In 1972 the "cash cow" for Elmhurst Park District was unveiled, a tennis and handball/racquetball facility called The Courts. During its heyday it was operating at over 90 percent capacity, seven days a week. Over $ 1 million in surplus revenue was generated and transferred to other needs of the district. Racquetball use then dropped to under 30 percent and tennis use fell to around 70 percent.

The 40,000 square foot building had a static income situation while expenses climbed. Cash reserves were at less than $50,000 and the aging facility needed a new $300,000 roof. While over $ 100,000 per year of administrative expense was being absorbed by the budget, doubt spread as to the center's ability to remain self-sustaining, let alone provide for other district needs.

The in-house 1985 Park District Master Plan suggested studying the feasibility of converting the racquet facility into a multi-purpose health and fitness center.

A comprehensive list of district-wide capital projects was created in 1987. The District's Citizens Advisory commission and the Park Board reviewed over 100 different capital needs and ranked renovating The Courts a top priority.

What evolved is now considered an unqualified success. After almost two seasons of operation, community response has been much greater than projected. The user now chooses between two levels of membership with a variety of services based on anticipated use. Six tennis and four handball/racquetball courts have been joined by large, renovated locker rooms, a steam room, and private shower stalls. A six-lane lap pool with deck-side dry sauna and

whirlpool provide a relaxing atmosphere.

Upstairs, a combination walking/running track encircles a glass-enclosed atrium that overlooks the lap pool and aerobic exercise equipment area. The new equipment far surpasses the former eight-station Universal gym. Free-weights are also provided and are popular with many of the users. Massages are available by appointment by trained massage therapists.

A large, mirrored aerobics room accommodates classes for all levels of fitness from six in the morning until late in the evening. A well-designed nursery became so popular that a second area was needed, so one was created six months later.

Feasibility Study Projects a Vision for the Future

An in-house feasibility study and life cycle analysis showed a strong interest in aerobic exercise, health-related programs, lap swimming and fitness program being offered in the expanded facility.

A competitive analysis conducted in the study indicated that the strengths of an expanded facility would be:

• community ownership and operation

• the only full-service facility in its geographical market.

• a fee structure comparable to facilities in the suburban market

• handicapped accessibility features in an expanded and updated facility

Needs assessment surveys showed a strong current and future demand for this kind of facility.

Primary research was obtained from the district's outdoor swimming pool season pass holders. Phone surveys of randomly selected residents and tennis and racquetball members were also conducted. Sixty-one percent of existing members indicated that they would probably join as full facility members. Predictably, a sizable number of the existing members felt that membership must be realistically priced, based upon anticipated use.

Most importantly, the market attractiveness and business position demonstrated that a much broader segment of the community would be served by repositioning the services and activities of the facility. It also substantiated the growing demand for fitness and rehabilitation services.

All three financial scenarios of the feasibility study indicated the facility would break even or show a profit at a membership of 2,250. It was important that the facility cover its operational costs to insure it would not deplete resources from the operating tax funds of the district.

A new mission statement and objectives were devised. The district was operating a variety of health and fitness programs at its community centers. An expanded facility would allow the district to serve more residents, produce a modest amount of surplus and

create a central location for a wide variety of physical activities, including health and fitness education.

Only one element was needed—a partner who specialized in quality health care.

A Corporate Partner

The park district board noted that several Chicago-area hospitals were building fitness centers and contacted Elmhurst Memorial Hospital to gauge its interest in cooperating on the project. Within six months an agreement was signed giving the hospital 5,000 square feet of space for physical therapy, cardiac rehabilitation Phase III, and health-related classes in their LifePlan Center.

"The hospital paid the construction costs of converting a portion of the original facility as well as annual rent plus utility costs."

When an individual comes to the Life Plan Center for physical or cardiac rehabilitation, he or she is permitted limited, supervised use of the pool, track, or aerobic equipment. When the state-of-the-art facility is seen or experienced first-hand, a new membership often results. The hospital gets a well-established facility for a fraction of the cost and significant potential business exposure due to its location in a facility that has more than 700 uses per day.

The hospital and district complement one another nicely, providing a one-stop shopping center for health, fitness, sports, and wellness.

Financial structure

The $4.9 million dollar project was financed using an installment purchase contract that allows the 20-year, $380,000 annual principal and interest payment to be levied each year via non-referendum bonds. Of the $4.9 million, only $3.8 million was financed with the installment purchase contract. The hospital paid nearly $300,000 for its share of the remodeling costs and a sizable amount of interest was generated during construction. Some of the costs were also borne by the district's capital budget during the initial stages of investigation.

Budget Policy Changes

Going from a gross revenue of $500,000 with the old facility to $1.8 million with the new facility caused a number of budget policy changes to be instituted. In addition to absorbing over $150,000 of the district's overhead, 50 percent of the $380,000 principal and interest payment is absorbed in the operating budget.

All of the facility's Illinois Municipal Retirement Fund and Social Security costs are borne by the facility, thus lowering the IMRF and FICA taxes of the district. Within two years a reserve of $750,000 was established for future major repairs. Interest on the $750,000 accrues and is credited to the reserve, providing a hedge against inflation.

Additionally, an Early Bond Replacement Fund was comprised of annually generated surplus revenue, providing for early retirement of the outstanding principal on the loan. As with the reserve fund, interest will accrue on the balance of this fund.

Response from the Public

After the first complete year of operation, attendance totaled 232,000 individual uses, not including the LifePlan portion of the facility. This compared to 47,000 annual uses when only tennis and handball were offered.

Membership sales before the expansion stood at 1,400, compared to 3,450 at the close of the 1991-92 year. It is estimated that the 3,450 memberships translate into 6,500 individual members, considering the number of couples, family and corporate memberships. Elmhurst Park District resident usage is 81 percent while 19 percent come from surrounding communities.

Results

The Courts facility features state-of-the-art activity areas that allow for self-direction, but it offers a wide variety of leisure opportunities.

Fitness assessments, fitness program consultation, one-on-one personal trainers, social mixers, swim parties, aquatic exercise programs, lessons at all skill levels for tennis, handball, racquetball, house leagues, self-formed leagues, and aerobic classes are available to the members.

The overwhelming success of the facility was not a lucky coincidence. Careful planning, listening to the customer, flexibility in offering membership packages at reasonable rates, state-of-the-art equipment, emphasis on cleanliness, and training sessions for the full-and part-time staff have been instrumental in retaining 76 percent of the membership when the industry standard is 70 percent.

The uniqueness of the facility has been recognized not only by the members but by the Illinois Park and Recreation Association, Athletic Business magazine, and the United States Tennis Association. It was featured in articles published in Chicago Magazine and Club Industry magazine.

About the Authors

Charles T. Balling, CLP, is director of leisure services of Elmhurst Park District. Michael S. Pope, CLP, is executive director of Elmhurst Park District.