Denton aquatic center losing money, analysis shows

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by By LOWELL BROWN / Denton Record-Chronicle lmbrown@dentonrc.com

wfaa.com

Posted on September 8, 2009 at 12:00 AM

Updated Monday, Oct 19 at 5:51 PM

The Denton aquatic center has received more than $5 million in city and school district subsidies to cover operating losses since opening in 2003, despite initial hopes that the project would support itself, a Denton Record-Chronicle analysis has found.

The city-run aquatic center - which includes Water Works Park and the Denton Natatorium - has run an operating deficit each year, including a nearly $350,000 shortfall as of July 30 this budget year, city records show. Water Works Park consistently turns a profit, but not enough to cover operating losses at the adjacent natatorium.

In all, the center has cost the city about $10.71 million to operate while generating about $7.72 million in revenue - a deficit of $2.99 million. The revenue includes payments from the Denton school district of more than $2.2 million, pushing the total taxpayer-funded subsidy to about $5.2 million, according to an analysis of city records. Under a 2002 agreement, the school district uses the natatorium for swim meets and other activities and reimburses the city for half of the center's annual losses.

'Get out of this one'

Some say the city should cut its losses and find a company to run the facilities.

"We ought to just get out of this one, find somebody that can take it over and let them do it because we are losing too much money on it," said City Council member Charlye Heggins, a critic of the project since her first campaign in 2005. "If we keep losing money, it [privatization] is going to almost have to happen, because where are we going to get the money to sustain it?"

Denton parks and recreation director Emerson Vorel said the city considers the school district's payments a reimbursement for operating expenses at the natatorium.

"The aquatic center recovers approximately 50 percent of its operating costs and consistently operates at a much lower level of subsidy than any other city or [school district] facility," Vorel said in an e-mail.

Amanda Green, the city's superintendent of leisure services, said she wasn't sure how the city would detach itself from the natatorium even if it wanted to. The school district owns the natatorium; the city owns Water Works Park and manages both facilities under the 2002 agreement.

"For the water park side, it [privatization] is a viable option," Green said. "But why would we do that, because it turns a profit?"

School district officials did not respond to a request for comment Friday. In the past, they have defended the natatorium's value as an instructional facility.

"If the city doesn't operate it at a profit, it just means it'll cost us money to operate it," a school district assistant superintendent, Tony Swafford, said in a 2004 interview. "Our main objective is to use that facility for our swim teams."

Mayor Mark Burroughs, who as a council member voted for the 2002 operating agreement with the school district, said he did not know how the city could privatize a school district facility.

"I've never seen a proposal that suggests what the implications would be," Burroughs said. "I would think that would have to clear a tremendous amount of hurdles."

Burroughs defended the natatorium as an asset to schoolchildren and an attraction for current and potential Denton residents.

"It's not just a dollars-and-cents issue," he said.

Still, Burroughs said he wants the parks department to study ways to bring in more customers.

"We're making money on the water park side, but it would seem to me there would have to be ways to increase that further," he said.

2003 bond vote

The city and school district pooled millions of dollars in voter-approved bond money to open the 17-acre outdoor Water Works Park and indoor natatorium in 2003.

The water park and natatorium are both open to the paying public, but the 2002 agreement gives the school district the right to use the natatorium during the school year for swim team meets, practices, swimming lessons and other school-related activities. The city plans its programs around the school district's schedule.

Officials originally hoped the project would support itself, with water park profits offsetting any losses at the natatorium. That didn't happen, leading then-Mayor Euline Brock to say in 2005 that officials had overestimated the business plan.

Early revenue projections assumed the project would include a full-service concession building and an outdoor recreational pool, but those potential money-makers weren't built, said Vorel, the city's parks director since 2007.

"We built everything we could at the time," Vorel said. "I think that the loss of those two components has had a large negative impact on the revenue for the water park."

City officials argue that the aquatic center is relatively profitable compared with city recreation centers such as North Lakes, Martin Luther King Jr. and Denia, which generally recover less than 10 percent of their operating costs. The aquatic center recovers about half of its expenses.

To some, though, the aquatic center has become a symbol of government waste and overreach. It's a common target each spring for council candidates who say the city should focus on streets and sewers over water slides.

Denton real estate broker Dalton Allen raised concerns about the project during his unsuccessful run for mayor in 2002. In an interview last week, Allen said he studied several public water parks in other cities during his race and found that all were in the red or had been sold to private enterprises. He could not recall the names of the cities.

"It's always a drain on the city, and that's what I said during my campaign," Allen said. "Of course, we were assured that would not occur, but it's a money pit."

Pricey operations

Vorel said natatoriums are expensive to operate because of the amount of equipment, energy use and staffing required.

"It's very, very difficult for a natatorium to be self-supporting," he said, adding that parks department leaders are constantly thinking of ways to draw more customers.

Council member Chris Watts questioned the city's continued support for money-losing projects during his spring re-election campaign, as many candidates were sounding "tighten-the-belt" themes in light of the recession. Watts said last week the aquatic center deserves more study.

"If the city of Denton can divest itself of that shortfall and still have it available to the community at either the same cost or something that is somewhat reasonable, I'm not sure why we wouldn't look at that," he said.

Watts said he wants to make sure residents are able to use the facilities enough to justify the city subsidy. The school district uses the natatorium about 17 percent to 20 percent of the hours it is open, city officials say.

Watts added that he doesn't accept the comparison of the aquatic center with city recreation centers. The aquatic center was supposed to pull its own weight, and no one expects that of a typical recreation center, he said.

Aquatic center losses rising
The Denton aquatic center - which includes Water Works Park and the natatorium - has lost money since opening in 2003. Here's a year-by-year look at its performance.
YearRevenue*ExpensesShortfall
2002-03$706,924$824,227$117,303
2003-04$1,021,144$1,423,192$402,048
2004-05$1,077,823$1,696,555$618,732
2005-06$1,108,756$1,787,944$679,188
2006-07$1,371,356$1,687,898$316,542
2007-08$1,257,802$1,769,770$511,968
2008-09**$1,173,571$1,522,128$348,557
Totals$7,717,376$10,711,714$2,994,338
*Revenue includes reimbursements from the Denton school district to the city for half of the aquatic center's annual losses.
**Through July 31
SOURCES: Staff research; city of Denton

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