“Pool Progress: Behind the Scenes of the Lopez Swim Center” is an eight-part informational series about the Lopez Swim Center. These articles are possible thanks to a Lopez Thrift Shop grant. This is part five of this series: FLIP interviews Stu Isaac of Isaac Sports Group, FLIP’s Aquatic Advisor.
FLIP: How did you approach this project?
Our first steps were to understand the unique elements of Lopez Island and how they impact the Swim Center’s development and operation. We viewed this through the lens of best practices that apply to all aquatic facilities, as well as our extensive research on Puget Sound area swim facilities.
What is the Center’s model for operating and how will it be affordable to all?
FLIP is a nonprofit business, combining the best of public and private swimming models. Similar to any business, it needs to be financially sustainable, but as a nonprofit, it also must be affordable to all. A financial assistance program was established to provide discounts of 50%, 75%, and, in special cases, 90%. This was one of the most important outcomes of our business planning.
The Center will not rely on levies or taxes for funding. Instead, it relies upon user and membership fees, which makes up 65% of overall revenue.
Summer season prices will reflect peak demand, and allow annual and monthly membership prices to be kept low for the nonpeak eight months of the year. We strongly feel the membership projections are very conservative. These projections assume that only 14% of Lopez families with children under 18 will have a Swim Center family membership. The market penetration for seniors is even lower, with our senior membership projections showing only 10% of Lopez seniors. Adult-specific memberships project to 12% of adult residents.
Overall, we project that 18% of Lopez year-round residents have some type of membership in the Swim Center. Having two pools offers the ability for concurrent programming, providing more opportunities for fun and significantly bolstering financial sustainability. A wide range of programs, such as swimming lessons, special events (birthday parties and sunset gatherings at the pool), facility rentals, and a variety of classes, generate an additional 35% of gross revenue, with only 4% of the total revenue coming from annual contributions.
Pools are expensive to run; how is this any different?
Expense projections were based on best-practice operations to keep the Swim Center safely operating for years to come. We worked closely with WTI, the project’s aquatic engineers, to identify key technologies that reduce maintenance costs, and energy, water, and chemical use. The operational savings pay for the incremental cost of the technology in the first two to three years of the Center’s operation; the return on investment over the long term is very good. Utility costs constitute less than 10% of total operating costs, which is also excellent. Staffing costs make up 60% of total operating costs, which is right in line with best-practice aquatic facilities around the country. The Center has made strategic decisions to limit costs. For example, instead of having an expensive permanent slide, FLIP will rotate flexible activities, from inflatable obstacle courses to pool logrolling, which collectively cost 20% of a water slide and do not require additional assigned lifeguards. Rotating activities keeps programs fresh so that people want to come back. We feel that the expense model for the Swim Center is realistic and conservatively at the high end of the range.
What about long-term maintenance and equipment replacement?
FLIP secured an initial donor commitment of $510,000 to seed its Capital Reserve Fund (CRF). Our budget projections predict net annual revenue beginning in Year 3, which will allow the Center to allocate funds to the CRF over subsequent years, accruing $1.85M by Year 20. Besides the CRF, the Center’s budget provides best-practice maintenance funding to meet all equipment maintenance requirements and recommendations to limit unexpected capital maintenance needs.
What provides some assurance of the Center’s financial sustainability?
We worked from the bottom-up and only consolidated totals at the very end, without targeting specific financial results. This bottom-up approach ensures the accuracy of our projection and gives both FLIP and us strong confidence in the validity of the operating budget. Over the course of our research, program design, and development of the business model, I am now very confident in the financial viability and the budget projections for the Swim Center—and in the incredible game-changer the Center will be in the overall quality of life for all Lopez Island residents.