Category: HFFA

A quick update on some encouraging news from the new management company at Huntersville Family Fitness and Aquatics that was overshadowed by the local election last week. Swim Club Management (“SCM”) CEO Brian Sheehan made remarks during the public comments portion of the town board meeting last Monday regarding a few key areas of improvement. You can listen to his comments from the Nov. 6 board meeting beginning at the 48:50 mark here.

HFFA now has an updated, more interactive website that you can check out here. The site was updated to better enhance the experience of members and has far more information about the facility, including class schedules, than did the old site.

Membership software has been updated to better track who is entering the facility. In conjunction with updating the membership software, SCM intends to audit membership rolls to help better define the various membership categories available and ensure appropriate revenues are being collected for each membership.

Since taking over management responsibilities in early September, SCM has collected approx. $15K in outstanding membership fees and has reduced NSF (non-sufficient funds)
 charges in each of their first two full months of processing membership fees. NSF fees were typically being assessed under prior management due to old or incorrect credit card information. These fees were being passed along to the town – i.e., the taxpayers. According to Huntersville Finance Director Jackie Huffman, “for the twelve months in FY 2017, declines and chargebacks averaged $17,131 per month, with a high of $22,677 and a low of 11,831. September and October 2017 have been processed at $15,270 and $10,023 respectively.”  SCM anticipates this downward trend to continue due to measures they have implemented to decrease the reliance on credit card payments.

Finally, SCM has added staff in certain areas while at the same time they are projecting annual payroll to be $100K lower than last year. If you add the savings above to the approx. $125K the town is saving just on the management fee alone ($183,564 v. $58,500) SCM has made close to a $250K impact on the HFFA bottom line in just the first two months. But, this is to be expected when you hire a management company who treats taxpayer dollars as they would their own dollars and has an actual incentive to make HFFA profitable.

It’s often hard to tell truth from fiction over the din of local elections, but it’s hard to argue with the numbers SCM is producing in just their first two months at HFFA.

And while we’re on the topic of HFFA – why has the town still not paid a termination fee to the prior management company for 6 months base management fees and for severance? The town was sent demand letters over two months ago by nine individuals with a payment deadline of Sept. 15, 2017, and we’re well past that deadline. It seems pretty easy to figure up the 6 months of base management fees total – $183,564 annual, so $15,297 x 6 = $91,782. Maybe it’s the 8 weeks of severance that is the sticking point. (You might remember the severance language being added to the last minute contract rushed through immediately prior to the 2015 elections…) Again, seems like that would be an easy calculation, so why didn’t those demanding severance just ask for a specific figure in their demand letters? Is it possible no specific figure was demanded so the public wouldn’t find out how much certain members of the prior management company were being compensated?

Funny thing, I saw a figure of $200K cited by at least two people during the recent campaign as the cost to taxpayers for severing ties with the former management company at HFFA – Joe Sailers and Jeff Neely (who currently lives in Davenport, FL where he enjoys making up fake news). No basis was ever provided for this figure despite my requests for more information. It’s almost as if the figure was completely made up as a campaign tactic to damage the four candidates who voted in support of a management change at HFFA. Even if you add the management fee total of $91,782 and the total severance demand of $95,287.29, you only come up with $187,069.29. And that’s assuming the town would ever pay severance to all nine individuals – which, hopefully, the town will not.

HFFA has cost Huntersville taxpayers millions since it opened – not even including the millions in property taxes sacrificed by the town board in July 2000 when they agreed to allow Duke Power to extend the term during which McGuire Nuclear could not be involuntarily annexed into Huntersville in exchange for accelerating tax equivalent payments to the town so HFFA could be built. If you’re reading this and didn’t live here in 2000 which is very likely, the town board members in July 2000, according to Meck BOE records, were Alex Barnette, Tim Breslin, Charles Guignard, Bill Pugh, Jr., and Jill Swain – along with Mayor Randy Quillen. Interestingly, the minutes from the meeting when this agreement was voted on have still not been located…

Let’s hope the positive trends at HFFA under SCM continue so maybe Huntersville taxpayers will be able to use those hotel/motel funds currently going to HFFA for something else one day other than subsidizing exercise.

Eric

It’s been just over a month now since a new company began managing Huntersville Family Fitness & Aquatics (“HFFA”). The Swim Club Management Group (“SCMG”) based in Huntersville was awarded the HFFA management contract by the town board this summer after the prior management group had managed the facility since 2002. I wanted to see how the transition was going so I reached out to SCMG CEO Brian Sheehan to get his thoughts.

