Recreational provider now projects a profit if it runs city-owned rec center
(Editor's note: This updates a previous version of this story by including a response by YMCA of Columbia-Willamette officials regarding revised HealthFitness figures.)
A health fitness company vying to become the next provider of recreational services in the city now says it will turn a major profit over the next five years, ending in the black to the tune of almost $600,000.
On Tuesday, the Minneapolis-based HealthFitness projected a surplus due to updating its average monthly membership fees, resulting in a substantial profit, according to a document the city received and has posted online.
Originally, HealthFitness projected a deficit.
In a letter from HealthFitness representatives, officials from the company said they were addressing council concerns with the negative net outcome of their initial 5-year budget plan and discovered they weren't using apples to apples when comparing their fees to the YMCA, the current operators of the city-owned recreational facility.
The HealthFitness letter states that the company originally relied on a $47 per month membership unit fee to figure costs compared to the YMCA's monthly membership unit of $57. However, HealthFitness updated its figures after discovering the YMCA had different monthly membership unit costs for adults, adult couples, seniors and family memberships.
As a result, HealthFitness said its new fee would be $52 per membership unit, an amount that would add to projected annual profits ranging from $2,544.11 in the first year and accelerating to a total of $596,415.60 in the fifth year.
Those numbers are quite a discrepancy from original figures received from HealthFitness, which originally projected a $1.5 million loss, later changing that amount to a $480,700 loss over five years compared to YMCA officials who had predicted a surplus of $119,310 over that same time period.
City Manager Joe Gall said city staff was hesitant to comment on the revised numbers and has asked HealthFitness representatives to attend the Tuesday, Sept. 19, city council meeting to explain in detail the their new conclusions and revisions.
"That's quite a difference," Gall said. "It's the company's projection, not the city of Sherwood."
The Sherwood City Council has asked Gall to negotiate a contract the council could vote on either by the Sept. 19 or Oct. 3 meetings.
Gall said while his staff has been working hard on the contract, it won't be ready for council consideration until the Oct. 3 meeting, a week before the council's requested Oct. 12 deadline.
Meanwhile, Tammy Spencer, a spokeswoman for the YMCA of Columbia-Willamette, said the organization believes the latest HealthFitness revised proposal "significantly overestimates projected revenue and underestimates costs by over $1.0 million in each category. Given this, the original Health Fitness proposal showing a $1.5 million loss is more accurate."
She added, "The YMCA's proposal guarantees the city will never have to write the 'Y' a check for operating costs or management fees, as has been the case for nearly 19 years," said Spencer. "Conversely, (HealthFitness') proposal requires the city to pay them a fixed management fee and hands all financial risk to the city."
Meanwhile, Spencer said the council still has the ability to alter the outcome of who receives a new recreational center contract.
"The Health Fitness contract negotiation is grounded in questionable financial revisions in contrast to the YMCA's clearly presented and documented facts based upon our successful experience," she said. "We hope council members will weigh the outpouring of support the YMCA continues to receive from the overwhelming majority of their Sherwood constituents."