Daniel Meyer Pool Revenue Bond - March 29, 2020
(I had this post ready 2 1/2 weeks ago, but with the Covid-19 outbreak, am just now getting to posting it…. )
I’ve been asked several times whether Ashland residents will see a tax increase to pay for the major repair and expansion of Daniel Meyer Pool. The short answer is no.
When we hear the word “bond,” we naturally (and correctly) understand that money is being borrowed to handle a particular need. In this case, it is a “revenue bond,” which is a short-term bond that is to be paid back over time by a consistent revenue source rather than an increase in property taxes.
In late 2019 the Ashland Parks and Recreation Commission put forward a request to the City of Ashland to authorize a revenue bond that would cover the following projects:
Major structural repair/remodel of Daniel Meyer Pool - $2.6 million
Tennis court re-surfacing at Hunter Park - $150,000
Pickleball court installations at Oak Knoll Golf Course - $150,000
As is typical with bonding to pay for buildings and facilities, the Ashland Parks and Recreation Commission bundled several projects together and came forward with a package. This is done because bonds cost money to set up, so it is better to do several projects under one bond structure than to create a separate bond structure for each project.
The bond will allow the City of Ashland to borrow the $2.9 million needed for these three projects and Ashland Parks and Recreation will pay the debt over the next 10 years from funds that come from the 5% Food and Beverage Tax charged on prepared food in Ashland.
Ashland Parks and Recreation receives 25% of the Food and Beverage Tax revenue each year for the purposes of acquisition, planning, development, repair and rehabilitation of City parks that are used by residents and visitors.
Revenue bonds backed by Food and Beverage Tax revenue have been used successfully by Ashland Parks and Recreation for previous projects, such as purchasing Briscoe school, remodeling Garfield Park facilities, and resurfacing Calle Guanajuato.
Here is what will be owed annually on these projects, plus the Daniel Meyer Pool/Tennis/Pickleball projects for the next ten years:
Food and Beverage Tax Encumberances until 2030
2020: $184,820 (Garfield Park, Briscoe School, Calle Guanajuato)
2021: $514,295 (Garfield Park, Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2022: $512,687 (Garfield Park, Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2023: $512,047 (Garfield Park, Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2024: $511,365 (Garfield Park, Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2025: $461,618 (Garfield Park, Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2026: $412,344 (Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2027: $416,475 (Briscoe School, Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2028: $365,500 (Calle Guanajuato, Daniel Meyer Pool/Tennis/Pickleball)
2029: $325,000 (Daniel Meyer Pool/Tennis/Pickleball)
2030: $325,000 (Daniel Meyer Pool/Tennis/Pickleball)
Food and Beverage Tax Projections
Projections for Food and Beverage Tax revenue to Ashland Parks and Recreation total $750,000 per year, which is a solid average of actual revenue over the past three years (2017-2019). Actual income for FY19 was $803,844, FY18 was $758,100, and FY17 was $708,590. This revenue bond for $2,900,000 at 2% interest for 10 years will have payments of approximately $325,000 per year.
As you can see from the table above, Ashland Parks and Recreation is currently paying about 25% of their annual Food and Beverage Tax revenue on debt service for Garfield Park, Briscoe School, and Calle Guanajuato. By financing this package of projects with a revenue bond, the tax encumbrances would increase to about 68% for four years before beginning to go down again as other projects are paid off.
Why doesn’t Parks and Recreation borrow their own money?
While Ashland Parks and Recreation is governed by its own elected board of commissioners, the assets it manages are owned by the City and the two entities operate under the financial umbrella of the City. So, if Ashland Parks and Recreation wants to go out for a revenue bond, the City of Ashland has to approve it and be the entity that actually secures the bond.
Does that mean the City is on the hook if something goes wrong?
Good question! Technically, yes. The City is responsible for paying this money back if somehow Parks and Rec cannot make the payments. However, it is clear that the Board of Commissioners for Ashland Parks and Recreation understands its fiscal responsibilities. They have committed to adjusting other capital project plans if needed in the future to ensure that the debt service on these projects is paid on schedule.
Do we really need such a big investment in our community pool?
From Ashland Parks and Recreation: “The Daniel Meyer Pool is overused and in constant need of repair. The pool was built in 1986 with the intent that it would serve as a seasonal community pool; open just a few months per year for swim lessons, recreation swimming and casual lap swimming. The actual use is much more intensive. The pool is open year-round, it is used for competitive sports training and serves a population much larger than what was intended. Daniel Meyer Pool has rapidly deteriorated over the past few years causing a premature closure to the 2019 summer season due to hazards created by the failing pool surface.”
My Thinking
The Daniel Meyer Pool has been a staple recreational facility since before I moved here in the early 1990s. My children learned to swim at that pool and it is an important feature for many Ashland parents with young children, as well as our elders and now the water polo team at Ashland High School. At this point, given the state of the pool, Ashland Parks and Recreation needs to either invest significantly in the pool or shut it down.
This revenue bond will allow the pool to be fixed quickly and well while making it better able to serve our community. Resurfacing the tennis courts in Lithia Park is a necessary maintenance task, and building dedicated pickle ball courts at the golf course responds to the enthusiasm with which people are now flocking to pickle ball courts in our community. All without raising taxes for Ashland residents. A win-win-win in my book.
Update 4/19/20: With the COVID-19 crisis calling into question revenues for Parks and Recreation from the Food and Beverage Tax, Ashland Parks and Recreation is no longer moving forward with the revenue bond and is instead looking for alternative funding sources for the Daniel Meyer Pool remodel.