Athens Wave Pool
Introduction: A New Wave Pool Explored
Athens County Parks and Recreation District currently faces significant problems
from an antiquated pool and increasing cost of operation. The Recreation District
is investigating the replacement of the facility in order to provide the citizens of
Athens with a superior leisure venue for the next twenty years. In order to
using a wave-acting mechanism that is set into motion for ten minutes out of
every thirty minutes. The waves add a dynamic element that increases the
experience of visitors. This addition will add a unique experience that in turn will
increase interest from local residents as well as people outside the community.
The following report identifies two types of bonds that could be used for funding
the wave pool, as well as a third combination option. Later we identify what we,
for a 1.9 mills to support the new project. The mill amount was determined by
the following equation:
Total building cost= $3,700,000 divided by Present Value of Annuity= 10.206
This gives you payment= $362,531.84
Then take payment and divide by value of the property in Athens Park and
Recreation District ($190 million).
In order to view results from the analysis, please refer to the Break Even Analysis
spreadsheet [Brown 2e Ch08 Case Analysis Solution 1_Excel], which indicates
that a general obligation bond will not work at minimum attendance. However,
by referring to the Higher Attendance Analysis spreadsheet [Brown 2e Ch08 Case
Analysis Solution 1_Excel], one can see that just by increasing attendance a
general obligation bond could be successful. However, this success depends on
pool, the bond would be based solely on daily admission revenue from the new
facility, which may be another negative because the facility would have to have a
certain level of admittance in order to “break even” or they would not be able to
repay the revenue bond. One good note about revenue bonds is that the general
public would not have to see taxes increase. Instead, if a person or family desired
to use the facility, they would just pay for that day.
In order to determine feasibility of using a revenue bond, a break even analysis
was performed to determine minimum number of people needed to break even
and then based on that number the total revenue that would be generated. The
calculation is as follows:
Operating cost including interest to be repaid= $588,855.00
Average unit cost = $4.00
calculated by adding the cost of two child admissions and one adult
$588,855.50 = total revenue
In order to view our analysis of this option, please view the Break Even Analysis
spreadsheet and the Higher Attendance Sample Analysis spreadsheet in order to
see that this option is not feasible. Revenue bond was not examined at
maximum optimistic attendance, which might work. However, even if at
maximum predicted attendance the bond did result in success on paper, that
additional revenue sources that are detailed below. Due to several initial one-
time fundings, a revenue bond is needed for only $2.7 million and will be paid off
over a twenty year period with payments of $264,550. In addition to this annual
payment, the wave pool will also incur an annual operating cost estimated to be
$212,000. A total annual payment of $476,550 will need to be covered in order
for this plan to be a successful choice in funding the wave pool. The following
1. Primary Funding Source
Revenue Bond: $2,700,000
Our team of financial planners will use a revenue bond in order to finance the
construction and materials of a new wave pool in Athens, Ohio. The bond will be
supported solely by revenues acquired from the wave pool. Despite the fact that
2. One Time Grants and Donations
National Park Urban Recreation Development Grant=$700,000
This grant is available to rural communities that strive to develop community
projects that aid in the leisure pursuits of the county in which the funds are
given.
$2.7 million. This decrease positively affects this option and enables profitability.
3. Additional Yearly Sources
Daily Admission= $720,000
The wave pool will charge $5 per adult and $3.50 per child. Attendance is
estimated to be 180,000 annually (approximately 60,000 adults and 120,000
children).
Special Groups= $7,500
In the past, Pepsi has supported new facilities in Athens such as the Skate Park
without concession rights or OU facilities. We feel that $20,000 annually from
Pepsi to the wave pool in exchange for the exclusive soda rights at the pool is fair
and doable.
Concessions= $40,000
Except for the Pepsi rights, the wave pool will independently operate the
carries basic supplies such as towels, sunscreen, sunglasses, suits, etc. Retail
sales are expected to be $7500 annually. We spoke with several people involved
with the OU Aquatics Center and worked together to generate $7,500 as a
feasible estimate of sales.
Raft Sponsorships = $10,000
One hundred local businesses will each sponsor three rafts at $100.00 for one
Instruction = $5,000
4. Other Funding Sources
Naming Rights= $250,000
Naming rights for the wave pool facility will be sold for a $250,000. This amount
will be paid over a five-year period at a rate of $50,000. These rights are for the
life of the facility and/or subject to contract.