HomeMy WebLinkAboutWORKSHOP re PFD Exhibit B to E ATTACHMENT B
Key Findings
1. A modern, public aquatic facility will greatly benefit the health and well-being of Jefferson
County residents. Benefits include water& boating safety,teaching children to swim, healthy
recreation, athletic competition, aquatic therapies,community building and more.
2. Its success will depend on community collaboration,through education, engagement,trust
building,and buy-in.
3. The first step is broad agreement on general location and funding mechanisms.
4. Compared with Mountain View, a larger portion of the county population can readily access
potential pool locations in the Tri-Area (Port Hadlock, Irondale, Chimacum).An aquatic facility
can be sited on a septic system, as one will be in South Whidbey.
5. Operating two public pools is not financially feasible, but the current Mountain View Pool will
need financial support at least through 2028, until a new facility is complete.The current pool
can be repaired and modernized for$4 million to$8 million or expanded to 25 yards for about
$21 million.
6. A Public Facilities District(PFD) supported by a County sales tax of 0.2%would generate(in
today's dollars)$15 million for capital construction and $500k every year to support operations
and maintenance.Other funding sources—such as existing lodging taxes, state and federal
grants, and private philanthropy—should also be pursued.
7. An aquatic facility can be largely designed to cost. Pre-engineered, pre-fabricated and modular
building and pool vessel systems utilizing project delivery methods besides traditional "design-
bid-build"offer savings on initial capital cost, life-cycle cost,and time of installation.
8. Aquatic centers face challenges with cost recovery, but can generate substantial revenue from
user fees,facilities rentals, merchandising and community programming(e.g.,childcare,swim
lessons,aerobics classes).
Key Recommendations
1. A community consensus on a Port Townsend or Mid-County location should be the first
decision.The Task Force recommends a Mid-County pool funded with a PFD.
2. Establish a PFD(or MPD)with sufficient administrative funding to lead the project.
3. The PFD or MPD needs to work in concert with the community to finalize site selection,facility
amenities, a financing plan, and a budget-constrained design. Identify how community priorities
align with projected costs to build &operate a new facility.
4. Develop a long-term financial plan that balances project revenues and costs.We must take the
time now to build a complete&affordable plan before asking for a new tax.
5. Before any renovation or new construction at Mountain View,definitively answer questions
about unknowns, including: seismic,ADA compliance, HVAC upgrades, utilities and stormwater.
ATTACHMENT C
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TOURISM INFRASTRUCTURE, RECREATIONAL
FACILITIES AND TOURISM DEVELOPMENT
Original scientific paper
Ante Mandic Received 1 I October 2017
1e1jko Mrnjavae Revised 12 November 2017
21 November 2017
Lana Kordic 17 April 2018
Accepted 8 May 2018
https://doi.org/10.20867/dun.24.1.12
Abstract
Purpose and design - This research explores the interconnectedness between tourism
infrastructure,recreational facilities and tourism development.It analyses their importance in,and
compliance with the current phase of tourism development in the destination(TALC).Attention
has been given to the tourist board managers'perception of infrastructural management and key
limitation for their involvement in the management process.Finally,the role of the private sector
in the development of infrastructure and facilities in destination has been explored.
Methodology and approach - The semi-structured questioner has been repeatedly sent to 312
tourist board managers in Croatia, leading Southern Mediterranean destination. The research
applies qualitative and quantitative analysis.
Findings-There is a significant correlation between TALC and number of arrivals,overnights,
the current state of the infrastructure and facilities. Findings suggest growing demand and
expectations regarding infrastructure and facilities in the examined destination can be related to a
destination position in TALC.The compliance level between the stage of the tourism development
and state of the infrastructure and facilities varies especially between destinations in initial and
maturing phases of tourism development.The destinations position in TALC is correlated with the
importance of specific types of infrastructure and facilities for a specific destination.Due to mostly
financial limitations,managers are not willing to take responsibility for the development of tourism
infrastructure.Their expectations regarding private sector involvement vary,considering the type
of infrastructure,facilities and destinations position in TALC.
The originality of the research-Research provides supply-side perspective and new insights into
the infrastructural development-TALC relation,and delivers tourist board managers attitudes
toward the private sector involvement.
Keywords tourism infrastructure;recreational facilities;tourism development;public and private
sector stakeholders;TALC
INTRODUCTION
Recreation is defined as a pleasurable, socially sanctioned activity that restores the
individual,concomitant with the experience of leisure(Simmons and Moore: in Jafari
and Xiao, 2016). In a deeper psychological sense, recreation refers to the human
emotional and inspirational experience arising out of the recreation act. Although it
contrasts with the work, which is done mostly to earn money and mechanics of life
(eating, sleeping), there is no sharp line between recreation and all other activities
(Clawson and Knetsch,197 1).Therefore,some activities may be work at some times and
recreation at others. In some manner, tourism contributes to the enlightenment of that
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difference. Considering that most of the tourists,arrives in destination for leisure, it is
expected that recreational activities they undertake will mostly be focused on recreation
in its profound meaning—Latin recreare,to renew or to be re-created(Smith, 1992).
Recreational activities that visitors undertake may include different specific indoors
and/or outdoors actions.Some activities can be relatively formal,as in case of organised
events and group activities, while most of the recreational activities are informal and
include picnics, hiking, fishing, expeditions and many other activities. Regardless of
form, recreation is an integral element of tourism product that influences significantly
tourism development and visitors satisfaction(Tribe,2012).
The concepts of tourism, recreation and leisure are specifically interrelated. Tourism
forms special form of leisure: "leisure away from home, on trips", albeit with some
dimensions that raise it above daily recreation(Leiper, 1995).In some manner,last two
or three decades tourism has contributed to the transformation of simple outdoor
recreational activities like jogging to commercial and fashionable products. There has
been a shift away from a simple non-commercial outdoor recreation culture toward a
more sophisticated demand-driven commercial sector with new forms of recreation and
a prospering outdoor retail industry (Buckley, 2000). Such trends have consequently
resulted in the improvement of existing and development of new recreational facilities
in most of competing tourism destinations.
Recreational facilities are an integral part of physical infrastructure which is an
indispensable pillar of overall economic and tourism development (Khadaroo and
Seetanah in: Jafari and Xiao,2016). Along with hotels and other hospitality facilities,
they form the constituent called tourism infrastructure. Each of these elements boosts
tourism development mostly by raising the attractiveness and competitiveness of a
destination. Tourists expect facilitates in their chosen destination to be comparable to
what they enjoy at home, especially those that have become the essential element of
everyday life recreation(Murphy et.al.2000,Crouch and Ritchie,2000).
Recreational facilities are mostly organised,provided and developed in the context of
public and commune pool resources, which implies government and public sector
involvement and provision.In that process,public sector deals with management issues
ranging from simple cost-benefit analysis to complex questions of the optimal mix of
recreational facilities (McConnell, 1985). In tourism destinations, public sector
involvement implies local or regional authorities and tourist boards activities, focused
on fostering sustainable tourism development. The rapid development of tourism has
blurred the line between public and private sector responsibilities. Due to different
reasons, sometimes the public sector is limited to respond emerging needs of tourism
development and depends upon private sector involvement.New challenges that we face
in the 21 st century are transforming the understanding of"traditional"public and private
sector roles in economic and tourism development.The increasing importance of tourism
in the local, regional and national economy requires and boosts active cooperation
between key public and private sector stakeholders.
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The provision of recreational facilities is commonly seen as the responsibility of public
sector(Cooper et al.2008;McConnell, 1985).However,a different understanding of the
concept of tourism infrastructure along with the growing importance of tourism has
resulted with the stronger involvement of private sector stakeholders. This research
explores the concept of tourism infrastructure and recreational facilities to broaden the
understanding on:
• The interconnectedness between tourism infrastructure, recreational facilities and
tourism development;
• Their importance in a process of shaping tourism product and delivering visitors and
local population requirements;
• The compliance between the state of the infrastructure, facilities and the phase of
destinations development(TALC);
• Tourist board managers perception of infrastructural management and key limitation
for involvement in management process;
• The role of the private sector in the development of infrastructure and facilities.
It provides supply side (public) perspective by exploring the TB managers' attitudes.
While most of the current researchers use statistical data to analyse destinations
development trajectory and accordingly development of phvsical plant(Smith, 1994),
we are utilising TB managers holistic approach to analyse specifically the development
of one segment of overall tourism product — tourism infrastructure and recreational
facilities.Additionally,research contributes broadening the current understanding of the
position of private sector stakeholders in the provision and management in
Mediterranean destination.
Empirical research has been conducted in Croatia, one of leading Mediterranean
destinations with the application of semi-structured questionnaire on a sample of 312
tourist board managers in the period from June to September 2017.
1. LITERATURE REVIEW
In a broader sense infrastructure includes physical, legal, environmental and mental
amenities which contribute to making tourism product enjoyable,reliable and sustainable
(Khadaroo and Seetanah in:Jafari and Xiao,2016).The physical infrastructure of direct
relevance to tourism includes recreational facilities that along with hotels and other forms
of accommodation,spas and restaurants form the main tourism infrastructure(Figure 1).
However,both concepts are wide,transformative,and limited mostly with boundaries of
individual understanding and national policies.To define tourism infrastructure properly
is easier said than done. Mostly because tourism is not a single industry so too there is
no clearly defined"tourism"infrastructure(Dwyer et al.2010).
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Figure 1:Recreational facilities as a constituent of the overall infrastructure
Physical C 'I I
:CR1EATI
Other lbrins
Fri,61TOWrIC11t Leg L of Spas and
alamcnitics
accommodat' restaurants
LL ion
L_ 61ha, —..aA
INFRASTRUCTURE —� Tourism Infrastructure
Source: Adapted from:Jafari,J.,Xiao,H.Eds.(2016).Encyclopedia of Tourism.Switzerland,
SpringerReference.
Literature has stressed out different approaches to concepts of infrastructure, tourism
infrastructure and recreational facilities.Hansen(1965)same as Mera(1973)considers
infrastructure to be a sum of economic and social overhead capital. While economic
capital focuses on supporting productive activities (e.g. roads, streets, bridges etc.),
social capital focuses on enhancing human capital mostly via publicly provided social
services (e.g. public health and education). Infrastructure focuses more on providing
preconditions for development,while recreational facilities are seen as a way to improve
everyday life. They should be accessible on an everyday basis and developed for local
community and visitors(Bell et al.2007;Lewinson,2001),including a range of different
elements from hiking, trekking and thematic trails to sports halls, water parks and
swimming pools (Hadzik and Grabara, 2014; Heldt, 2010). The scope of tourism
infrastructure is broad and related to all those elements in a destination that enable and
boost tourism development(Swarbrooke and Horner, 2001). In that manner, different
aspects of infrastructure and recreational facilities can be considered as elements of
tourism infrastructure. In a broader sense,it includes all those facilities that tourists use
when they leave their homes, reach their destination and return back home(Lohman
and Netto,2017),while in reality,most of the tourism infrastructure is constantly used
by residents(Fourie and Santana-Gallego,2011,Hadzik and Gabana 2014).
