The salient issues relative to the proposed budget for each of the respective funds are
discussed in the sections attached hereto.
2015 Summary
The 2015 fiscal year marked the eighth full year of joint operation of both the Ames and
Hasse Arenas. The joint operation has enabled the Lakeville Arenas organization to
continue to offer new and expanded opportunities to better serve our customers – the
community. Some of the highlights and initiatives are as follows.
Public Skating. The arena has continued to offer year round public skating to the
community. Public skating attendance for paid sessions decreased this past year
from 3,263 skaters in 2014 to 3,036 skaters in 2015 due to fewer public skating
sessions.
Learn to Skate Program. The Learn to Skate program has continued to provide
skating opportunities for children and adults of all ages. Enrollment has remained
4
steady between 550 – 650 skaters per year over the past three years. This past
year, Learn to Skate revenues increased 8% from $40,003 in 2014 to $43,598 in
2015. The Learn to Skate program continues to partner with the Heritage Figure
Skating Club which is made up of a combination of Learn to Skate students and
local figure skaters. Both of these programs have created great experiences for our
young skaters that will last a life time.
High School attendance. Attendance at high school games decreased from 2014-
15 as the teams were not as successful and the Lakeville North boys team was not
chasing an undefeated season as they were the prior season.
2011-12 2012-13 2013-14 2014-15 2015-16
Boys 315 avg/gm 258 avg/gm 319 avg/gm 417 avg/gm 375 avg/gm
Girls 200 avg/gm 189 avg/gm 193 avg/gm 233 avg/gm 215 avg/gm
Total 11,228/44 gms 9,953/45 gms 11,139/44 gms 14,317/44 gms 13,964/47 gms
Dry Floor Activities. The artificial turf has continued to provide opportunities for
a wide range of indoor activities during the non -ice season. In 2015, over 200
hours of turf activities involving lacrosse, soccer, baseball and softball were
rented at Ames Arena. In addition, over 200 hours of dry floor events including
numerous children’s consignment sales and a Home Design Expo were held. We
also hosted the annual Free Family Fun Fest which attracted over 1,200
community members. Overall, dry floor revenue decreased in 2015 due to an
extended ice season to accommodate multiple post season tournaments.
A new scoreboard project in Ames Arena with additional signage locations and
the on-ice successes of the high school teams from the prior season helped to
increase advertising revenues by 21% through new sponsors.
2016 Operations
The following is a succinct overview of the salient changes in operations and budget.
Ice rentals are projected to decrease slightly due to the timing of spring break and
the Christmas Eve/Day holiday yet will remain consistent with the adopted
budget. Cooperation between LHA and the Arenas has allowed the available ice
hours to be fully utilized during the early tryout season resulting in maximum
facility usage.
Dry floor events including multiple consignment sales, a K9 Flyball competition
and a craft show will continue to generate additional revenue as well as showcase
the facilities for future dry floor events.
A number of maintenance projects will be undertaken at the Ames Arena to
maintain the facility at optimum efficiency and improve conditions to meet
5
customer expectations. A complete description is provided in the General Fund
narrative.
A new energy management system at Hasse Arena will help to control operating
expenses and improve ice plant efficiency by reducing run times and maximizing
non-peak hours.
Overall, the Arena operations are very strong both financially and operationally.
Customer satisfaction and community involvement continue to be high. The changes in
the budget and operations will further enhance Arena performance capabilities.
Proposed 2017 Budget Highlights
Maintaining current programs and expanding facility use opportunities requires an
investment in facility maintenance and equipment. As such, the salient budget proposals
are as follows.
Ice rental rates for 2017-18 are proposed to remain steady with 2016-17 rates at
$225 per hour.
The projected 2017 ice rental hours during the winter season are expected to
remain steady with past seasons.
Learn to Skate, high school game attendance and concession sales are expected to
remain steady in 2017.
