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Home My WebLink AboutCSD-13-039 - Facility Rental Discount for Affiliated Ice Groups REPORT TO: Community and Infrastructure Services Committee DATE OF MEETING: May 6, 2013 SUBMITTED BY: Kim Kugler, Director of Enterprise, 519-741-2200 Ext 7544 PREPARED BY: Kim Kugler, Director of Enterprise, 519-741-2200 Ext 7544 WARD(S) INVOLVED: All DATE OF REPORT: April 30, 2013 REPORT NO.: CSD-13-039 SUBJECT: FACILITY RENTAL DISCOUNT FOR AFFILIATED ICE GROUPS RECOMMENDATION: That the Tier 1 minor sports grants for affiliated ice groups be allocated to decrease the approved 2013 prime time affiliated ice rates from $217.94 to $157.14 for multi-pad ice rentals and from $193.15 to $138.15 for single pad ice rentals effective September 1, 2013; and further, That a sum of $349,510, which represents the 2013 Tier 1 minor sports grants approved for the affiliated ice groups, be transferred to the Aud/Arena ice budgets to offset the September 2013 change in ice rates. BACKGROUND: The City of Kitchener provides ice to three affiliated sports groups; Kitchener Minor Hockey Association, Kitchener- Waterloo Skating Club, and Kitchener Ringette. These three ice groups receive an annual Tier 1 minor sports grant and a facility rental discount that provide a discounted prime time ice rate. 2013 Tier 1 January to August September to December Organization Grant2013 Grant Allocation2013 Grant Allocation Kitchener Minor Hockey $491,785$163,928$327,857 Association Kitchener Ringette $26,409$26,409* $0 Kitchener-Waterloo Skating Club $37,892$16,239$21,653 Total $556,086$206,576$349,510 Kitchener Ringette * $16,548 * Kitchener Ringette allocated their 2013 grant of $26,409 to the 2012-2013 ice season resulting in the potential for a one time negative variance within the Aud/Arenas 2013 budgets of up to $16,548. Staff is working with this group to look for other revenue sources to assist with mitigating the negative impact. 6 - 1 The operating season for the ice groups is September to April which aligns with the September effective date for their user fees but their season does not align with the Tier 1 grant that is applied January to December which covers two different ice seasons; January to April is the end of one season and September to December is the start of the second season for ice groups. Historically the annual inflationary increases applied to user fees and grant allocations were the same, which resulted in no negative or positive impacts on the affiliated ice groups. During the 2012 budget process the increases applied to user fees were higher than the inflationary increase applied to grants. This differential gap created some unforeseen budgetary challenges for the affiliated ice groups. Not only did they need to find revenue sources to offset the new fee increases, they also had to find additional revenue sources to cover the changes to their Tier 1 grant allocations. There are two potential fluctuations caused by the City’s budget process which impact ice groups: ice rates and grant funding. The main revenue source the ice groups have to offset any increases to their expenses and any shortages in revenues is the registration fee charged to participants. Their largest budgeted expense is ice costs and any changes in the user fees directly impact their expenses, while any changes to their Tier 1 grant funding directly impact their revenue sources. When their revenue sources do not grow with their expenses, the ice groups are at risk of having to price their programs out of reach or fall behind in making ice use payments while they try to fundraise or find further efficiencies within the operations. All affiliated sports groups are dependent on numerous volunteers to provide their programs and fundraise for revenues to keep their sport affordable. If the City ran these programs, the participant costs would be significantly higher and registrations would decline. The City benefits significantly from the ice revenues generated by having these programs offered by these groups. In 2011 and 2012, the Council approved solution to the budgetary challenges for the affiliated ice groups was to set a lower user fee increase on the prime time affiliated ice rate to offset the lower inflationary increase to the grants. REPORT: Staff from the Aud/Arenas and Athletics units started working with the affiliated ice groups to (1) see how they were applying their Tier 1 minor sports grants; (2) investigate and compare how grants were applied; and (3) investigate what fees were being charged to affiliated ice groups in the neighbouring municipalities and townships. City of Kitchener staff discovered several things about how the Kitchener ice groups were budgeting: (1) they applied their Tier 1 grant directly to offset their ice costs; (2) they increased their participant fees annually in September to offset any increases to user ice fees set by the City; and (3) they never anticipated that the inflationary increases for user fees and grant amounts wouldn’t match. The investigation of the grants and ice fees applied in the surrounding townships and municipalities revealed that the affiliated ice groups, including hockey, skating and Ringette, were receiving higher facility rental discounts and lower or no additional grant funding. The ice rate comparatives for 2013-14 ice are summarized in the chart below. 