The development of tourism infrastructure and recreational facilities is associated with
tourism development(Heath, 1992;UNWTO,2007;Sharpley,2009).In many cases,the
state of the urban renewal and local infrastructure indicate the destination position in area
life cycle(Getz, 1992;Formica and Uysal, 1996;Garay and Canoves,2011).Therefore,
it is not surprising that tourism destinations depending on their position in TALC have
different expectations and requirements regarding tourism infrastructure. According to
the life-cycle model, tourism management should be pro-active, smoothing the
fluctuations foreseen by the cycle and favouring a balanced relation between the costs
and the benefits originated by tourism(Van der Borg, 1991).
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Once developed, infrastructure and facilities highly influence destination
competitiveness (Crouch and Ritchie, 1999; Murphy et al., 2000); increases the
efficiency of privately producing and distributing tourism services,and in certain cases
makes possible the supply of tourism services(Sakai in:Dwyer and Forsyth,2006).The
emergence of sustainability has highly influenced the research path for infrastructure and
facilities.Consequently attention has been given to those researchers encompassing both
concepts; for instance, the relationship between transport infrastructure and tourism
development(Khadaroo and Seetanah,2007;Khadaroo and Seetanah,2008;Albalate et
al.2017;Rehman Khan et al.2017),or management of sustainable destinations(Phillips
and Jones, 2006; Currie and Falconer, 2014). Researchers also place the significant
emphasis on the development of outdoor facilities.For instance,Deenihan and Caulfield
(2015)examine how tourist value different types of cycling infrastructure.They found
out how tourists are willing to double their cycling time if proper infrastructure is
provided. Bil et.al. (2012) explore the potentials of new technologies i.e. GIS in the
creation of a network of cycling tourism infrastructure, to support visitors activity.
Olafsdottir and Runnstrom (2013) use similar technology to analyse the hiking trail
condition and its relationship with local physical properties. They deliver important
managerial implications on how to improve existing and design new infrastructure to
deliver visitors requirements and remain sustainable. Fallon and Kriwoken (2003)
explore the community involvement in tourism infrastructure.They have concluded how
local and cultural community,managers and operators play important role in planning,
designing and operating new tourism infrastructure.
Public governance of tourism infrastructure is mostly influenced by the tourism
importance in overall economic development and characteristics of the tourism product.
In some economies,tourism potential to strengthen other economic sectors in rural and
urban regions has resulted with prioritization in the development and improvement of
hard infrastructure (facilities, utilities, transportation networks) while the soft
infrastructure (human resources) have left underdeveloped (Thapa, 2012). From an
economic perspective, public governance and investment is rationale when private
markets fail to produce an efficient amount,which is often in a case of public goods such
as tourism infrastructure.There is a large body of literature in the economics of natural
resources and public goods dealing with the efficiency of government intervention in the
market when markets fail to provide information on uncertainty, irreversibility or
externalities (McConnell, 1985). Infrastructure may be provided by public or private
sector,and the outcome is often determined by domestic economic,social and political
policies(Dwyer et al.2010).Most of tourism infrastructure can and should be provided
by the private sector (hospitality facilities, i.e. hotels, restaurants, shops), while
responsibility for the provision of recreational facilities,due to their importance for local
population and visitors,remain blurred.
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2. RESEARCH
Case study:Croatia
Croatia is among leading Southern and Mediterranean Europe destinations. Tourism
accounts for 18,1%of its GDP and 7%of total employment(Ministry of tourism,2016).
Development, maintenance and operationalization of tourism infrastructure (including
recreational facilities) are extremely important and by that defined with several laws.
The basic governmental document is Regulation on public tourism infrastructure that
defines tourism infrastructure as:
"Public in in tourism destination that generates direct and indirect
impacts on tourism offer and tourism development including:garage and parking
lot; sport and concert halls and cinemas; congress centres; skating rink; ski
facilities; football pitch, tennis court, basketball court, children's playground;
amusement parks; inner and outdoor pools and beaches; beach facilities;
promenades; cycling, hiking, horseback riding, educational and thematic trails;
excursion sights and sport-recreation facilities".
In a national context,the concept of tourism infrastructure integrates different forms of
recreational facilities which are treated as public good,that with given permission from
local and/or regional municipality, tourist board can manage. Operationalisation of
existing and building of new infrastructure is defined with following laws: Law on
management and use of property owned by the Republic of Croatia, Law on critical
infrastructure,Law on concessions,Law on local and regional self-government,Law on
communal economy, Law on tourist boards and Regulation on public tourism
infrastructure'. The complexity of regulation system often results with infrastructural
under-development, meaning that local infrastructure is neither well managed nor
developed to deliver residents and visitor's needs.In most cases,private stakeholders via
concessions manage most attractive infrastructural elements (beach facilities), while
tourist boards'lack of financial and/or human resources to involve in that process.
In this research,the terms infrastructure is used to address economic and social overhead
capital,and the term tourism infrastructure and recreational facilities to address all types
of tourism infrastructure according to Croatian Regulation on public tourism
infrastructure.Qualitative and quantitative analysis research results have been presented
below.
Methodology
Research has been conducted from June to September 2017. The semi-structured
questionnaire has been repeatedly sent to 312 tourist board managers in Croatia.Croatia
tourist board has a hierarchical structure.It includes Regional tourist board(county and
territory), Local tourist board (town, municipality, locality and island) and Tourism
information centres.In this research,we have included all regional and local offices due
to their potential involvement in the tourism infrastructure management process. The
questionnaire consists of three parts.The first part focuses on general information about
tourism destination and tourist board. The second part of questioner analyses current
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tourism development phase and overall infrastructural development state.The final part
of questionnaire delivers answers regarding usage of tourism infrastructure and
recreational facilities and potentials of its future improvement.The questions have been
prepared to capture current stage, importance and future perspective of tourism and
recreational infrastructure.The research applies(1)qualitative(descriptive analysis and
analysis of open question) and (2) quantitative analysis (Regression analysis and
Kruskall-Wallis H and post hoc test).
Findings
Conclusions have been made based on forty-one(nil)response.The sample includes
tourist board (TB) offices from two regional territories, sixteen towns, twenty-two
municipalities and one island.
The size of the destinations included in the sample varies based on the numbers of
arrivals and overnights scored in 2016. The highest recorded number of arrivals, in a
town level TB was 524.471 and lowest was 347 visitors, while the highest recorded
number of overnights was 3.109.224 and the lowest 846. The regional tourist offices
have recorded higher numbers,however,their statistics reflect cumulative statistics of
lower lever offices,therefore,they cannot be mutually compared.Variations in a size of
the destination in the sample are welcome because,in a context of open questions,it is
expected that TB managers will stress out different problems, expectations and
perspective regarding tourism infrastructure management and use.
The number of beds in all types of tourist accommodation facilities, recognized
throughout Croatian classification system, varies considering destination (hotels and
apart-hotels,tourist resorts,tourist apartments,campsites,private accommodation,spas
and health resorts, holiday resorts, hostels). Distribution of beds in the sample,
considering the type,follows the national trends i.e.private accommodation accounts for
59%, hotels and apart-hotels for 12,1% and camps for 20,1% of all accommodation
(Ministry of tourism,2017).
Figure 2:Characteristic of tourist boards in a sample
Tourist board In Arrivals Arrivals Overnights Overnights
office sample minimum maximum minimum maximum
Regional 1 26.678 754.902 49.175 4.457.257
territory
Town 16 347 524.471 846 3.109.224
Municipality 22 400 242.614 1.188 1.497.344
Island 1 - 3.206 34.336
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2.1. Compliance: tourism and tourism infrastructure and recreational facilities
development
The regression analysis (Sykes, 1993) has been used to determinate the
interconnectedness between the stage of the tourism development considering
destination life cycle (TALC) (Butler, 2005) and four independent variables, namely
number of arrivals,number of overnights,infrastructural development and development
of tourism infrastructure and recreational facilities. Considering that every destination
passes from exploration to rejuvenation or decline phase, TB manages were asked to
estimate the current stage of tourism development for the destination they manage.
Maturing of the destination is characterised with the continuous increase in a number of
arrivals and overnights(Ivars et al.2013)but also stronger pressures on destination space
and growing requirements regarding infrastructure and facilities (Ritchie and Crouch,
2003).
Research results have demonstrated the statistically significant correlation between the
stage of the tourism development and all four independent variables (p--0,000 -
p=0,002). The positive coefficients for analysed destinations indicate that higher stage
of tourism development can be associated with growing demands regarding destination
infrastructure and tourism facilities, but also with an increase in a number of arrivals
and overnights. Mean VIF (Variance inflation factor) values, in all four individually
tested cases,are one(VIF<1),therefore multicollinearity can be eliminated as a potential
problem in regression analysis and results as valid for interpretation(Kennedy, 1985).
Figure 3: Regression analysis:dependent variable stage of tourism development-
destination life cycle
LIFE CYCLE Coef. Std.Err. t P>ltl [95%Conf.Interval]
PHASE
ARRIVALS 5.48e-06 1.64e-06 3.34 0.002 2.16e-06 8.80e-06
Cons 2.847452 .2888162 9.86 0.000 2.263266 3.431638
OVERNIGHTS 9.76e07 2.69e-07 3.63 0.001 4.33e-07 1-52e-06
Cons 2.831651 .2810563 10.08 0.000 2-263161 3.400141
TOUR INF. & REC. .7003715 .1547187 4.53 0.000 .3874234 1.01332
FAC. .4814225 .6678787 0.72 0.475 -.8694897 1.832335
Cons
INFRASTRUCTURE •7754183 .1698596 4.57 0.000 .4319449 1.118992
Cons .0830116 .7451378 0.11 0.912 -1.424172 1.590195
Source:Conducted research in STATA 13.0.
Destinations have to ensure their general infrastructure is properly developed and user-
friendly(Wild and Cox, 2008). Many destinations fail to do so(Buhalis,2000)which
consequently negatively affects their image and competitiveness(Jenkins, 1999).Local
roads, airports and all other forms of transport should allow unimpeded movement of
visitors, while tourism facilities should be able to provide comprehensive travel
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experience and influence visitors return.Therefore,TB managers are expected to have a
holistic approach to tourism development and planning.
In that manner,they have been asked to rate on the Likert scale(1-7)the capability of
infrastructure, tourism infrastructure and recreational facilities to deliver visitors and
local population needs and address current requirements of the tourism development.
Figure 4: Compliance level of tourism development with the development of
infrastructure and tourism infrastructure and recreational facilities
14 13
l2
12
10
10 9 9
8
6
6 � 5
4 3 3 ;
0 j
L
j
1 2 3 4 5 6
■EVFR.4.STRUCTURE
■TOURISM INFRASTRUCTURE AND RECREATIONAL FACII.rI7FS
• 1=current stage of development cannot fiditl visitors and local population needs;7=the development of
infrastructure and tourism infrastructure and recreational facilities corresponds to tourism development.