Eric

– What are some of the immediate changes SCM has implemented at HFFA over the past month?

We have made a number of changes, many of which members will begin to fully enjoy over the next 30-60 days. For example, we immediately closed down the outdated Café and signed an agreement with Summit Coffee to have them renovate and operate the Café and kitchen. We see an opportunity with this arrangement to increase our member service by offering a more diverse, healthy menu to our members. The arrangement should also be a boast to overall profitability. We have also signed agreements to purchase new fitness equipment. Members will soon see new equipment and repurposed spaces that will allow for bootcamp style classes and other specialized group exercise classes. 

We are also working with an outside firm to perform a membership survey at no additional cost to members or the taxpayers. We will receive their presentation on the results later this week and we expect to implement additional changes based on membership feedback. 

– How have HFFA members reacted to some of these immediate changes?

The response has been terrific. Some of the changes have been small. For example, we added complimentary fruit infused water at the entrance, dedicated a room to cycle/spin classes and created a classroom more conducive for the yoga classes. These changes cost very little but have made for a much better member experience. 

– Do you have any social media or marketing plans to attract new members to HFFA?

Yes, we identified this as an opportunity for improvement early on. We have enhanced our presence on social media and plan to do a better job of engaging our members through social media moving forward. In addition, we signed an agreement recently to have the HFFA website redesigned. The current website is outdated and unengaging. I believe the last time they updated the Current Events Section was 2015. Our members can expect a more functional and dynamic website within a few weeks.

– What are some of the short-term goals SCMG is focusing on at HFFA?

Our immediate focus has been on improving the members experience. We believe the best way to attract new members is to offer our current members a great experience. We have also put a heavy emphasis over the past 30 days on cleaning up a few risk management issues. Part of having a positive member experience is keeping our members and their children safe. This is a responsibility we take very serious and we are moving quickly to make certain all areas of the facility are operating at industry best-practice. 

– How do you see HFFA benefiting from or complementing the town’s new rec center still under construction across the street on Verhoeff?

We have quickly established a great working relationship with Parks & Recreation and we are excited to create synergies with their new space. They have offered all HFFA members free access to the facility which provides a great value proposition for our members. 

– Can you briefly explain how HFFA is funded – including how taxpayers contribute.

HFFA is funded, in part, by Tourism (Hotel/Motel) Taxes, along with other revenue sources like membership fees. Our goal is to reduce the reliance on taxpayer funds at HFFA. 

Within our first week we identified that there were numerous members with past due balances. In fact, the total dollar amount was in excess of $12,000. Our team worked diligently on this matter and within our first 30 days we have collected over $10,000 in past due fees. In most cases the issue was simply a member that had obtained a new credit card and forgot to update us. Making all those phone calls was certainly not the most fun job in the building during the first 30 days, but it was necessary to properly operate the business. We understand the fiduciary responsibility we have to the taxpayers to be good stewards of their money and the people of Huntersville can expect us to operate accordingly.   

– What message do you have for those who were opposed to the decision to make a change in management at HFFA?

Whether you advocated for a change in management or opposed a change in management, we welcome you as a member at HFFA.  I have lived here most of my life and I know the people of Huntersville are fair and open-minded. I hope everyone will take the time to stop into the facility over the next 60 days and see the positive changes we’re making. 

The town board voted well over a month ago on July 11 to change management companies at HFFA. As a consequence of that decision, pursuant to section 8.(c) of the current management contract between the town and the current management company, Health & Sports Works, if the contract is terminated without cause the town is required to pay a termination fee equal to 6 mos. base management fees AND 8 WEEKS SEVERANCE FOR DEPARTMENT HEADS. Interestingly, this line about severance was only added to the current contract that the prior board rushed through less than a month before the 2015 elections – approved 4-2  by Commissioners Julian, McAulay, Neely, and Bales (yes, the same Melinda Bales running for re-election this year).

In all three prior management contracts in 2002, 2006, and 2011, the termination language limited the town’s exposure to 6 mos. base management fees – of course, if the town had taken the reasonable position that the contract was being terminated for cause, taxpayers wouldn’t have had to pay any additional monies to terminate the contract. Why the town would ever agree to such unfavorable terms is a topic for another post.

