proposed surf coast shire aquatic and leisure centre

Prepared by SGL Consulting Group Australia Pty Ltd

www.sglgroup.net

Proposed Surf Coast Shire Aquatic and Leisure Centre – Financial Models Final Report - Financial Model Commercial In Confidence

September 2014

SGL Consulting Group Australia Pty Ltd Adelaide 2a Mellor St West Beach SA 5024 Phone: +61 (08) 8235 0925 Fax: +61 (08) 8353 1067 Email: [email protected] Brisbane PO Box 713 Mount Gravatt Queensland 4122 Mobile: +61 (0) 416 235 235 Email: [email protected] Melbourne Level 6, 60 Albert Road South Melbourne VIC 3205 Phone: +61 (03) 9698 7300 Fax: +61 (03) 9698 7301 Email: [email protected] Perth 19 Clayton Street East Fremantle WA 6158 Phone: +61 (0) 8 9319-8991 Mobile: +61 (0) 407 901 636 Email: [email protected] Sydney 1/273 Alfred St Nth North Sydney NSW 2060 Mobile: +61 (04) 17 536 198 Email: [email protected]

SGL also has offices in: • Auckland • Christchurch • Wellington

(VIC 63.2011) Volume One – COGG IRFS – Key Findings and Recommendations - 24 July 2013 Commercial in confidence. SGL Group Consulting Pty Ltd www.sglgroup.net

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Table of Contents

1 Introduction ......................................................................................................... 5 1.1 Introduction ............................................................................................................. 5 1.2 Background ............................................................................................................. 5 1.3 Concept Plan and Indicative Capital Cost ............................................................. 6 1.4 Capital Cost Review ................................................................................................ 7 1.5 Demographic and Catchment Review .................................................................... 7

1.5.1 Surf Coast Shire population overview .................................................................. 7 1.5.2 Torquay catchment Population ............................................................................ 9 1.5.3 Age Profile Torquay catchment .......................................................................... 11 1.5.4 Older Age Profile ............................................................................................... 12 1.5.5 Other population characteristics ........................................................................ 12 1.5.6 Strengths and Weaknesses of the Torquay catchment ...................................... 13

1.6 Torquay Community and Civic Precinct Opportunity Study .............................. 14 1.6.1 Population Trends and Forecasts for Torquay North ......................................... 14 1.6.2 Armstrong Creek Urban Growth ........................................................................ 14 1.6.3 Geelong Ring Road ........................................................................................... 15 1.6.4 Summary of Key Issues ..................................................................................... 15

1.7 General Aquatic Facility Trends ........................................................................... 15 1.7.1 Specific Aquatic Facility Trends ......................................................................... 16 1.7.2 Potential Future Aquatic Facility Trends ............................................................ 19

1.8 Waterslide and Water Play Development Trends ................................................ 20 1.8.1 Splash Pads and Water Play Equipment ........................................................... 20 1.8.2 Adventure Water Slides ..................................................................................... 21 1.8.3 Body Ride Water Slides ..................................................................................... 21 1.8.4 Summary of Water Play Features ...................................................................... 22

2 Introduction ....................................................................................................... 23 2.1 Facility Options Business and Financial Models ................................................ 23

2.1.1 Business Growth ............................................................................................... 23 2.1.2 Price Growth/Increases ..................................................................................... 23 2.1.3 Consumer Price Index (CPI) .............................................................................. 23

2.2 Other Business Model Key Assumptions ............................................................ 24 2.2.1 Operating Hours ................................................................................................ 24 2.2.2 Entry Charges ................................................................................................... 24 2.2.3 Recurrent Operating Expenditure ...................................................................... 24 2.2.4 Recurrent Maintenance ..................................................................................... 24 2.2.5 Major Maintenance/Refurbishment .................................................................... 24 2.2.6 Programs and Services ..................................................................................... 24 2.2.7 Crèche/Occasional Care .................................................................................... 25 2.2.8 Insurance .......................................................................................................... 26 2.2.9 Food and Beverage and Merchandising ............................................................ 26 2.2.10 Pre-Opening Expenses and Sponsorship ........................................................ 26 2.2.11 Building Depreciation and Cost of Capital ........................................................ 26 2.2.12 Business Sensitivity ......................................................................................... 27 2.2.13 Management Options ...................................................................................... 27 2.2.14 Proposed Staff Structure ................................................................................. 29

2.3 Scenario One – Traditional Centre - Base Case 10 year Business Model ......... 30 2.3.1 Scenario One – Traditional Centre – Base Case Financial Model ...................... 30 2.3.2 Business Case Scenario Comparisons .............................................................. 30 2.3.2.1 Optimistic Case Option ................................................................................... 31 2.3.2.2 Conservative Case ......................................................................................... 31 2.3.2.3 Facility Business Scenario Comparison .......................................................... 32

Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014

2.4 Scenario Two – Health and Wellness Centre – Base Case 10 year Business Model .............................................................................................................................. 32

2.4.1 Scenario Two – Health and Wellness Centre – Base Case Financial Model ...... 33 2.4.2 Business Case Scenario Comparisons .............................................................. 33 2.4.2.1 Optimistic Case Option ................................................................................... 34 2.4.2.2 Conservative Case ......................................................................................... 35 2.4.2.3 Facility Business Scenario Comparison .......................................................... 35

2.5 Scenario Three – Smaller Traditional Centre – Reduced facility Scope ............ 36 2.5.1 Impact of Reduced Scope ................................................................................. 36 2.5.2 Scenario Three – Smaller Traditional Centre – Base Case Financial Model ...... 37 2.5.3 Business Case Scenario Comparisons .............................................................. 37 2.5.3.1 Optimistic Case Option ................................................................................... 37 2.5.3.2 Conservative Case ......................................................................................... 38 2.5.3.3 Facility Business Scenario Comparison .......................................................... 38

2.6 Facility Scenario Business Case Scenario Comparisons .................................. 39 2.6.1 Depreciation Cost .............................................................................................. 39 2.6.2 Cost of Capital ................................................................................................... 39

Directory of Tables TABLE 1.1 PEAK POPULATION ALL TOWNS, SURF COAST SHIRE, DECEMBER 2012 –

JANUARY 2013 ................................................................................................................................ 9 TABLE 1.2 TOTAL POPULATION, TORQUAY/JAN JUC/BELLBRAE/BELLS BEACH AREA, 2011-

2031 ................................................................................................................................................ 10 TABLE 1.3 INDICATORS OF PHYSICALLY ACTIVE COMMUNITY ................................................... 13 TABLE 2.1 BUSINESS GROWTH ........................................................................................................ 23 TABLE 2.2 LEARN TO SWIM ASSUMPTIONS .................................................................................... 25 TABLE 2.3 MEMBERSHIPS ASSUMPTIONS ...................................................................................... 25 TABLE 2.4 OPERATING PERFORMANCE ......................................................................................... 25 TABLE 2.5 SCENARIO ONE – TRADITIONAL CENTRE BASE CASE ............................................... 30 TABLE 2.6 SCENARIO ONE – TRADITIONAL CENTRE OPTIMISTIC CASE – 10% MORE USE .... 31 TABLE 2.7 SCENARIO ONE –TRADITIONAL CENTRE CONSERVATIVE CASE –10% LESS USE 31 TABLE 2.8 FACILITY BUSINESS SCENARIO COMPARISONS......................................................... 32 TABLE 2.9 SCENARIO TWO – HEALTH AND WELLNESS CENTRE BASE CASE .......................... 33 TABLE 2.10 SCENARIO TWO – HEALTH AND WELLNESS CENTRE OPTIMISTIC CASE – 10%

MORE USE ..................................................................................................................................... 34 TABLE 2.11 SCENARIO TWO – HEALTH AND WELLNESS CENTRE CONSERVATIVE CASE –

10% LESS USE .............................................................................................................................. 35 TABLE 2.12 FACILITY BUSINESS SCENARIO COMPARISONS....................................................... 36 TABLE 2.13 SCENARIO THREE – SMALLER TRADITIONAL CENTRE BASE CASE ...................... 37 TABLE 2.14 SCENARIO THREE – SMALLER TRADITIONAL CENTRE OPTIMISTIC CASE – 10%

MORE USE ..................................................................................................................................... 37 TABLE 2.15 SCENARIO THREE – SMALLER TRADITIONAL CENTRE CONSERVATIVE CASE –

10% LESS USE .............................................................................................................................. 38 TABLE 2.16 FACILITY BUSINESS SCENARIO COMPARISONS....................................................... 39 TABLE 2.17 FACILITY BUSINESS SCENARIO - AVERAGE ANNUAL OPERATING AND CAPITAL

COSTS COMPARISONS ............................................................................................................... 39

Appendices APPENDIX A Proposed Year One Fees and Charges APPENDIX B Scenario One – Traditional Centre Base Case Financial Model APPENDIX C Scenario One – Traditional Centre Optimistic Case Financial Model APPENDIX D Scenario One – Traditional Centre Conservative Case Financial Model APPENDIX E Scenario Two – Health and Wellness Centre Base Case Financial Model APPENDIX F Scenario Three – Smaller Traditional Centre Optimistic Case Financial Model APPENDIX G Scenario Four Conservative Case Financial Model

Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014

1.1 Introduction This report provides a background review and summary of business and financial models for the proposed development of the Surf Coast Shire Aquatic and Leisure Centre.

The proposed facility to be constructed at a cost of approximately $20.8M will see the development of a multi purpose integrated aquatic and leisure. This report covers the following sections:

• Financial Models Global Impacts

• Business and demand assumptions

• Business performance summaries

• Business sensitivity analysis

A key requirement of the project brief was to develop financial models based on three scenarios including:

• Scenario One – Traditional Centre

• Scenario Two – Health and Wellness Centre

• Scenario Three – Smaller Traditional Centre - Reduced facility scope – (25 metre and program pool area, group fitness and crèche)

This report should be read in association with the financial model spread sheets listed in Appendix C, D and E of this report. The report has been prepared for Surf Coast Council and the Surf Coast Aquatic and Leisure Centre Taskforce as a guide to potential business development for the proposed aquatic and leisure centre.