Energy efficient upgrades addressed in previous years such as an energy recovery
dehumidification system installed in 2009, low-e ceiling installation in 2010 in
Rink 2 and LED lighting over the ice in Rink #1 in 2014 are major reasons that
utility increases have been kept at a minimum. Savings of nearly $45,000/year
have been achieved as result of past energy efficient improvements.
Investment in major maintenance of the Ames Arena will ensure long term
operational reliability and success at the building. Ames Arena is continually in
need of major maintenance in order to improve energy and operational
efficiencies and to improve the customer experience.
Capital purchases planned in the Capital Reserve Fund necessitate an increase in
the transfer from the General Operating Fund.
6
Future
The primary goal of Lakeville Arenas is to continue to focus on marketing efforts which
will result in an expansion of the facility use and revenue base with the expectation that
ice use rates in future years will continue to be competitive with those of surrounding
communities.
The staff has developed a long-range plan for future equipment acquisitions and
replacements. A specific issue affecting the ice making equipment at Ames and Hasse
Arenas is the planned phase-out by the Environmental Protection Agency of the
refrigerant HCFC-22 (R-22), which is currently the primary refrigerant used to cool the
ice sheets in our arenas. The proposed budget accounts for short term operating
requirements while the Capital Reserve Plan addresses the anticipated intermediate and
long-term needs required to comply with this mandate.
The Capital Reserve Fund reflects debt being issued to fund major capital upgrades
starting in 2020.
The future is indeed very bright for the long term outlook for the Arenas and the
community. The facilities are well structured to accommodate user needs.
Conclusion
The success of these programs has established a foundation for expanded use of the
arenas by the community’s residents in the years to come. Our objective for the coming
year is to expand on the success by creating even greater opportunities and enjoyable
experiences for the customers.
The proposed budget is consistent with the purpose of the Joint Powers Agreement to
“…operate and manage the Arena Complex in the best interests of the community.” The
organization will continue its efforts to undertake entrepreneurial endeavors to maximize the
return on the public investment.
Respectfully submitted,
Shayne Ratcliff
Shayne Ratcliff
Arenas Manager
7
59% 26%
3%
4%
4%
2% 2% Lakeville Hockey Association - 59%
ISD 194 - 26%
Other Hockey Associations - 3%
Adult Hockey - 4%
Public Skating - 4%
Learn to Skate - 2%
Other - 2%
General (Operating) Fund
The General Fund accounts for the overall operations of the Lakeville Arenas.
Operating Revenues
In order to adequately finance operations, sufficient revenues must be provided through a
concerted effort of maximizing facility use rentals and facility use fee adjustments. The 2017
revenues from operations are estimated to be $1,142,265 of which $939,670 (83% of budget)
is from ice rental in order to adequately finance Arena operations.
2016 2017 Increase/
ESTIMATE PROPOSED (decrease)
Operating Revenues
Ice Rental 931,195$ 939,670$ 8,475
Dry floor 28,070 30,080 2,010
Learn to Skate 42,720 42,720 -
Admissions-Public Skating 13,250 13,250 -
Event Admissions(Net of ISD Reimb)44,000 44,000 -
Skate Sharpening 6,100 6,100 -
Skate Rental 6,000 6,000 -
Concessions and pro shop - net 26,500 26,500 -
Vending Machines 6,000 6,000 -
Other - Advertising Contract 25,587 25,587 -
Other - Miscellaneous 2,358 2,358 -
Total Revenues 1,131,780 1,142,265 10,485
Ice rental hours are expected to be 100% rented from November through February to either
the school district, youth hockey groups, public skating or learn to skate programs. The
primary ice customers are listed below.
8
In order to adequately finance operations, the winter ice rental rates for the 2017-18
season will remain unchanged at $225 per hour. Non-winter season ice rental is proposed
to remain unchanged at $160 per hour in 2017. The following is a comparison of prime time
winter and summer rates with other communities for the 2015-2016 season.
