This business plan is considered a working document portions of which are open to change as the project evolves. If the project is approved, the contents of the business plan would be subject to review as we progress toward project development. MINOT AQUATICS & RECREATION CENTER MINOT, NORTH DAKOTA BUSINESS PLAN JANUARY 2015 PRESENTED BY Minot Aquatics & Recreation Center Business Plan | January 2015 TABLE OF CONTENTS 1. Executive Summary  Background & Section Overviews 1-2 2. Market Analysis  Market Area Definition 2-3  Market Assessment 2-3 3. Programming & Design  Planning Consid erations 3-2  Programming 3-2  Space Plan & F acility Design 3-9  External Approvals 3-23  Interview Summary 3-23 4. Marketing & Sales  Objectives 4-2  Positioning Strategies 4-2  Marketing & Sales Budget 4-4 5. Ownership & Financing  Ownership Stru cture & Options 5-2 6. Financial Projections  Project Costs 6-6  Furniture, Fixtu res and Equipment 6-11  Operational Pro jections 6-15 © January 2015 by IBIS Enterprises, LLC. All rights reserved. Table of Contents Minot Aquatics & Recreation Center Business Plan | January 2015 7. Project Development  High-Level Timeline 7-3  Detailed Project Schedule 7-4 8. Next Steps 8-2 As per the terms of the Business Plan Agreement, this Business Plan is a proprietary and confidential document for the exclusive use of the Minot Park District. Any use, reproduction or redistribution of any portion of this document without the written permission of IBIS Enterprises is prohibited. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Table of Contents | January 2015 Minot Aquatics & Recreation Center Business Plan | January 2015 Minot Aquatics & Recreation Center Business Plan Executive Summary Project General Objectives The Minot Park District wishes to develop and operate a community aquatics and recreation facility that will provide comprehensive health, fitness, wellness-related education and recreation services to the people of Minot and immediately surrounding areas. The Minot Park District, located in Minot, North Dakota has been coined the “Magic City”. After being founded in 1886 and experiencing significant growth due to the development of the Great Northern Railway, the city was nicknamed the Magic City. Minot is the fourth largest city in North Dakota, behind Fargo, Bismarck and Grand Forks. Minot is best known for oil and gas that has helped to create thousands of relatively high-paying jobs. Keeping up with the growth, the city has been challenged to meet the increased population by developing a sound community foundation that includes schools, health care facilities, retail establishments, residential developments and community-centered services and facilities. In 2011 a devastating flood occurred in Minot, which destroyed thousands of homes. Over three years later, the Minot community continues to recover from the flood’s damaging effects. Hundreds of homes remain empty and in need of immediate attention. Concurrently, the economic growth of North Dakota, particularly in the western part of the state continues to progress. Conservative population growth projections indicate that Minot’s population will increase at a rate more than double the overall growth of the U.S. The combination of both the need to rebuild and revitalize the Minot area, coupled with the significant economic growth simply enhances the need to appropriately plan for current and future needs of the people of Minot. Part of this plan includes the potential development of a community based facility that will add to the Park District’s wide variety of amenities and services offerings, which enrich the attractiveness of the Minot area lifestyle. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 2 | January 2015 Minot Aquatics & Recreation Center Business Plan IBIS Deliverables This purpose of this Business Plan is to provide the Minot Park District Administrators with the information needed for sound decision making regarding the potential development of a new community-based facility. The information presented allows for a comprehensive review of prospective service offerings and a variety of programs, along with the associated capital and operating costs as well as any potential revenue streams. In order to adequately assess the associated feasibility of the proposed facility, IBIS has completed a thorough investigation as to the market need, potential costs, viable options and overall operational practicality. The Executive Summary Section of this Business Plan will address each Section and provide a cursory overview of the findings and projections with detail following within each respective section. Section Overviews Market Analysis Potential Project Site: