Title
Discussion regarding Parks and Recreation Financial Sustainability Strategy and fees.
Summary
This item provides an overview of the Parks and Recreation Financial Sustainability Strategies developed in partnership with 110%, Inc., Parks and Recreation staff, and the Parks and Recreation Commission. Staff is seeking City Council's consideration of adopting The Monarch Financial Sustainability Strategy as the framework for establishing and adjusting fees, rather than adopting individual fees within the City's Master Fee Schedule. This is a timely request as staff anticipates pre-sales for memberships beginning in November. This approach establishes Council-approved cost recovery goals while providing staff the flexibility to make pricing decisions based on actual service costs, market conditions, and operational needs.
The strategies establish a consistent, data-driven approach to evaluating the full cost of recreational programs, services, and facilities. Services were organized into categories based on their level of community benefit versus individual benefit, with cost recovery goal ranges established using financial and operational data that account for both direct and indirect expenses, including materials, staffing, benefits, and contracted services.
For The Monarch, the strategy establishes nine service categories with cost recovery goals ranging from 0% for Human Services to 150-175% for Merchandise and Food & Beverages. Services providing greater community benefit have lower cost recovery expectations, while those providing greater individual benefit have higher expectations. For example, a Beginner Activity costing $1,000 to provide would be expected to generate $500-$700 in revenue under its 50-70% cost recovery goal, while a facility rental costing $1,000 would be expected to generate $1,200-$1,400 under its 120-140% goal. Revenue generated by higher-recovery services helps offset the costs of those with lower recovery expectations.
Because The Monarch has not yet opened, staff worked with 110%, Inc. and a recreation center expert consultant to develop conservative revenue and expense projections in the absence of actual operating data. The attached Financial Sustainability Strategy and Monarch Financial Framework Draft Report establishes the service categories, cost recovery goals, and pricing methodology.
The strategy is particularly important given City Council's direction to achieve 100% cost recovery within its first five years of operation. While services providing greater community benefit will have lower cost recovery expectations, their costs must be offset by revenue generated elsewhere within the facility to achieve the overall goal. This requires a flexible pricing approach that allows staff to respond to market conditions, operational expenses, and customer demand.
Staff will present recommended membership and daily admission fees for The Monarch. Additional program and facility rental fees have not yet been finalized and will be established using the strategy and cost calculator developed by the consultant. Adoption of the strategy will allow staff to begin establishing fees and membership pre-sales using available financial projections while refining pricing decisions as actual operating data becomes available.
At this time, only The Monarch Financial Sustainability Strategy is being recommended for adoption through an amendment to the City's Master Fee Schedule. The Department-wide strategy will be presented for discussion and adoption during the FY28 budget process.
The work session will provide City Council an opportunity to review the strategies, discuss the proposed approach to establishing fees, and consider the financial and community impacts of The Monarch's cost recovery goals.
Prior City Council Action
N/A
Supporting documents attached:
Monarch Financial Framework Draft Final Report
Supplement A: Financial Sustainability Policy
Recommended Action
Discuss only.