Dry floor program opportunities have been greatly enhanced with the installation of
artificial turf at the Olympic size rink at Ames Arena. Lakeville Arenas will continue to
aggressively pursue renting of the facilities for dry floor activities. Target customers continue
to be youth sports activities such as soccer, lacrosse and baseball. The Arenas have
numerous dry floor events scheduled for 2016. The Arenas will continue to market itself as a
showcase for trade shows and other exhibition programs. Revenues from dry floor activities
are estimated to be $30,080.
The Learn to Skate program has enrolled nearly 5,000 participants since its return in 2007.
With our highly qualified Director and competent staff, we expect the program to be a
continued success. For the 2016-17 season, the hours of operation will continue to include:
i) Four (4) 8-week sessions over the course of a year
Fall and Winter sessions will be held at Hasse Arena
Spring and Summer sessions will be held at Ames Arena
ii) Fall/Winter sessions will include 4.5 hours on Saturday mornings
iii) Spring session will include 2.5 hours on Tuesday mornings &
evenings and 4.5 hours on Saturday mornings
iv) Summer session will consist of 2.5 hours on Tuesday evenings
9
The public skating program decreased slightly during 2015 due to fewer sessions offered
during the prime winter months. This reduction was due to numerous double header high
school games on Saturday afternoons which take scheduling priority over public skating
sessions. For the 2016-17 winter season, the hours of operation will continue to be offered in
the same manner as last season; Saturdays from 5:45pm – 7:15pm and Sundays from 1:30pm
– 3:00pm for $4.00/person and $3.00/skate rental. The budget anticipates approximately
$19,250 of revenues from public skate admissions and skate rental.
Event Admissions for high school games are shared with ISD #194 (60% Arenas/40% ISD
194) and will generate approximately $44,000 of revenue.
Pro Shop Sales / Skate Sharpening are provided at both Ames and Hasse Arena.
Concessions operations at Ames Arena and Hasse Arena have been managed by the Arena
staff since October 2012. Concessions revenue is expected to remain steady from 2015 as
overall arena operations will be very similar to the previous year. The budget anticipates
approximately $26,500 of revenues from the concession stand operation.
Vending Machines revenues are approximately $6,000.
Advertising contracts are anticipated to generate approximately $25,000. Current contracts
are in place with 24 local and regional companies and organizations.
Expenditures
The 2017 expenditure budget is $1,134,784 which is an $8,533 (0.8%) increase over the
previous year. The following is a summary of the proposed budget expenditures:
The majority of the costs attributable to operations are fixed costs such as insurance, debt
service, Capital Reserve and certain personnel costs. As such, the arena must seek to
maximize efficiencies by operating the facilities as one complex with a common
objective – providing quality services for the community and maximizing the return on
the public investment.
10
Personnel costs account for approximately 32% of the operating costs. The proposed budget
provides for three full time staff members to operate the facilities.
Arenas Manager
(2) Assistant Managers
The arena also has a contingent of part-time staff including resurfacer drivers, office workers,
Learn to Skate Director, Learn to Skate Instructors, concession and custodians. Part-time
personnel are scheduled based on facility rental commitments. Hence, part-time personnel
costs are directly proportional to revenues.
2016 2017
Estimate Proposed Total %
Salaries and benefits
Salaries - Full Time 163,374$ 165,693$ 2,319$ 1.4%
Salaries - Part Time 122,005 122,005 - 0.0%
PERA 16,061 16,108 47 0.3%
FICA 21,831 22,009 178 0.8%
Hospitalization 29,424 31,736 2,312 7.9%
Life and Disability 174 174 - 0.0%
Long Term Disability 356 356 - 0.0%
Dental Insurance 1,728 1,728 - 0.0%
Workers Compensation 8,219 8,288 69 0.8%
Total 363,172$ 368,097$ 4,925$ 1.4%
Increase/(decrease)
Commodities represent approximately 4% of the total budget.