1.2 Background In November 2009, Surf Coast Shire Council completed a Feasibility Study for a proposed Aquatic and Leisure Centre in Torquay. The report provided a concept plan, financial operating and construction costs and a number of site location options that could accommodate such a facility. Council noted the report in 2009. From 2009 to 2014, Council planned for and has partially delivered on the Community and Civic Precinct located in Torquay North. This precinct comprises of new council offices surrounded by playing fields of 2 x AFL ovals, 3 x football (soccer) pitches, 4 x netball courts and a major community hub (Grant Pavilion). The recreation component of the Precinct is still being delivered and a new housing estate along with students from the Surf Coast Secondary School will use these facilities. The Precinct was planned on the principles of a regional facility providing for the broader Surf Coast Shire area. In 2012, during the construction of the Community and Civic Precinct, Council resolved to put aside a parcel of land identified in the Civic Precinct Opportunity Study (2011), being the north east corner of the site for a future swimming pool/aquatic healthy living facility.

1 Introduction

Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence

In 2013, Council resolved to revisit the 2009 Feasibility Study. The resolution included the establishment of a “Taskforce” for a six-month period. The role of the Taskforce was to update the 2009 report and advise Council.

The key objectives of the Taskforce are to:

• Advise and contribute to the development of an action plan that outlines a process of advocacy for a Surf Coast Shire Aquatic and Leisure Centre;

• Provide advice to Council on a number of options for consideration in the development of such a facility, including the comparison with other “like” facilities based on similar size demographic catchments as Surf Coast Shire;

• Conduct a review of the 2009 feasibility study, updating new circumstances or change since 2009 that would impact on such a facility.

The Taskforce consisting of community members and Councillors has met three times and a report will be presented to Council for consideration in June 2014.

1.3 Concept Plan and Indicative Capital Cost In 2009 Consultants, Sports and Leisure Solutions developed a Feasibility Study for a Surf Coast Shire Aquatic and Leisure Centre. The Feasibility Study recommended the development of a new indoor aquatic and leisure centre to include the following components:

• Indoor 25-metre pool x 8 lanes

• Leisure water / learn to swim pool

• 500 square metre Gym

• 200 square metre group fitness room

• Allied health consulting suites

• Café

• Crèche

• Change rooms

• Office / Administration area

Mantric, project architects developed a number of concept options based on the above facility components. The site of the Community and Civic Precinct was identified as the preferred location. Quantity Surveyors Aquenta developed a revised capital cost estimate in June 2013. The indicative capital cost for the facility as at June 2013 was $20,758,680.


Figure 1 Proposed Surf Coast Shire Aquatic and Leisure Centre

1.4 Capital Cost Review Quantity Surveyors Trevor Main and Associates have developed a revised capital cost plan based on the 2009 concept design. Based on escalated prices to 2018 the capital cost estimate is $25,387,000. Appendix A provides a copy of the detailed cost report.

1.5 Demographic and Catchment Review The following provides a summary of the demographic profile of the Surf Coast Shire and identifies key characteristics and catchment data that will impact on the usage of the proposed Surf Coast Aquatic and Leisure Centre.

1.5.1 Surf Coast Shire population overview

The Surf Coast Shire, with its beach, bushland and rural environment, is located in south-western Victoria, 120km from Melbourne, 21km south of Geelong and close to the extended Geelong Ring Road. The Surf Coast Shire is a popular destination for intra and interstate holiday makers, international visitors, or those looking to make a permanent sea change. The Shire includes the townships of Aireys Inlet, Anglesea, Deans Marsh, Fairhaven, Jan Juc, Lorne, Moriac, Torquay and Winchelsea and a significant rural population including farming and rural residential communities.

Figure 1: Surf Coast Shire map


The following provides a summary of the key population characteristics:

• Surf Coast Shire is one of the fastest growing municipalities in Victoria

• Between 2012-13 it was the fourth fastest growing municipality in regional Victoria, growing by 2.9%.

• In 2013 Surf Coast Shire’s population was 28,282. This is the latest available official figure from the Australian Bureau of Statistics and is called the Estimated Resident Population.

• The population is estimated to be 29,247 in 2014 (Forecast .id)

• The permanent population has grown from 20,556 since 2001

• The population is forecast to grow to 44,787 by 2031, representing a 58% change 2013-31

• 7,632 new households are forecast between 2011-2031

• Approximately 50% of the Shire’s permanent population live in Torquay-Jan Juc

• The major drivers of strong forecast growth include:

o The high amenity lifestyle including the natural environment

o The large pool of baby boomers entering retirement age

o Improved access with opening of Geelong Ring Road

o Proximity to Geelong and Melbourne and for a variety of services and social, educational and employment prospects for all age groups.

o Limited development capacity in other Victorian coastal areas within two hours of Melbourne for residential development (e.g. Mornington Peninsula) also increases Surf Coast Shire’s attraction for traditional city to coast retirement.

o Armstrong Creek will impact on Surf Coast Shire demand (Source: forecast .id)

• Part time populations and peak populations are also significant including holiday home owners, seasonal visitors, event populations and day trippers.

• The Shire’s peak overnight population (estimated on a peak night such as new year’s eve) December 2012/January 2013 was estimated at 83,654 (Economic Indicators Bulletin Geelong).

Figure 2: Past, current and forecast population, Surf Coast Shire, 2001-2031 Source: 2001-2011 Estimated Resident Population, Australian Bureau of Statistics, Cat. No. 3218.0, Regional Population Growth, 2013. 2016 onwards Forecast .id.


20,556 22,333

26,666

31,374

44,787

0

10,000

20,000

30,000

40,000

50,000

2001

2006

2011

2016

2031

Data note: forecasts are only as good as the assumptions they are based on, and.id works closely with the council to ensure detailed information about current and planned residential development activity. The forecasts are however updated on a rolling cycle to take into account changes in the real world, such as economic factors that may impact on the pace of development and population growth (forecast .id). Table 1.1 Peak Population All Towns, Surf Coast Shire, December 2012 – January 2013

Permanent Population

2012

Peak Overnight Population

*

Permanent to peak

multiplier % of Shire permanent

% of Shire peak

Torquay/Jan Juc/Bellbrae/Bells Beach 15,447 36,257 2.3 57.5 43.3 Aireys Inlet/Fairhaven/Moggs Creek 1,052 8,060 7.7 3.9 9.6 Anglesea 2,487 14,739 5.9 9.3 17.6 Deans Marsh 336 831 2.5 1.3 1.0 Lorne and District 1,499 15,954 10.6 5.6 19.1 Winchelsea (and Winchelsea South) 2,238 3,112 1.4 8.3 3.7 Surf Coast Rural Towns 3,807 4,701 1.2 14.2 5.6 Total Surf Coast Shire 26,866 83,654 3.1 100.0 100.0 Figure 2: Peak Population all towns, Surf coast Shire, December 2012-Jan 13 Data notes: The data should be considered indicative only however as it is not directly comparable to other population data in this paper for the following 2 reasons: 1. City of Greater Geelong undertake their own permanent population estimates in the smaller areas in 2012 to allow comparison with peak data for the 2012/13 season. 2. Definitions of areas/methodology differs from those in figures using the .id Consultant data.

1.5.2 Torquay catchment Population

Leisure and sporting facility trends and benchmarking generally indicate that local or municipal recreation or sporting facilities have a primary catchment radius of 5km and a secondary catchment radius of 10km. In general approximately 75% to 85% of users will reside within a 0km to 5km radius of a facility with the remaining 15% to 25% coming from areas within the 5km to 10km radius of the facility. In rural areas these catchments may be slightly larger depending on the distribution and availability of facilities and the secondary catchment may extend to up to 20km particularly for people wishing to access specific programs such as learn to swim, squad training and therapy based classes. Figure 3:Catchment area from 2009 Report Figure 3: 2009 Surf Coast Aquatic and Leisure Centre Feasibility Study Catchment Mapping Source: (Sport and Leisure Solutions, Final Report Surf Coast Shire, Aquatic Leisure Centre, Feasibility Study, Surf Coast Shire, 2009) Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence

http://forecast.id.com.au/surf-coast/residential-development?

http://forecast.id.com.au/surf-coast/residential-development?

Based on this definition, the Torquay catchment area within approximately 10km of Torquay includes Torquay, Jan Juc, Bellbrae and Bells Beach. Figure 4 represents the closest match of readily available Census and forecast geographies/data within the 10 km radius from Torquay. The only population not captured by this is methodology is about 200 people in the Freshwater Creek area and about 250 in Breamlea area, so analysis of Torquay, Jan Juc, Bellbrae and Bells Beach (as defined by this map) is a good representation of the catchment.

Figure 4: Torquay Catchment area Torquay-Jan Juc-Bellbrae-Bells Beach Source:.id forecasts

The following provides a summary of the key catchment population issues:

• The Torquay catchment (within approximately 10km of Torquay) includes Torquay, Jan Juc, Bellbrae and Bells Beach and had a population of 15,570 in 2011 and about 17,000 in 2013.

• This Torquay catchment area is forecast to increase to about 28,000 in 2026 and 31,000 in 2031.

• Other potential catchment populations:

o Armstrong Creek: consideration was given to inclusion in the catchment area of part of Armstrong Creek’s forecast growth (areas closer to Torquay than Leisurelink). Any facility may draw users from this area, however an aquatic centre is planned for Armstrong Creek anytime ten years onwards, so these users could not be relied on in the future.

o Anglesea: while any facility will draw some users from Anglesea for specific programs, this population could not be relied on as it falls well outside the 10km catchment, located about 20kms from Torquay. Anglesea’s population is estimated at 2,522 in 2013 with little growth forecast through to 2031 and an older age profile than the primary catchment.

• Inclusion of part time populations in the catchment was considered however capturing detailed data on these populations is difficult and it is unclear how these translate into usage of an aquatic facility. More evidence would be required to include peak population data in the catchment.

