Ask ELi: Closing, Demolishing, or Selling the Aquatic Center?

Photo courtesy City of East Lansing.

If the income tax proposal that is now scheduled for the August 7 election does not pass, the next round of projected budget cuts for East Lansing will kick in for the 2020 fiscal year (which starts June of 2019). Closing the East Lansing Family Aquatic Center is one of the proposed cuts, and if it is closed, Parks Director Tim McCaffrey has suggested the park would need to be demolished relatively soon after closing.

We’ve received questions from our readers asking: Why can’t the park be sold or the management transferred into private hands? Why would the Parks and Recreation Director suggest that the water park be demolished?

What the Aquatic Center costs:

Compared to the projected savings if the City closed the Hannah Community Center, which would come to about a million dollars per year, the Aquatic Center’s average annual expense to the City of $48,050 seems relatively modest.

The estimated annual $48,000 in net costs comes from the difference between annual revenue and annual cost of operation as averaged over the seventeen years that the Aquatic Center has been in operation. Nine of those years showed positive net revenue – one year even saw a $100,000 profit – and eight of those years showed a loss, which was sometimes the result of a major repair or capital improvement. On average, the Center has lost $48,000 per year.

According to documents produced by the City's Department of Parks, Recreation, and Arts, the Aquatic Center is likely to be needing upwards of $1 million in capital improvements in the coming years if it is kept open.

If Hannah is closed, the Aquatic Center might immediately follow:

East Lansing Parks and Recreation shuffles staff between different positions to keep part-time seasonal staff working year-round. If the Hannah Center were to be closed, without that facility to balance the staff responsibilities, it would be difficult to fully staff the Aquatic Center with seasonal employees.

According to comments from Mayor Mark Meadows at the May 9, 2018, City Council meeting, if the Hannah Community Center is closed, the Aquatic Center would almost certainly follow in being closed; the operating budget is not the only consideration involved with keeping the center open.

Demolishing the Aquatic Center if it is closed:

In the “Preliminary Budget Impacts” assessment that he prepared for Council in December of 2017, McCaffrey included the following recommendation: “In the event the determination is made to close the EL Family Aquatic Center, demolition of the facility is recommended in a very timely manner.”

He also noted that demolition costs had not been calculated. Following up with McCaffrey in an interview about cuts to Parks and Recreation programing I asked him if he had an estimate for the possible demolition and he responded “We have not estimated those demo costs. That’s something that I hope to never have to do.”

He explained that his recommendation to close the facility was informed by his experience with closed pools in other communities. “If we try to close it down and then come back two years later, or three years later, or ten years later – whenever you want to reopen it – it’s not going to work. Or it’s going to work but it’s going to be really expensive.”

Could the Aquatic Center or the land be sold?

Because the park land on which the Aquatic Center sits is publicly-owned, selling it would require a vote of the people. But that’s not the only barrier to transferring the Center out of City control.

The Aquatic Center was developed through a bond, funded by East Lansing property taxes, but the park land was acquired through the help of a Michigan Department of Natural Resources (DNR) Trust Fund Grant, which means that the DNR has a stake in what happens to that property.

The DNR Trust Fund is a $500 million endowment fund (interest earned on investment is used for grants, and the principle is left untouched) which distributes grants of up to $300,000 to Michigan communities for Parks and Recreation development and the acquisition of new park lands. The total dispersed each year depends on the income earned on the investment, but according to the DNR’s website, it’s usually between $15 and $20 million.

The trust fund, which was started in 1971, was funded with revenue generated by the sale of oil and gas on state-owned lands. Most of East Lansing’s newer parks have been acquired and/or improved with DNR Trust Fund money.

According to McCaffrey “without Natural Resources Trust Fund, [East Lansing’s Parks system] would be extremely small. You wouldn’t have the Northern Tier trail system, you wouldn’t have the softball complex, you wouldn’t have the soccer complex, you wouldn’t have Hawk Nest Park, you wouldn’t have Harrison Meadows Park.”

East Lansing has also applied for a DNR grant for planned improvements to the park behind the newly reopened Bailey center.

Using DNR money for public lands means that the DNR legally maintains an interest in what happens to those lands. In the case of the Aquatic Center, McCaffrey explained it this way: “If you try to get out of the Natural Resources Trust Fund it means that, because they helped to develop the property, you could sell it but then you’d have to find another location in the East Lansing community that met or exceeded the same value in terms of its recreational value.”

He adds, “I don’t know where you’re going to find another property in the East Lansing community that’s going to meet that criteria. I don’t believe we’ve got one. So, there’s really no benefit at all to the East Lansing community” to trying to sell the land, and “in fact it could end up costing us.”

Similarly, the DNR would have a say in whether the management of the Center could be transferred to a private entity, since the DNR money is meant to be spent for public recreation facilities on public lands. McCaffrey clarified that possibility in an email saying “A third party management agreement with any other agency public or private requires MDNR and MNRTF approval.”

Would passing the income tax make a difference?

I asked East Lansing Mayor Mark Meadows if the money generated from the current income tax proposal would be enough to save the Hannah Community Center and the Family Aquatic Center, given that the Council was originally looking for $5 million in new revenue to dedicate to the City’s pension liability, and the version which will be voted on in August only creates a projected $3 million in new revenue for covering pension liabilities.

Meadows responded via email to say, “Just speaking for myself, our objective in making cuts was to get extra payments to the pension fund and reduce the unfunded liability. If we have a different source of revenue than just cutting the budget, I would still be looking to add to the amount the income tax brought in but we would not need to cut as much as we talked about next year. So, I would not be voting to close Hannah or the Aquatic Center. I would probably still look at some smaller cuts.”