PENMET PARKS COMMUNITY RECREATION CENTER

BUSINESS PLAN & PRO FORMA

June 24, 2019

Objective

Determine the viability of the newly proposed Community Recreation Center, a 180,000 sq. ft. air-
supported structure that would consist of soccer, football, lacrosse, basketball, volleyball,
pickleball and other assorted athletic activities along with renovating the adjacent golf driving
range structure to host the majority of the PenMet Park District’s non-athletic programs and
activities.

Finalize the exact floor plan and layout specific to both facilities that would ensure viability and
success within the community.

Create the activities and program calendar specifically for both structures.

Determine the new Organizational Chart to best serve the project once it is complete.

Mission

The Community Recreation Center’s mission is to provide a year-round, clean, safe and
affordable arts and athletic complex for the surrounding community’s residents and sporting
teams aged 4 years to 80 years of age. The goal is to keep the structures active with current and
new programs that will give all participants the opportunity to grow and succeed as individuals
and teams.

Keys to Success

1. There is a distinct advantage with the location based on the proximity to the Narrows
Bridge (Tacoma residents) and Bremerton.
2. The location is ideal; adjacent to the freeway off ramp
3. There is an immediate clientele base from all the past Park District program and activity
participants.
4. Currently there is nothing that compares to this entire package (complex) in Western
Washington.
5. Having both structures adjacent to each other will eliminate parents with multiple active
children having to travel to different locations across Gig Harbor.
6. The existing structure will have six conference/meeting rooms with audio visual and
whiteboards. There is currently a shortage of these two services in Gig Harbor.
Company Summary

The Community Recreation Center Complex will be located 2416 14th Ave. NW, Gig Harbor,
Wash. This is currently the location of the Performance Golf site directly off Route 16.

The Complex consists of two structures. One is the existing building containing driving range
stalls. This building will be renovated for community classroom and programming space. The
other structure is a new, air-supported structure that will cover most of the driving range. This
structure includes athletic areas, walking track, large event rental space and other active
recreation amenities.

The Complex includes over 190,000 square Feet of recreation space and 12 plus multi-purpose
classrooms.

During the development and construction of the air-supported structure, the existing structure will
be used to host many of the Park District’s current programs and activities along with a few new
options.

Ownership

The Community Recreation Center Complex will be owned and operated by the PenMet Park
District.

Start-up Summary

The PenMet Park District is contemplating purchasing the land and existing structure
(Performance Golf) that is located in Gig Harbor just off the exit on Route 16. The land requires
development before the Community Recreation Center Complex can open and be operational.

The cost for construction drawings include; the site drawings, grading plans, electrical plans, and
building plans for the existing building, air-supported structure and the reception/restroom/locker
room building.

The site development costs include the grading, stormwater management system, utilities
including water, electrical and septic, dome infrastructure, indoor sports surfaces, irrigation and
landscaping, sidewalks, asphalt paving, and the Performance Golf building improvements.

See attached Schedule #1 (Estimated Probable Cost – Level 3. These reflect the majority of the
initial costs necessary to complete the project and be ready to open up for business activities.
The few remaining major expenses for the project that will be necessary for the project before
opening are listed below.
Table: Start-up Costs

Start-up

Requirements

Start-up Expenses

Office Equipment, Computers & Furnishings $50,000.00

Meeting Room (5) AV Equipment $25,000.00

Miscellaneous $15,000.00

Total Start-up Expenses $90,000.00

Start-up Assets

Cash Required $

Other Current Assets $

Long-term Assets $

Total Assets $

Total Requirements $
Product Summary

The Community Recreation Center Complex is designed to have:

- Three (3) indoor turf fields for football, soccer, lacrosse, baseball skills training,
bocce…etc.
- Six (6) indoor basketball courts that could also be used for volleyball, pickleball,
dodgeball and badminton
- Two (2) indoor batting cages.
- Indoor walking track.
- One outdoor turf field.
- Six (6) conference/meeting rooms with white boards, audio visual and recording
equipment.
- Indoor areas for gymnastics, group exercise classes, dance classes, music classes, art
classes, educational classes, cooking classes…etc.

The original floor plan inside the air-structure was to have two (2) tennis courts and a large area
for a child’s playground. This has been replaced with one (1) additional turf field, two (2)
additional multi-purpose courts (basketball, volleyball and pickleball) and an area for two (2)
batting cages. The reasoning is as follows:

- Programming on just two tennis courts is very limited and will not inspire any great deal of
enthusiasm or revenues.
- The additional turf field will allow a greater opportunity to host larger leagues and
tournaments for football, soccer and lacrosse.
- The area for batting cages will available as needed. When the area is not being used for
batting cages, it can be used for fielding practice and drills.
- The suggestion to eliminate the playground area was based on the possibility that
parents would not be supervising their children at all times and that could potentially lead
into children running off and disrupting games or practices that are being held at the
adjacent fields and courts.

There will be large restroom areas for all participants. They will be large enough to use for
changing into uniforms.

The air-structure will also include an area for parties and/or large meetings.