Table 1.2 Total Population, Torquay/Jan Juc/Bellbrae/Bells Beach area, 2011-2031

2011 2013 2016 2021 2026 2031

Total Change 2013-2031

Av Annual % Change

2013-2031

Torquay North 6,112 6,818 7,986 10,792 14,476 17,660 10,842 5.43 Old Torquay – Torquay West 4,882 5,354 6,286 7,146 7,508 7,696 2,342 2.04 Jan Juc – Bellbrae – Bells Beach 4,576 4,946 5,508 6,022 6,022 5,965 1,019 1.05 Torquay Catchment Area 15,570 17,118 19,780 23,958 28,006 31,321 14,203 3.41 Source:.id Consulting Forecast. http://www.surfcoast.vic.gov.au/My_Council/Population_Information


http://www.surfcoast.vic.gov.au/My_Council/Population_Information

1.5.3 Age Profile Torquay catchment

The key age profile of the Torquay catchment indicates:

• The Surf Coast Shire age structure in 2011 included a larger than regional Victorian and G21 Region average proportion of ‘primary schoolers’ (0-11) and 'Parents and homebuilders' (35 to 49 year olds) and a smaller proportion of ‘tertiary independent’ and ‘young workforce’ (18 -34 year olds) and people in the 70 years and over age groups.

• The Torquay/Jan Juc/Bellbrae/Bells Beach area (base Torquay catchment) between 2013 and 2031 shows growth across all age groups, including strong family growth, which is unusual for a regional area where ageing populations are the norm.

• The most active users of aquatic facilities are aged up to 40 years.

• The number of people under 40 in the Torquay catchment area increases from 9,187 in 2013 15,477 in 2031.

• The proportion of people under 40 however decreases from 53.7% of the population to 49.4%. This reflects the fact that despite the attraction of the catchment for young families, the catchment population is still ageing.

• With significant growth in the “baby boomers” over 50s and 60s the industry is re-visiting this population usage profile. They represent however smaller numbers than the under 40 year olds in the base Torquay catchment area.

• In Torquay/Jan Juc/Bellbrae/Bells Beach area the number of people 65 years and over will increase from 2,011 in 2013 to 4,517 in 2031 reflecting baby boomers ageing in place and in migration of those seeking coastal retirement.

• The proportion of people aged 65 years and over will increase from 11.7% of the base Torquay catchment area population in 2013 to 14.4% in 2031.

Figure 5: 5 year age groups, Torquay/Jan Juc/Bellbrae/Bells Beach area, 2013-31

1,306 1,3491,186

1,001848 919

1,146

1,432 1,493

1,221 1,1691,057 980

752497

338224 200

2,162 2,2132,102

1,841

1,519 1,438

1,866

2,336 2,438 2,4312,303

2,1911,962

1,541

1,211

855

554356

0

500

1,000

1,500

2,000

2,500

3,000

5 year age groups, Torquay/Jan Juc/Bellbrae/Bells Beach area

2013-2031

2013

2031


Figure 6: Number of people under 40, Torquay/Jan Juc/Bellbrae/Bells Beach area. Source: .id Consulting Forecast. http://www.surfcoast.vic.gov.au/My_Council/Population_Information

1.5.4 Older Age Profile

The following graph details the age profile of older residents. Figure 8: Number of 55 and 65 years and over Torquay/Jan Juc/Bellbrae/Bells Beach area, 2013-31 Source: .id Consulting Forecast. http://www.surfcoast.vic.gov.au/My_Council/Population_Information

1.5.5 Other population characteristics

Key points:

• An active community with a higher proportion of people in Surf Coast Shire compared with Victoria meeting physical activity guidelines.

• A lower proportion, than the Victorian average, of people in shire with sedentary behaviour

• Higher income levels are a positive indicator in terms of ability to pay for services provided at an aquatic centre.

• Income levels in the Torquay/Jan Juc/Bellbrae/Bells Beach area are higher than Surf Coast Shire overall, G21 Region and Victoria.


http://www.surfcoast.vic.gov.au/My_Council/Population_Information

• Higher proportion than comparison areas earning $1,000 a week or more and a lower proportion earning under $400 a week.

• Transport access to any facility is important. 91% of households in the Surf Coast Shire in 2011 have one or more vehicles representing a higher proportion than Victorian average.

• Linkages with public transport will also be an important issue that will need to be addressed if an outdoor aquatic centre is developed in Torquay.

Table 1.3 Indicators of physically active community

Indictor Surf Coast Shire

Victoria Year Source

People who met physical activity guidelines

69.8%

63.9%

2011-

12

Department of Health, Victorian Population Health Survey 2011/12

Sedentary behaviour (sitting > 7 hours per day)

28.0%

32.6%

2011

VicHealth Indicators Survey 2011, http://www.vichealth.vic.gov.au/Research/ Vichealth-Indicators/LGA-Profiles.aspx

Source: Australian Bureau of Statistics, Census of Population and Housing 2011. Usual residence count (see glossary) Profile.id Figure 10: Individual weekly gross income, Torquay/Jan Juc/Bellbrae/Bells Beach area, 2011

1.5.6 Strengths and Weaknesses of the Torquay catchment

The following provides a summary of the key strengths and weaknesses of the Torquay population that will impact on the provision of an aquatic and leisure centre: Strengths

• A very physically active community that is likely to result in a high usage of aquatic and leisure facilities and visits per capita.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

% o

f pop

ulat

ion

Individual weekly gross income, proportion of population (15 years and over) in each income bracket,

Torquay/Jan Juc/Bellbrae/Bells Beach and selected comparison areas, 2011

Torquay catchment areaSurf Coast ShireVictoria


http://www.vichealth.vic.gov.au/Research/

• The age profile of the catchment with 53.7% of residents under the age of 40 in 2013. This is the demographic that are the most active users of aquatic facilities.

• Forecast growth particularly in Torquay North will enhance future viability.

• Increasing share of Surf Coast Shire’s population in catchment area forecast through to 2031.

• Increasing numbers of older residents correlate with increasing trend to use of aquatic facilities by this age group.

Weaknesses

• A smaller than ideal catchment size that will require a substantial annual subsidy

• Proximity to Leisure Link Waurn Ponds.

• Planned Aquatic Centre in Armstrong Creek.

• Strong forecast growth based on continuation of current trends. Actual growth rates may vary due to unforeseen changes in economic, social or demographic trends.

1.6 Torquay Community and Civic Precinct Opportunity Study

In 2011 the Sweett Group were commissioned to undertake the Torquay Community and Civic Precinct Opportunity Study. Whilst this report provides a summary of the precinct opportunities it should be noted that the demographic Section 1.5 within this report provides updated current and predicted future population estimates.

1.6.1 Population Trends and Forecasts for Torquay North

Torquay North is defined to incorporate the areas of Torquay to the north of Deep Creek, south of South Beach Road, and east of the Surf Coast Highway. This is the area that would be served by a potential new activity centre on the Community and Civic Precinct site or another appropriate location in Torquay North Torquay Jan Juc has experienced high levels of population growth in recent times. The Sustainable Futures Plan Torquay Jan Juc 2040 analysing Id forecasts and the State Government’s Victoria in the Future growth figures estimated that approximate 25,000 to 30,000 people would be expected within the settlement boundary for Torquay Jan Juc by 2040. Over 10,000 people were expected in the Torquay North area including the existing Greenfield zoned land surrounding the Community and Civic Precinct and a planned growth area north west of Messmate Road.

1.6.2 Armstrong Creek Urban Growth

A key future growth opportunity that will impact on the future growth role and market demand for various uses in Torquay will be the Armstrong Creek Urban Growth area located to the south of Geelong, 8km kilometres from Torquay Jan Juc. Comprising a total of 4,284 hectares, the projected population is 55,000 – 65,000 with approximately 22,000 homes to be built with a range of diversity and a mix of densities. Initial findings have also confirmed that the presence of the two employment areas within Armstrong Creek will provide regional employment opportunities in addition to the construction based jobs with the development of Armstrong Creek over the next 20 years. These factors will help contribute to opportunities for residents of Torquay – Jan Juc in a short distance from the townships. It should be noted that the master plan for Armstrong Creel identifies the future development (10 years Plus) of an aquatic and leisure centre to service the population. The identified site for the future development is approximately 10km from the Torquay Community and Civic Precinct.


1.6.3 Geelong Ring Road

The Geelong Ring Road has provided a significant new element of transport infrastructure in the region, which has increased accessibility to the coast and to Melbourne. The Economic and Land Use Impacts of the GRR Report March 2009 has identified a range of impacts for Surf Coast Shire. Between 2006 – 2031 the following upper level forecasts and potential impacts were identified:

• A population growth of 15,000 (13% of the regions growth).

• An employment growth of 5,100 (9% of the regions growth).

• A demand for 7,900 dwellings (13% of the regions growth).

• 21,000 sq m. of office floorspace (8% of the regions growth).

• 47 Hectares of Industrial Land (8% of the regions growth).

• Moderate increases in the rates of demand for residential and employment land.

• Marked improvement of accessibility to the Melbourne.

• An increase in commuting for both work and discretionary purposes.

• Large tourism boosts/ improved tourism flows and spending.

1.6.4 Summary of Key Issues

The Sweett Group report indicated the following key issues for the Torquay area:

• There is strong planning policy that Torquay Jan Juc accept the majority of urban growth within the Surf Coast Shire.

• Ongoing population growth, tourism opportunities and improved road infrastructure (Geelong Road) will continue to drive demand for activity and development in Torquay.

• Residential development will be the key land use from in the Torquay North area which will require provision of recreational, community, education and activity supporting amenities and services. Council’s Strategic planners have confirmed that the staged development of the surrounding residential precincts has seen development to the south reach the Community and Civic Precinct by 2013 with northern residential areas to occur beyond this timeframe.

• Future regional population growth (particular from Armstrong Creek) is likely to determine demand and employment requirements (including Government departments) for Surf Coast Shire commercial/ offices uses in the medium to long term. Short term land banking would be required to allow the market to “catch-up”. Given the greenfields location of the Precinct and likely existing alternatives in central Torquay, these uses are unlikely to have current market appeal on the Precinct in the short to medium term.

• The Community and Civic Precinct has been identified as a major focus for provision of recreation and community facilities to services Torquay North and the wider Shire.

