by Claire Anderson | Feb 22, 2024 | News
The Dream Has Arrived:
THE POOLS ARE HERE!
The two Myrtha pools arrived on Lopez on January 30th and are in storage on Pool Lane.
We are eagerly anticipating the culmination of the construction campaign to close the gap in fundraising. We’re almost there, and getting closer every day, thanks to your ongoing support. The Islands will Swim!
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Winter Appeal Brings in More Than $720K!
We are thrilled to announce that our 2023 Winter Appeal was a tremendous success, raising $723,154.35! We would like to express our sincere gratitude to all of our donors who generously contributed to this important fundraising effort. Thanks to your support, we are getting closer to construction. We truly could not have done it without you. You are making the dream come alive!
P.S. Did you donate to FLIP in 2023? If you’d like a duplicate report of your tax-deductible giving, we can help! Please contact info@lopezislandpool.org.
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“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 the series: FLIP interviews Stu Isaac of Isaac Sports Group, FLIP’s Aquatic Advisor.
Financial Sustainability & Membership at the Lopez Swim Center
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 fees and pool passes, which make up 65% of overall revenue. The estimates of pool-pass sales is also conservative, with Year One projections at only 68% of projected full use by Year Three.
Summer-season prices will reflect peak demand, and allow annual and monthly pool-pass prices to be kept low for the nonpeak season (eight months of the year). We strongly feel the pool-pass projections are very conservative. These projections assume that, by Year Two, only 14% of Lopez families with children under 18 will have an annual Swim Center family pool pass. The market penetration for seniors is even lower, with our senior annual pool-pass projections showing only 9% of Lopez seniors having passes. We estimate adult-specific annual pool-pass sales to only 10% of adult residents. Overall, we project that 19% of Lopez year-round residents will have some type of monthly or annual pool pass at the Swim Center.
Having two pools offers the ability for concurrent programming, providing more opportunities for fun and significantly bolstering the Center’s financial sustainability. A wide range of programs, such as swimming lessons, special events (birthday parties or sunset gatherings at the pool), facility rentals, and a variety of classes, will generate an additional 31% of gross revenue, with only 4% of the total revenue coming from annual fundraising. |
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…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.
—Stu Isaac, FLIP Aquatic Advisor
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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 Water Technology Inc. (WTI), the project’s aquatic engineers, to identify key technologies that reduce maintenance costs, as well as 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 a permanent water slide, FLIP will rotate flexible activities, from inflatable obstacle courses to pool log-rolling, which collectively cost just 20% of what a water slide would cost and do not require additional assigned lifeguards at the top and bottom of the water slide. Rotating activities keep programs fresh so that people want to come back. We feel that the expense model for the Swim Center is realistic and conservative.
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 with a bottom-up approach and only consolidated revenue and expense totals at the very end, without targeting specific financial results. This 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. |
by Claire Anderson | Dec 26, 2023 | News
“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.
by Claire Anderson | Oct 26, 2023 | News
FLIP Letter to the Community
FLIP is grateful for the many years of generous support from our community. FLIP’s support from 1,300+ donors has reinforced the strong need and desire for a Lopez Swim Center, for water safety of our kids and adults, for our community’s health and mobility, and for a year-round gathering place for all ages and all incomes.
Over the past two years, project revisions have been made to economize the project, refine equipment choices, and update financial operating projections to reflect today’s economy. We appreciate your patience as plans and operating impacts were finalized. In an effort to efficiently respond to as many questions as possible, we’re sharing the following update.
Project Costs, Operating Costs, Transparency
Updated Project Costs: Since FLIP’s original plans, the economy has changed, construction costs have risen significantly, and more eco-friendly technologies have been identified. This led to FLIP embarking upon a comprehensive update that included a facility redesign to eliminate the more costly natatorium, simplify shower-house facilities, and revise aquatic equipment to ensure maximum water and energy savings while improving pool water/air quality and reduce chemical use. The original County permit application of July 2018 was amended with updated design and construction-level drawings in May 2023. The review process is proceeding smoothly with no concerns. While the construction bid details are still being finalized, we expect the remaining fundraising gap to be less than $2 million.