Would you expect current employees at HFFA to receive “severance pay” if they maintain employment under the new management company? Dictionary.com tells me that severance pay is paid because of a lack of work. So if the new management company decides to hire employees of HSW and keep them employed in their same or similar positions, how will they be without work? Doesn’t make sense to me, but that’s the position HSW is taking according to emails sent to the town. Seems to me the town never intended to pay “severance” to people who maintain consistent work. Too bad the current contract doesn’t have a definitions section so any disagreements over terms could be easily resolved. Good thing the town has top notch legal counsel advising them on how to resolve disputes over easily understood terms like severance.

UPDATE: Not surprisingly the budget passed 5-1 with little discussion and with Commissioner Phillips being the lone vote in opposition. And as I wrote below, Huntersville appears to have taken a page out of the Nancy Pelosi school of governing since they voted on a budget on June 5 that had not been presented to the public beforehand.

There is a town board meeting tonight at 6:30pm – no pre-meeting is scheduled. You can view the agenda or download the full agenda packet here. You can watch a live stream of tonight’s meeting at the town’s Ustream page here. I can’t cover every agenda item – especially for tonight’s overly packed 297 page agenda – so I always encourage residents to review these agendas and discuss any items of interest with the mayor or a board member because even a single motivated resident can make a difference on how the votes turn out on some of these.

I’m not even going to try to address any of the other issues on tonight’s agenda because the most important item is adoption of the budget (and because I haven’t had time to sufficiently review the 297 page agenda packet that wasn’t even made available to the public until sometime mid-day last Thursday). The budget doesn’t have to be voted on until the end of June – why not just defer a budget vote until the June 19 meeting given how many other items are already up for discussion tonight so that the budget can receive the full attention of the board?

A few other random thoughts on the proposed FY 17/18 budget.

First, why is there no revised budget in the agenda packet? The town board and staff held a budget work session two weeks ago on May 22 and discussed changes to the interim town manager’s proposed budget. Does staff plan to just hand a hard copy of any revisions to the proposed budget to the board at the dais immediately before the meeting starts tonight? If so, why not make the same copy available online to the public prior to tonight’s meeting? I guess the board has to pass the budget before the public is allowed to know what’s in it…

Local government continues to grow unabated despite the election of a new, “fiscally conservative” town board in 2015. Total budget expenditures (including HFFA and Electricities funds) of $47.3 million in FY 12/13, $48.8 million in FY 13/14, $53 million in FY 14/15, $55.7 million in FY 15/16, $57.9 million in FY 16/17, and now just over $61 million recommended this year. If the board does vote on the budget tonight, I look forward to the mayor explaining to Huntersville taxpayers they have to wait just one more year for that reduction in the tax rate he pledged to work on this year…

$17.9 million estimated in last year’s budget for property tax revenues. The town has collected $18,245,815 YTD according to the proposed budget. What is the surplus revenue being used for?

Gotta love paying a $20 vehicle tax to the town every year to help do your part to generate another $1.6 million or so in revenue because paying taxes when you bought your vehicle and having to pay the DMV and the county ever year based on an inflated value of your vehicle isn’t bad enough.

Huntersville’s portion of county ABC revenues remains a paltry $95K. Davidson doesn’t even have an ABC store and yet they receive the same portion of ABC proceeds. What are the state legislators who represent the town doing to bring about a more equitable distribution of ABC revenues in Mecklenburg County?

Every single town department’s budget is up over last year’s adopted budget figures except Governing Body (costs associated with the mayor and town board) which is only down a mere $6,500.

Did you know your tax dollars are used to subsidize memberships for elected officials and town staff to HFFA? See that line item for “Other Contri(Fitness)” in every department’s budget except Legal, that is where the town budgets for a supplement for HFFA memberships. According to the town’s finance director, the town supplements employees and elected officials at the same rate, which is $312 per year. She explained it is considered a supplement because the employee/elected official is also required to contribute $120 per year for their individual membership. Elected officials currently taking advantage of a subsidized membership to HFFA are: Mayor Aneralla and Commissioners Bales, Boone, Guignard and Kidwell.   

Even with all that help from taxpayers, HFFA joining fees AND membership fees are down again this year and it’s highly unlikely the facility will make up the gap in projected figures in the next three months going into summer. But hey, let’s continue to subsidize exercise in Huntersville because economic development, right?

Over $3.4 million budgeted for the Huntersville Fire Dept., Inc. and yet they don’t have to itemize their budget like every other department. That doesn’t seem very transparent. It’s interesting that the proposed budget only uses the term “volunteer” but not “paid” or “salaried” when referring to the Huntersville Fire Dept., Inc. since it is made up of both volunteer and paid firefighters.

