President
As a part of the budget process, there has been an examination of the Fitness Classes and their related costs. The Board is considering an increase in the Fitness Class fees to cover costs and that has many asking the question as to ‘Why’. Very simple, but complicated question, but I will do my best to cover many points about the class rates and costs to help explain our predicament. Please understand that these are my comments and not necessarily the opinions of other Board members. Nor do my comments mean the Board will vote a certain way.
Many have asked why the Fitness classes aren’t subsidized at the same level as Golf. Golf operations are subsidized more than other areas, that is true. That operation takes more money to maintain, just like security takes more money to maintain than the fitness dept. When we all moved here we agreed to these costs as part of living here, and that is paid for from the monthly assessments. There is no surprise in paying the cost for maintaining the golf course or paying for security, etc. because we all knew about these costs when we moved in. The future goal is to maintain the level of services in a cost-efficient way without raising monthly assessments unreasonably.
Currently Fitness classes have a yearly pass (use all the classes you like in one year), a monthly pass (use all the classes you like in one month), or pay each time one at a time. Keep in mind the golfers pay for every round they play. That is part of the equation. There are no passes at a yearly rate to reduce the costs of each round. Clearly if we did that the subsidy would have to increase because we would be getting less money for each round played. That is the difference between the yearly passes for fitness classes and golf fees. Golf is pay as you go, so costs are distributed equally among the users.
Fitness classes currently do not operate this way. About 1.5 years ago, at the request of residents, more classes were offered, but it was done on the expectation and condition that the program would break even. So, many classes were implemented, and projections were made to break even so that homeowners would not have an increase in the monthly assessments for the classes. This concept seemed reasonable because these classes were never part of the fitness budget, so to increase the cost of classes to all residents by increasing their monthly assessments did not seem fair.
Part of the projection at that time was a yearly, monthly, and day use fee for the classes. This was implemented and has been tried for the last 1.5 years. The problem is we now have too many people using the fitness classes that are not paying for the cost of the class, so the subsidy would have to increase to all residents if we are to maintain that same program. This was not the intention or plan in expanding the number of classes.
The current cost to the HOA per fitness class is about $65. If residents paid $4 per class, we would need about 16 people in the class to break even. As the program grew, the problem became yearly pass holders given their cost of the pass. At $200, if a person were to take a class twice per week, their cost would be less than $2 per class. This would mean we would need 32 people in each class to break even. The situation gets worse the more people use the pass. Example: one person contacted me and said they would be willing to pay $400 for the pass because they use it six days a week. This person is only paying about 65 cents per class. This is the problem. The concept of a yearly unlimited pass will conflict with the actual cost of providing the class, the more it is used, the more money the HOA loses, and the more money all residents will need to pay as a subsidy.
Even if people are willing to pay $400 for the pass, individual costs of the classes would have to increase to make up the difference in costs. This becomes the complex decision of the Board on how to distribute those costs fairly. Should residents be subsidizing classes along with individual users so yearly pass holders pay little for any class. I am not sure at this point that is fair. The best way to maintain services equally is to have costs distributed equally among the users. This is the platform of golf users. Each person pays as they play, with no special benefit for a monthly or yearly pass. This way we can track the costs for golf and if necessary raise the golf fees up to cover the cost, but it is done for everyone equally.
I don’t believe you can have competing systems in place at the same time; Yearly passes vs. individual pay as you go fees. These two systems conflict and will ultimately lead to yearly pass holders being subsidized by increased costs to residents and daily fee users. The most efficient and fair way to spread costs is everyone pays their fair share of the costs. I favor this approach for a program that needs to break even. If the cost of the classes were to stay at $4 per class, with no yearly or monthly passes, then costs can be tracked, classes with too few people eliminated, and remaining classes can be offered long term without increasing the monthly costs to the homeowners.
The current proposed budget by the fitness dept. was an increase of about 40% in subsidy, this is just too high for all residents so that about 200 people can take classes far below market rates. If we provide the classes at a set fee for everyone, then just like golf, everyone that uses the classes will share equally in the cost. This is maintainable. Otherwise daily fees and monthly assessments to all residents will have to increase. I would be concerned about raising monthly fees to 3,450 homeowners for the benefit of 200 yearly pass holders. Although I understand everyone would like the costs to be low, but sometimes that is not realistic. I also don’t think $4 per class is unreasonable for the benefit, the same as I don’t think golf fees for $42 to $52 dollars is unreasonable.
This program of classes was never part of the original subsidy agreement to residents for the fitness department, so we must find a way to break even if such classes are going to continue. Naturally I am giving you my thoughts, the Board may, and can decide as they wish when a vote comes for the final budget.
I think it wise and reasonable to campaign to the Board for whatever outcome you would like to see take place. That is how the system works, and the final vote for a budget and how classes are offered will not happened until the next Board meeting.
Thank you,
Kim Fuller