1.7 General Aquatic Facility Trends The following graphic details the main leisure and aquatic facility markets that support a successful facility.


1.7.1 Specific Aquatic Facility Trends

Specific Aquatic Facility Trends that are impacting on people in the 21st Century include:

a) Aquatic Facility Trends and Main User Markets

Traditionally many local authority aquatic leisure facilities were built for specialist or limited market users (i.e. competitive swimmers or high level sport participants). Detailed planning and comprehensive feasibility studies now are able to show more targeted user profiles. Such studies usually identify the demographic profile of residents in the project area, their current aquatic and leisure participation patterns and use of surrounding aquatic facilities that provide a sound base for more user friendly facilities. The majority of aquatic facility market research indicates future complexes must equally cater for four distinct aquatic user markets being:

Successful Facilities Model

SUCCESSFUL FACILITIES KEY

COMPONENTS TO MEET MAIN USER

MARKETS

HEALTH & WELLNESS • Gym and Exercise studios

• Massage/Beauty Treatments

• Warm water program pools

HOSPITALITY • Training and program rooms

• Meeting/social facilities

• Café and merchandising

LEISURE & ADVENTURE • Indoor water play complex

• Free form play pools

• Adventure rides and pools

FITNESS & EDUCATION • Competition/training pools

• Learn to Swim pools

• Spa/saunas

• Club/association facilities


• Recreation and Leisure Market - usually made up of families, people coming with friends and groups for fun, relaxation, social activity and low level competition/participation.

• Competitive/Training/Fitness Market - usually made up of people predominantly attending facilities alone for structured fitness or competition activities.

• Education Market - usually made up of children and adults wishing to increase water safety and survival skills. Includes Learn to swim classes, school and club use and individuals improving their skills and techniques. They require hot water pools and water depths with some straight edges and easy water access etc.

• Health and Therapy Market - usually made up of children, adults and older adults wanting to relax or exercise in hot water. This market also includes specialist health condition groups such as arthritis, asthma suffers, etc. They require hot water pools and associated health relaxation areas, i.e. Spa/saunas, etc.

Research indicates that the recreation and leisure market will be the largest as it contains people of all ages, ability, types, interest and gender. The competitive/ training/fitness market is a more specialist market as it usually contains younger, fitter and more active people who have made time to train and compete. Previous research conducted by SGL Leisure Planning Team indicates that in many cases 60% to 70% of facility users come from the recreation/leisure sector with 20% to 30% coming from the competitive/training/fitness markets. The health and therapy and education markets can range from

Main Aquatic User Markets

MAXIMUM AQUATIC FACILITY USER ATTRACTION SUBJECT TO

DEMOGRAPHIC

EDUCATION • 10% to 15% of users

• Learn to swim, schools etc.

• Special needs users

THERAPY • 10% to 15% of users

• Hydrotherapy

• Exercise classes in water

REC, LEISURE & ADVENTURE

• 60% - 70% of pool users

• Families, friends, social groups

• Coming for fun and play

FITNESS & TRAINING • 20% to 25% of pool users

• Competitive swimmers

• Club/association users


10% to 20% of the market subject to the age and health profile of the community in which the facility is located. The most successful centres attract all user markets and should be set up to allow people to participate in a range of activities at the one site. The further addition of health and fitness facilities, spas and saunas and social areas have been very successful at many aquatic facilities, as they add to the user experience and contribute to people being attracted to attend these facilities more often.

b) Aquatic Facilities Activity Areas

Industry trends indicate that the majority of current indoor standalone aquatic facilities revenue does not meet annual operating costs. Average losses range from $200,000 to $500,000 plus per annum. The limited numbers of Centres that are raising their operating costs show minimal return on capital investment. A review of Centres' that break even or return an operational surplus indicates that these Centres record:

• High visits per meter

• High expense recovery ability including capital repayment

• High operating profits per visit

• Excellent program range returns and attendances

• High secondary spend returns

• Excellent range of attendance types (adult/child ratio)

• Draws users from a large catchment area

• High revenue returns from health and fitness

To ensure financial viability and attract potential interest from capital investors, any future facility development must be designed with the above business aims in mind. This supports usually recommend activity area components that can:

• Provide a mix of shallow leisure/recreation water with programmable water areas.

• Provide high revenue generating complementary service areas such as spas, saunas, and food and beverage services.

• Are located in a high traffic/visitation area.

• Are located as part of other leisure facility development.

• Are located in single catchment zones – not competing with other similar facilities.

Traditionally, commercial investment in aquatic facilities has been in specialist pools such as learn-to-swim or as additions to health and fitness clubs. The high capital cost and limited financial returns have contributed to this situation. Recent projects do see an increase in the number of management groups prepared to invest capital funds in return for longer-term agreements.

c) Health and Fitness Activity Areas

Industry trends indicate that users of aquatic facilities are also significant users of health and fitness facilities. Location of each of these activity components at the one site improves financial viability. Health and fitness has the capacity to record high expense recovery returns, with many centres returning 125% to 180% of expenditure. Traditionally these returns can also attract commercial investors and operators to health and fitness facilities. Locating these facilities at aquatic centres increases the potential of cross-selling and spin-off use. It also improves the membership/program user and casual user ratio.


d) Ancillary Services and Activity Areas

In recent years, there has been a trend to develop a range of complementary businesses in conjunction with aquatic leisure facilities. These include:

• Wellness Centres/Day Spas: There is an emerging trend of adding in an area for specialist wellness activities, services and merchandising. The key services found at successful wellness centres include massage, beauty therapy treatments, gentle exercise classes and relaxation and time out activities.

Inclusion of such facilities offers a broader range of activities to a larger age profile of people. The massage and beauty therapy are high yield sales activities and also can have high linked merchandising product sales.

It is essential in developing such areas that they are located with good views, away from general public noise and viewing areas and have very good finishes and fittings. There needs to be a close by lounge for relaxation after treatment or classes.

• Sports Medicine: Development of consulting rooms, with patient access to health and fitness and pools, have been excellent revenue generators.

• Health and Therapeutic Services: Health consultancies, weight loss and therapeutic services linking in worker and accident rehabilitation patients to use the range of facilities with centre memberships paid by relevant authorities.

• Health and Beauty Services: Leased areas to services such as beauticians, hair salons and body toning.

1.7.2 Potential Future Aquatic Facility Trends

Aquatic Facility reviews completed in New Zealand, North America, Canada, the Middle East and China during the past ten years by SGL provides a guide to likely new aquatic facility innovations and trends. Key features that should be considered when developing or retrofitting high use aquatic facilities are:

a) Leisure Play Equipment

Changing static shallow water areas into water play and fun zones is one of the most popular renovations. This can be done by adding simple play equipment, water sprays and interactive equipment to existing pools. Added to this is the option to introduce inflatable play equipment to allow the area to be changeable.

b) Major Attraction Leisure Features

Water slides and similar challenge and adventure type activities have remained popular as long as the venue has a range of slides/rides to keep peoples interest. Single ride facilities struggle to keep interest due to the lack of variety. Multi ride areas allow users to try different length and configuration rides. There are also a range of new water rides that have a slide component leading to another ride experience such as dropping into a bowl and then water, or onto a ramp and then into a splash pool. A key design trend is to link all slides to a common entry platform to ensure one staff person can supervise the area. A common splash down zone also allows one lifeguard to control a range of ride water entry points.

c) Special Effects

A range of North American Indoor leisure parks have added computerised light shows and sound systems to allow night time areas to be changed. The use of lights and sound provided users with new indoor facility experiences at night-time. Some centres have gone further by adding projection walls to incorporate movies and short video clips with their new light and sound effects.


d) Leisure Furniture

Many centres aim to keep parents and children at centres longer (to encourage greater secondary spending on food/beverage/merchandising) by providing quality furniture. The use of pool side lounges, tables, chairs, umbrellas, has allowed families to stay close to the water areas in relative comfort.

e) Food/Beverage/Merchandising

This area has seen some major changes through development of pool side and dry area multi serving zones. Linked to these are high quality wet and dry lounge zones where people are encouraged to sit down and relax. A number of innovative centres provide extensive lounge areas as well as pool side furniture. These centres use mobile food and beverage carts to sell items directly to centre users (i.e. they take the product to the customer). A number of other centres visited have used merchandising innovations, such as all existing customers having to go through the sales area. Other innovations included:

• Multi-media video screens through the centre reminding customers about programs, special promotions, and food/beverage and merchandising specials.

• Providing customers with discount vouchers (at entry to centre) to spend in food/ beverage and merchandising outlets or on their next visit.

• Offering combination sales specials to attract a higher spend per person.

1.8 Waterslide and Water Play Development Trends The aquatics Industry has gone through a number of development phases and product and facility development trends with waterslides and water play equipment since the first facilities were developed around the 1970s and 1980s. The first stages started with a range of commercial developers building stand-alone waterslides and then some Councils installing waterslides and some limited play equipment. This section lists details on these facility development trends and identifies options for various facility types and associated costs and user attraction.

1.8.1 Splash Pads and Water Play Equipment

In the late 1980s and 1990s there was significant demand to take static water areas into a more water playground theme. This saw a number of wave pools built as part of multi-purpose leisure centres as well as the introduction of multi use areas such as:

• Rapid Rivers

• Waterslides

• Water play equipment

• Food and beverage services pool side

Most facilities developed in the 1990s saw designers build free form pools and then add somewhat ad hoc basic play equipment and sprays. This approach has now been superseded by play and water splash parks that maximise play and fun and then add water zones appropriate to the size and scale of development and user. The photos on the following page details examples of recently developed water play components.


1.8.2 Adventure Water Slides

In the 1980s and 1990s there was a major increase in different ranges of waterslide products and design. The open and closed individual rider slides were improved for speed and thrill experience. Over time, a number of new products were also developed with more efficient and different size rider flumes that allowed different ride experiences such as:

• Inflatables,

• Multi-person tubes and

• Multi-person rafts.