Research results have demonstrated how in most of the destinations in the sample,the
compliance level between tourism development and development of infrastructure,
tourism infrastructure and recreational facilities is average. TB managers perceive how
current state of all types of infrastructure in the destination can be improved to address
not only the growing number of visitors but also more sophisticated visitor's needs. A
Kruskal-Wallis H(KW H)test indicate statistically significant differences in compliance
level between the perceived stage of tourism development and the perceived current state
of the development of infrastructure, tourism infrastructure and recreational facilities
(Chi-Square=18,331;dt=5;p=0,003).Moreover,a KW H posthoc test has proved how
those differences are statistically significant only between destinations that are in initial
and maturing stage of tourism development(p-value for pairwise comparison,p=0,003),
(Figure 5)i.e. 1 stage and 7 stage of tourism development(p=0,026)and 1 stage and 6
stage of tourism development(p=0,025).
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Figure 5: Independent-Samples Kruskal-Wallis Test—perceive stage of tourism
development TALC and perceived state of the development of
infrastructure,tourism infrastructure and recreational facilities
v
Soo-
Total N 42
a Test statistics 18,331
w 3 o Degrees of Freedom 5
$ x Asymptotic Sig.(2-sided test) 0.003
g a 2.00
i o2
1.The test statistics are adjusted for ties
1000 2,000 3.000 SHOO 6.000 7,000
Rrcehed OW oitwrim&vOwmeW-TALC
Stronger or weaker public focus on the development of certain aspects of infrastructure,
tourism infrastructure and facilities potentially reflect the way destinations compete
against its main competitors for target segments(March,2004). Croatia is a destination
where passive rest and relaxation are main motives of arrival for 55% of visitors
(TOMAS,2017).However,there is growing proportion of visitors interested in the active
holiday (24% in 2017), sport, and recreation (20% in 2017) (TOMAS, 2017).
Consequently, TB managers were asked to rate (on a Likert scale 1-7) the perceived
overall importance of tourism infrastructure and recreational facilities for their tourism
product. Findings suggest that tourism infrastructure and recreational facilities are
important for most of the respondents(Figure 6). Furthermore, the Kruskall-Wallis H
test results indicate a statically significant correlation between the stage of tourism
development considering TALC and perceived development stage of Sport and concert
halls and cinema(p=0,010);Amusements parks(p=0,001),Beaches(p-=0,044), Beach
facilities(p=0,014)(Figure 7).
Figure 6: Perceived importance of tourism infrastructure and recreational
facilities in overall tourism development
16
14
14
12
to
6
6 5 5
4 3
0 ■
1 2 3 4 5 6 7
■TOURISM INFRASTRUCTURE AND RECREATIONAL FAMMES
• /= tourism infrastructure and recreational facilities are NOT important; 7= tourism infrastructure and
recreational facilities are vital.
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Depending on a stage of tourism development,destinations have different requirements
regarding infrastructure and facilities (Figure 7). Consequently, findings suggest that
more complex and expensive infrastructural investments like amusements parks,sport,
concert halls and cinemas are requested in those destinations that are in upper phases of
tourism development.
Such investments potentially reflect the efforts to improve tourism offer but also can be
seen as rejuvenation policy measure(Stansfield: in Butler,2005).Tourism destinations
in upper phases of development(Figure 7)consider almost equally important beaches
and beach facilities,which proves 3S to be the dominant product for destinations in the
sample (i.e. the ranks are on a similar level). However, those destinations that are in
initial phases of tourism development have expressed lower ranks, meaning they are
potentially considering niche tourism to be their development path.
Figure 7: Independent-Samples Kruskal-Wallis Test—perceive stage of tourism
development TALC and perceived development stage four significant
forms of tourism infrastructure and recreational facilities
Independent4emples Nruskol-Welhe Test Independent-Samples Kruskal-Wallie Teat
Sport and - T Amuumems 5
concert halls . parka
and
rs :m sm am rm im :m sm sm em rm
Percahnd mge of tourhm devalopme t ►ereetred stage of baruds is development
-TALC -TALC
T _ ❑
6
_ch
Beaches J0 j s o
6dlitiea .. o
Perceived stage of tourism development Perceived stale of tourism develapwrwt
-TALC -TALC
Maturing destinations higher demands regarding beach facilities and sport and concert
halls reflect their efforts to maintain attractiveness and competitiveness on growing
receptive market.The outliers presented on boxplot(')for amusement parks prove the
existence of a difference in ranks between respondent in same development phase
(TALC).
Perceived development state of different types of tourism infrastructure and recreational
facilities varies across the observed destinations. Findings (Figure 8) suggest
promenades, excursions sights, football pitch, tennis courts and trails are the best
developed.However,even for these categories,there are significant variations between
destinations,while overall results are not promising.
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Figure 8: Perceived development state of different aspects of tourism recreational
infrastructure
45
40
35
30
25 - - --- - _. _.
20
15
10
S
J.
�a Voc� �� F add Q *� t�L�dQ`� �s4 Sd
Q, �qo Q,
NO Q' G
■I ■2 03 64 ■5 26■7
'1=highly underdeveloped,7=highly developed.
The recreational facilities and infrastructure are related to destination,its resources and
main product lines(Murphy et al.2000).Considering Croatia is 3S destination ski rinks
and ski facilities are expected to be underdeveloped,however,the problem arises with
poor development of essential facilities including beaches and beach facilities,different
types of sport and recreational facilities,garages and parking lots and congress centres.
Further analysis has proved(Kruskall-Wallis H test)statistically significant correlation
between the overall importance of tourism infrastructure and recreational facilities for
destination product and the current state of development of the sport and recreational
facilities(Chi-Square= 14,389;df--6;p=0,026).
TB managers' satisfaction with the current state of the development of tourism
infrastructure and recreational facilities statistically significant differs depending on the
current stage of the destination development(TALC). KW H test results have pointed
out following aspects of infrastructure as statistically significant,namely Sport,concert
halls and cinemas(p=0,004),Amusement parks(p=0,013),Inner and outdoor pools(p=
0,20),Beaches(p=0,005),Beach facilities(p=0,004)(Figure 9).
Figure 9: Satisfaction with the current state of the infrastructure and facilities
depending on the position of the destination in TALC
Sport,concert halls Amusement Inner and Beach
and cinema arks outdoor is Beaches facilities
Chi-Square 17.087 14.538 13.343 16.935 17.340
df 5 5 5 5 5
As m .Sig. .004 .013 .020 .005 .004
Mean ranks for five significant aspects of infrastructure delivered with KW H posthoc
test (Figure 10) suggest how mature destinations (those in upper phase of TALC), in
overall, have expressed higher ranks, i.e. satisfaction with the current development of
infrastructure and facilities.The exception are sport and concert halls and cinemas,that
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record higher ranks even in destinations that are in initial phases of tourism development.
The outliers presented on boxplot(•)prove the existence of a difference in ranks, i.e.
satisfaction with the development of sport and concert halls,amusement parks and inner
and outdoor pools, between destinations that are in the same phase of tourism
development.
Figure 10: KW H posthoc test—satisfaction with the state of the development of
infrastructure,facilities and destination position in TALC
sport and ° P.M
rmie.l hwh ; T p.nl
a.d o«Iw ' T .
hrrNvM Vagr neimulam drvai„p.rnt TA1f MrrMVM Vase Memrlan dawltpmsM TAU
.� -
mldddrpmla; a
-1 —_—'-_
ft—i.ed A.V ul i—derev,lnaml IX(
I
f - > 5 ° 7
PMdWdaf eof IlwlsndeVeWWM TALC Perze J,laseof loth derelPpinell-TALL
2.2. Usage and management of tourism infrastructure and recreational facilities
The Croatian Regulation on public tourism infrastructure" indicates TB can manage
tourism infrastructure and recreational facilities. In most cases, their involvement
depends on individual willingness to participate in governance process but also on
financial, human and operational resources. Involvement usually reflects individual
willingness to change and improve quality of tourism infrastructure. Although TB
managers have expressed, mostly, moderate or poor satisfaction with tourism
infrastructure and recreational facilities, they have shown restraint regarding
involvement in the management process.
Research results have demonstrated,in overall,poor involvement in the management of
tourism infrastructure and recreational facilities. Only seven (n=7) out of forty-one
office has been involved in the management of promenades, nineteen (n=19) in the
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management of cycling trails, and three(n--3)in the management of playgrounds and
street workout.For other forms of facilities,results are none or one TB involved in the
management process.
TB managers have stressed out following reasons to be most important for potential
involvement in management process(open question results):
1. Boost destination development,competitiveness and attractiveness,
2. Brand tourism destination and redistribute tourism flows,
3. Develop tourism product and boost development of special interest tourism,
4. Increase number of arrivals and overnights,
5. The increase of TB revenues,
6. Increase quality of tourism and recreational infrastructure,
7. Maintain existing and develop new infrastructure,
8. Preserve natural resources,
9. Support adequate valorisation of all resources involved in tourism development.
Stated reasons for involvement are mostly economical — focused on fostering local
tourism and infrastructural development,and environmental—focused on preservation
and valorisation of different types of resources,integrated into tourism product.
Croatian laws do not define properly the management of tourism infrastructure and
facilities.The Law on management and use o/'property owned by the Republic of Croatia
considers management to be all those coordinated activities aimed at sustainable
management ofgovernment property based on national strategic plans.However,there
are no specified activities that can be done with government property, including
infrastructure.
Given the lack of information and instruction, TB managers were asked to explain their
perception of acceptable management activities. Research results suggest that TB
managers perceive management of tourism infrastructure and facilities as a complex
process that includes following activities(open question results):
1. Creating tourism offer and promotion,
2. Cooperation with different public stakeholders,
3. Sustainable valorisation of resources,
4. Maintenance of the parks and promenades and other existing infrastructure,
5. Planning and preparing projects,
6. Building new infrastructure,
7. Improving accessibly of sights,
8. Management of historical and cultural sights,
9. Marking tourism sights and thematic trails.
The scope of infrastructural management from TB managers'perspective is quite wide.
It includes different strategic(planning and building new infrastructure)and operational
activities (improvement of site accessibility, management and marketing of existing
sights).
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TB managers have expressed moderate to high willingness to involve in the management
of tourism infrastructure,which is limited mostly with a lack of financial resources and
human potentials. Almost half of TB have low and minimal financial and human
capacity to manage infrastructure and facilities,while the organizational capacity results
are slightly better but still account for a significant limitation for inclusion in most cases
(Figure 11).