6 - 2 Facility Rental Non-AffiliatedAffiliatedDiscount FRD % of Ice Municipality/Township Ice Rate Ice Rate (FRD) Rate Waterloo - All other ice 232.09 116.04 116.04 50% - Memorial only 251.02 125.51 125.51 50% Woolwich 231.41 126.88 104.53 45% Wilmot 208.10 135.27 72.83 35% Cambridge 258.03 140.05 117.98 46% Current 2013-14 * Kitchener - Single Pad 234.02 193.15 40.87 17% - Multi Pad 256.36 217.94 38.42 15% New Proposed ** Kitchener - Single Pad 138.15 234.02 95.87 41% - Multi Pad 157.14 256.36 99.22 39% * Including Tier 1 minor sports grant ** Excluding Tier 1 minor sports grant Based on the current 2013-14 approved ice rates for the affiliated ice groups, the ice rates in Kitchener are the highest within the Region. City staff propose that, effective September 1, 2013, (1) the new prime time affiliated rate for ice be $138.15 for a single pad facility and $157.14 for a multi pad facility; (2) a transfer in 2013 of $349,510 from the Tier 1 minor sports grant budget be made to reconcile the revenues in the 2013 Aud/Arena ice budgets; and (3) should Kitchener Ringette incur a negative variance, staff will work with the group to look for other revenue sources to assist with mitigating the negative impact. The affiliated ice groups using Kitchener facilities are aware that the new proposed facility rental discount still positions Kitchener with the highest ice rates, but the increase in the facility discount moves Kitchener to an administration of the fee policy that is more similar with the surrounding townships and municipalities. Aligning the administration of ice rates for affiliated groups will assist ice groups like the K-W Skating Club who operate programs in multiple cities and will assist ice groups with joint events such as the past Oktoberfest hockey tournament that was hosted by Kitchener and Waterloo. This year, Waterloo left the partnership as they were able to generate more revenues for their organization by using ice in Waterloo only, as Kitchener’s ice costs were too high. An additional advantage in moving towards a greater facility discount and the elimination of the Tier 1 minor sports grants to ice groups on a permanent basis is that it will allow these groups more control in monitoring and establishing their annual participant fees. They will now only have to make adjustments for one variable, that being ice user fees. Currently the Tier 1 minor sports grants are increased by inflation annually with minimal consideration of growth or decline in programs provided. The new proposed ice rate would encourage the ice groups to consider growing programs and potentially increasing ice rental revenues for the City. Any decrease in programs would increase ice inventory for the City to sell at a higher rate without having to make any adjustment to Tier 1 grants. This provides the groups with more control over their budgets and allows them to keep their programs affordable to continue attracting youth to participate. Many of these youth participants will continue in their sport and eventually become the adults who pay higher fees to use the ice facilities. Future review and consideration will be given to other minor sports groups who pay facility fees and receive Tier 1 minor sports grants. 6 - 3 ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Foundation: Efficient and Effective Government Public Sector Leadership Anticipate and be responsive to legislative changes and external pressures. Promote continuous improvement to ensure corporate policies, processes and systems are sustainable, innovative and adaptable. FINANCIAL IMPLICATIONS: Effective September 2013, the change from budgeting user fees and grant allocations for affiliated ice groups will permanently change. The ice user fees will reflect an increase in the facility rental discount and the Tier 1 minor sports grants for affiliated ice groups will no longer be budgeted. Staff and Kitchener Ringette will work on strategies to mitigate the potential $16,548 funding shortfall required to offset the new proposed facility rental discount. Any shortfall will be reported as a variance in the 2013 Aud/Arena year end statement. COMMUNITY ENGAGEMENT: The affiliated ice user groups were consulted in the process of reviewing the challenges with the Tier 1 minor sports grants and the benefits of a Facility Rental Discount. ACKNOWLEDGED BY: Michael May, Deputy CAO, Community Services 6 - 4