To enable higher speeds to run these rides tower height was increased from the standard 8 to 10 metres to 12 metres and some even went up to 15 metres high. The waterslide flumes were also increased in diameter from 800 mm (individual rider width) to 1200 mm for inflatables and 1320 mm for multi-person inflatables and rafts. The extra width and height in the slides allowed designers to introduce high speed and high-banked radius turns therefore increasing variation in waterslide rides and experiences.

1.8.3 Body Ride Water Slides

Traditionally body ride waterslides are the most common waterslides as they have fast throughput of riders and can take up a smaller development footprint and can use exit flumes at concourse level to quickly clear the slide for the next rider. Again subject to the height of entry to the slide and length of slide hourly through put can much more than that of adventure or signature rides and can range from 400 to 600 riders per hour. Industry trends indicate that it is essential that a number of body slides be developed off one tower to ensure ride options and keep people interested with different ride experiences. These slides work best at sub-regional, district or local facilities with lower user numbers and the key to success is ensuring that multiple rides are offered to ensure high throughput and variety of ride experience.


Subject to ride type chosen these slides also require less staffing to control riders and this can impact on the operational viability of such rides at lower throughput centres. Most waterslides require staff at the entry point to control when riders enter the slide but when using exit flumes staff at the bottom of the slide can be minimal.

1.8.4 Summary of Water Play Features

The provision of waterslides at any Centre could be seen as a catalyst to attracting greater annual family and children and youth visits than projected. If water slides or aquatic play features were deemed appropriate the Centre user throughput would best be serviced by a range of lower cost, higher use body slides rather than developing a higher cost major adventure or signature ride and body slides at this site. Regional locations such as Warun Ponds (2 slides), Frankston (2 major signature water slide rides) and Greensborough (2 major signature waterslide rides) have invested more than $4M in major rides as they have been developed for 1 million plus visits and therefore can justify such large capital investment whilst also having higher usage and income to cover the large staffing cost to supervise and control such rides. The capital cost of these major facilities would be cost prohibitive to this project.


2.1 Facility Options Business and Financial Models Detailed business and financial models have been developed for the proposed Surf Coast Aquatic and Leisure Facility. The financial models have been developed using SGL Consulting Group’s computerised financial software. This process enables each stage to be developed into a 10-year financial model. The 10-year projections are developed using the following global impact assumptions.

2.1.1 Business Growth

Industry trends indicate it takes up to 3 years to establish new facilities usage and business. The financial models therefore assume average business and usage in year three. These figures are impacted by reduced business and usage in year 1 at 5% less and Year 2 at 2% less (than year 3). From year 3 onwards business growth has been increased by 3% each year to match the anticipated population growth. Advice received by Councils Manager of Planning indicated that current growth areas of Torquay and Jan Juc are expected to generate a growth rate of about 3% a year (about 345 dwellings per year) over the next 17 years (out to 2031) based on evidence presented to the C6 Panel hearing from various experts. By year eight-business growth may reduce slightly unless the facility is upgraded or new components are added. The financial models therefore sees the following business growth impacts. The participation growth within the model therefore reflects the anticipated population growth in the key catchment area. Table 2.1 Business Growth

Year 1 2 3 4 5 6 7 8 9 10 95% 98% 100% 103% 106% 109% 112% 111% 110% 109%

2.1.2 Price Growth/Increases

Fees and charges price growth is set at 1% annually from year 2 onwards with CPI applied on top of this.

2.1.3 Consumer Price Index (CPI)

The financial model is annually impacted by a CPI increase. This has been set at 2.5% from year 2 to year 10.

2 Introduction


2.2 Other Business Model Key Assumptions The following business and management assumptions impact on the financial model.

2.2.1 Operating Hours

The facility is estimated to be open 93 hours per week and operating all days except Christmas Day and Good Friday. The facility would normally operate between the hours of 6.00am to 10.00pm Monday to Friday and 8.00am to 9pm Saturday and Sunday.

2.2.2 Entry Charges

Entry charges are based on similar charges to aquatic and sports facilities and exclude GST. They have also been benchmarked against other rural aquatic and leisure Centre’s.

The health and fitness area provides for both membership and casual entry into group fitness classes. Program fees are based on benchmarked aquatic and leisure centres. A copy of the proposed first year fees and charges for 2016/2017 is provided in Appendix B.

2.2.3 Recurrent Operating Expenditure

The recurrent operating expenditure including administration, marketing, maintenance and cleaning is based on the industry benchmarks for similar facilities. An allowance has been made for the facility commencing operation in 2016/2017.

2.2.4 Recurrent Maintenance

The following recurrent maintenance allowances have been made within the model.

• Building maintenance - $60,000

• Equipment maintenance - $20,000

• External/landscaping maintenance - $50,000

2.2.5 Major Maintenance/Refurbishment

Industry trends indicate that indoor aquatic and leisure facilities usually require a capital improvement investment about every 5 years to ensure they are presented at a high standard. The high use facilities and corrosive environment will require ongoing capital funding. To compensate for this the financial model allows for a capital investment of $350,000 every 5 years. This is recorded below the operational performance bottom line.

2.2.6 Programs and Services

A range of wet and dry program and service usage assumptions have been made based on benchmarking of other similar facilities. The usage and visitations assumptions included in the model have been based on the average expected visits for a population the size of Surf Coast, benchmarking of other similar facilities and the size and capacity of the facility components i.e. gym and pool size to cater for the programs and services. The two key areas of income generation for a facility of this type are the learn to swim program and the dry health and fitness membership programs. The model provides a conservative estimate of the usage assumption for these program areas due to the lack of an existing facility and business history. The following table details the assumptions made in the model for these two key program areas and provides a comparison of the income, expenditure and visitation should the projected usage figures be doubled. Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence

It should be noted that any increased usage would also have a corresponding impact on the secondary spend component. This comparison has been completed for Scenario One – Traditional Centre Base Case. Table 2.2 Learn to Swim Assumptions

Classes Per

Week Average Visits

Per Yr. Average

Income Per Yr. Average

Expenditure Per Yr.

Current Scenario One – Traditional Centre Base Case

60 15,921 $269,971 $30,601

Revised Scenario One – Traditional Centre Base Case (Learn to Swim Usage increased by 100%)

120 31,843 $539,941 $61,202

Table 2.3 Memberships Assumptions

Members Average Visits Per Yr.

Average Income Per Yr. Expenditure

Current Scenario One – Traditional Centre Base Case

595 66,044 $537,187

Revised Scenario One – Traditional Centre Base Case (Learn to Swim Usage increased by 100%)

1,190 132,088 $1,074,374

Additional expenditure

(salary) $30,601

It should be noted that the increase in usage will also have the following impact on secondary spend.

• Base Case Model net secondary spend $25,887

• Revised Base Case Model (learn to swim and membership increased by 100%) net secondary spend $42,900

The following table provides a summary of the total Centre performance for the two options. Table 2.4 Operating Performance

FACILITY STAGES Current Scenario One –

Traditional Centre Base Case

(000)

Revised Scenario One – Traditional Centre

Base Case Usage increased by 100%

(000) Average Income $2,390 $3,283 Average Expenditure $2,564 $2,742 Average Centre Operating Performance ($174) $541

Average Visits 227 309

2.2.7 Crèche/Occasional Care

The model currently assumes that Centre management would operate the Crèche. The service is often subsidised or returns a small surplus and is included to support parents/carers access and participation to the programs and services offered at the Centre. It is also a requirement of any government funding body that users of the centre would have access within a reasonable distance to childcare facilities to support participation. The crèche service in an aquatic and leisure centre usually operates during the hours of 9am to 1pm Monday to Friday. The area is then often used as a meeting room/program space after these hours if there is the ability to pack away equipment. Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence

Whilst scenario one – Traditional Centre and two – Health and Wellness Centre include the crèche as part of the facility there is also the opportunity to make use of an existing childcare facility that is located within close proximity to the Centre. The multi purpose children’s services hub that is proposed as part of the Community and Civic Precinct may satisfy the criteria. The Centre will include services for surf coast families including a kindergarten, maternal and child health and childcare services. Scenario three – Smaller Traditional Centre does not include the crèche within the centre. The opportunity to lease/license this area to an external provider was also identified. While this may be an option to further explore research indicates that given the size of the childcare service (number of place up to 40) it is doubtful that either a community or commercial operator would be interested in providing the service unless a subsidy was provided by council over an agreed period of time.

2.2.8 Insurance

The model includes an allowance for public liability and building insurance.

2.2.9 Food and Beverage and Merchandising

Due to the potential large number of visitors to the Centre the model assumes significant secondary spend income based on a percentage per spend per visitor. This model assumes that centre management operates the food and beverage and merchandising areas. Over the past 5 years there has been a shift in the operations of these areas. Previously the food and beverage and merchandise areas were seen as a drain on the operational performance of the center’s and provided limited financial returns. Many Centre’s leased or licensed this section of the business to minimise the costs. However these areas are now being designed to reduce the staffing requirements and provide a better range of food, beverage and merchandise options. As a result there are now a number of centre’s that are reporting significant operating profits from this area.

2.2.10 Pre-Opening Expenses and Sponsorship

An allowance of $100,000 has been provided for preopening expenses including, staffing, promotion/marketing and training. This figure has been amortised over the first three years of the model. No major allowance for sponsorship i.e. naming rights has been provided within the model. This would be seen as a below the operating line contribution. A one off equipment sponsorship of $5,000 is provided in year one of the model.

2.2.11 Building Depreciation and Cost of Capital

The financial models have been developed and include operational budgets and total project costs including depreciation and cost of capital. Industry trends indicate that aquatic leisure centres usually require a capital improvement investment about every 3 to 5 years to ensure they are presented at a high standard. The high use of facilities and very corrosive atmosphere requires such investment. To compensate for this the financial model allows for a capital investment of $350,000 every 5 years. Depreciation has been based on the capital cost of each option less the noncapital expenses for the proposed development i.e. fees, escalation etc. For the purpose of the model the structural components have been depreciated over 50 years and the plant and equipment over 10 years. Cost of Capital based on advice received from Councils Finance area the cost of capital has been calculated at 6% interest on 75% of the capital cost. The cost of capital includes both interest and principle costs for a term of 20 years. Cost of capital and depreciation has not been calculated for Scenario Three – Smaller Traditional Centre. To enable these figures to be calculated an agreed scope of works would be required to guide the development of revised concept options. Once the option was agreed a capital cost estimate report could be developed.