Figure 11: Tourist board capacity to manage tourism infrastructure and
recreational facilities
Ortr—atimal capwdv ME
Itu�putrnhal
kina¢aul�ajre�ily
0 5 10 15 20 25 30 35 40 45
■t 02 83 64■5 06 07
Low High
In spite of Kruskall-Wallis H test results have proved there is no statistically significant
correlation between TB.self-interest to involve in management of infrastructure and their
attitudes toward private sector involvement(Chi-Square=3,370,di--6,p=0,761),there
is significant correlation between their financial capacity to manage infrastructure and
attitudes toward private .sector involvement (Figure 12). Organizational capacity and
human potentials have not proved to impact TB attitudes toward private sector
involvement.
Figure 12: Kruskall-Wallis H test—key limitation of tourism board Nillingness to
involve in the infrastructural many;ement process
Financial capacity Human potentials Organizational capacity
Chi-Square 12,605 7,005 5,060
df 6 6 6
Asymp.Sig. '050 320 536
a.Kruskal Wallis Test
b.Grouping Variable:attitudes toward private sector involvement
Due to their mostly financial limitations,the majority of the respondents agree that the
inclusion of the private sector stakeholders'can contribute improvement of local tourism
infrastructure and recreational facilities.
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Figure 13: Tourist board managers'attitudes regarding the inclusion of priN ate
sector in the management process
Completely disagrer u,pletely agm
Local community and tourist board are not
capable of maintaining desirable state of tourism
and recreational infrastructure without private
sector m%'oh ement.
I do consider that private sector in%ol%emeru in
tourism and recreational to improve process can _
contribute significantly to improvement of its
current state and overall tourism development in
destination.
0 3 10 15 20 25 30 35 40 45
at N2 83 04 25 06 07
Involvement of private sector, according to Croatian Regulation on public tourism
infrastructure, and cooperation between public and private sector is possible only via
concessions and public private partnership.Despite most of the respondents are highly
familiar with both concepts, there is a correlation only between their knowledge on
concessions and their expectations regarding the effects of the private sector involvement
on the improvement of infrastructure and facilities.
Figure 14: Are the tourist board managers expectations toward the private sector
involvement determined with their knowledge on PPP and
Concessions?
Public-Private Partnership Concessions
Chi-Square 10,503 12,661
df 6 6
Asymp.Sig. ,105 049
a.Kruskal Wallis Test
b.Grouping Variable:Expectations regarding private sector involvement
Concessions are most commune form of the private sector involvement in the
management of infrastructure and provision of recreational facilities in Croatia.In 2017,
Ministry of finance has issued 1441 concession permission for the use of the maritime
state propertyi'i.
TB managers believe that the private sector involvement would contribute improvement
and development of Excursion sights (p=0,24), Sport-recreation facilities (p-0,45),
Cycling, hiking and horseback riding trails (p=0,16). In case of excursion sites and
thematic trails,highest ranks are recorded in those destinations that are in the upper phase
of tourism development(consolidation, stagnation,rejuvenation and decline), while in
case of sport and recreational facilities, ranks are almost equal in destination no matter
phase of development. KW H post hoc test results have shown,in a case of Excursion
sights (p=0,51) and Cycling, hiking, horseback riding trails(p=0,38), the correlation
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between satisfaction with the current state of infrastructure and/or facilities and
attitudes(expectation from)regarding private sector involvement.
Respondents have indicated there are currently(open question results):
• 7 examples of public-private partnership(build and operate model for viewpoint and
halls;operate and maintain public areas—parks,promenades,trails)and
• 18 examples of concessions(maritime good—beach facilities;communal services;
maintenance and management of trails; management of historical sights and
mountain huts).
Finally,TB managers have stressed out the role of the private sector in the improvement
of all those types of tourism infrastructure and recreational facilities that are and should
be in the destination;however,they do perceive the importance of the public sector.The
role of the private sector is reflected in their involvement in smaller and larger scale
projects (depending on destination position in TALC) operationalized throughout
concession system.They are expected to improve quality of local infrastructure,facilities
and consequently competitiveness of overall tourism product.Large-scale infrastructural
projects (ski lifts, congress halls and garages) are perceived as public sector
responsibility.Public sector(municipality—county—central government)is expected to
provide preconditions for overall economic and consequently tourism development.The
former is particularly accentuated in those areas that are economically dependent upon
tourism development.
3. CONCLUSION
Infrastructure forms an indispensable element of contemporary tourism destination,a set
of tourism facilities that once provided focus on delivering visitors and residents'needs.
Commonly is seen as public good and/or commune pool resource. Along with
technology and other physical elements, it is a visible feature of tourism product that
influences travel experience (Murphy et at. 2000; Choy, 1992). In most cases, it is
provided by public authorities and intended to support the local community and its
development.It is an essential precondition in early stages of tourism development and
competitive advantage in maturing stages of TALC,characterised with the shared and
often blurred responsibility of public and private sector stakeholders(Ruso,2002).The
development of tourism infrastructure and recreational facilities is highly determined by
governmental laws and regulations. Depending on the importance of tourism in overall
economic development,different destinations(i.e.countries)have a different approach.
Empirical research results in Croatia have demonstrated a statistically significant
correlation between the stage of tourism development and a number of arrivals,
overnights and state of the infrastructure, tourism infrastructure and recreational
facilities. Moreover, positive coefficients suggest that growing demands and
expectations regarding quality of all forms of infrastructure and facilities in examined
destinations can be related to destinations position in TALC. Findings support
conclusions made by Seetannah et al. (2011) proving tourism to be sensitive to and
influenced by infrastructural development. The compliance level between perceived
stage of tourism development and the perceived state of current development of
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infrastructure and facilities varies i.e. there is the statistically significant difference in
compliance level between maturing destinations and those that are in initial phase of
tourism development.Tourism infrastructure and corresponding facilities should follow
up the position of the destination in TALC and develop correspondingly (Ioannides,
1992; Da Conceic and Roque Aguas 1997, Russo, 2002; Ivars i Baidal, et al. 2012);
otherwise, infrastructural underdevelopment could, potentially negatively influence
visitors'satisfaction and decision to return(Buhalis,2000).
For most of the respondents, tourism infrastructure and recreational facilities are
important in process of tourism development. However, not all forms of infrastructure
and facilities equally. Empirical results have demonstrated there is a significant
correlation between the development of some forms of infrastructure and destinations
perceived position in TALC. Destination in upper phases of tourism development
requires the development of more complex and expensive infrastructural projects
including amusement parks,sport and concert halls and cinemas,i.e.big scale projects
for maturing destinations can equally be treated as an effort to improve tourism offer and
rejuvenation policy measure. Those destinations that are in initial phase of tourism
development have expressed low ranks for all significant forms of infrastructure,
including beaches and beach facilities,which means they still do not have a clear vision
of their tourism development. Maturing tourism destinations focus on maintaining
existing consumers(tourist)throughout increasing service quality,widening distribution
channels but also developing tourism infrastructure and recreational facilities (Da
Conceit:and Roque Aguas 1997). Depending on the state, maturing destinations often
require destination repositioning which can be achieved through large-scale
infrastructural projects(Butler,2005).
Findings suggest that the current state of the development of recreational facilities is
significantly correlated with their overall importance for tourism development.
Moreover,satisfaction with the state of the development varies considering the stage of
the development of the destination.In average,maturing destinations have shown higher
satisfaction with the current state of the infrastructure and facilities; however,there are
differences between destinations and considering the type of infrastructure.
Despite tourist-board, managers have expressed poor to moderate satisfaction with
tourism infrastructure and recreational facilities due to mostly financial limitation they
are not willing to involve in management processes for which they believe would gain
the economic and environmental benefits. I that manner, their financial capacity to
manage infrastructure is significantly correlated with their attitudes toward the private
sector involvement. They do believe the private sector can potentially contribute
improvement and development of a different form of tourism infrastructure, namely,
excursion sites, sport and recreational facilities and thematic trails. Moreover, the
preferred form of involvement would be well-known concession permissions.Currently,
public and private sector cooperate through several examples of public-private
partnership(mostly on larger infrastructural projects)and a large number of concessions
(mostly on maritime goods and thematic trails).
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In highly tourism-dependent countries like Croatia, tourism sustains economic and
overall growth and development. Therefore, it is expected that public sector failure in
the provision of tourism infrastructure and recreational facilities will mostly and
effectively be addressed via private sector involvement throughout existing models of
public-private partnership and concessions.Private sector stakeholders are profit-driven,
agiler and capable of delivering visitor needs in short period.From the other side,public
sector stakeholders are more robust, slow to react and limited by numerous internal
regulations and capacities.As a continuous process,tourism development must be driven
and directed.In that process tourist boards,are not and should not be alone.It is possible
to expect their stronger reliance on the private sector in the context of the provision of
those services that were before exclusively public sector responsibility,i.e.management
of tourism infrastructure and recreational facilities.
Despite a limited number of tourism board managers involved (n=41), this research
provides valuable and useful conclusions and supply(public)side perspective,regarding
provision and management of tourism infrastructure and recreational facilities and their
compliance with TALC in Mediterranean destinations. While most of the previously
stated researchers use statistical data to analyse destination development trajectory this
research is among first to explore the TB managers' attitudes. In that manner we are
utilising their holistic approach to deliver comprehensive analysis.Additionally,research
findings highlight and confirm tourism infrastructtral development can be related to
destinations position in TALC. Furthermore, it contributes broaden the understating of
the role of both public and private sector stakeholders in management and provision and
delivers key limitations for and expectations from their involvement.
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61
Tourism and Hospitality Management,Vol.24,No.1,pp.41-62,2018
A.Mandi6,2.Mmjavac,L.Kordic:TOURISM INFRASTRUCTURE,RECREATIONAL FACILITIES...
Ante Mandik,PhD(Corresponding Author)
University of Split,Faculty of Economics,Business and Tourism
Cvite Fiskovica 5,21 000 Split,Croatia
+385(0)99 2130 655
+385(0)21 430 699
E-mail address:ante.mandic@efst.hr
;eljko Mrnjavac,PhD,Full Professor
University of Split,Faculty of Economics,Business and Tourism
Cvite Fiskovica 5,21 000 Split,Croatia
Lana Kordic,PhD
University of Split,Faculty of Economics,Business and Tourism
Cvite Fiskovica 5,21 000 Split,Croatia
Please cite this article as: Mandic,A.,Mmjavac,2.,Kordic,L. (2018),Tourism Infrastructure,
Recreational Facilities and Tourism Development,Tourism and Hospitality Management,Vol.24,
No. 1,pp.41-62,010205,https://doi.org/l0.20867/thm.24.1.12
CC T
Creative Commons Attribution-Non Commercial-Share Alike 4.0 International
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62
DocuSign Envelope ID: 32065395-CF5F-4970-87A8-6BD7F8B6A34F
ATTACHMENT D
I U04
STATE OF WASHINGTON
DEPARTMENT OF COMMERCE
1011 Plum Street SE • PO Box 42525• Olympia, Washington 98504-2525•(360) 725-4000
April 3,2024
Honorable Jay Inslee
Washington State Governor
PO Box 40002
Olympia,WA 98504-0002
Dear Governor Inslee:
In accordance with RCW 36.100.025(3),the Department of Commerce is electronically submitting the final
independent feasibility review for the Jefferson County Public Facility District formation project.This review is
available at:
Report:https:Hdeptofcommerce.box.com/s/e7cisrlpOk44bcim6gdol3cl4hlzodyoci7
Commerce's primary role in this process is to contract for an independent review to provide objective and timely
analysis of the financial feasibility of the proposed project.The statute further directs Commerce to make the
review public and to submit it to the governor,the state treasurer,the state auditor,the public facility district and
participating local political subdivisions,and appropriate committees of the legislature.
