Operating Budget

Bowen Island Municipality has a solid track record of operating in a financially responsible, efficient way, and we will continue to do so as we build and operate the new Community Centre.

 

To develop a solid business plan for the facility, we analyzed revenues and expenses based on a number of assumptions about how we expect the building to function. We also consulted stakeholder and user groups to determine the level and frequency of use of rental venues.

 

The operating budget is based on the following assumptions:

  • The Community Centre will be owned, operated and managed by Bowen Island Municipality.

  • Community recreation, arts and cultural programs, and activities currently scheduled in facilities rented by the Municipality will be relocated to the Community Centre.

  • The building will be open from 6:00 am - 10:00 pm, seven days a week.

  • Community recreation and arts and cultural programming will increase because we will have more accessibility and availability of our own programming spaces. Increased programs and events will incur additional expenses, but we will gain more program revenues as well. 

 

What it will cost to operate the Community Centre

 

Operating expenses for Municipal facilities (currently rented) are paid for by property taxes and accounted for in the Five-Year Financial Plan (the Municipal Budget). The annual operating expenses for the Community Centre are anticipated to increase the Budget by $244,307 in the first year of operation. This increase will be offset by $133,407 of new rental and programming revenue. The remaining operating expenses of $110,900 will be funded through an increase in property taxes. For the average property owner, this translates about $47 a year more than what you’re currently paying for operating expenses.

This is a simplified version of the projected budget. For detailed, line item analysis, please see the Business Plan.

How we estimated revenues

  • Projected weekly and annual calendars of use of community and multi-use spaces have been developed with stakeholder input to determine the potential rental revenue of the facility.

  • Revenues from groups, individuals and businesses leasing the Community Centre, recreation program revenues, grants and interest from the Community Centre endowment fund will cover over 45% of the operating expenses.

  • Property tax revenue, just as it currently offsets Municipal operating costs, will help offset the cost of operating the Community Centre. An approximate 2% tax increase more than what is being paid now to operate Municipal facilities will be required. For the average property, this translates into about $47 more a year.

 

How we estimated expenses

  • The operating budget includes office expenses like supplies, advertising, accounting, telephone/network, and insurance; facility expenses like security system, utilities, IT, property and liability insurance, short and long-term maintenance; and staff costs.

  • Total expenses are compared to facility revenues for a total operating surplus or shortfall.

  • Costs are based on unit costs per square foot; others are determined through research of facilities in B.C. and knowledge of existing Bowen Island facilities.

  • In addition to current Municipal staff, the projected operating budget includes additional staffing requirements:

    • Recreation clerk working 21 hours/week

    • Facility Coordinator working 35 hours/week

    • Custodial services working 35 hours/week (contract)

 

The projected operating budget includes rental revenue based on the following assumptions:

A conservative estimate of hours of use is based on stakeholder engagement, identified community needs, current and projected increases in recreation, arts and cultural programming, and assumptions of community use that might include 10 weddings, 8 theatre productions, 4 celebrations of life, 2 dances, 4 community events, 12 choir performances.

 

Additionally, rental rates used in revenue forecasts are intentionally set low, to reflect the majority of on-island community based rental use.  Differential rates will be established for different uses, including private, for-profit and not-for-profit as well as consideration will be given to differential rates for off-island use.

Operating budget + capital costs

Debt servicing costs of the long-term debt to build the community centre (Capital Cost) will reflect an increase of about $50 per year for the average property. 

 

​Operating the Community Centre will reflect an increase of about $47 per year for the average property.

 

​The total annual cost to the average taxpayer to service the debt incurred for construction and the annual operating costs combined will be about $97 per year.

Potential risks

Revenue risk: Low. Too few rentals and revenue targets are not met. The projected revenues are based on a review of activities on Bowen Island over the calendar years of 2018 and 2017 and are a conservative estimate, based on the current level of activities. The rate structure is a based on local users with comparative rental rates. A higher rate structure, translating into higher revenues from off-island and commercial rentals will be explored. Bookings of the rental spaces will be carefully monitored to ensure they are realistic. However, the existence of the new building is expected to increase opportunities for events and therefore the probability of meeting revenues targets is high.

 

Expense risk: Low. The operating expenses are based on anticipated operating and programming costs of the facility. The revenue projections to fund programming costs are conservative.  Changes in programming costs are anticipated to be offset by changes in programming revenue. Unanticipated operating costs will be funded through taxation revenue. Lifecycle maintenance and replacement costs will be addressed through the capital renewal and replacement reserve and the Municipality’s Asset Management Plan.

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