Sierra Planning and Management Velodrome - Town of Milton

Sierra Planning & Management
46
46 Velodrome Business Plan – Town of Milton
Given the volume of space that the velodrome comprises, and the realities of the Canadian winter, the
utility cost represents a significant portion of the operating budget. They are also subject therefore to
potential risk depending on the change in prices for heating and cooling of the building. The analysis
estimates as a base case an average of $3.50 per square foot of GFA resulting in some $420,000 in annual
utility costs. All expenses and revenues are subject to a 3% annual escalation. However, should utility rates
increase by 10% for example, this would affect the operating costs by increments of $40,000 annually. It is
therefore in the interest in the Town of Milton to secure the necessary long-term agreements with respect
to utility rates and/or provide a range of measures which tend to reduce utility costs compared with typical
municipal facilities. To that end, we understand that the Town is currently investigating opportunities for
linking the Velodrome to a broader district heating infrastructure project that will be based on the
application of geothermal technology. Should this be successfully achieved, this may reduce the risk
associated with utility costs for the building and may result in a significant cost savings. As to the quantum
of the cost savings and any upfront capital costs necessary to create the infrastructure, this specific
information is not available at this time.
7.3.8 SUMMARY OF SCENARIOS
Scenario 1:
Lower revenue potential, higher
operating costs
� Municipal Ownership and
operation through a non-profit
corporation
Business Plan | January 2012
Scenario 2:
Moderate revenue base
� Municipal Ownership and
Operation through a nonprofit
Corporation
� No change compared with
Scenario 1 for track demand
or space utilization
� Higher staffing costs � Track rental rates consistent
with levels previously agreed
� Small commercial tenant lease
space opportunities (CCA only)
and rental of fitness space to
3 rd party operator with no
access to performance share
of revenues from fitness
centre operation
� Revenues from events based
solely on rental of facility
� Lower estimates of achievable
track rental rate
� Higher risks associated with
revenues from the infield
compared to Scenarios 2 and 3
� Small food concession owned
and operated by the Town of
Milton
to by major cycling bodies
� Labour costs reflect the
specification of this building
as a high performance centre
� Ticketed events revenue
based on 10% gate revenue
plus base rent
� Municipality operates fitness
centre
� Food concession tended to
by private operator;
municipal share is 50% of
gross margin
� 2,000 sq.ft. of tenant space
(assumed to be CCA or other
cycling body)
Scenario 3:
Higher revenue potential
� Municipal Ownership and
Operation through a nonprofit
Corporation
� Builds upon Scenario 2 but
with modest incremental
increase in track rental rates
� Lower risk associated with
achieving infield revenues
� High leasable tenant space
(3,000 sq. ft.)
� Retail concession space of
2,000 sq. ft.