2016 2017
Commodities Estimate Proposed Total %
Office Supplies 545$ 545$ -$ 0.0%
Operating Supplies 12,000 10,700 (1,300) -10.8%
Motor Fuels 3,000 3,000 - 0.0%
Cleaning Supplies 10,000 10,000 - 0.0%
Clothing 2,400 2,400 - 0.0%
Equipment Parts 3,000 3,000 - 0.0%
Building Repair Supplies 18,000 18,000 - 0.0%
Small Tools/Equipment 1,500 1,500 - 0.0%
Total 50,445$ 49,145$ (1,300)$ -2.6%
Increase/(decrease)
11
Other Charges and Services are proposed to decrease by $1,328 (0.7%) from $200,304 in
2016 to $198,976 in 2017. Other charges and services represent approximately 18% of the
budget expenses.
2016 2017
Other Charges and Services Estimate Proposed Total %
Fiscal Management Fees 32,640$ 33,200$ 560$ 1.7%
Attorney Fees 50 50 - 0.0%
Bank Charges 1,720 1,720 - 0.0%
Audit 4,750 4,988 238 5.0%
Use of Personal Auto 375 375 - 0.0%
Advertising 5,500 5,500 - 0.0%
Insurance 27,110 27,923 813 3.0%
Water and Sewer Service 12,000 12,000 - 0.0%
Waste Disposal 7,704 7,704 - 0.0%
Telephone 5,357 5,357 - 0.0%
Postage 100 100 - 0.0%
Other Contractual 15,337 15,337 - 0.0%
Equipment Repair and Maintenance 13,650 13,650 - 0.0%
Building Repair and Maintenance 48,787 47,837 (950) -1.9%
Contract Landscaping 2,000 2,000 - 0.0%
Schools and Conferences 1,500 1,500 - 0.0%
Business Meetings/Misc. Expenses 200 200 - 0.0%
Dues/Subscriptions/Licenses 9,285 5,785 (3,500) -37.7%
Snow Removal 12,239 13,750 1,511 12.3%
Total 200,304$ 198,976$ (1,328)$ -0.7%
Increase/(decrease)
The budget provides for annual audit services. Use of personal auto is attributed to the staff
traveling between the Ames and Hasse Arenas. Advertising is comprised of flyers, signage
and publication advertising. Insurance premiums for liability, property and casualty
insurance provides coverage for both facilities.
“Other Contractual” ($15,337) includes water treatment services, alarm system monitoring,
water softening, fire extinguisher and sprinkler system testing. “Fiscal Management Fees” is
a charge from the City of Lakeville to provide support services such as payroll, human
resources, annual financial reports, periodical financial reports, accounts payable,
Information Technology support and other administrative support functions for the arenas.
Equipment Repair and Maintenance costs for 2016 are projected to be $13,650 in order to
address maintenance requirements at the arenas. Some of the significant projects include
repairs to ice resurfacers ($7,000), dehumidification repairs ($2,500) and replacement dasher
12
board glass ($1,500). The equipment repair costs are estimated to remain steady at $13,650
for 2017.
Building Repair and Maintenance provides appropriations for maintenance agreements
relating to HVAC, refrigeration and ice painting as well as major maintenance projects. The
costs for 2016 are estimated to be $48,787 in order to address major maintenance
requirements at the arenas. Some of the significant projects include the repairs to the HVAC
systems ($7,000), repairs to the refrigeration system ($4,500), crack filling and fog sealing
parking lots ($3,000) and repairs to door hardware ($2,500). The proposed 2017 budget for
building repair and maintenance will decrease by $950 a result of completing a significant
number of major maintenance projects in 2016.
The budget provides for fertilizer and herbicide applications at the two arenas. Lawn
mowing is performed by arena staff.