Currently the thoughts on program and activity pricing is as follows;

- All sports, team and league pricing will remain consistent with the 2017 and 2018 actuals.
- The arts, music and advanced learning activity pricing will remain the same as the
2017and 2018 actuals.
- Pickleball pricing for random court usage $3/player per hour, leagues and team rates will
average $5/player. Nothing has been budgeted for lessons at this time.

The Year One Pro Forma does not include the revenues and related expenses for Park District
programs that will held off site of the Community Recreation Center Complex.
Market Analysis Summary

Based on the most recent demographic report, the population of Gig Harbor and South Kitsap
County combined is approximately 72,000. A conservative active community for fitness and
sports is generally 8-10% and for non-fitness and sport activities it tends to be slightly higher.

With that in mind, to reach the participation and financial goals that have been determined based
on the Year One Pro Forma, approximately 10,595 participants are required; 6,275 for the arts,
music and advanced education activities (current Golf Performance Center) and 4,325 for the
fitness and sports activities (air-structure facility). The breakdown is based on historical
participation numbers from 2017 and 2018.

Based on this information, the Community Recreation Center Complex would need to penetrate
8.8% of the population for the non-sports activities and 6% for the sports activities. At this point, it
needs to be mentioned that none of these assumptions include any participation from the
population from the east side of the Narrows Bridge. At least for the sports activities; leagues and
tournaments, this particular source could easily make up over 50% of the participants.

To maximize marketing efforts, the Community Recreation Center Complex will be targeting eight
(8) groups for potential customers;

(1) Older active adults for pickleball lessons, leagues, teams and special events.

(2) Active adults that continue to play competitive sports for fitness and/or pleasure.

(3) Teenage youths (boys & girls) that play competitive sports.

(4) Youths (boys & girls) that are just beginning their athletic endeavors.

(5) Youths and teens that want to participate in the non-athletic activities such as art, music and
advanced educational.

(6) Adults who wish to continue or begin in participating in the arts, music and advanced
educational.

(7) Local schools and sporting clubs that are in need of larger venues for their offseason
tournaments.

(8) Residents of the Gig Harbor and the South Kitsap communities.
Sales Strategy

We are focusing our marketing efforts into five (5) distinct categories based on the different
phases of the overall project:

(1) Once the project’s financial structure has been agreed upon, floor plan for both structures
determined and project site purchased a campaign to notify the surrounding community on all the
details.

(2) Ground breaking ceremony and up to date coverage of the construction process and
notification of any key hires along with the first of four quarterly program and activity guides.

(3) Presale programs such as leagues, tournaments and field/court rentals along with a Grand
Opening celebration event.

(4) Continue the normal seasonal program and activity guide distribution.

(5) Marketing campaign directed toward the key individuals, elite athletic teams and local schools
for sports leagues and tournaments.

Sales Forecast

We have visited the two local sports complexes to research what we could expect for our
participation at the Community Recreation Sports Complex. Each facility/park visited, Community
Recreation Center in Federal Way and the NW Sports Hub in Centralia, stated they have an
average participation/occupancy of 75%. Each of these facilities has indoor basketball, volleyball
and pickleball courts, the NW Sports Hub has turf fields.

In addition to these two venues, Tacoma has DaKine Sports and Comeback Sports who cater
mostly to adults for various sports activities, leagues and tournaments and are always in the need
for additional playing venues.
Also, for the Pro Forma, we’ll use a more conservative approach and will calculate projected
revenues at 50% participation/occupancy for the athletic/sports activities and 75% for the non-
athletic activities. Below are the projections based on the above-mentioned assumptions;

1. Total annual participation for the arts, music and advanced education activities and
programs will be projected at @ 6,275.

- Total annual gross revenues for these activities/programs = $412,845

2. Total annual participation for Pickleball is projected @ 464

- Total annual gross revenues for pickleball = $109,016

3. Total annual participation in the other indoor athletic activities and programs will be
projected @ 580

- Total annual gross revenues for the other indoor athletic activities & programs = $89,300

4. Other Income total annual participation will be based on various individuals and teams
renting the courts and fields for practice or their own special events and individuals or
groups renting the meeting/conference rooms…rates are charged by the hour not
individual participant.

- Other income total annual gross revenues = $315,280

5. Total annual participation for the core athletic activities and programs will be projected @
3,280.

- Total annual gross revenues for the core athletic activities & programs = $594,400

Grand Total $1,520,841

Financial Plan

We are projecting modest growth in participation for the first year of operations. Overall, we are
projecting an 8.8% market penetration of Gig Harbor and South Kitsap with the arts, music and
advanced learning programs and a 6% penetration with the sports programs and activities. This
equates to the Year One projection of $622,845 compared to $143,450 (2018) and
$110,341(2017) for the non-athletic revenues. The athletic revenues are projected at $897,996
(Year One) compared to $234,659 (2018) and $269,857 (2017). Remember, there was no
pickleball revenues in 2018 and 2017.

Based on the various (3) different Income Statements being used currently, we believe the overall
net (loss) from operations has been reduced by approximately $500,000 annually with this
project. This is not taking into account the Sehmel Homestead Park DEBT SERVICE or any
DEBT SERVICE for the purchase and build out of the new property and structures.

There is a large portion of the community of Gig Harbor that is aware of the project and is
anxiously awaiting to hear of the Board’s/Commissioner’s decision.