Updated Financial Operating Projections: FLIP’s original financial operating forecasts developed in 2017/2018 have been updated to account for the current economy and operating environment, as well as the revised facility. To ensure the projections were rooted in best practices, we brought in aquatic experts, the Isaac Sports Group (ISG), to ascertain long-term financial sustainability and community impact. ISG’s expertise is in privately funded projects and public/private partnerships, areas where conventional public approaches often falter. ISG dedicated months to grasp the intricacies of Lopez’s operating environment, engaging with local community groups, comprehending market dynamics, and understanding the unique challenges of Lopez.
- Projections reflected in the Summary of Financial Projections (see previous post) encompass all operational aspects, from equipment and staffing to maintenance and program planning. These projections have been meticulously researched with operating pools, rigorously challenged, and thoroughly refined within a detailed 35+ page operating budget.
- Why has the operating budget grown? Under the guidance of ISG, FLIP’s budget grew in both revenue and expenses to align with today’s opportunities and costs. Income and expense budgets were built independently from the bottom up, based upon similar operations. ISG first identified all available income opportunities and enhanced our plans to include activities not previously identified, such as summer camps. Cost escalation required adjustments at nearly every level. For example, the original budget planned lifeguard wages of $15 per hour and are now planned at a starting wage of $20+ per hour.
- How are we planning for capital replacements and repairs? The Capital and Maintenance Reserve Fund will grow from an initial $510,000 pledge to $1.89 million over 20 years and will be funded from operating income. This fund covers capital replacements, including the dome, as well as equipment maintenance and repair.
- Will FLIP take on debt? To finance the purchase of the heat pumps, FLIP plans to utilize OPALCO’s Switch It Up program, a low-interest loan payable over 10 years. FLIP will also utilize a bridge line of credit, common in capital campaigns, to provide cash against the value of pledges/commitments from donors and state awards.
- What is FLIP’s “plan B” if projections don’t work out? The financial plan is scalable, without affecting the Swim Center’s viability. Our detailed projections are conservative for both revenue and expenses, and include opportunities for additional revenue and cost savings. For example, while no other pool in San Juan County has full-time lifeguards, FLIP has budgeted for full-time lifeguards. We will have the ability to adjust staffing hours during slower winter periods. Once the Swim Center is open, there are also grants available to support programming activities.
- Will Lopezians be taxed? No, FLIP is not considering a public taxing district. Our model is entrepreneurial: a nonprofit venture that treats the Swim Center as a business, and requires practices that optimize the balance of income and expenses. Public funding would raise our costs substantially due to specific requirements. Sustainable swim centers thrive as entrepreneurial setups, allowing us to manage operation hours and staffing efficiently.
Transparency: FLIP posted a link to request financials on its website, has held multiple town halls and community meetings, and has held open-to-the-public Board meetings for the past 11 years. It is only during the last couple of years, as FLIP explored project revisions to simplify the facility and its impacts, that sharing updated data was challenging as revisions were being made. Now, after painstaking work to update costs, we are pleased to share summary financial projections. This will be posted on our website, and we will continue to hold public meetings to provide updates.
A More Economical Plan
What about the dome? One major cost-savings measure was the decision to capitalize on the island’s summer season with an outdoor pool and provide shelter with an air-inflated dome during winter. Not only does this save the capital cost of the natatorium but it eliminates the energy use of a dehumidification system during warmer months.
Today’s domes are long-lived and come with high-efficiency air-handling systems. Arizon Building Systems was chosen first and foremost because it is an air-handling company and understands how to ensure a comfortable swimming environment. Domes are used throughout the world; many sports facilities use them year-round. Swimming pools use domes seasonally, with multiple examples in the Puget Sound area, including three on Mercer Island. The dome membrane comes with a 20-year warranty, but real-world experiences reflect a 25-year+ lifespan. Regardless, the dome membrane replacement is a planned expense in the capital reserve fund at Year 20. At the end of its working life, the membrane can be repurposed and used as tarps. A premium fabric option is available without PFAS; information on this will be posted on our website.
