Wednesday, October 1, 2008

Aquatic Feasibility Study Released

The aquatic feasibility has been released (pdf). I have not read the whole thing yet, but I took a look at the numbers. Page 111 has the important stuff, which is the projected cash flows. Here is the gist:

The 50 meter pool option that a few vocal residents have been clamoring for will cost $17.3 million. Ignoring this initial cost to build the pool for a second, the cash needed to operate the pool will exceed the cash revenues generated by $430,000 per year. Let me repeat that: the pool will burn up over $430,000 in cash per year just to fund operations. This money will have to come from somewhere. If not the fairy godmother, then from taxes.

Here is the worst part: the above figure of $430,000 does not include debt service on the bonds to build the pool in the first place (i.e to generate the $17.3 million). The pool will require $1.5 million per year to be spent on debt service, which is the interest and principal paid to the bond holders. I did not see the specific terms of the bonds yet, but my quick calculations tell me that at an estimated rate of 6%, these are 20 year bonds. A lower interest rate will decrease the number of years, a higher rate will drag that out even longer.

So, the taxpayers will have to pay at least $1.9 million a year for the next 20 years to have this pool. Revenues from its operations won't pay for it. Gee Wally, I wonder why private investors don't want to build this pool?