HPD is asking for approx. $1 million more than their adopted budget last year, although the interim town manager is only recommending a mere half a million budget increase. And yet, as of March 13, 2017, HPD is sitting on $347,807.19 in equitable sharing funds received from both the DOJ and Treasury Department. When asked about these funds at the May 22 budget work session Chief Spruill said (paraphrasing) they were saving these funds for a big ticket item. HPD already purchased an armored vehicle without using these equitable sharing funds, what other big ticket item is HPD saving up for? Why are these funds not being used to offset some of the police budget this year? Can these funds be used to help stop the seemingly unending string of vehicle break-ins in Huntersville? Maybe the board’s public safety liaison, Commissioner Boone, can help answer these questions.

And in case you missed it, my thoughts on the Legal Dept. budget are here.

I’m already close to a thousand words so Parks and Rec gets off easy this time.

Eric

Here is my obligatory response to the Lake Norman Tax the Citizen “talkers.” If you’re one of the many, many, many local residents who doesn’t actually read the Citizen despite it being delivered free to your house every week and so don’t know what I’m responding to, you can click here. It doesn’t show up in the online version, but the print edition ran a “photo” of yours truly alongside the Talk of the Towns column. Touche, talkers, touche.

Is it just me, or is the whole referring to yourself as “talkers” gimmick so you can avoid signing your name to an opinion piece slightly absurd? Do these “talkers” actually think by hiding behind unsigned editorials readers don’t know that the news staff is contributing to the opinion section of the paper? I know the Citizen can’t afford to hire separate editorial staff like the WSJ or Charlotte Observer, but drop the pretense with the unsigned editorials. One has to wonder if they walk around the newsroom referring to each other as “talkers?”

And is it just me, or is it slightly hypocritical for a paper that disparages social media and users of social media at every opportunity to waste ink responding to something written by “a local blogger?” Maybe my criticism just hit a little too close to the mark. Or, maybe the “only experienced, professional, legitimate news outlet in the Lake Norman region” is upset that some “local blogger” has any influence at all on local politics when we all know “real news” print journalism outlets are the only proper source of influence on local politics. It’s almost as if the Citizen longs for the days when its stated agenda will again manifest itself behind the dais at Huntersville Town Hall like it did before this current board was elected.

I’m not going to delve into the economics of the Rapids agreement not because it’s boring, but because the talkers have already demonstrated their inability to grasp basic economic concepts in the past. See the talkers demonstrate their inability to understand scarcity here and then see the talkers throw a tantrum here when I point out their inability to understand scarcity and their desire for greater state control of the economy. If you want to know how I can consider “an organization paying the town a half-million dollars over 10 years for prioritized field use” to not automatically be a good deal for Huntersville taxpayers, you can start by reading the introduction and first essay of Bastiat’s collection of essays entitled What Is Seen and What Is Not Seen.

Instead of merely speculating, I attempted to verify the talkers’ claim that it was the volume of phone calls and e-mails the electeds likely received in the two weeks between votes that changed their minds [about the Rapids renewal agreement] by asking the three commissioners who changed their votes (Boone, Guignard and Phillips) how many emails/calls they actually received. Commissioner Boone said he believes he received a total of five emails – 4 in support of renewal, 1 against renewal, and that support for renewal came mostly from face to face contact with individuals. Commissioner Guignard said he received two emails – both in support of renewal, and had one conversation on the issue. Commissioner Phillips said he received a total of three emails – 2 in support, 1 against. Phillips didn’t remember any phone calls, but did have face to face conversations with individuals who had a vested interest in renewal of the agreement; however, he added none of these face to face conversations were with actual parents of soccer players. So, the three originally dissenting commissioners received approximately ten total emails between them – 8 in support, 2 against, and a handful of in-person conversations (not including two long-winded blog posts opposing the renewal agreement as presented…). Not exactly a flood of opinion either way.

Finally, a suggestion for the talkers from this humble local blogger to help restore their credibility amongst the social media class: some in-depth, investigative reporting. It’s been two weeks now since the talkers column suggesting they needed more time to ask questions about the allegations that the former Huntersville mayor and town manager benefited from a no-cost membership to Northstone Country Club. Might the talkers be putting the final touches on a thorough investigative piece about Northstone for this week’s issue? One other potential topic for a great investigative piece – when is the last year HFFA made a profit and how much money has this facility cost Huntersville taxpayers since opening? A good complimentary story could investigate how much Duke Energy could have contributed to the town in taxes related to the McGuire Nuclear plant but for a prior town board and prior mayor agreeing in or around July 2000 to give up millions in future tax contributions in exchange for expedited payments to help get HFFA built. For reference, Duke paid roughly $9.8 million in taxes to the county in 2016 related to the McGuire plant. Assuming Huntersville would be getting around a third of what the county receives, just think of all the good politicians in town could be doing with those few million in extra taxes every year!