Used for the Business Plan study: the intersections of 21st Avenue NW & 14th Street NW (Final site to be determined) For the purposes of this study the Minot Market Area has been defined as a 25 minute drive time from the above site, which has been deemed the potential site for this proposed facility. Due to the relative rural nature of the surrounding area of Minot, the market area was expanded to a 25 minute drive time, as opposed to a typically shorter drive time for a facility located in an urban environment. From 2000 to 2014, the Primary Market Area has experienced a 27.9% overall population increase. The population is expected to continue this momentous growth through 2019, increasing another 9.2% or 1.85% annually. Graph 1-1 illustrates growth, both historic and projected through 2019. Graph 1-2 provides a comparison of median household income of the Minot market area to other predominant markets in North Dakota. The Minot area appears to lag behind the other markets with regard to median income, but remains comparable to the U.S. median overall. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 3 | January 2015 Minot Aquatics & Recreation Center Business Plan Chart 1-1: Market Area Population and Household Growth 70,000 30,000 rAea 60,000 25,000 rAea Minot Annual Projected Population Growth rektMa ation 5400,,000000 2105,,000000 ektMar lhods o 1.85% (2014-2019) tnoMiluPop 3200,,000000 10,000 tnoMiseouH toTal 10,000 5,000 tooal U.S. Annual Projected Population Growth - - T o 0.7% (2014-2019) 2000 2010 2014 2019 Population Households Source: Nielsen Solution Center, 2014. Chart 1-2: Median Household Income Comparisons – 2012 U.S. Median HH = $51,371 $80,000 $69,559 $58,622 $60,000 $54,099 $53,585 $50,201 $41,144 $40,000 $20,000 $- Source: U.S. Census Bureau, 2012. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 4 | January 2015 Minot Aquatics & Recreation Center Business Plan Membership/Member Projections In order to develop volume projections for the proposed facility three stratified methods of analysis were used. Factoring in competitive influences of the market area, programming interests, price sensitivity, etc., it is projected that the proposed community center will conservatively attain a wide membership base serving varied community interests. Memberships provide the predominant revenue source for the Minot Aquatics & Recreation Center; therefore, a conservative and accurate membership projection is critical to the overall financial success of the facility. Factoring in competitive influences of the Market Area, programming interests, price sensitivity, etc. the proposed community center will conservatively attain a wide membership base serving varied community interests. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 5 | January 2015 Minot Aquatics & Recreation Center Business Plan Chart 1-3: Membership/Member Projections - Pre-Opening Year 1 Year 2 Year 3 Year 4 Year 5 Memberships Members Notes: [1] Membership projections ramp up through Year 3 of operations. (Pre-Opening = 50%; Year 1=75%; Year 2=90%; and Year 3=100%) Community Usage & Economic Contribution Impact The Community Usage & Economic Contribution Impact Information was developed by the Minot Park District based upon the North Dakota State University study which utilized Minot Park District operating budgets to determine direct and secondary economic community impacts. Community usage revenues will be included in the Business Plan financials. A summary of this information is shown below. © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 6 | January 2015 Minot Aquatics & Recreation Center Business Plan Table 1-1: Projected Facility Participants Utilization Source Part Formula Estimated Annual Utilization icipants 400 Meter Track/Turf Soccer Field Minot State University MSU Track 60 60x3dpwx24wks 4,320 MSU Soccer 33 33x3dpwx15wks 1,485 MSU Softball 21 21x3dpwx14wks 882 MSU Baseball 40 40x3dpwx14wks 1,680 Minot Public Schools MPS Track 350 350x5dpwx8wks 14,000 MPS Soccer 36 36x5dpwx8wks 1,440 MPS Softball 50 50x5dpwx8wks 2,000 MPS Baseball 50 50x5dpwx8wks 2,000 Other Schools Ryan TBD TBD Velva TBD TBD Surrey TBD TBD DLB TBD TBD Adult Groups Adult Running Group 50 50x1dpwx52wks 2,600 Adult Day Walkers 20 20x5dpwx52 5,200 Youth Soccer & Football Soccer Youth (spring) 751 751x2dpwx2wks 3,004 Soccer Youth (winter) 203 203x2dpwx4wks 1,624 Youth Football 200 200x1dpwx8wks 1,600 400 Meter Track/Turf Soccer Field Total 40,035 Golf Training Youth Golf 27 27x1dpwx24wks 648 Minot State Girls Golf 21 21x2dpwx8wks 336 Minot Public Schools 4 4X2dpwx8wks 64 Adult Golf 69 69x1dpwx24wks 1,656 © January 2015 by IBIS Enterprises, LLC. All rights reserved. Executive Summary 1 - 7