The FLIP project team spent many months researching alternative covered structures for community pools. Some creative ideas are not possible due to strict State code regulations for community pools. Alternatives did not reduce capital costs and would have increased heating/dehumidification needs (and thus operating costs and energy usage).
Will it be a saltwater pool? Although plans initially called for a saltwater pool, further analysis necessitated a changeup for the following three reasons: 1) Fisherman Bay Sewer District will not allow salt water in their sewer system, as it disrupts the natural biologics they need to maintain for the health of the sewer system; 2) saltwater pools would have required additions of chlorine to adhere to State health codes. Saltwater pools have chlorine generated by a saltwater chlorinator, which also consumes more energy than chlorine pools, and needs to be augmented with chlorine in pools with greater numbers of swimmers; and 3) greater expense, as the highly corrosive nature of salt water would have damaged equipment, required more frequent replacements, and necessitated specialized maintenance workers.
Growth & Lopez
How can a small community support a swim center? The pool’s revenue base extends beyond full-time residents to a variety of sources, including seasonal membership and drop-in fees, swimming lessons, day- and week-long camps, special events, and retail sales. Four key user groups have been identified: full-time residents, part-time residents (and their family/friends/grandchildren), a small number of users from neighboring islands (primarily Orcas and Shaw), and visitors. Forty-five percent of the Swim Center’s revenue is projected to be generated during summer months (peak demand) when San Juan County Visitor Bureau states 80,000 unique visitors come to Lopez. A small amount of fundraising is planned primarily focused on supporting financial assistance for those in need.
Managing growth is important for Lopez. Preserving open spaces while working within our tourism-driven economy is vital. The Swim Center offers local activity in a commercially zoned area with several established businesses; it is an open lot located within walking distance of the K-12 public school. Focusing growth in specific areas preserves our natural spaces. But we can also imagine how the surrounding property can be carefully cultivated so it’s “more than just a pool:” BBQs, ping pong, community gardens, and native plantings with more trees have all been suggested as viable options.
Energy efficiency: Recent facility and equipment updates focus on energy and water conservation. For example, instead of traditional sand filters, which would consume 22,000 gallons of water monthly, we are investing in regenerative media filtration systems that use just 740 gallons monthly. Heat pumps and pool covers are two of the many additional ways that the Swim Center will reduce its energy and water consumption. For more information, see our website.
Enhancing community health: This project represents 1,300 community voices, of all types, who have stepped up time and time again to say this is important: for water-safety, for year-round fitness, for health and healing, and for connection. With only 8% of our island K-5 students passing the Red Cross’s basic swim competency test, swim lessons are crucial (for adults too!). The Swim Center will offer water-safety skills beyond swim lessons, such as kayak safety and water-rescue training. The warm water wellness pool will be a place to build strength and mobility. It will be a year-round gathering place for all ages, abilities, and incomes.
The health and mental well-being of our community is why income and expense budgets were built independently from the bottom up, based upon similar operations. Early on, FLIP established partnerships to complement existing community groups, including Lopez Island Physical Therapy, Lopez Island School District, Lopez Island Family Resource Center, Lopez Fire & EMS, and Lopez Community Trails Network. A multifaceted partnership with the Lopez Island School District includes integrating swim lessons and water activities into the K-12 PE curriculum so that every Lopez student will graduate knowing how to swim. Afterschool and preschool activities are being coordinated with the LIFRC. Water activities are shown to help with anxiety, one more way that the pools will support a healthier community.
Stronger together. FLIP is committed to maintaining open discussions and adjusting our project based upon community needs. We appreciate the questions that have been raised. We look forward to continued dialogue.
This article series is supported by a grant from the Lopez Thrift Shop.