We hope this review is helpful to Jefferson County and participating governments in informing decisions about
their project.
Sincerely,
Co0-862-a by*
,AUA fjA 4/3/2024 1 3:35 PM PDT
W312MMC4se...
Mark Barkley
Assistant Director,Local Government Division
cc: Mike Pellicciotti,Washington State Treasurer
Pat McCarthy,Washington State Auditor
Mark McCauley,Jefferson County Project Manager
Participating Local Political Subdivisions
Independent Financial Feasibility Review
Proposed PFD Formation
by Jefferson County, Washington
for Aquatic and Wellness Facility
III IT
47
L�
-r' y fig I.3'yns
MAR .. r t � -� !� Yap. y�•
Prepared for
Washington State Department of Commerce
By Susan Musselman LLC Dated April 3, 2024
[THIS PAGE INTENTIONALLY LEFT BLANK]
Cover photo shows the Mountain View Pool, located in Port Townsend, Washington.
https://www.olympicpeninsulaymca.org/locations/branch/mountain-view-pool/
Independent Financial Feasibility Review
Proposed PFD Formation
by Jefferson County, Washington
TABLE OF CONTENTS
EXECUTIVE SUMMARY
INTRODUCTION
PFD Proposal
Independent Financial Feasibility Review
PFD Formation in Washington State
PFD Powers
PFD Funding and Revenue
PFD Operations
BACKGROUND ON EXISTING FACILITY
The Existing Pool
Lease of Existing Pool to the City
City of Port Townsend — Lessee/Operator
YMCA— Pool Operator
STEERING COMMITTEE
Formation and Purpose
Key Partners
The City of Port Townsend
Jefferson County
Port Townsend School District
Olympic Peninsula YMCA
Jeffco Aquatic Coalition
Page i
HEALTHIER TOGETHER FEASIBILITY STUDY
Overview
Project Siting
Programming/Project Features
Preliminary Capital and Operating Costs
Steering Committee Recommendations
Capital Funding Plan - Base Option
Operating Analysis - Base Option
PFD FINANCIAL CONSIDERATIONS
Facility Operations
Revenue from 0.20%Sales and Use Tax
Costs for PFD Administration
Capital Funding Plan
CONCLUSION
Potential Costs Relating to PFD Formation
APPENDICES:
APPENDIX A
Provider of this Independent Financial Feasibility Review
APPENDIX B
Documents Reviewed in Performance of this Independent Financial Feasibility Review
Page ii
Independent Financial Feasibility Review
Proposed PFD Formation
by Jefferson County, Washington
EXECUTIVE SUMMARY
This independent financial feasibility review is triggered by the proposed formation of a
Public Facilities District ("PFD") by Jefferson County pursuant to RCW 36.100.025 and
is provided by Susan Musselman LLC, through contract with the State's Department of
Commerce.
A multi-agency steering committee has recommended formation of a countywide PFD in
Jefferson County (the "County") for the purpose of constructing an aquatics and
wellness facility to replace an existing pool in the City of Steering Committee
Port Townsend (the "City"). The steering committee, Partners
created pursuant to a Memorandum of Understanding, is
currently made up of representatives from the City, Port • Jefferson County
Townsend School District (the "School District"), Jefferson • City of Port Townsend
County Public Hospital District #2, the County, Jeffco
Aquatic Coalition and the Olympic Peninsula YMCA. Jefferson County Public
Hospital District#2,
A PFD, which may be formed by a city or county, is an . Port Townsend School
independent taxing district and has all the usual powers District
and responsibilities of a municipal corporation. Among
• Jeffco Aquatic Coalition
these is the power to impose certain taxes, to impose
charges and fees for use of its facilities and to accept and • Olympic Peninsula
expend gifts, grants and donations. YMCA
In February 2023, the City contracted with a team of consultants to provide planning
and architectural services for development of a recreation facility feasibility study to
include an aquatics center to replace an existing pool in the city limits. The final report
was dated September 18, 2023 (the "Study").
Page 1
The existing pool was built by the School District in 1963, is located on School District
property and is leased to the City, which has operating control. The School District, as
owner of the pool, and the City, as pool operator, recognize that the existing pool is
nearing the end of its life and there is an interest in developing a new aquatic center.
The Study included development of a level of conceptual design and an estimated
project budget of $37.1 million for a new aquatics center. The capital funding plan
contemplates $17 million of fundraising to include state and federal grants and
philanthropy, with the other $20.1 million to be paid from proceeds of bonds to be issued
by the proposed PFD.
The Study concludes that the projected operating revenue from the facility as proposed
would not cover anticipated expenses and includes an approximate $400,000 operating
subsidy from the City to balance the operating budget. Without a subsidy, the projected
revenues are not adequate to cover expected facility operating costs.
The following table shows the estimated capital cost, as well as the estimated annual
operating expenses and revenues, and the resulting subsidy requirement for the
proposed project.
One-time Annual
OptionsFacility
Base $37,182,810 $1,268,557 $834,466 -$434,091
Source: Healthier Together Center Feasibility Study
The Steering Committee recommended formation of a PFD by the County and that the
PFD seek voter approval for a 0.2% (two-tenths of 1%) sales and use tax. Based on the
implied taxable retail sales of $805,000,000 for 2023 it is estimated that a sales and use
tax of 0.2% would result in annual tax revenue of approximately $1,610,000.
Apart from the proposed facility, a PFD will need funding for its own administration,
including initial organizational costs. These include staff, which may be full or part-time
to coordinate the work of the PFD, insurance, planning resources. and funds to pay
costs of administering an election for the proposed sales and use tax. Sales and use tax
revenue would be needed to fund PFD administration, unanticipated operating shortfalls
and reserves, and debt service.
The Study consultant has estimated debt service for $20 million of financing, for 30
years at 5.5% will be $1,513,719, which is expected to result in financial shortfalls, at
least in the early years.
Page 2
Although significant work and studies have been performed by community partners,
resulting in the recommendation to the County to create a PFD, the board of directors to
be appointed to govern the PFD may modify the plans and budget for a new aquatic
center. The specific programs, location, design and project costs referenced herein
should be viewed as aspirational at this point.
The PFD, if formed, is expected to seek a more detailed, project specific independent
financial feasibility review prior to issuance of any indebtedness, or the long-term lease,
purchase or development of a facility by the PFD in the future, as set forth in RCW
36.100.025. It is expected that the PFD will refine its project and capital funding plan
prior to requesting an independent financial feasibility review relating to the issuance of
any proposed debt.
If the proposed PFD is formed, the PFD board of directors will need to refine estimates
of revenue available from a potential sales and use tax and develop a budget for PFD
administration, any operating shortfalls and reserves to determine how much revenue is
projected to be available to support debt service on bonds.
It is not the goal of this review to create, test or otherwise opine on the costs for capital
or operations, but rather to identify costs specific to the formation of the PFD by the
County. The PFD is expected to request a separate review that will focus on operating
and capital costs, prior to the issuance of any debt, as required by RCW 36. 100.025.
The potential costs to be incurred relative to the proposed formation of the PFD by
Jefferson County are summarized as follows. Additional detail, integral to this review, is
included in detail in this report.
1. The PFD will need start-up funding to enable it to operate.
2. The PFD will need money to pay costs to undertake an election to seek approval
for voter approved funding.
3. The PFD is likely to incur costs for additional studies, planning or review prior to
seeking a vote on PFD-imposed taxes.
4. As proposed, the project requires significant fundraising for capital in addition to
any capital financing by the PFD.
5. As proposed, the operational analysis indicates that the project will require an
annual operating subsidy, which may be provided by the City.
6. The City is anticipated to incur costs related to the proposed PFD.
7. The County is anticipated to incur costs related to the proposed PFD.
Start-up and ongoing costs should be expected for any PFD. It will not be possible for
the PFD to do meaningful work without a source of start-up funding as they are required
to seek voter approval prior to receiving direct revenue. For many newly-formed PFDs,
this cost is covered by the forming entity or other stakeholders.
Page 3
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Page 4
Independent Financial Feasibility Review
Proposed PFD Formation
by Jefferson County, Washington
INTRODUCTION
PFD Proposal
A multi-agency steering committee has recommended formation of a countywide Public
Facilities District ("PFD") in Jefferson County (the "County") for the purpose of
constructing an aquatics and wellness facility to replace an existing pool owned by the
Port Townsend School District (the "School District") and leased to the City of Port
Townsend (the "City"). The existing pool is currently operated by the Olympic Peninsula
YMCA (the "YMCA") pursuant to an agreement with the City.
The steering committee, formed through a memorandum of understanding, was initially
made up of representatives from the City, the School District, Jefferson County Public
Hospital District #2, the County, the Port of Port Townsend, Jeffco Aquatic Coalition
("JAC") and the YMCA.
The City hired a consultant to assist the steering committee as it considered information
and alternatives for planning and support for a proposed aquatic facility. The following
statement is included in the background section of the final report prepared by the
consultant:
"Concentrated efforts have been made since 2001 by the City of Port
Townsend, in 2008 by a nonprofit, in 2012 by Jefferson County, and
2014-2018 by the YMCA and Hospital District. The ongoing need and
interest in replacing the existing antiquated pool and adding health
and wellness components was documented through community
feedback . . . "
The proposal subject to this independent financial feasibility review is formation of a
PFD by Jefferson County to construct an aquatics and wellness facility.
Page 5
Independent Financial Feasibility Review
State law (RCW 36.100.025) requires an independent financial feasibility review to be
completed prior to:
(1) formation of a PFD by a county.
(2) issuance of any indebtedness by a PFD, or
(3) the long-term lease, purchase or development of a facility by a PFD.
The independent financial feasibility review must be conducted by the department of
commerce through the municipal research and services center or another contracted
entity.
This review is triggered by the proposed formation of a PFD by Jefferson County and is
provided by Susan Musselman LLC, through contract with the State's Department of
Commerce. Information regarding the contractor, Susan Musselman LLC, is provided in
Appendix A.
The purpose of the review, as set forth in the statute, is summarized here:
The review is to examine the potential costs to be incurred by the PFD
and the adequacy of revenues or expected revenues to meet those costs.
Upon completion, the independent financial feasibility review is to be a
public document and must be submitted to the governor the state
treasurer, the state auditor, the PFD and participating local political
subdivisions and appropriate committees of the legislature.
