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To:              Sally Bagshaw, Chair of Parks and Neighborhoods Committee

From:         Christopher Williams, Acting Superintendent

Re:              2013 Statement of Legislative Intent-Athletic Field Fees for 2014-2015

                         Response to Green Sheet 114-1-A-1

Date:          May 15, 2013

Summary: The 2013-2014 Adopted Budget included a City Council Statement of Legislative Intent (SLI) regarding athletic field fees in 2014 and 2015. Specifically, the SLI included the following requests.

“This Statement of Legislative Intent requests that the Department of Parks and Recreation (DPR) report to the Council on the annual cost to operate and maintain its athletic fields, and any changes to fees for those fields it anticipates proposing for 2014 and 2015. The Council wishes to discuss options for fee levels with the DPR and to allow public notice of any likely changes at least six months before the fees go into effect. Also, Council requests DPR to assess the feasibility of setting up an athletic field maintenance reserve, funded with fees and/or other City revenue, to assure that DPR can keep pace with replacement or rehabilitation requirements of athletic fields.”

Annual Cost to Operate and Maintain Athletic Fields

Use of the athletic fields is very popular in Seattle for sports ranging from soccer and baseball to cricket and track and field. The fields are managed by staff in the Citywide Athletics Unit, and scheduling accounts for about one-third of the unit’s total budget. The remaining two-thirds of the budget supports the sports programs offered through the department. The fields are maintained by Parks Ground Maintenance crews.

The cost to manage and maintain the department’s 204 athletic fields is approximately $4.2 million annually.  This includes 22 synthetic fields and 182 grass fields. The source of athletic field revenues is user fees. The fields generate about $2.6 million in revenue each year resulting in a system wide cost recovery rate of 62%. If an annual field replacement cost is included, then the cost recovery rate is 49%.  The main cost categories include field scheduling and routine maintenance (e.g. comfort station cleaning, graffiti removal, irrigation repairs, seasonal game preparation, cleaning synthetic fields). Maintenance and management costs do not include synthetic field replacement costs, which average $500,000 per field.  (Please see p.4 for a discussion of different approaches to capturing synthetic field replacement costs.)

The natural grass fields require fertilizing, aeration, over-seeding, and top dressing once per season to stay green and healthy.  They also require seasonal game preparation but are not maintained from late November through March 1. The synthetic fields require regular cleanings as well as periodic repairs and are maintained year-round. Also, Parks recently acquired a Sports Champ machine that may prolong the life of the synthetic fields by decompacting the carpets or removing pieces of the synthetic infill that stick together on the surface.  This may lead to lower future replacement costs if use of Sports Champ extends the life of the synthetic fields.

On average, each synthetic field costs $58,000 a year to maintain and each grass field costs $16,000 a year to maintain.  However, when costs are allocated on a per hour of scheduled use basis, synthetic fields cost $38 per hour of use to maintain while grass fields cost $51 per hour of use.  This difference is driven by the fact that synthetic fields are used more than five times as much during the year as grass fields.  Synthetic fields are used more heavily because the fields are open year-round and in all weather conditions.  Grass fields are only scheduled from spring through early fall (See Attachment 1-Cost Recovery Methodologies).  It is also important to note that if synthetic field replacement costs were factored into the maintenance per hour of use calculation, Parks would spend $67 per hour of use to maintain synthetic fields.

Synthetic Turf Field Replacement Cycle

On average, synthetic fields must be replaced every 10 years.  Parks owns 22 synthetic fields. To date, two fields have been replaced including Genesee Field 2 and Queen Anne Bowl.  The 2008 Parks Levy funded the Genesee replacement, and Queen Anne Bowl was funded with REET[1] revenue in the 2008 Capital Improvement Program (CIP). Parks’ field replacement schedule would replace one to four fields a year over the next 10 years depending on when the field was first installed. The current plan to pay for upcoming replacements is to include the projects in the Department’s annual CIP. The replacement schedule can be found in Attachment 2-2013 Synthetic Field Replacement Schedule.

Each field costs on average $500,000 to replace.  To put all 22 fields on a 10 year replacement cycle, Parks needs to reserve about $1.2 million a year for a total of $11.9 million over the next ten years.  Parks can either rely on City funds (e.g. General Fund or REET funds) to replace these fields, or Parks can look to using user fees to support a portion of field replacement costs.  Please see pages 4 and 5 for a discussion of two possible options for using field user fees to help support field replacement costs.

Fee Setting Policies and Practices

The fee setting framework for athletic fields has historically included the following analysis:

      How fees compare to the Department’s Fees and Charges Policy

      How fees compare to other local and national cities

      How fees compare to an elasticity study performed every two years

As a policy and practice, athletic field fees are set to align with the department’s cost recovery goals for recreation services.  In 2010, and at the direction of the City Council, Parks developed a fee policy that distinguishes between services that provide a community benefit (e.g. youth athletic field rentals, drop-in hours at community centers, youth swimming lessons, etc.) versus services that provide a mostly individual or minor community benefit (e.g. adult athletic field rentals, facility rentals, competitive or private swimming lessons).  The policy notes that services that provide a benefit to a restricted group of people should be funded by fees that reflect the cost to the City of providing the service. In contrast, services that provide a greater community benefit and are open to the general public should be subsidized by the General Fund. 

