Rec. District ahead of budget, mulls bond refinance
January 25, 2013
The Fraser Valley Metropolitan Recreation District reported having a good year in financial terms during the Jan. 22 board meeting, with a 92 percent facility cost recovery for the Grand Park Community Recreation Center and the rest of the departments staying ahead of their budgets for 2012.
The board also discussed the possibility of refinancing a portion of the Recreation District’s bonds, due to historic low interest rates, which could potentially save the District money translating into savings for taxpayers.
Staying in the black
Nearly all of the different facilities the Recreation District oversees reported staying ahead of their budgets including the Grand Park Community Recreation Center and Pole Creek Golf Course. Pending the annual audit, the District ended the year with a contribution to its reserve funds of $203,510, which is $170,583 better than the 2012 budget anticipated.
The recreation center’s 92 percent facility cost recovery means that 92 percent of the costs to operate the facility in 2012 were recovered through the revenues of the facility. The original budget prior to opening the facility anticipated a cost recovery of 70 to 75 percent, so the news of the amount of cost recovery was well received by the Recreation District board.
The recreation center had approximately $1,050,000 in expenses for 2012, with approximately $985,000 in revenues generated.
The recreation center also saw good visitation numbers during 2012 with over 117,000 scanned daily visits. Based on 356 days of operations, the recreation center averaged 329 visits per day.
Pole Creek Golf Course also ended the year ahead of budget with a year-end net income of $48,900, which is $44,050 better than the budget.
Possible bond refinance
During the meeting, the board discussed the possibility of refinancing a portion of the bonds the district took out in February 2008. While hard numbers were not formally submitted and no decision was made by the board members, the board requested that staff begin to create a resolution for review, and possibly vote, during next month’s meeting, which will take place Tuesday, Feb. 26. The resolution would include parameters for the potential refinancing, such as interest rate thresholds and setting a dollar amount of desired savings, so when the interest rate and amount of the bonds to be refinanced hits those numbers, action would be taken to complete the refinance.
If the board were to refinance, based on current interest rates, there would be a potential savings to the District of nearly $600,000 over the life of the bonds.
The bonds were originally sold after the 2007 elections to complete the community enhancement projects which included the Grand Park Community Recreation Center, The IceBox ice rink, the clubhouse at Pole Creek Golf Club and the installation of a new irrigation system at Pole Creek Golf Course.
The original amount of the bonds was $19.5 million. The District began paying back the bonds in 2008 and has since paid off $1.9 million in principal, which leaves $17.6 million to be paid back in principal on the bonds. The repayment schedule lasts through 2037.
The repayment schedule would not change if the bonds were refinanced. During the meeting the interest rate that the bonds could have if refinanced was estimated at 3.42 percent. The current interest rate on the bonds is 5.27 percent.
While the historically low interest rates are tempting, there is a catch to refinancing the bonds. The difficult part of refinancing the bonds is that, unlike a home mortgage, bonds can only be refinanced once. Every member of the board as well as the district staff agreed it was a good opportunity to save money for the district and its constituents. The question is when to pull the trigger on the refinancing so the greatest saving is achieved.