The PFD, if formed, is expected to seek a more detailed, project specific review prior to
issuance of any indebtedness, or the long-term lease, purchase or development of a
facility by the PFD in the future, as set forth in RCW 36.100.025.
The primary documents reviewed in performance of this independent financial feasibility
review are listed in Appendix B.
Page 6
PFD Formation in Washington State
State law allows for PFDs to be formed by cities, counties or contiguous groups of cities
with an Interlocal Agreement under 39.34 RCW. The process and details relating to
creation of a PFD are set forth in detailed statutes in Sections 35.57 (formation by cities)
and 36.100 RCW (formation by counties).
Upon formation, the PFD is an independent taxing district and has all the usual powers
and responsibilities of a municipal corporation. Among these is the power to impose
certain taxes, to impose charges and fees for use of its facilities and to accept and
expend gifts, grants and donations.
For a review relating to the formation of a PFD we, as an independent consultant, will
necessarily rely upon planning and work undertaken by various parties to develop a
vision and general proposal. Because the PFD will not be bound by the prior work and
plan of the entity forming the PFD the review will focus on costs specifically related to
the PFD formation and start-up needs. The specific programs, location, design and
project costs described herein should be viewed as aspirational.
PFD Powers
A PFD is an independent taxing district and has all the usual powers and responsibilities
of a municipal corporation.
State law specifically provides the following:
A public facilities district constitutes a body corporate and possesses all
the usual powers of a corporation for public purposes as well as all other
powers that may now or hereafter be specifically conferred by statute,
including, but not limited to, the authority to hire employees, staff, and
services to enter into contracts, including contracts with public and private
parties, to acquire, own, sell, transfer, lease, and otherwise acquire or
dispose of property, to grant concessions under terms approved by the
public facilities district, and to sue and be sued.
Page 7
PFD Funding and Revenue
Various charges, fees and taxes are legally available for imposition by PFDs under state
law, some of which require majority vote by the electorate within the PFD.
(1) Charges and fees for the use of any of its facilities
(2) Admission charges
(3) In limited cases, vehicle parking charges
(4) Sales and use taxes, subject to voter approval
(5) Lodging fees, restricted to certain lodging facilities, subject to voter approval
(6) Within limitations, property taxes, subject to voter approval
State law provides that the taxing authority of a PFD may not be restricted by the
forming jurisdiction or by any action of the PFD.
Additionally, PFDs are allowed to issue voted or non-voted general obligation bonds and
revenue bonds, within certain statutory limits.
PFD Administration
As a municipal corporation, PFDs face expenses relating to administration and
operation of the entity itself, including insurance, staff to coordinate and oversee the
work of the PFD, prepare and distribute agendas, minutes and other information,
perform accounting and generally administer the affairs of the PFD. These costs are
present for any PFD.
Until legally available revenue sources are implemented, a newly formed PFD will have
no direct sources of revenue to pay these costs and will rely on start-up funding.
Implementation of viable and legally available direct revenue sources will require
approval by the electorate. Any such election will require prior funding.
Page 8
BACKGROUND ON EXISTING FACILITY
A multi-agency steering committee has recommended creation of a countywide PFD in
Jefferson County for the purpose of constructing an aquatics and wellness facility. The
facility is proposed to replace an existing pool owned by the School District and leased
to the City, referred to herein as the "existing pool." The existing pool is operated by the
YMCA pursuant to an agreement with the City.
The Existing Pool
The existing pool, built in 1963, is located on the Mountain View campus in Port
Townsend and owned by the School District. It is recognized by the School District, as
owner of the pool, and the City, as operator of the pool, that the existing pool is nearing
the end of its life and there is an interest in developing a new aquatic center.
Lease of Existing Pool to the City
As owner of the property and existing pool, the School District in 2009 leased the pool
to the City, giving the City operating control. The original lease ran from August 2009
through August 31, 2017. A subsequent lease was entered into on June 24, 2014 and
expires on August 31, 2032. The lease includes an option to extend through 2047.
The lease states that the pool has operational and capital issues and is subject to
possible closure if unexpected emergency repairs are required and funding is not
available or it is not feasible to make the repairs. The City is responsible for considering
and potentially funding and undertaking repairs.
The lease also provides that the property may be used for constructing and operating a
new recreational facility on the premises utilizing a fee based operational model and
specifically allows for the City to partner with community non-profit agencies, such as
the YMCA, to provide for additional improvements and facilities. The School District
retained rights for approval of any new facilities constructed on the premises and the
lease states that such approval "shall not be unreasonably withheld." The School
District uses the pool for its students and supports development of a new aquatic facility
at the current site.
Page 9
City of Port Townsend — Lessee/Operator
The City has leased the premises and the existing pool from the School District since
2009. During that time, the City has invested in the facility, including roof repairs and
mechanical (HVAC) repairs and upgrades. The City made lease payments to the School
District, which started at $60,000 in 2009 and increased by CPI through 2019. Since
January 1, 2020 the rent under the lease has been $1 per year.
The City has maintained and operated the pool for use by the public and provides
certain hours for the School District's exclusive use as is agreed from time to time.
Beginning in 2021, the City has contracted with the YMCA to provide day to day
operation of the pool.
YMCA — Pool Operator
Since 2021, the City has had an operating agreement with the YMCA for operation and
management of the pool on behalf of the City. The current agreement, dated
December 14, 2023, is in effect through December 31, 2025 or until a new aquatic
facility is completed or the existing pool is permanently closed or demolished, whichever
is sooner. The agreement includes a 90-day termination provision, applicable to either
party, and the potential to extend the term beyond 2025.
The YMCA has discretion and control in matters relating to management and operation
of the facilities and is to make a good faith effort to maintain certain minimum hours of
pool operations. The agreement provides for the YMCA to make the pool and programs
available for use and participation by the public on a fee basis, without requirement for a
membership. The YMCA is obligated to honor agreements in the lease between the City
and the School District relative to use of the pool by the School District.
The City's agreement with the YMCA provides for payments to the YMCA, to subsidize
the operating budget, in an amount that can vary each year and is typically around
$300,000. The City remains responsible for completing any routine and major repairs to
the pool facility and equipment, for which the City budgets up to $100,000 each year.
In addition to operating the existing pool in Port Townsend, the YMCA operates the
Sequim Aquatics and Recreation Center, in the nearby city of Sequim.
Page 10
STEERING COMMITTEE
Formation and Purpose
In February 2023, the City. the School District, Jefferson County Public Hospital
District #2 (the "Hospital District'), the County, the Port of Port Townsend, Jeffco Aquatic
Coalition ("JAC") and the YMCA entered into a Memorandum of Understanding (MOU)
under which they formed a Steering Committee to undertake a planning effort and to
support development of a proposed aquatic facility.
Each of the parties to the MOU contributed funds toward Steering Committee
planning costs, including $30,000 by the City, $100,000 by Partners
the County, $50,000 by the Hospital District, $5,000 by the
school district, $5,000 by the Port of Port Townsend, and . Jefferson County
$3,000 by JAC. City of Port Townsend
Funds were used to undertake a feasibility study, called the • Jefferson County Public
Healthier Together Center Feasibility Study, that resulted in Hospital District#2,
a final report dated September 18, 2023 (the "Study"). As . Port Townsend School
reflected in the Study, MOU and other documents, the District
creation of the Steering Committee represented an effort to Port of Port Townsend
bring together the interests of various entities into one plan.
While the project may have initially been viewed by some as Jeffco Aquatic Coalition
a City project, the Study reflects a user base that extends Olympic Peninsula
beyond the city limits.
The Steering Committee considered formation of an independent entity under
governance models that included a potential metropolitan park district ("MPD") and a
potential PFD. Models reviewed included two options for MPDs with boundaries larger
than the city but smaller than the county, a city-formed PFD to coincide with City
boundaries, and a county-formed PFD to coincide with County boundaries. The
governance model has implications on potential revenue and it was determined that a
countywide PFD provides greater potential than a city-formed PFD or MPD would have
and may better match the potential user base.
Since completion of the Study, the Steering Committee has continued to meet and has
adjusted plans and proposals based on new information or feedback on revenue
options. It has been stated that the partners to the MOU intend to remain committed to
the goal of developing an aquatic center regardless of the final decisions on facility
design and location. While the Port of Port Townsend initially participated in the Steering
Committee, the Port discontinued its participation as of December 31, 2023.
Page 11
Initially the Hospital District envisioned moving their rehabilitative services to the
proposed facility but subsequently decided not to do so. The Hospital District plans to
incorporate a 750 square foot area for wellness programs into the proposed facility.
Key Partners
The City of Port Townsend
The City has been leading the effort to explore options for replacement of the existing
pool, which is located in the city limits and is operated under control of the City. The City
has loaned staff to the project and has funded various studies relating to the existing
and proposed pool. The City paid the cost to obtain rough cost estimates and input on
potential upgrades to the existing pool for consideration by the Steering Committee.
City representatives have indicated that the City is considering the options for financial
support the City could provide to the PFD, which support could come in the form of
loaned staff, loans or direct funding. Based on the recommendation of the Steering
Committee that a countywide PFD be formed, the City and County agreed to jointly fund
this financial feasibility review which is required by the State prior to formation of a new
PFD.
Jefferson County
The County's involvement in planning for a new aquatic facility has included
participation as part of the Steering Committee because there is an interest in
supporting the activities. The County provided $100,000 of funding from the American
Rescue Plan Act for this effort. The County has not provided funding for the existing
swimming pool over the past 25 years.
After being requested to consider formation of the PFD, County representatives have
indicated that the County is considering the options for financial support the County
could provide to the PFD, which support could come in the form of loaned staff, loans or
direct funding. As stated above, the County and City are jointly funding this financial
feasibility review.
Page 12
Port Townsend School District
The existing pool is located on the Mountain View campus and is owned by the School
District. As the owner of the property and pool, the School District has an interest in
using the pool for school-related sports and activities.
If the PFD determines that the Mountain View campus is the preferred location for a
new aquatic center, it is expected that the School District will lease property at that
location to the PFD for a nominal fee. The School District supports the Mountain View
site for location of the pool.
Olympic Peninsula YMCA
The YMCA operates and manages the existing pool under an operating agreement with
the City. If the PFD determines that it would like to enter into an operating agreement
with a third-party provider, it is expected that they will enter into an operating agreement
with the YMCA on similar terms as the current agreement with the City.
The Study states that the operating budget for the proposed facility is based on the
assumption that the YMCA serves as operator of the facility and the YMCA provided
input for development of the staffing plan and operating budget.
Jeffco Aquatic Coalition
JeffCo Aquatic Coalition ("JAC") is a nonprofit corporation formed in 2007 to champion
aquatic amenities and access in the county. The purpose of the JAC, as set forth in its
bylaws, includes "working with community stakeholders to sustain the current publicly
accessible aquatic amenities while simultaneously developing and implementing a plan
that provides improved and financially sustainable aquatic facilities and programs for
East Jefferson County." Jac is designated as a 501(c) 3 non-profit corporation exempt
from federal income taxes of the Internal Revenue Code.