2.2.12 Business Sensitivity

Business sensitivity analysis has been completed on the base case (average) business model for a range of different scenarios for each facility option including 10% less use and 10% more use.

2.2.13 Management Options

There are a range of management options that could be considered for the management and operation of the proposed Centre. The five options currently operating in Victoria include:

• In house – direct council management

• Contract management

• Lease

• Partnership

• Company limited by guarantee

The following provides a summary of each option.

(i) In house – direct council management

• Council directly operates and manages the facility through the employment of a facility manager and associated staff.

• Council is responsible for all aspects of the facility's operation including operating policies, financial performance and asset maintenance.

• In some cases, a management or advisory committee may be established to help with policy development and to ensure community involvement in management decisions.

(ii) Contract management

• Council contracting the management of the centre to an individual manager, a community-based organisation or a facility management company.

• The roles and responsibilities of Council and the contractor are set out in a formal contract for a fixed period of time.

(iii) Lease

• Council would negotiate the development of a formal lease detailing the rights and responsibilities of the Council (lessor) and the operator (lessee).

• The lessee has full property rights and is responsible for financial performance, asset maintenance and operational policies.

(iv) Partnership

• Council would develop a workable management agreement prior to the facility being built.

• Partner agreement should detail funding, cost-sharing, legal and access arrangements, so that responsibilities and usage rights are clear from the outset.

(v) Company Limited by Guarantee.

• New management option recently adopted by Moree Plains Shire Council, Frankston City Council and Wyndham City Council.

• Council establishes a separate company responsible for the management of the centre under the Australian Companies Act.

• This management model in Victoria can operate under section 193 of the Victorian Local Government Act (Municipal Enterprise) and requires State Government Risk Analysis approval.

• Council would be the shareholder and sets statement of intent, operating conditions and key business and service level outcomes.


• Allows management to work in a more commercial environment, subject to the agreed statement of intent and constitution.

Based on a review and discussion with the Project Taskforce about the management options it was agreed that the Company Limited by Guarantee be used in the financial models developed for the proposed Surf Coast Centre. The impact of this management model on the financial model includes:

• An allowance of $80,000 for governance costs

• Increased health and fitness and general memberships due to improved sales results 20% increase.

• Reduction in program instructors rates (due to agreed spread of hours and deletion of penalty rates)

A base management and staffing structure has been developed for the Centre based on the agreed management model. A summary of key staffing positions and allocations by Equivalent Full Time (EFT) positions against average salary is listed in Appendix C, D and E. The staff organisational structure used in the model is detailed on the following page. Salaries are based on a revised management option where Council manages the facility under a commercial arrangement. Salaries are impacted by CPI annually and every 3 years by an extra 2% to take into account wage increases. The diagram on the following page details the draft proposed staffing structure.


2.2.14 Proposed Staff Structure

Surf Coast Shire Council

(Shareholder)

CEO 1 EFT

Operations Coordinator

1 EFT

Aquatics Programs 1 EFT

Lifeguards 30 EFT

Learn to Swim/Program Instructor

Aqautic Supervisors 1 EFT

Operations Leader 1 EFT

Reception & Customer Service Coordinator

1 EFT

Customer Services/Reception

Staff

Cleaning (Contractors)

Maintenance (Contractors)

Business Manager /Sales 1EFT

Sales/Marketing

Health & Fitness Coordinator

1 EFT

Gym Instructors

Personal Trainers

Programs Coordinator

Program Instructors

SURF COAST FACILITIES MANAGEMENT COMPANY (SCFMC) (Company Limited by Shares/Directors appointed by SCSC)


2.3 Scenario One – Traditional Centre - Base Case 10 year Business Model

The consultant team has used the SGL Leisure Facilities Computerised Facility Financial model to develop a business model for the Surf Coast facility. Detailed excel financial models have been developed to assist with presenting a 10 year projection.

2.3.1 Scenario One – Traditional Centre – Base Case Financial Model

The Scenario One – Traditional Centre base case 10-year business projections are detailed in the following table. Table 2.5 Scenario One – Traditional Centre Base Case

CATEGORY Y E A R S AVERAGE PER

ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)

Revenue $1,798 $1,912 $2,017 $2,189 $2,329 $2,476 $2,682 $2,748 $2,815 $2,940 $2,391 Expenditure $2,236 $2,298 $2,333 $2,438 $2,506 $2,577 $2,701 $2,766 $2,832 $2,956 $2,564 Long Term Maintenance $0 $0 $0 $0 $350 $0 $0 $0 $0 $350 $70

Total Operating Performance ($438) ($386) ($316) ($249) ($527) ($101) ($19) ($18) ($17) ($366) ($244)

Cost of Capital $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 TOTAL PROJECT COST EXCLUDING DEPRECIATION ($2,072) ($2,020) ($1,950) ($1,883) ($2,161) ($1,735) ($1,653) ($1,652) ($1,651) ($2,000) ($1,878) Depreciation $561 $561 $561 $561 $561 $561 $561 $561 $561 $561 $561 Total Project Cost Including Depreciation ($2,633) ($2,581) ($2,511) ($2,444) ($2,722) ($2,296) ($2,214) ($2,213) ($2,212) ($2,561) ($2,439)

Note: Does not include development costs such as, land tax, Council rates.

The 10-year base case business projections indicate:

• Revenue is expected to increase annually ranging from $1.798M in year 1 to $2.940M by year 10.

• Expenditure is expected to increase annually ranging from $2.236M in year 1 to $2.956M in year 10.

• The Centre is expected to operate at an annual operating deficit from year 1 to 10. The average operating deficit before cost of capital and depreciation are included is estimated to be approximately ($244,000) per annum.

• The average operating deficit once cost of capital and depreciation are included is estimated to be approximately ($2.439M) per annum.

• Centre attendances are expected to gradually increase each year from 205,000 in year 1 to 235,000 by year 10.

2.3.2 Business Case Scenario Comparisons

The tables on the following page provide a 10-year impact comparison for the following different business scenarios:

• Optimistic Case - 10% more use than the base case

• Conservative Case - 10% less use than the base case


2.3.2.1 Optimistic Case Option

The following table details the 10-year optimistic case option.

Table 2.6 Scenario One – Traditional Centre Optimistic Case – 10% More Use


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)


Total Operating Performance ($288) ($225) ($146) ($64) ($330) $109 $208 $215 $222 ($116) ($42)

Cost of Capital $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $1,634 $2,537 TOTAL PROJECT COST EXCLUDING DEPRECIATION

($1,922) ($1,860) ($1,781) ($1,698) ($1,965) ($1,526) ($1,426) ($1,419) ($1,412) ($1,750) ($1,676)

Depreciation $561 $561 $561 $561 $561 $561 $561 $561 $561 $561 $561 Total Project Cost Including Depreciation

($2,483) ($2,421) ($2,342) ($2,259) ($2,526) ($2,086) ($1,987) ($1,980) ($1,973) ($2,311) ($2,234)


The 10-year optimistic case business projections indicate:

• Revenue is expected to increase annually ranging from $1.969M in year 1 to $3.223M by year 10. • Expenditure is expected to increase annually ranging from $2.257M in year 1 to $2.989M in year

10. • The Centre is expected to operate at an annual operating deficit from year 1 to 5 and year 10, and

an operating surplus from year 5 to 9. The average operating deficit before cost of capital and depreciation are included is estimated to be approximately $42,000 per annum.

• The average operating deficit once cost of capital and depreciation are included is estimated to be approximately ($2,234M) per annum.


2.3.2.2 Conservative Case The following table details the 10 year conservative case option.

Table 2.7 Scenario One –Traditional Centre Conservative Case –10% Less Use CATEGORY Y E A R S AVERAGE

PER ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)

Revenue $1,626 $1,729 $1,823 $1,979 $2,106 $2,238 $2,424 $2,484 $2,545 $2,658 $2,161

Expenditure $2,214 $2,275 $2,309 $2,412 $2,479 $2,548 $2,670 $2,735 $2,801 $2,924 $2,537

Long Term Maintenance $0 $0 $0 $0 $350 $0 $0 $0 $0 $350 $70



($2,223) ($2,180) ($2,120) ($2,067) ($2,358) ($1,944) ($1,881) ($1,885) ($1,890) ($2,251) ($2,080)

Depreciation $561 $561 $561 $561 $561 $561 $561 $561 $561 $561 $561

Total Project Cost Including Depreciation

($2,784) ($2,742) ($2,681) ($2,628) ($2,919) ($2,505) ($2,442) ($2,446) ($2,451) ($2,812) ($2,641)



The 10-year conservative case business projections indicate:






2.3.2.3 Facility Business Scenario Comparison

The following table provides a comparison of the average operational performance over the 10-year period of each model based on:

• 10% more use

• Base Case – Average predicted use

• 10% less use

Table 2.8 Facility Business Scenario Comparisons

FACILITY STAGES

FACILITY BUSINESS SCENARIO Optimistic Case 10% More Use Average Net Profit/(Loss)

Over 10 years

Base Case (Average Use) Average Net Profit/(Loss)

Over 10 years

Conservative Case 10% Less Use Average Net Profit/(Loss)

Over 10 years Revenue $2,620 $2,391 $2,161 Expenditure $2,591 $2,564 $2,537 Long Term Maintenance $70 $70 $70 Total Operating Performance ($42) ($244) ($446) Cost of Capital $2,537 $1,634 $2,537 Total Project Cost Excluding Depreciation ($1,676) ($1,878) ($2,080)

Depreciation $561 $561 $561 Total Project Cost Including Depreciation ($2,234) ($2,439) ($2,641)

2.4 Scenario Two – Health and Wellness Centre – Base Case 10 year Business Model

The Scenario Two – Health and Wellness Centre Model Health and Wellness model includes a range of facility components that support health and wellness in addition to the traditional gymnasium and dry areas. The areas that have been included in the Scenario Two – Health and Wellness Centre model include: Consulting Suites - 200m2 of consulting suites to support allied health activities such as physiotherapist, massage etc.

