Company Analysis Assignment

PRTM 503

2014, Fall Session

Ameer K. Edwards

Durham Parks and Recreation

Department Analysis

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North Carolina State University

Department of Parks, Recreation and Tourism Management

Table of Contents

Executive Summary…3

Company Profile….4

Mission Statement….4

Goals – Durham Department of Parks and Recreation…..5

Department History….5

Economic Issues…6

Revenue and Expenditure Summary….7-8

Assets and Liabilities Summary…8

Financial Analysis and Ratios…..8-11

Future Trends…12

References….15

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Executive Summary

The Durham Parks and Recreation Department is working towards becoming fiscally stronger through the process of property acquisition, and expansion of services. Durham Parks and Recreation has seen expenses consistently exceed revenues. Assets have grown to over 65 million, while liabilities have been less than 10 million over the past two years. The department is growing and acquiring resources which will maintain sustainability and produce greater revenues in the upcoming years. Durham will need to acquire additional land resources for the development of future park and recreation facilities to meet the demands and needs of an ever growing and diverse population. It is estimated that the population of Durham County will increase from 268,000 in 2014 to 356,000 by 2030. That growth rate will reflect an increasing need for park and recreation facilities. The public will expect a system of parks, greenways, trails, recreation centers and programs that reflect the community desires and expectations of quality. Durham will need to identify funding strategies to provide the means to acquire future parkland, develop facilities and to upgrade and improve existing facilities. The City must identify additional funding sources to provide relief to traditional tax based sources and to build public support to finance the economic goals of the Durham Parks and Recreation Department.

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Company Profile (2013)

II. Agency Characteristics

A. Operating budget:

$10,547,768

B. Capital budget:

$66,502,475

C. Full-time employees:

103

Mission Statement

“Durham Parks and Recreation provides opportunities for our community to Play More! We strive to make our programs, services, and facilities accessible for all individuals and families, regardless of race, color, religion, gender, national origin or ability level. Durham Parks and Recreation strives to help citizens discover, explore, and enjoy life through creative and challenging recreational choices that contribute to their physical, emotional, and social health.”

The City of Durham provides a comprehensive system of parks, trails, events, and recreation programs for residents and visitors to enjoy. Those facilities and programs add to the quality of life that Durham residents expect of their community, and they are a product of many years of development and community support. Durham’s parks department is the second oldest in the state, established in 1924; and Durham voters have approved a series of bond issues over the decades to fund parks, recreation centers, open space, and trails.

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The Durham Parks and Recreation (DPR) system contains 68 parks, ranging from the smallest at 0.44 acres (Drew Granby Park) to the largest at 381.8 acres (West Point on the Eno Park). DPR also operates 12 recreation centers; the smaller neighborhood centers average 3000 square feet and the larger community centers range from 25,000 square feet (Weaver St.) to 90,000 square feet (Holton Center). The system includes greenway trails as well, soon to be at 30 miles of trail when the southern portion of the American Tobacco Trail is opened in 2013. Finally, there are six “special use” facilities under the department’s management, including the Armory, the CCB Plaza, The Clubhouse at Forest Hills, Spruce Pine Lodge, the Holly Grove campsite, and the downtown DPR Administrative Office. This system serves both City and County residents.

History

First publically funded recreation in Durham began with summer playgrounds in 1924

Under leadership of George Watts Hill City Council appropriated funding to organize a Recreation Department (the second one in North Carolina).

First Director was C.R. Wood; He remained the departments head until 1960

The Herbert S. Swan City Plan, published in 1927, showed a number of locations across the city which were indicated as future park sites.

On May 15, 1944 the City Council officially created the Department of Public Recreation as a full-fledged City Department.

May 25, 1954 successful bond issue for 250, 0000 allowed the construction of five new neighborhood recreation centers.

In June of 1963, the City also integrated its centers, parks and pools.

In 1973, another City bond issue allocated $4,035,000 to parks.

The largest bond issue in Durham’s history at that time passed in 1990, with $3.4 million for parks and $3.2 million for greenways included in the total package.

On the occasion of the department’s 75th anniversary in 1998, the system consisted of 61 parks, 3,183 acres of property (counting the City Lakes), four large centers, and twelve neighborhood centers.

$40 million from a 2005 bond issue used to open new parks in southern, western, and eastern Durham.

In 2013 Tobacco Trail was completed.

