March 2, 2023
As recreation facility managers struggle with safely operating and maintaining millions of dollars in assets, a seperate, but connected underlying conversation is "what should be charged for the use of these public operations"? ORFA is committed to continually raising awareness of what might be best described as a quiet, crumbling, infrastructure crisis. As each day passes, recreation facilities age. Like people, what this aging looks like will depend on the early and ongoing investment in facility health through proper maintenance and lifecycle planning. Regrettably, most recreation assets are not in the best of health and are entering a period where significant investment will most likely be required.
Today’s facility manager who has inherited older operations may benefit from understanding how these investments got to their current state. I have written many different articles and resources on the history of the recreation 1970’s & 80’s Wintario construction boom. This was a time that government was focused on healthy lifestyles and could vision a return-on-investment by way of reduced health care costs when Ontarian's became more healthy. This vision was supported by multiple significant funding programs that many communities were successful in accessing. These provincial grant applications often included over inflated revenue projections. Much of this forecasted revenue was expressed as “spin-off” revenue in local businesses based on sport tourism dollars. Little of this money was collected by the facility or community. As the buildings were primarily funded by provincial grants, communities had no need to collect user fees that might reflect a reasonable cost recovery calculation. Keeping user fees low would drive the local economy as projected in the grant application calculations.
At the same time, the province was at an all time high in all forms of business developments, manufacturing was driving much of the economy. Transfer payments from the province to communities were generous. In addition, energy rates were extremely low and household incomes allowed for significant amounts of disposable income that was most often dropped back into local economy through events programs and structured recreational activities. It was not uncommon for municipal budgets to increase by 5% or 10% and even 15% without any expectation of reducing any budget line.
Recreation staffing levels were reasonable. Wages were low and employment opportunities for youth was abundant. Regulations and legislation existed but was not heavily enforced. Recreation operations were rarely government or agency inspected unless there was a significant incident. As we left the 1980’s and entered the 1990’s, the winds of change had started to blow.
Ontario’s manufacturing industry began to leave for countries with lower wages, less taxation and governance. The province started to dial back transfer payment amounts to all communities. Energy and staff wage costs began to significantly increase. Other municipal services such as water and sewer, which are older than recreation facilities began to fail and municipalities began to feel the pinch. Legislation like the Occupational Health and Safety Act began to be more aggressively applied and awareness of the lack of compliance to other governance specific to recreation operations became more relevant. Failing to meet expected levels of safety and due diligence saw an increase in litigation. Recreation fees remained low as people needed an outlet to personal stress that was also increasing. Recreation infrastructure continued to age with less investment being available as municipal leaders strived to keep local tax increases in check.
Structured sport, which was once grass root focused, evolved into big business. Organized sport demanded preferential access to public facilities to meet their needs and growth. These needs often had direct appeals to community leaders to provide even lower user fees for these events. Buildings continued to age and naturally deteriorate. During this time period, the ORFA membership raised awareness with regards to what was occurring, and the organization responded by creating a variety of resources and training pathways to assist in meeting these challenges. As an industry, we are at an important crossroad, that at times, will be difficult to navigate. Facility management will be required to be creative and provide leadership so that hard operational decisions can be made by senior management and/or by elected officials. This will include charging user fees on a cost-recovery basis that reflects the true cost of providing safe services while maintaining the assets for future generation of users.
Facility managers will need to carefully track an operations current financial position and provide the rationale for proposed user fee increases specific to their operations. As a quick check and balance, if 2023 user fee increases were below 4%, the reality is the health, safety and longevity of the asset is being reduced. Our collective responsibility as recreation professionals is the generation of operational data that is reflective in real time while providing direction on the unfunded liabilities associated with the care of these community assets.
There are many skills required to be a good facility manager but none more important that developing and maintaining quality asset management plans. This investment by today’s leaders are their legacy to be passed on to the next generation of practitioners. In addition, having and maintaining quality asset management plans that are used as part of budget presentations are a professional insurance policy should a manager’s capability or professionalism ever be called into question. Knowing what it actually costs to provide 1-hour of recreation is critical information necessary to calculate reasonable user fees. How much the user fee is below the actual operating cost calculation is the amount being funded by the non-user of the recreational asset. This subsidy or reduced user fee maybe an owner or political decision at the local level but a decision that is only made after having all the information available and clearly visible. It also provides a reasonable calculation of the created unfunded liability associated with the operation if the facility owner is not providing the lost revenue as part of the budget allocations. Cost to make the necessary repairs is being passed on to future managers, elected officials and taxpayers.
Creating an asset management plan is the forecasting of what investments will be required as infrastructure and equipment ages. Creating fair and reasonable user fees today assists in meeting these objectives of tomorrow.
For more on this topic, refer to the ORFA Analyzing and Calculating User Fee Guideline and Ready, Shoot, Aim – Recreation Revenue Generation Guideline
Comments and/or Questions may be directed to Terry Piche, CRFP, CIT and Director, Training and Research Development, Ontario Recreation Facilities Association
Note: The publisher, (Author(s)/General Editor(s)/Licensor(s)) and every person involved in the creation of this communication shall not be liable for any loss, injury, claim, liability or damage of any kind resulting from the use of or reliance on any information or material contained in this communication. While every effort has been made to ensure the accuracy of the contents of this communication, it is intended for information purposes only. When creating this communication, none of the publisher, the (Author(s)/General Editor(s)/Licensor(s)) or contributors were engaged in rendering legal or other professional advice. This communication should not be considered or relied upon as if it were such advice. If legal advice or expert assistance is required, the services of a competent professional should be sought and retained. The publisher and every person involved in the creation of this communication disclaim all liability in respect of the results of the any actions taken in reliance upon information contained in this communication and for any errors or omissions in the works. They expressly disclaim liability to any user of the work.