Warm water pool – 18m x 10m warm water pool with ramp access.


Based on a recently completed quantity surveyor report for the above components the capital cost would be in the order of $3.5M to $3.6M. The anticipated capital cost for Scenario Two – Health and Wellness Centre based on the additional components could be in the order of $28,900,000. It should be noted that this figure is not based on any concept plan or independent cost plan. A concept plan and independent quantity surveyors report will be required to confirm a capital cost figure for this scenario. The inclusion of the warm water pool allows for the provision of additional therapy and rehabilitation programs and the use and hire of the pool by external health providers. The model assumes that the consulting suites are leased to an external provider. The Scenario One – Traditional Centre global assumptions such as CPI, business and price growth also apply to Scenario Two – Health and Wellness Centre.

2.4.1 Scenario Two – Health and Wellness Centre – Base Case Financial Model

The Scenario Two – Health and Wellness Centre base case 10-year business projections are detailed in the following table. Table 2.9 Scenario Two – Health and Wellness Centre Base Case


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)


Total Operating Performance ($346) ($288) ($240) ($137) ($411) $24 $115 $120 $124 ($218) ($124)


($2,210) ($2,152) ($2,103) ($2,001) ($2,273) ($1,839) ($1,748) ($1,743) ($1,739) ($2,082) ($1,989)


($2,870) ($2,813) ($2,764) ($2,662) ($2,934) ($2,501) ($2,409) ($2,404) ($2,400) ($2,743) ($2,650)





• The Centre is expected to operate at an annual operating deficit from year 1 to 5 and 10 and then an operating surplus from year 6 to 9. The average operating deficit before cost of capital and depreciation are included is estimated to be approximately ($124,000) per annum.




The tables on the following page provide a 10-year impact comparison for the following different business scenarios:





The following table details the 10-year optimistic case option for Scenario Two – Health and Wellness Centre. Table 2.10 Scenario Two – Health and Wellness Centre Optimistic Case – 10% More Use


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)


Total Operating Performance ($188) ($119) ($61) $57 ($203) $245 $354 $366 $376 $45 $87


($2,051) ($1,983) ($1,925) ($1,807) ($2,066) ($1,619) ($1,509) ($1,498) ($1,487) ($1,818) ($1,776)


($2,712) ($2,644) ($2,586) ($2,466) ($2,727) ($2,280) ($2,170) ($2,159) ($2,148) ($2,479) ($2,437)

Note: Does not include development costs such as, land tax, Council rates. The 10-year optimistic case business projections indicate:



• The Centre is expected to operate at an annual operating deficit from year 1 to 3 and 5 and return an operating surplus for years 4, 6 to 10. The average operating surplus before cost of capital and depreciation are included is estimated to be approximately $87,000 per annum.




2.4.2.2 Conservative Case

The following table details the 10 year conservative case option for Scenario Two – Health and Wellness Centre.

Table 2.11 Scenario Two – Health and Wellness Centre Conservative Case – 10% Less Use


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)




($2,368) ($2,321) ($2,282) ($2,195) ($2,480) ($2,060) ($1,987) ($1,989) ($1,990) ($2,344) ($2,202)


($3,029) ($2,982) ($2,942) ($2,856) ($3,141) ($2,721) ($2,648) ($2,650) ($2,651) ($3,006) ($2,863)









The following table provides a comparison of the average predicted operational performance over the 10-year period of each model based on:

• 10% more use


• 10% less use



FACILITY STAGES


Over 10 years


Over 10 years


Over 10 years Revenue $2,811 $2,571 $2,330 Expenditure $2,654 $2,626 $2,598 Long Term Maintenance $70 $70 $70 Total Operating Performance $87 ($124) ($338) Cost of Capital $1,863 $1,863 $1,863 Total Project Cost Excluding Depreciation ($1,776) ($1,989) ($2,202)

Average Depreciation $661 $661 $661 Total Project Cost ($2,437) ($2,650) ($2,863)

2.5 Scenario Three – Smaller Traditional Centre – Reduced facility Scope

The Scenario Three – Smaller Traditional Centre model includes a reduced scope of facility components from Scenario One – Traditional Centre. The key features of the reduced components include:

• Reduction in 25metre pool from 8 lanes to 6 lanes – 125m2 reduction

• Reduction of program/leisure pool area from 356m2 to 250m2 – 106m2 reduction

• Deletion of the Crèche

• Reduction in program rooms from two rooms to one room – area reduced to 150m2

2.5.1 Impact of Reduced Scope

The following details the assumed impact on usage as a result of the reduced facility scope:

• The global assumptions such as CPI, business and price growth will remain consistent.

• Usage of the 25 metre pool reduced by 20% adult entry and 15% child entry

• Learn to swim and rehabilitation/therapy programs will be reduced by 20% (accounts for both 25m and program pool).

• Lane hire reduced by 25%.

• Pool hire (carnivals reduced by 50%) – 8 lanes required for higher age group carnivals.

• Aquatic members reduced by 20%.

• Aquatic expenditure reduced by 20%

• General membership reduced by 10%.

• Group fitness participation spinning activity deleted (single purpose activity room).

• Crèche income, expenditure and usage deleted

• Above usage reductions will impact food and beverage and merchandise sales.

It should be noted that this model does not include depreciation or cost of capital due to the lack of facility concept plan or capital cost report.


2.5.2 Scenario Three – Smaller Traditional Centre – Base Case Financial Model

The Scenario three – Smaller Traditional Centre base case 10-year business projections are detailed in the following table. Table 2.13 Scenario Three – Smaller Traditional Centre Base Case


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)


Total Project Cost ($600) ($565) ($536) ($465) ($764) ($359) ($305) ($311) ($316) ($678) ($490)

Note: Does not include development costs such as, capital cost repayments, land tax, Council rates and depreciation.




• The Centre is expected to operate at an annual operating deficit from year 1 to 10. The average operating deficit is estimated to be approximately ($490,000) per annum.



The tables below provide a 10-year impact comparison for the following different business scenarios:




The following table details the 10-year optimistic case option for Scenario Three – Smaller Traditional Centre. Table 2.14 Scenario Three – Smaller Traditional Centre Optimistic Case – 10% More Use


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)





The 10-year optimistic case business projections indicate:





2.5.3.2 Conservative Case

The following table details the 10 year conservative case option for Scenario Three – Smaller Traditional Centre.

Table 2.15 Scenario Three – Smaller Traditional Centre Conservative Case – 10% Less Use


ANNUM ($000)

1 ($000)

2 ($000)

3 ($000)

4 ($000)

5 ($000)

6 ($000)

7 ($000)

8 ($000)

9 ($000)

10 ($000)










The following table provides a comparison of the average predicted operational performance over the 10-year period of each model based on:

• 10% more use


• 10% less use



FACILITY STAGES


Over 10 years


Over 10 years


Over 10 years Average Revenue $2,171 $1,979 $1,787 Average Expenditure $2,421 $2,399 $2,377 Average Long Term Maintenance $70 $70 $70 Average Total Project Cost ($320) ($490) ($660)

2.6 Facility Scenario Business Case Scenario Comparisons

The following table provides a comparison of the average predicted operational performance over the 10-year period of the model between the three scenarios.

Table 2.17 Facility Business Scenario - Average Annual Operating and Capital costs Comparisons

FACILITY STAGES

Scenario Scenario One –

Traditional Centre

Base Case (000)

Scenario Two – Health and Wellness Base Case

(000)

Scenario Three – Smaller Traditional

Centre Base case

(000) Revenue $2,391 $2,571 $1,979 Expenditure $2,564 $2,626 $2,399 Long Term Maintenance $70 $70 $70 Total Operating Performance ($244) ($124) ($490) Cost of Capital $1,634 $1,863 Not included TOTAL PROJECT COST EXCL DEPRECIATION ($1,878) ($1,989) Not Included

Depreciation $561 $661 Not included Total Project Cost Including Depreciation ($2,439) ($2,650) Not Included

*Figure in brackets represent a negative figure

2.6.1 Depreciation Cost

The cost of depreciation has been removed from the operating performance of each of the development Scenarios and placed as a below the line expense. The cost of depreciation Scenario One – Traditional Centre and Scenario Two – Health and Wellness Centre is:

• Scenario One – Traditional Centre: $561,121 per annum

• Scenario Two – Health and Wellness Centre: $661,121 per annum

• Due to the lack of concept plan and capital cost report depreciation for Scenario Three – Smaller Traditional Centre has not been calculated.

2.6.2 Cost of Capital

A calculation for the cost of capital has been completed for Scenario One – Traditional Centre based on the revised May 2014 capital cost estimate developed by Trevor Main Quantity Surveyors. A cost of capital calculation has also been calculated for Scenario Two – Health and Wellness Centre based on the estimated capital cost.


Cost of capital has not been calculated for Scenario Three – Smaller Traditional Centre at this stage due to the lack of agreed final scope, concept plans and capital cost estimate by a qualified quantity surveyors. The cost of capital for Scenario One – Traditional Centre and Scenario Two – Health and Wellness Centre assumes an interest rate on borrowings of 6% and that Council will fund 75% of this development with the balance to be found from other sources . The cost of capital includes both interest and principle costs for a term of 20 years.