Eric

This column originally appeared in the Jan. 21, 2016 edition of the Herald Weekly. You can find my second HFFA column here. The column below is relevant once again because HSW (formally known as Health Works, Inc.), the management company in charge of the HFFA, is requesting $25,000 in bonus money per their contract with the town. The agenda for the upcoming board meeting on Tuesday night has the bonus money budget amendment request listed as Item K. under Other Business.

Interestingly, HSW is still using weighted metrics as outlined in their 2011 contract, not the weighted metrics outlined in their 2015 contract (attached below).  So upon further review it appears HSW is using the 2011 metrics because the 2015 contract was not effective until July 1, 2016. I assumed incorrectly the 2015 contract was effective immediately upon execution in October 2015, hence why it was rushed through by the prior board, but that’s clearly not the case.

Let’s hope this current board takes a more inquisitive approach to the self-serving metrics review document submitted by HSW in support of their bonus request than did the board in 2015.

Eric

The Huntersville Family Fitness & Aquatics facility located on Verhoeff Drive is partially funded by taxpayers. This may be common knowledge to longtime Huntersville residents, but many newer residents are likely unaware that tax dollars are used to support HFFA. You definitely wouldn’t know it based on the HFFA website, except for the small Huntersville town logo on the home page.

For those Huntersville residents who were living here in the late ’90s when the HFFA was originally proposed and voted on, don’t worry; this column will not rehash the contentious debate over whether funding a gym is a proper function of town government – mainly because it isn’t. But, since taxpayers are still funding this facility after more than a decade in existence, it is reasonable to question whether their tax dollars are being spent properly.

HFFA proponents like to point out that it has gone from an entity that was in need of funds from the General Fund to operate, to operating solely on hotel/motel/prepared food taxes. Politicians like these “good” taxes because it means avoiding taxing residents directly to fund their favored projects (unless you’re a Huntersville resident who chooses to patronize a Huntersville restaurant). While it’s true that general fund money is not currently used to keep the doors open at HFFA, it is used for any bonus paid to the management company, like the $50,000 approved in 2015. But this misses the larger point: What are the opportunity costs of using limited taxpayer funds to run a gym?

A few more facts most Huntersville residents without a passing familiarity on submitting records requests may not be aware of. The HFFA is managed by a company named Health & Sports Works. This company has managed the HFFA almost exclusively except for a short period immediately after it opened. The initial management contract in 2002 between Huntersville and HSW provided for a management fee of $30,000 for the first year, $40,000 for the second year, and a fee of $50,000 during each subsequent year.

The renegotiated contract in 2006 saw management fees significantly increased to $153,750 annually, along with a potential bonus payment of up to $50,000. In 2011, Huntersville renegotiated with HSW and agreed to an annual management fee of $158,362.50 (a strangely specific amount…) with the potential of a $50,000 bonus. Finally, two weeks before the recent election and eight months before the contract was set to expire on June 30, 2016, the prior town board voted 4-2 to approve a renegotiated contract with HSW at $183,564 annually. [See most recent 2015 HSW contract below]

HSW 2015

Going from $30,000 annually to $183,564 annually in little more than a decade sounds like a massive cost increase, but surely it’s because this is the market rate for managing a facility like HFFA, right? A reasonable question, but not one that was answered prior to the vote on Oct. 19, 2015, approving the renegotiated management contract, which was not even made available for public inspection at the town’s website until the morning of the vote.

The town manager made the decision not to put out the management contract for competitive bid, a decision that was fully supported by town board members Melinda Bales, Jeff Neely, Ron Julian and Sarah McAulay. State law does not mandate this type of contract be put out for competitive bid, but decision makers have no basis for comparison and are not ensuring tax dollars be spent in the most efficient manner possible without a bidding process. When the town can find time to request bids on landscape contracts costing between $46,000 and $65,000 annually (which was scheduled to be voted on at Tuesday night’s town board meeting), it is beyond implausible the HFFA management contract shouldn’t have been put out for bid.

The current HFFA management contract requires the town to pay a fee equal to six months of management fees if terminated prior to July 1, 2019. This gives the current town board at least three years to request a competitive bid be prepared to determine if HSW is indeed the only qualified company to manage the HFFA. Let’s hope that’s enough time.