JAC has stated its intention to support the development of a new aquatic center through
philanthropic fundraising and independently developing a campaign to support the
proposed sales and use tax proposal if one is put forth by the PFD.
Page 13
HEALTHIER TOGETHER CENTER FEASIBILITY STUDY
Overview
In February 2023, the City contracted with Opsis Architecture to provide planning and
architectural services for development of a comprehensive recreation facility feasibility
study to include an aquatics center with community health and wellness amenities. The
contract incorporated the work of several subcontractors including a subcontractor to
provide cost estimates based on the building program and conceptual building and site
design, and a subcontractor to provide operational cost recovery projections and
operational cost analysis. The consultants created the Healthier Together Center
Feasibility Study, delivering a final report dated September 18, 2023 (the "Study").
According to background information in the Study, it is stated that:
"In February 2023 Opsis Architecture and its planning/design team of
specialized consultants initiated work with the project Steering Committee
to develop a comprehensive feasibility study to identify, evaluate, and
select a preferred site, develop a market analysis, verify the aquatic and
other program needs. develop a conceptual design vision with total project
cost estimates, and evaluate operational and funding strategies. Working
with the Steering Committee, project guiding principles were developed to
guide the planning and design process."
The Study includes, among other things, an executive summary and background
information on the work undertaken to consider the ongoing need and interest in
replacing the existing pool and adding health and wellness components.
Project Siting
The Study included evaluation of four potential sites in the Port Townsend city limits,
using criteria developed by the Steering Committee. After evaluation of the four potential
sites, the Steering Committee recommended the Mountain View campus as the
preferred site and the City council in June 2023 approved a motion to endorse and
approve the recommendation. The School District was a participant in the Steering
Committee and supports the recommendation to utilize the Mountain View site, which is
where the existing pool is located.
Page 14
Programming/Project Features
As reflected in the Study, two program options were developed for replacement of the
existing pool, a base option focused on aquatics and a full build-out option, to include
aquatics and recreation. Development of both options are based on the assumed
location on the Mountain View campus in Port Townsend. A level of conceptual design
was developed along with capital and operational cost estimates.
The following project summary of the building program is excerpted from the Study:
Base Option —Aquatics (29,700gsf)
• Aquatics (6-lane 25-yard lap pool, recreation pool, whirlpool, and
sauna)
• Events (birthday party / meeting room)
• Lobby with lounge seating
• Wellness studio space for Jefferson Health Care
• Binary locker rooms and universal / gender-neutral changing rooms
• Administration. staff. and support spaces
Full Build-Out Option —Aquatics & Recreation (40,200gsf)
• Includes outlined base program spaces
• Gymnasium (one (1) high school court with two (2) cross courts)
• Fitness and group exercise space
Source: Healthier Together Center Feasibility Study
Page 15
Preliminary Capital and Operating Costs
The Study reports a project cost estimate of $37.1 million for the base option with
$1.27 million of annual operating costs and a project cost estimate $45.9 million for the
full build-out option with $2.08 million of annual operating costs.
The following table summarizes the estimated capital cost as well as the operating
expenses and revenues, and the resulting subsidy requirement from the Study.
One-time Annual
Facility
Options Ca•ital Cost Expenses •
Base $37,182,810 $1,268,557 $834,466 -$434,091
Full Build Out $46,517,939 $2,084,333 $1,731,761 -$352,572
Source: Healthier Together Center Feasibility Study
It is not the goal of this independent financial feasibility review to create, test or
otherwise opine on the costs for capital or operations, but rather to identify costs
specific to the formation of the PFD by the County. The PFD is expected to request a
separate review that will focus on operating and capital costs, prior to the issuance of
any debt, as required by state law.
Steering Committee Recommendations
The Study states that the recommendations from the Steering Committee are to pursue
the base option (estimated capital cost of$37.1 million) with a desire to implement the
full build-out option if fundraising efforts allow, that a countywide PFD be created and a
0.2% Sales and Use Tax and a 2% Lodging Tax is recommended.
The Steering Committee minutes, as well as a press release from the City, reflect that in
December 2023 the Steering Committee determined that it would not be feasible to
rehabilitate the existing pool due to estimated costs and the risk of unforeseen
circumstances that may arise due in part to the condition of the existing pool.
The Study states that the Steering Committee has committed $15 million of fundraising
and assumes that amount will be available for capital costs. Since the Study was
finalized, the Steering Committee increased the fundraising target to $17 million. It is
expected that the PFD will fund the remaining $20.1 million through issuance of bonds.
Page 16
The Steering Committee partners have stated that they will continue to meet as needed
to support the proposal. Since the conclusion of the Feasibility Study and release of
recommendations, there has been some interest in looking at other sites outside of the
city limits and other project or construction approaches, either of which could change
the proposed capital and operating costs.
The County has agreed to lead a new task force to review potential sites outside of the
city limits and explore alternative construction methods that may reduce project costs.
The task force is to be made up of six representatives appointed by the County (two
representatives from each of the three commissioner districts) and two representatives
appointed by JAC. The task force is expected to report back to the Steering Committee,
which will then provide additional information or recommendations to the Board of
County Commissioners, the City Council and other partners.
Capital Funding Plan - Base Option
The Steering Committee recommendation at this time is to pursue the base option for
the project. Based on capital cost estimates and the fundraising targets, the capital
funding plan is summarized as below.
Successful completion of fundraising will be needed to support the project's potential
budget of$37.1 million, given the relatively limited revenue expectations from the
proposed PFD sales and use tax.
Capital Funding Plan
Capital Cost— base option $37,182,810
Fundraising commitment 17,000,000
Assumed PFD Bond Financing $20,182,810
The fundraising is a crucial component of the capital funding plan based on the current
project proposal, representing over 45% of the estimated $37.1 million capital cost.
Fundraising efforts are expected to include state and federal grants and philanthropy.
Page 17
Operating Analysis - Base Option
The Study includes an operational analysis with estimates of fee-based revenue and
costs to operate and maintain the proposed facilities. Revenue projections in the Study
were developed based on the demographics of the service area and comparisons to
statistics and similar facilities, with assumed design, operating philosophy, priorities of
use and fees and charges.
The operational analysis includes projected staffing needs based on expected use of
the facility, hours of operation, key amenities and operation practices of the facility. It
incorporates assumptions of staffing, wages, utility costs, insurance costs and costs of
equipment and maintenance, all of which are subject to change.
The Study concludes that the projected annual facility operating revenue will not cover
anticipated annual operating expenses. It was assumed that the City will subsidize
operations with approximately $400,000 annually, equivalent to the current level of
subsidy provided to the City's existing pool.
Annual Operating
Analysis
Facility
Options Expenses Revenues Subsidy
Base $1,268,557 $834,466 -$434,091
Full Build Out $2,084,333 $1,731,761 -$352,572
Source: Healthier Together Center Feasibility Study
Page 18
PFD FINANCIAL CONSIDERATIONS
After review of the legally available revenues for a PFD, the Steering Committee initially
recommended that the PFD seek voter approval
for a 0.2% (two-tenths of 1%) sales and use tax Statutorily Available Revenue
and a 2% lodging tax. Upon further investigation Options for PFDs
it was determined that the revenue potential
from the 2% lodging tax is not meaningful and (1) Charges and fees for the use of
should not be pursued. any of its facilities
(2) Admission charges
Although there are several revenue options (3) In limited cases, vehicle parking
statutorily available for PFDs, only sales and use charges
taxes or property taxes, both of which require (4) Sales and use taxes, subject to
voter approval, are practical options for the voter approval
(5) Lodging fees, restricted to certain
proposed PFD. lodging facilities, subject to voter
Tax or other revenues will be needed to pay for approval
(6) Within limitations, property taxes,
PFD administration, unanticipated operating subject to voter approval
shortfalls and reserves, and debt service.
Facility Operations
As stated earlier, the Study concludes that the projected annual facility operating
revenue will not cover anticipated annual operating expenses.
The evaluation of revenues and expenses directly related to facility operation in the
Study have included a $400,000 operating subsidy from the City, which is required to
balance the operating budget.
Without a subsidy, the projected revenues are not adequate to cover expected
operating costs.
Page 19
Revenue from 0.20% Sales and Use Tax
If the voters approve the imposition of a sales and use tax at the rate of 0.2% it would
be collected on the countywide taxable retail sales base — both the unincorporated
County and the City of Port Townsend — subject to certain exemptions in state law. The
tax proposal requires approval by a majority of voters casting a vote in order to pass.
Timing of collection of sales and use tax is based on detailed statutes, which
necessitates a delay between the date an election is certified and the date new tax
revenue is collected and disbursed to the taxing entity.
Taxable retail sales in the County for 2022 (the latest full year Jefferson County
available from the state Department of Revenue (the "DOR")) Taxable Retail Sales
is reported to be approximately $785,630,000. DOR data for
2023 shows that the taxable retail sales increased 2022 $785,630,000
approximately $20 million during the first three quarters of 2023 $805,000,000(Est)
2023 compared to 2022, which could imply a tax base of
$805,000.000 for 2023.
Based on the implied taxable retail sales of$805,000,000 for 2023, it can be estimated
that a sales and use tax of 0.2% would result in annual revenue of $1,610,000.
Page 20
Costs for PFD Administration
The scope and purpose of the Study was specific to development of capital and
operating costs of the proposed aquatic center.
Apart from the proposed facility, a PFD will need funding for its own administration,
including initial organizational costs.
Significant financial needs of the PFD will include:
• Staff, which may be full or part-time, to coordinate and oversee the work of the
PFD, to direct investments and account for financial matters of the PFD, create
agendas, take minutes, prepare and distribute information, and generally
administer the affairs of the PFD.
• Resources to assist the newly-appointed board members in their review of the
project proposal and in making decisions on siting, design, construction and
financing. This may include project design work and/or various studies.
• Development of sufficient planning to determine a project cost and financial
needs, and method of communicating the plan and needs to the electorate.
• Funds to pay the costs of administering an election.
General administrative costs (staff, insurance, meetings) will be ongoing costs for the
PFD and will presumably be paid from sales and use tax if one is approved by the
voters. Until tax revenue is available, the PFD will need a source of funding for these
costs.
Some of the project-related costs may be able to be capitalized into the project if it is
eventually funded and undertaken, but money will be needed to pay the costs before
then. While the newly appointed PFD board members will have the benefit of the Study
and the recommendations of the Steering Committee, the PFD will be responsible for its
own due diligence and planning for the project and costs for this work will likely need to
be paid prior to requesting voter approval of a sales and use tax.
All of this work will require funding commitments for the PFD and it is best that these be
addressed prior to formation of the PFD. Funding may be provided through agreements
among the County, City and/or other partners. Staff may be volunteers or loaned from
the County, City or other partners.