• Scenario One – Traditional Centre: 75% of $25,387,000 = $19,040,250

• Scenario Two – Health and Wellness Centre: 75% of $28,900,000= $21,675,000

Based on the above the annual cost of capital would be:

• Scenario One – Traditional Centre: 75% of $25,387,000 = $1,634,292 per annum

• Scenario Two – Health and Wellness Centre: 75% of $28,900,000 = $1,863,432 per annum


APPENDIX A: Updated Capital Cost Estimate


APPENDIX B: Proposed Year One Fees and Charges

Area Category Proposed Fee

25 Metre Pool Adult Casual Entry $6.00 Child Casual Entry $4.00 Concession (Adult) Casual Entry $4.50 Concession (Child) Casual Entry $3.00 Family Casual Entry $18.00 Family Concession Casual Entry $4.50 Spectator Entry $2.00 School Recreation Visit $4.00 Watersport Entry Adult $5.00 Watersport Entry Child $3.50 Club Swimmer Adult $5.00 Club Swimmer Child $3.50 School Student - Secondary $3.50 School Student - Primary $3.50 Event Spectator - Adult $3.00 Event Spectator - Child $2.50 Lane Hire - Club $14.00 Lane Hire - Other $20.00 Competition Pool Hire - Watersports/Club Events Hire

$500.00

Competition Pool Hire - School Events $350.00 Learn to Swim Classes $14.00 Aquaerobics $13.00 Aquatic Membership Joining Fee $0.00 Aquatic Membership monthly payment $45.00

Leisure Pool Learn to Swim Pool

Adult Casual Entry $6.00 Child Casual Entry $4.00 Concession (Adult) Casual Entry $4.50 Concession (Child) Casual Entry $3.00 Family Casual Entry $18.00 Family Concession Casual Entry $15.00 Spectator Casual Entry $2.00 School Group Casual Use $3.00 Adult 10 Voucher $45.00 Adult 15 Voucher $60.00 Child/Senior 5 Voucher $15.00 Child/Senior 10 Voucher $28.00 Child/Senior 15 Voucher $40.00 Family 5 Voucher $70.00 Family 10 Voucher $115.98 Family 15 Voucher $381.82


Area Category Proposed Fee

Learn to Swim Class $14.00 Aquaerobics Class $13.00 Water Exercise/Physio Class $13.00 Birthday Parties $20/per participant Leisure & Program Pool Membership monthly payment

$45.00

Gym Adult Casual Rate $18.00 Concession Users $10.00 Schools Casual Visit $6.00 Gymnasium Membership Joinging Fee $40.00 Gymnasium Membership monthly payment

$70.00

Program Room Aerobic Class $14.00 Older Adults Classes $10.00 Toddler and Kinder Gym Classes $9.00 Casual Room Hire $20.00 Health and Fitness Membership Joining Fee

$40.00

Health and Fitness Membership monthly payment

$55.00

General Memberships Gold Membership Joining Fee $40.00 Gold Membership monthly payment $75.00 Gold Membership Concession Joining Fee

$40.00

Gold Membership Concession monthly payment

$63.00

Occasional Care Childcare $6.00


APPENDIX C: Scenario One – Traditional Centre – Base Case Financial Model 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Income by area Aquatic area $900,843 $962,048 $1,016,286 $1,104,819 $1,177,077 $1,253,057 $1,358,939 $1,394,280 $1,430,425 $1,496,017

Weights rooms $168,112 $179,534 $189,656 $206,177 $219,662 $233,841 $253,600 $260,195 $266,941 $279,181

Health & Fitness Programs $263,169 $281,037 $296,869 $322,716 $343,809 $365,986 $396,896 $407,201 $417,741 $436,879

General Memberships $202,350 $216,098 $228,281 $248,168 $264,398 $281,465 $305,249 $313,187 $321,306 $336,040

Support facilities $184,092 $194,653 $203,591 $219,135 $231,156 $243,640 $261,611 $265,758 $269,947 $279,531

Crèche $74,100 $78,351 $81,949 $88,206 $93,044 $98,069 $105,303 $106,972 $108,658 $112,516

Sundry income $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Income $1,797,666 $1,911,721 $2,016,632 $2,189,220 $2,329,145 $2,476,059 $2,681,598 $2,747,594 $2,815,018 $2,940,163

Expenditure by area Aquatic area $1,446,474 $1,483,751 $1,521,608 $1,591,275 $1,632,282 $1,674,345 $1,751,003 $1,794,329 $1,838,728 $1,920,991

Weights rooms $198,360 $203,319 $208,402 $217,780 $223,225 $228,805 $239,101 $245,079 $251,206 $262,510




Crèche $57,900 $59,348 $34,566 $63,569 $65,158 $66,787 $69,792 $71,537 $73,325 $76,625

Sundry income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$2,137,851 $2,198,208 $2,231,620 $2,366,892 $2,433,651 $2,502,269 $2,622,998 $2,685,796 $2,750,095 $2,870,875

Undistributed overheads $64,540 $66,154 $67,807 $70,859 $72,630 $74,446 $77,796 $79,741 $81,734 $85,412

Amortisation of pre-opening expenses $33,333 $33,333 $33,333 $0 $0 $0 $0 $0 $0 $0

Total expenditure $2,235,725 $2,297,695 $2,332,760 $2,437,751 $2,506,282 $2,576,715 $2,700,794 $2,765,537 $2,831,830 $2,956,288

Projected operating performance ($438,059) ($385,974) ($316,129) ($248,530) ($177,136) ($100,657) ($19,196) ($17,944) ($16,812) ($16,125)


APPENDIX D: Scenario Two – Health and Wellness Centre – Financial Model Base Case 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Income by area Aquatic area $978,648 $1,045,140 $1,104,062 $1,200,241 $1,278,740 $1,361,282 $1,476,309 $1,514,703 $1,553,969 $1,625,227

Weights rooms $168,112 $179,534 $189,656 $206,177 $219,662 $233,841 $253,600 $260,195 $266,941 $279,181




Crèche $74,100 $78,351 $81,949 $88,206 $93,044 $98,069 $105,303 $106,972 $108,658 $112,516

Sundry income $65,000 $61,500 $63,038 $65,874 $67,521 $69,209 $72,323 $74,132 $75,985 $79,404

Total Income $1,940,857 $2,062,008 $2,173,402 $2,356,929 $2,505,093 $2,660,622 $2,878,946 $2,949,924 $3,022,446 $3,156,956

Expenditure by area Aquatic area $1,473,474 $1,511,426 $1,549,974 $1,620,919 $1,662,667 $1,705,489 $1,783,548 $1,827,689 $1,872,921 $1,956,722

Weights rooms $198,360 $203,319 $208,402 $217,780 $223,225 $228,805 $239,101 $245,079 $251,206 $262,510




Crèche $57,900 $59,348 $60,831 $63,569 $65,158 $66,787 $69,792 $71,537 $73,325 $76,625

Sundry income $20,000 $20,500 $21,013 $21,958 $22,507 $23,070 $24,108 $24,711 $25,328 $26,468

$2,189,161 $2,250,940 $2,312,030 $2,423,623 $2,491,954 $2,562,186 $2,685,775 $2,750,087 $2,815,936 $2,939,619

Undistributed overheads $64,540 $66,154 $67,807 $70,859 $72,630 $74,446 $77,796 $79,741 $81,734 $85,412

Amortisation of pre-opening expenses $33,333 $33,333 $33,333 $0 $0 $0 $0 $0 $0 $0

Total expenditure $2,287,034 $2,350,426 $2,413,171 $2,494,482 $2,564,584 $2,636,632 $2,763,571 $2,829,828 $2,897,670 $3,025,031

Projected operating performance ($346,177) ($288,418) ($239,769) ($137,553) ($59,491) $23,990 $115,375 $120,096 $124,776 $131,925

Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence Page 1

APPENDIX E: Scenario Three – Smaller Traditional Centre Financial Model

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Income by area Aquatic area $752,316 $803,430 $848,726 $922,661 $983,006 $1,046,459 $1,134,883 $1,164,398 $1,194,583 $1,249,361 Weights rooms $168,112 $179,534 $189,656 $206,177 $219,662 $233,841 $253,600 $260,195 $266,941 $279,181 Health & Fitness Programs $179,379 $191,554 $202,341 $219,954 $234,325 $249,436 $270,497 $277,515 $284,693 $297,730 General Memberships $182,115 $194,488 $205,453 $223,351 $237,959 $253,319 $274,724 $281,869 $289,176 $302,436 Support facilities $156,677 $165,665 $173,272 $186,502 $196,732 $207,358 $222,653 $226,181 $229,747 $237,903 Crèche $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sundry income $55,000 $51,250 $52,531 $54,895 $56,268 $57,674 $60,270 $61,776 $63,321 $66,170 Total Income $1,493,599 $1,585,922 $1,671,979 $1,813,540 $1,927,952 $2,048,086 $2,216,626 $2,271,935 $2,328,460 $2,432,781 Expenditure by area Indoor stadium $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Aquatic area $1,393,713 $1,429,424 $1,465,752 $1,532,641 $1,571,909 $1,612,184 $1,685,753 $1,727,548 $1,770,379 $1,849,673 Weights rooms $198,360 $203,319 $208,402 $217,780 $223,225 $228,805 $239,101 $245,079 $251,206 $262,510 Health & Fitness Programs $170,368 $175,352 $180,232 $189,119 $194,643 $200,326 $210,193 $215,157 $220,237 $229,835 General Memberships $85,000 $87,125 $89,303 $93,322 $95,655 $98,046 $102,458 $105,020 $107,645 $112,489 Support facilities $143,782 $151,433 $157,991 $169,447 $178,137 $187,156 $200,350 $203,728 $207,150 $214,726 Crèche $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sundry income $5,000 $5,125 $5,253 $5,490 $5,627 $5,767 $6,027 $6,178 $6,332 $6,617 $1,996,222 $2,051,778 $2,106,934 $2,207,798 $2,269,196 $2,332,285 $2,443,882 $2,502,709 $2,562,950 $2,675,851 Undistributed overheads $64,540 $66,154 $67,807 $70,859 $72,630 $74,446 $77,796 $79,741 $81,734 $85,412 Amortisation of pre-opening expenses $33,333 $33,333 $33,333 $0 $0 $0 $0 $0 $0 $0 Total expenditure $2,094,096 $2,151,265 $2,208,074 $2,278,656 $2,341,826 $2,406,731 $2,521,678 $2,582,450 $2,644,684 $2,761,263 Projected operating performance ($600,496) ($565,343) ($536,095) ($465,116) ($413,875) ($358,645) ($305,052) ($310,515) ($316,224) ($328,482)

Draft Surf Coast Shire Aquatic and Leisure Centre – Financial Model April 2014 Commercial in confidence Page 1

proposed surf coast shire aquatic and leisure centre

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