For the past 15 years, city councilmembers, city managers, planners and other administrators have emphasized different areas of growth and identity in an attempt to put Maricopa “on the map.”[quote_box_right]Parks & Rec Debt Service
Voter approved 2008 for $65.5 million
Paid through secondary property tax
Started Jan. 1, 2014 at 3%
Ends July 1, 2030 at 6.335%
Ak-Chin grant $7.4 million ($1.48 million annually) ends July 1, 2019
Rate of return: 65%[/quote_box_right]
In 2008, a major move was made to bolster that development when voters approved a $65.5 million bond measure to expand the city’s parks, recreation and library facilities. The bonds were placed on a 15-year amortization schedule and are to be paid in full by 2030 via a secondary property tax.
After almost five years of planning, flood mitigation and eventually construction, Copper Sky Regional Park and Multi-Generational Center opened in the spring of 2014 at a cost of $52 million. The facility, being brand new, was expected to create an initial budgetary deficiency, Mayor Christian Price said.
“We’ve never operated a facility like this before… so you look around and see how other cities do it,” Price said. “But you have to remember that as soon as this facility comes out of the ground, you have a giant hit to the General Fund.”
To help cushion that blow, a $7.4 million grant was awarded to the city by the AK-Chin Indian Community to be distributed over the course of five years at $1.48 million annually.
To prevent undue burden on the city when the grant runs out, Price said, council set a goal.
That goal, he said, was to generate enough revenue through usage fees to cover at least 75 percent of operational costs and eventually shrink that margin to cover 100 percent of the cost.
Now, as the city enters the fifth and final year of the Ak-Chin grant, administrators are sifting through the facility’s budget in an attempt to lower overhead and get the facility on track to self-sustainability.
Not only will the $1.48 million cushion be taken away after next fiscal year, but the city is currently experiencing only about a 65 percent return, Interim Community Services director Fred Gray said.
In July, former Community Services Director Kristie Reister presented a financial review of Copper Sky at a Budget, Finance and Operations (BFO) Subcommittee meeting in an effort to address the impending situation and to both reduce costs and increase revenue.
The aquatic center was heavily scrutinized for its high overhead. Other suggested cuts were to simple expenses such as office supplies and advertising.
Additionally, in light of the recent increase in state minimum wage, increasing membership rates to reflect an increase in general labor costs was discussed at the July BFO meeting. This is most likely to take the form of increased day-use fees to encourage the purchase of monthly and annual memberships.
However, when considering rate increases, Price wants to err on the side of caution.
“Where’s the break-even point? How much do you let go so that you subsidize that because that’s what the taxpayers demand?” Price said. “They want to use [Copper Sky] for an economical price.”
Gray has since replaced Reister as head of the Community Services Department on an interim basis.
Gray has extensive experience in Community Services, including more than a decade as Tuscon’s Parks and Recreations director. And though his time with the City of Maricopa is currently considered provisional, he does agree changes must be made.
However, he said, any changes need to be done in such a way they “don’t impact services.”
Though officials seem to be working hard to compensate for the lack of a grant, Financial Services Director Brenda Hasler insisted that despite any potential shortcomings in the Copper Sky budget the city would never be in jeopardy of defaulting on any bond payments. Doing so would mean a significant blow to the city’s credit rating, so the city would make other budget shifts to prevent that from happening.
“We budget conservatively,” Hasler said. “We never budget [overall] expenditures over and above revenues.”
Accordingly, as the city prepares for life without the Ak-Chin grant, they must consider the impact of an increased burden on the city’s General Fund, the fund that AKIC grant money was channeled through.
And therein lies the rub.
As Price put it, the city must continue to subsidize the facility in such a way that rates do not price out the residents. As Gray put it, the city should be leery of sacrificing services. And as Hasler put it, the city cannot default on its debt obligations.
Instead, a balancing act must be performed that in the end keeps residents happy, Copper Sky afloat and the city financially solvent.
Additionally, for those who suggest issuing the remaining $13 million bond money to compensate, Price said, no way. The city doesn’t want to over-leverage itself and risk its credit-worthiness.
“Just because your credit card limit says $100,000, does it mean you should spend $100,000 if you only make $50,000 a year? No, it doesn’t.”
This story appears in the February issue of InMaricopa.