Page 21
Capital Funding Plan
The capital funding plan set forth in the Study, as later modified by the Steering
Committee, contemplates $17 million of fundraising with the balance to be paid from
proceeds of bonds to be issued by the PFD. Fundraising is expected to include state
and federal grants and philanthropy.
Capital Funding Plan
Capital Cost— base option $37,182,810
Fundraising target 17,000,000
Assumed PFD Bond Financing $20,182,810
As the sole source of income to the PFD, the estimated sales and use tax revenue
(estimated to be $1,610,000 per year, based on estimated 2023 taxable retail sales)
would need to provide for PFD administration, operating shortfalls and reserves, and
debt service.
For illustration purposes only, if$210,000 is budgeted for administration, operating
shortfalls and reserves, this would leave $1,400,000 available to cover annual debt
service.
The Steering Committee's consultant has estimated that debt service for $20 million of
financing, for 30 years at 5.5% will be $1,513,719, which would result in financial
shortfalls, at least in the early years.
It is likely that any financing plan will require a coverage factor, to ensure there is a
cushion between expected revenue available for debt service and actual debt service,
which will further limit financing capacity. The actual capital funding plan to be
developed by the newly formed PFD will be influenced by decisions about the project,
the actual amount of fundraising achieved, amounts budgeted for PFD expenses and
reserves other than debt service, bond interest rates and financing terms and structure.
The PFD, if formed, will need to refine the estimates of revenue available from a
potential sales and use tax and develop a budget for how much of the overall revenue
will be needed for PFD administration, operating shortfalls and reserves to determine
how much revenue is projected to be available to support debt service.
Page 22
CONCLUSION
This review is related to the proposed formation of a PFD by Jefferson County and is to
examine the potential costs to be incurred by the PFD and the adequacy of revenues or
expected revenues to meet those costs.
Although significant work and studies have been performed by community partners,
which resulted in the recommendation that the County form a PFD, the board of
directors appointed to govern the PFD may explore and develop a different approach to
and budget for a new aquatic center. The specific programs, location, design and
project costs referenced herein should be viewed as aspirational.
The PFD, if formed, is expected to seek an independent financial feasibility review prior
to issuance of any indebtedness in accordance with RCW 36.100.025, At that stage, the
PFD will need to have firm plans relating to the location, design, capital and operating
costs and financing plan, as well as have in place voter approval for any required taxes
or funding and any agreements relating to grants and gifts and with third party operators
or partners.
Potential Costs Relating to PFD Formation
The potential costs to be incurred relative to the proposed formation of a PFD by
Jefferson County and the adequacy of revenues or expected revenues to meet those
costs follow.
1 . The PFD will need start-up funding to enable it to operate.
a. The proposed PFD will not have its own source of revenue to pay
administrative expenses, including organizational costs, insurance and
administration prior to seeking and receiving voter approval for taxes.
b. The PFD will need formation-related documents, insurance and staff to
coordinate and oversee the work of the PFD, prepare and distribute
information, and generally administer the affairs of the PFD.
c. This cost is present for any new PFD and can be addressed through
agreements with the County, City and/or other partners, to cover the period
before PFD-implemented revenues are available.
Page 23
d. If the proposed PFD tax is not approved by the voters, the PFD would not
have the means to repay any borrowed funds.
e. No such plan or agreements are in place at this time.
2. The PFD will need money to pay costs to undertake an election to
seek approval for a voter approved PFD funding.
a. All viable revenue sources for the PFD will require a vote of the County
electorate, which will require pre-election expenditures for communication
and payment of election costs.
b. These costs will depend on many factors, but a minimum of $60,000 (if part
of General Election) to $110,000 (if part of a Special Election) is a suggested
placeholder for planning until better information is available.
c. This cost can be paid through funding agreements with the County, City
and/or other partners.
d. There will be no assurance that any tax proposal will be approved by the
electorate.
e. No such funding plan or agreements are in place at this time.
3. The PFD is likely to incur costs for additional studies, planning or
review prior to seeking a vote on PFD-imposed taxes.
a. The PFD board of directors will need to do its own due diligence and
planning for the project, which will likely require funding prior to seeking a
vote on a tax referendum for PFD revenue.
b. The PFD board of directors could decide to study different options for the
location, design and cost of the project rather than pursuing the proposal
recommended by the Healthier Communities Steering Committee.
c. While some of these costs can be capitalized into the cost and financing of
the eventual project, the money will be needed prior to having PFD revenue.
d. If the proposed PFD tax is not approved by the voters, there will be no ability
to capitalize or reimburse these costs.
e. No funding for project planning costs prior to a successful tax referendum
has been identified at this time.
Page 24
4. As proposed, the project requires significant fundraising for capital in
addition to any capital financing by the PFD.
a. The project proposal includes a commitment from community partners to
provide fundraising efforts targeting $17 million of the project costs.
b. This level of fundraising, representing over 45% of the estimated capital cost,
will be a critical component for a successful funding plan for the project as
currently envisioned.
c. The County (pre-formation) or the PFD (post-formation) can mitigate (but not
eliminate) this risk by entering into a memorandum of understanding or similar
agreement to clarify and solidify these commitments.
d. Fundraising efforts are expected to include state and federal grants and
philanthropy and any agreements can clarify which partner will pursue
specific funding sources.
e. If formed, the PFD will need to refine and adapt the project plan and financial
model based on actual fundraising results and project plans prior to moving
forward to project financing.
5. As proposed, the operational analysis indicates that the project will
require an annual operating subsidy.
a. The Study projects that the operating revenues will not be sufficient to cover
operating expenses and will require an annual subsidy.
b. The City has agreed in principle to provide a subsidy of approximately
$400,000 each year, which would balance the projected budget.
c. The PFD would need to budget additional funds or reserves to recognize the
potential for additional operating shortfalls, or enter into agreements with
other parties cover this risk.
d. There is no agreement in place formalizing any operating subsidy for the
proposed project.
Page 25
6. Expenditures by the City related to the proposed PFD
a. The City has led the effort for the Healthier Together initiative and
administration of the Steering Committee.
b. Presently, the City provides approximately $400,000 of funds annually toward
operation of the existing pool and has indicated that it is willing to provide
similar financial support to the operation of the proposed new pool if it is
located in Port Townsend.
c. The City has a strong interest in supporting an initiative to replace the existing
pool which is nearing the end of its life.
d. The City may incur additional costs related to formation of the PFD if it enters
into memorandum of understanding or other agreements with the County
and/or community partners prior to formation of the PFD, or with the PFD
after it is formed.
e. If successful, formation of the PFD, approval of new tax revenues, and
operation of the pool by a new entity, will eliminate the City's need to make
additional investments in the existing pool.
7. Expenditures by the County related to the proposed PFD
a. The County will incur legal costs related to the formation of the PFD, and may
have costs for consultants, advisors, outside attorneys and/or county staff.
b. The County may incur additional costs related to the formation of the PFD if it
enters into memorandum of understanding or other agreements with the City
and/or community partners prior to formation of the PFD, or with the PFD
after it is formed.
Page 26
APPENDICES
APPENDIX A
Provider of this Independent Financial Feasibility Review
APPENDIX B
Documents Reviewed in Performance of this Independent Financial Feasibility
Review
Appendix A
Provider of this Independent Financial Feasibility Review
This review is conducted by Susan Musselman LLC, an independent consulting firm
contracted by the state Department of Commerce for this purpose. Susan Musselman
LLC was formed in 2018 by Susan Musselman, Principal, for the purpose of providing
selected consulting services to municipal entities in the state of Washington.
Ms. Musselman began her career in public finance in 1982 and in 1996 formed her own
independent financial advisory firm for the purpose of assisting governments in the
Northwest with development and execution of financing plans. Her clients included
cities, counties, school districts, state agencies, public facilities districts, fire districts and
universities, primarily in Washington.
After 17 years. Ms. Musselman sold her financial advisory firm and subsequently retired
from the regulated securities advisory work. Thereafter, she formed Susan Musselman
LLC to provide a limited level of general consulting relating to capital projects, revenue
estimations and budgeting.
Ms. Musselman has direct experience as an advisor relative to formation of PFDs,
including development of formation documents, and financing for various PFDs. As
consultant to the state Department of Commerce, she has provided independent
financial feasibility reviews relating to formation of a PFD by Asotin County and for
development of a Sports Complex and Event Center by the Lewis County PFD.
It is hoped that the information provided in this review will be helpful to the State and the
County, its partners and constituents as formation of the PFD is being considered.
A-1
Appendix B
Documents Reviewed in Performance of this Independent
Financial Feasibility Review
The performance of this independent financial feasibility review required access to and
review of certain information and documents prepared by others, including the following.
1. Meeting minutes of the Steering Committee relating to the project.
(https://cityofpt.us/engagept/page/healthier-together)
2. Presentations from workshops, open houses and various meetings
(https://citvofpt.us/engagept/page/healthier-together)
3. Healthier Together Center Feasibility Study, final report
(https://cityofpt.us/sites/default/files/fileattachments/engage pt/page/20561/0918
23 healthier together final report and appendices.pdf)
4. Memorandum of Understanding among the City of Port Townsend, the Port
Townsend School District, Jefferson County Public Hospital District #2, Jefferson
County, the Port of Port Townsend, Jeffco Aquatic Coalition ("JAC") and the
Olympic Peninsula YMCA, signed by the parties between 11/29/22 and 2/27/23
5. Lease between the City of Port Townsend and the Port Townsend School District,
dated 6/24/2014
6. Operating Agreement between the City of Port Townsend and Olympic
Peninsula YMCA, signed 12/14/2023
7. Professional Services Agreement between the City of Port Townsend and
Opsis, signed by the City on 2/8/2023
8. Various statutes relating to PFDs, in Chapter 36.100 RCW
9. Actual taxable retail sales data from the Department of Revenue
(https://apps.dor.wa.gov/researchstats/content/taxableretailsaleslocal/report.aspx)
10.City Press Release Regarding Steering Committee Recommendations
(https-//cityofpt.us/sites/default/files/fileattachments/engage_pt/page/21901/2312
11_city_of pt_press_release_healthier_together_recom mend ation.pdf)
B-1
ATTACHMENT E
PFD Budget Estimates
Year 2 (yes
Expenses Year 1-2025 vote) 2026
Consultant or staff $50,000 $75,000
Ballot Measure- General election $60,000
2nd Commerce study $15,000
Market Analysis $20,000
Concept and Site Plan $250,000
Preliminary Architectual & Engineering $750,000
Partnership Analysis $3,000
Operational Feasability Analysis $50,000
Capital Cost Estimate $50,000
Office Supplies and Equipment $8,000 $10,000
County staff support $0 $0
Sales Tax Analyisis/Bond Expense Analysis $5,000
Total $391,000 $955,000
Revenues
.02%Sales Tax 1,700,000
State design grant $250,000
private fundraising $121,000 $100,000
JAC funds-market survey $20,000
Total $391,000 $1,800,000
Net $0 $845,000