Schools and Conferences provides for attendance by arena staff at the Minnesota Ice Arena
Managers Workshop & Conference. Dues and subscriptions ($5,785) will include the
Minnesota Department of Health food license for the concession stand, annual elevator
operating permit and music service licenses to accommodate public skating.
Snow removal contracts ($13,750) are required for the Ames and the Hasse Arena.
Utilities. Utilities are presumed to increase 8% for electrical and 8% for natural gas for the
upcoming year. Utilities represent 23% of the total budget and are the predominant reason
for increases in ice arena operating costs.
2016 2017
Utilities Estimate Proposed Total %
Electric Service 191,057$ 206,341$ 15,284$ 8.0%
Gas Service 55,647 60,099 4,452 8.0%
Total 246,704$ 266,440$ 19,736$ 16.0%
Increase/(decrease)
13
Capital Outlay items are included in budget to replace assets; which have exceeded their
useful life. Items include:
Contingency. A contingency has been included for unforeseen expenditures as well as a
cost of living adjustment for personnel.
Debt Service. The Ames Arena was financed with the issuance of debt which is repaid with
LHA pull-tab revenues ($95,000) and arena operations ($88,626). Final payment on the
Ames Arena debt is in August 2019. The LHA pull-tab revenues are pledged to the City for
payment of the debt and therefore, not accounted for within the Lakeville Arenas budget.
2016 2017
Estimate Proposed Total %
Debt Service Payments 88,626$ 88,626$ -$ 0.0%
Increase/(decrease)
The debt service for Hasse Arena is financed by the City of Lakeville and Independent
School District 194. The annual payment ($653,675) is not an obligation of Lakeville
Arenas and therefore, not included in the budget.
Transfer to Capital Reserve Fund. The transfer has been increased $12,000 to cover a
portion of the increased capital expenditures in 2017.
14
Fund balance
Arena revenues are highly cyclical with revenues exceeding expenditures in the months of
November through April. However, in the months of May through October, expenditures
tend to exceed revenues. Cash balances are at their lowest in October and early November.
As such, it is important that the fund balances at the beginning of the year are adequate to
provide sufficient working capital to sustain operations through the first 10 months of the
year.
The proposed budget results in an ending balance of $418,127 in 2016 and $425,609 in 2017.
2016 2017
Estimate Proposed Total %
Operating Revenues
Ice Rental 931,195$ 939,670$ 8,475$ 0.9%
Other revenues 200,585 202,595 2,010 1.0%
Total Revenues 1,131,780$ 1,142,265$ 10,485$ 0.9%
Operating expenses
Personnel 363,172$ 368,096$ 4,924.00$ 1.4%
Utilities 246,704 266,440 19,736 8.0%
Contractual 200,304 198,977 (1,327) -0.7%
Debt service 88,626 88,626 - 0.0%
Commodities 50,445 49,145 (1,300) -2.6%
Capital reserve fund 130,000 142,000 12,000 9.2%
Other 16,000 19,000 3,000 18.8%
Capital Outlay 31,000 2,500 (28,500) -91.9%
Total 1,126,251$ 1,134,784$ 8,533$ 0.8%
Net increase/(decrease)5,529 7,481 1,952
Fund balance, beginning 412,599 418,128 5,529
Fund balance, ending 418,128$ 425,609$ 7,481$
Increase/(decrease)
15
Capital Reserve Fund
The purpose of the Capital Reserve Fund is to provide a financial framework for replacement
of the arena infrastructure as it ages including, but not limited to, roofs, dehumidification, and
refrigeration systems.
The following is a summary of the Capital Reserve Fund Budget.
16
The Capital Reserve Fund reflects debt being issued to fund major capital upgrades
starting in 2020. The repayment of the debt is shown here for purposes of showing the
impact on fund balances and General Fund transfers. Further discussion would be needed
regarding other funding sources (e.g. ISD#194, City of Lakeville, LHA, etc). Separate
debt service funds would be established.
17
18