Goals

Agency philosophy and goals: The City of Durham’s mission statement is to provide quality

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services to make Durham a great place to live, work and play. The city-wide strategic plan identifies five goals

Strong and Diverse Economy

Safe and Secure Community

Thriving, Livable Neighborhoods

Well-Managed City

Stewardship of the City’s Physical Assets

Economic Issues

Durham Parks and Recreation makes up 7.7% of the total Public Services portion of the Durham City budget (FY2013-2014). Community Development had $4,838,154 less in expenditures than was budgeted a 9.4% variance, which was primarily due to reduction in cost in the Streets and Highways, Parks and Recreation, and Property and Facility management functions. Sustainability of Durham’s park and recreation system in tight economic times is a critical concern. Do we build more parks and centers, do we retrofit existing sites to be more usable, or can we fund some combination of both? How can the Durham Parks and Recreation maintain facilities it has while still meeting the needs of projected new growth? Economic goals include (1) asset prioritization (2) life cycle practices (3) analysis of funding needed and funding available (4) strategies to manage any “gap” in funding, and (5) consideration of asset disposition or change of use (City of Durham Parks and Recreation Master Plan 2013). Achieving desired maintenance standards within existing resources for athletic fields, park cleanup, and custodial services in recreation centers. Implementing a workforce management solution for automation of timekeeping to achieve desired consistencies and efficiencies, minimize compliance risks, and control labor costs. Funding aging recreation facilities and the continuing effects of deferred maintenance on those facilities. Increasing upkeep costs and an increased number of facilities and trail miles in the system pose ongoing funding problems. Both newly constructed and renovated facilities require maintenance, while resources for maintenance are stretched thin across all City departments. Durham Parks and Recreation intends to strategically expand or enhance outdoor facilities to attract more revenue generating events (City of Durham Parks and Recreation Master Plan 2013). Durham Parks and Recreation has two campsites which are revenue generating. In 2010 the PlayMore card was instituted to generate revenue (http://durhamnc.gov/ich/op/prd/Documents/Play%20More%20Jan-May%202014.pdf). Parks and Recreation is part of a larger governmental fund of which it only receives 6.4 %( http://durhamnc.gov/ich/as/fin/Documents/Finance/cafr_14.pdf page 9). Garnering and maintain public is the main economic issue facing Parks and Recreation, profit is not the major goal of this organization. The support the people and Durham City Hall allow the organization to operated and provide services for the citizens of Durham. Property tax, sales,

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taxes, income taxes, licenses and permits, fees and charges are all directly paid by the citizens of Durham city and county.

Revenue and Expenditure Summary

The Durham Parks and Recreation Department is not a revenue generating entity. Expenditures have consistently exceeded revenues over the past three years. Durham Parks and Recreation is part of the larger Governmental activities section of the budget. The fiscal year starts July 1st and ends June 30th each calendar year.

Fiscal Year2012

Fiscal Year 2013

Fiscal Year 2014

0 5,000,000 10,000,000 15,000,000 20,000,000

Durham P&R Revenue & Expenditure

Revenues Expenditures

The Governmental section of the budget is a combination of Revenues and combination of Expenditures from Public Safety (43.1%/93.5 million), General Government (18%/39.1 million),General Services(8.6%/18.8 million),Streets Highways (9.8%/21.4 million),Interest on long-term debt(4.2%/9 million), and Parks and Recreation (6.4%/14 million). Parks and Recreation is a small piece of the “pie”. This Class is actually Revenue Generating unlike Parks and Recreation as a Department.

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Fiscal Year2012

Fiscal Year 2013

Fiscal Year 2014

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

Governmental Activities R&E

Revenues Expenditures

Assets & Liabilities Summary

Durham Parks and Recreation has many more assets than liabilities. This trend has been consistent for the past three years. The graph illustrates the increase in assets and the decrease in liabilities. Durham does not post quarterly asset and liability statistics. The trend of increasing assets and decreasing liabilities indicate fiscal responsibility.

FY2012 FY2013 FY20140

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Durham Parks and Recreation Assets & Liabilities

Assets Liabilities

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Financial Analysis and Ratios

Current Ratios

The Current Ratio is the measure of short-term liquidity. In 2012 Durham Parks and Recreation had 58,529,564 in current assets, each year the assets increased with 2014 assets at 65,910,750. Liabilities in converse decreased every year over three years.

2012

Current Assets / Current Liabilities = Current Ratio

58,529,564/18,019,872=3.25 times

2013

Current Assets / Current Liabilities = Current Ratio

62,747,162/9,180,310=6.83 times

2014

Current Assets / Current Liabilities = Current Ratio

65,910,750/8,758,554= 7.53 times

Total Debt Ratio

The total Debt Ratio for Durham Parks and Recreation showed a decrease in debt over three years. In 2014 Durham Parks and Recreation had 0.13 in debt for every $1.00 in assets.