The department’s Fees and Charges Setting Policy states that the optimal cost recovery goal for adult use of the fields is between 70%-110%; the rate for youth is between 10%-50%. The department’s practice has been to exclude capital costs (such as field replacement costs) when calculating cost recovery rates. This practice stems from instructions in the Fees and Charges Setting Policy that direct the Department to include “expense to operate, monitor, schedule and maintain a facility or program,” when calculating costs for cost recovery. Note that the rates include all of the athletic fields; they do not distinguish between grass and synthetic. (See Attachment 5: Summary of Parks Fees and Charges Policy)

To evaluate athletic field fees, the department updated a survey of local cities to compare Seattle fees to other cities. The benchmark cities include Portland, Everett, Olympia, Spokane, Bellevue, Kent, and Shoreline. Likewise, the Department also updated the survey of national cities, including Riverside, San Diego, Minneapolis, Denver, Boston, and Milwaukee.  (See Attachment 4: Athletic Field Fee Comparisons)

Finally, the Department worked with Hebert Research to conduct a price elasticity study on fee increases. The 2013 study followed the same format as the study conducted in 2012. The report determined the most common types of sports and activities reserved by field users; calculated the average price paid to reserve a field excluding fees for lights; calculated the average price paid to reserve a field including fees for lights; determined the percentage of Seattle park field user that have reserved a field that required lighting; performed statistical analysis of the data from the quantitative survey to determine price elasticity and optimal price points for grass and synthetic field fees; and compared the results to the research conducted in 2012.

Proposed Fee Changes

To respond to this SLI, Parks developed potential fee increases in 2014-2015 based on the approach described in the previous section. These fee increases were then used to build two different synthetic field replacement options. The fee changes assumed in this SLI response are shown in the following table. The same fees proposed for 2014 would apply in 2015. The full range of fees can be found in Attachment 3-Possible Athletic Field Fees for 2014-2015. These fee increases are provided as a response to the Council’s requests and do not represent a recommendation or policy position of the Parks department.

The current cost recovery rate for adult field use is 110%, and the rate for youth is 38%, if one only assumes the operating costs, not capital replacement needs, of the fields. These recovery rates are in line with the Department’s goal of 70%-110% for adults and 10%-50% for youth (but do not include costs associated with synthetic field replacement). If field replacement costs are included, then the current recovery rate for adult field use is 90% and the rate for youth is 30%.

If the fees laid out below were implemented in July 2014, they would generate an additional $481,000 in 2014 and $962,000 in 2015.  

Table 1:  2014 Athletic Field Fee Increases Used to Develop Capital Replacement Options

 

2013 Fee

2014 Potential Fee

Justification

Benchmark Comps

Elasticity Study

Adult Fees

 

 

 

 

Games, Synthetic

$60

$70

Below local average

At optimal rate

Practices, Synthetic

$40

$55

Below local average

Below optimal rate

Practices, Grass

$24

$40

Above local average

At optimal rate

Stadium-Events

$65

$70

 

Stadium-Games

$65

$70

 

Youth Fees

 

Games, Grass

$10

$15

Below local average

Below optimal rate

Practices, Grass

$6

$12

Below local average

Below optimal rate

Games, Outside of Season, Grass

$25

$30

Above local average

N/A

Practices, Outside of Season, Grass

$15

$30

Above local average

N/A

Practices, Synthetic

$6

$30

Below local average

At optimal rate

Games, Synthetic

$10

$30

Below local average

At optimal rate

Games, Outside of Season, Synthetic

$25

$30

Below local average

N/A

Practices, Outside of Season, Synthetic

$15

$30

Above local average

N/A

Private Schools Games, Grass

$44

$50 

Below local average

N/A

Private Schools Practices, Grass

$30

$50

Below local average

N/A

Private Schools Games, Synthetic

$44

$70

Below local average

N/A

Private Schools Practices, Synthetic

$30

$55

Below local average

N/A

Youth Sports Camps, Grass

$60

$70

Increased based on cost recovery goals for private users

Youth Sports Camps, Synthetic

$60

$70

Increased based on cost recovery goals for private users

Stadium-Meets

$65

$70

Increased based on cost recovery goals for private users

Stadium-Practice

$25

$30

Increased to be consistent with practice synthetic fees

Stadium-Private School Practice

$25

$55

Increased to match Adult Games, Synthetic

Stadium-Private School Game

$65

$70

Increased to match Adult Stadium-Games

Stadium-Games

$65

$30

Decreased to match Youth Games-Synthetic

Synthetic Field Replacement Fund Options

Using the fee increases from the above table, Parks developed two different capital replacement options. The first option invests a portion of the increased fee revenues in a capital replacement fund with the remaining revenue available to offset operating costs. This option would still require the City to contribute approximately $6.9 million of REET to allow Parks to replace all of the synthetic turf fields over ten years. The second option dedicates all of increased fee revenue to a capital replacement fund. Under this option, athletic field fee revenues would cover 77% of the cost to replace all 22 fields over the next ten years; the City would still contribute approximately $2.8 million of REET. If neither option is implemented, the City would need to contribute $11.9 million over the next ten years to fund field replacement costs.

