This column originally appeared in the Jan. 21, 2016 edition of the Herald Weekly. You can find my second HFFA column here. The column below is relevant once again because HSW (formally known as Health Works, Inc.), the management company in charge of the HFFA, is requesting $25,000 in bonus money per their contract with the town. The agenda for the upcoming board meeting on Tuesday night has the bonus money budget amendment request listed as Item K. under Other Business.
Interestingly, HSW is still using weighted metrics as outlined in their 2011 contract, not the weighted metrics outlined in their 2015 contract (attached below). So upon further review it appears HSW is using the 2011 metrics because the 2015 contract was not effective until July 1, 2016. I assumed incorrectly the 2015 contract was effective immediately upon execution in October 2015, hence why it was rushed through by the prior board, but that’s clearly not the case.
Let’s hope this current board takes a more inquisitive approach to the self-serving metrics review document submitted by HSW in support of their bonus request than did the board in 2015.
The Huntersville Family Fitness & Aquatics facility located on Verhoeff Drive is partially funded by taxpayers. This may be common knowledge to longtime Huntersville residents, but many newer residents are likely unaware that tax dollars are used to support HFFA. You definitely wouldn’t know it based on the HFFA website, except for the small Huntersville town logo on the home page.
For those Huntersville residents who were living here in the late ’90s when the HFFA was originally proposed and voted on, don’t worry; this column will not rehash the contentious debate over whether funding a gym is a proper function of town government – mainly because it isn’t. But, since taxpayers are still funding this facility after more than a decade in existence, it is reasonable to question whether their tax dollars are being spent properly.
HFFA proponents like to point out that it has gone from an entity that was in need of funds from the General Fund to operate, to operating solely on hotel/motel/prepared food taxes. Politicians like these “good” taxes because it means avoiding taxing residents directly to fund their favored projects (unless you’re a Huntersville resident who chooses to patronize a Huntersville restaurant). While it’s true that general fund money is not currently used to keep the doors open at HFFA, it is used for any bonus paid to the management company, like the $50,000 approved in 2015. But this misses the larger point: What are the opportunity costs of using limited taxpayer funds to run a gym?
A few more facts most Huntersville residents without a passing familiarity on submitting records requests may not be aware of. The HFFA is managed by a company named Health & Sports Works. This company has managed the HFFA almost exclusively except for a short period immediately after it opened. The initial management contract in 2002 between Huntersville and HSW provided for a management fee of $30,000 for the first year, $40,000 for the second year, and a fee of $50,000 during each subsequent year.
The renegotiated contract in 2006 saw management fees significantly increased to $153,750 annually, along with a potential bonus payment of up to $50,000. In 2011, Huntersville renegotiated with HSW and agreed to an annual management fee of $158,362.50 (a strangely specific amount…) with the potential of a $50,000 bonus. Finally, two weeks before the recent election and eight months before the contract was set to expire on June 30, 2016, the prior town board voted 4-2 to approve a renegotiated contract with HSW at $183,564 annually. [See most recent 2015 HSW contract below]HSW 2015
Going from $30,000 annually to $183,564 annually in little more than a decade sounds like a massive cost increase, but surely it’s because this is the market rate for managing a facility like HFFA, right? A reasonable question, but not one that was answered prior to the vote on Oct. 19, 2015, approving the renegotiated management contract, which was not even made available for public inspection at the town’s website until the morning of the vote.
The town manager made the decision not to put out the management contract for competitive bid, a decision that was fully supported by town board members Melinda Bales, Jeff Neely, Ron Julian and Sarah McAulay. State law does not mandate this type of contract be put out for competitive bid, but decision makers have no basis for comparison and are not ensuring tax dollars be spent in the most efficient manner possible without a bidding process. When the town can find time to request bids on landscape contracts costing between $46,000 and $65,000 annually (which was scheduled to be voted on at Tuesday night’s town board meeting), it is beyond implausible the HFFA management contract shouldn’t have been put out for bid.
The current HFFA management contract requires the town to pay a fee equal to six months of management fees if terminated prior to July 1, 2019. This gives the current town board at least three years to request a competitive bid be prepared to determine if HSW is indeed the only qualified company to manage the HFFA. Let’s hope that’s enough time.