2014

Total Debt Ratio = Total Assets – Total Equity/Total Assets

65,910,750-57,152,196/65,910,750= .13 times

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2013

Total Debt Ratio = Total Assets – Total Equity/Total Assets

62,747,162-53,566,852/62,747,162= .15 times

2012

Total Debt Ratio = Total Assets – Total Equity/Total Assets

58,529,564-40,509,692/58,529,564= .31 times

Receivables Turnover and Days’ Sales in Receivables

These ratios reflect that Durham Parks and Recreation does not collect anything in credit, Parks and Recreation is part of a larger general fund, but these sales (revenue generated from fees and charges) are for Parks and Recreation only. Other general funds such as water and sewer, transit, and solid waste management do have accounts receivable (money owed by customers to another entity in exchange for goods or services that have been delivered or used but not yet paid for).

2012

Receivable Turnover = Sales/Accounts Receivable

Days’ Sales in Receivable = 365 Days/ Receivable

1, 192,679/0=1,192,679

365/1,192,679= 3 days

2013

Receivable Turnover = Sales/Accounts Receivable

Days’ Sales in Receivable = 365 Days/ Receivable

5,385,525/0=5,385,525

365/5,385,525= 7 days

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2014

Receivable Turnover=Sales/Accounts Receivable

Days’ Sales in Receivable=365 Days/Receivable

1,490,053/$0= 1,490,053

365 days/1,490,053=2 days

Profit Margin

Higher profit margins indicate profitable company that is more fiscally responsible.

In 2014 Durham Parks and Recreation had a net income of $2.37 for each dollar of sales.

2012

Profit Margin = Net Income / Sales

3,234,155/1,192,679=$2.71

2013

Profit Margin = Net Income / Sales

8,350,425/5,385,525=$1.55

2014

Profit Margin = Net Income / Sales

353,147,188/1,490,053=$2.37

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Future Trends

Strong economic indicators point toward continued growth and stability. Future income driven initiatives include and outdoor winter skating venue, an indoor playground, and adult playgrounds for fitness and exercise. The Durham North Carolina area is growing rapidly which will provide more taxes, and also require more Parks and Recreation programs to serve the influx of new citizens. Innovative ideas such as the playmore card which gives residents and non-residents at higher price access open gym, exercise equipment, and land fitness programs. Using the 2012-2014 as a gauge Assets should continue to increase while liabilities show remain steady or decrease. Expenses will outpace revenues but with more programs and larger population the discrepancy show decrease. Parks and recreation liquidity rate indicates a strong ability to cover short term debt. Program revenues have increased each of the last three years. The anticipated FY 2014-15 budget includes an increase to the minimum pay step for department of Parks and Recreation part-time employees by $0.75 per hour. It also includes provisions to maintain a 3% variance in the 5 step DPR part-time Paly Plan for each position. A .50 cent tax increase will provide $1,208,698 to support park and trail maintenance efforts.

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References

http://durhamnc.gov/ich/as/bms/Documents/2014-2015_budget_final/Budget_book_combined.pdf

http://issuu.com/dprplaymore/docs/play_more_sept-dec.__14

http://durhamnc.gov/ich/cb/ccpd/Documents/Comprehensive%20Plan%20Update/Draft%20Comprehensive%20Plan/Chapter_10%20Parks%20and%20Recreation%20Element_clean.pdf

http://durhamnc.gov/ich/op/prd/Documents/Master%20Plan%20August%2021%202013.pdf

Durham 2013 CAPRA Self-Assessment Report.pdf

http://durhamnc.gov/ich/cb/ccpd/Documents/Comprehensive%20Plan/Comp_Plan_Amend_20130621/Chapter_10%20Parks%20and%20Recreation%20Element_20130620.pdf

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http://durhamnc.gov/ich/as/fin/Documents/Finance/cafr_14.pdf (pages 8, 9, 12, and 20,160.169)

http://durhamnc.gov/ich/as/fin/Documents/Finance/cafr_13.pdf (pages 8, 20,168)

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http://durhamnc.gov/ich/as/fin/Documents/Finance/cafr_12.pdf (pages 8, 20, and 158)

http://durhamnc.gov/ich/op/prd/Documents/HistoricResourcesManagementPlan2012.pdf

http://durhamnc.gov/ich/as/bms/Documents/FY14-2015%20Budget%20Process/FY14-15_Parks%20and%20Recreation%20Follow%20up.pdf

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