Please keep in mind that no Parks program charges high enough fees to fully cover its associated capital costs. Golf generates enough revenue to cover operating costs and annual debt service payments for master plan improvements but not for capital costs outside of the master plan. Boating fee revenues cover 90% of the operating costs but are not sufficient to cover capital equipment costs. Tennis fees at the Amy Yee Tennis Center cover operating costs but not capital.

Option 1: Dedicate a Portion of Increased Fee Revenue to Field Replacement

Summary:  This option provides the most basic replacement plan by allocating revenues from the potential fee increases equal to the current average cost to replace a single field annually -- $500,000. Please keep in mind that this would only cover the cost of replacing approximately one field per year, not the two fields per year that Parks anticipates in order to replace all synthetic turf fields in 10 years. As a result, this option would require approximately $6.9 million of capital funds (i.e. REET) in order to replace all of the fields over a ten-year period. However, it would result in a stream of funds (approximately $462,000 per year) to provide General Fund relief for the costs to operate the fields. 

 Year

# of fields needing to be replaced

Replacement Cost

Option 1

Current Year Balance

Cumulative Cash Flow

2014

1

622,200

500,000

(122,200)

(122,200)

2015

1

521,240

500,000

(21,240)

(143,440)

2016

0

0

500,000

500,000

356,560

2017

1

748,949

500,000

(248,949)

107,611

2018

2

1,001,895

500,000

(501,895)

(394,284)

2019

8

3,380,147

500,000

(2,880,147)

(3,274,431)

2020

4

2,792,157

500,000

(2,292,157)

(5,566,588)

2021

1

470,574

500,000

29,426

(5,537,162)

2022

3

1,993,545

500,000

(1,493,545)

(7,030,706)

2023

1

371,793

500,000

128,207

(6,902,500)

Total

22

11,902,500

5,000,000

(6,902,500)

(6,902,500)

Pros:

         Provides a way to implement a capital replacement strategy partially backed by user fees while still covering operating costs.

         Allows for General Fund relief of $462,000 starting in 2015.

Cons:

         Given that an average of two fields need to be replaced each year (22 fields over a 10 year period), this option does not provide enough fee-based funds to fully cover the cost of replacing all of the fields over the long term.  Rather, this option only provides enough funding to replace one field per year.

         $6.9 million of additional capital funding will be needed to fully fund field replacement costs.

Option 2: Dedicate 100% of Increased Fee Revenue to Field Replacement

Summary:  This option dedicates all of increased fee revenue ($481,000 in 2014; $962,000 in 2015 and beyond) to field replacement costs.  It would cover 77% (or $9.1 million) of the ten year cost to replace all 22 fields.  It would reduce the amount of REET need to support field replacement costs from $11.9 million to $2.8 million over ten years.    

 

 

# of fields needing to be replaced

Replacement Cost

Option 2

Current Year Balance

Cumulative Cash Flow

2014

1

622,200

481,000

(141,200)

(141,200)

2015

1

521,240

962,000

440,760

299,560

2016

0

0

962,000

962,000

1,261,560

2017

1

748,949

962,000

213,051

1,474,611

2018

2

1,001,895

962,000

(39,895)

1,434,716

2019

8

3,380,147

962,000

(2,418,147)

(983,431)

2020

4

2,792,157

962,000

(1,830,157)

(2,813,588)

2021

1

470,574

962,000

491,426

(2,322,162)

2022

3

1,993,545

962,000

(1,031,545)

(3,353,706)

2023

1

371,793

962,000

590,207

(2,763,500)

Total

22

11,902,500

9,139,000

(2,763,500)

(2,763,500)

Pros: 

         Provides a way to implement a capital replacement strategy where over 75% of the cost is supported by user fees.

         Reduces the City’s contribution for field replacement costs from $11.9 million to $2.8 million over ten years.

Cons:

         Does not provide any General Fund relief for operating costs related to athletic fields.

Communication Plan

If the City chooses to implement any of the options presented here as part of the 2014 budget process, the Department would begin working with the users in a collaborative process to be decided on jointly between the Mayor’s Office and the City Council. 

Parks would post information about the process on the Parks website, and the Athletics Office would actively engage with users on a regular basis from October through June 2014.


[1] Real Estate Excise Tax

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