Ballard*King and Associates has been contracted by the Parks Authority for Castle Pines North to conduct a feasibility study regarding the viability of developing and operating a community recreation center. Following is a summary of the initial project assessment. This is a very preliminary assessment only and should be viewed as only the first step in determining the true feasibility of building a community recreation center in Castle Pines North. Future phases of this project will include a more detailed feasibility and needs assessment study, and a scientific survey of residents of the service area.

Demographic and Market Assessment: The intent of the recreation center is to serve the residents of the Castle Pines North Master Association. It is estimated that there are nearly 6,000 individuals currently living within the boundaries of the Master Association. There are estimated to be 2,083 housing units currently within this area. Within the next five years it is estimated that the population will increase by over 60% (to over 9,700) and the number of housing units will increase to over 3,400.

It is possible that the recreation center may serve a geographic area that is larger than just the Castle Pines North Master Association. A possible primary service area has been identified as an area that includes not only the Master Association but also Surrey Ridge, Oak Hills, Beverly Hills, Charter Oaks, Lagae Ranch, Castle Pines Village, Happy Canyon, and Hockaday Heights. The primary service area has an estimated population of approximately 12,000 and it is projected to increase by over 60% (to over 19,000) in the next five years.

The demographics of both the Castle Pines North Master Association and the primary service area are very conducive to supporting a comprehensive recreation center. Both areas have families with a number of children, expected strong growth in the overall population and high income levels. However, the population base itself is relatively small, thus it will be necessary for the next phase of this study to carefully evaluate the size of the facility and the operational budget.

Capital Cost Projections: Tamminga Construction Company, Inc. completed a capital cost estimate for the center in January 2002 and indicated that the construction cost (for the building and some site costs) for the center would be nearly $7 million dollars. It is estimated that true project cost (construction plus, architects fees, contingencies, furniture, fixtures and equipment and other "soft" costs) will add another 20% to 25% to the cost estimate. The construction cost estimate also needs to be updated to 2003 which could add another $250,000 to the budget (3.5% increase). This could push the total project cost for the center to nearly $9.15 million. It is highly recommended that the budget for the center be set at a minimum of $9.5 million and a maximum of $10 million.

Financing: The ultimate viability of the Castle Pines North Recreation Center is dependent on the ability of the Castle Pines North Master Association and the Castle Pines North Metropolitan District to fund not only the capital construction cost of the center but also the projected operating deficit.

Figuring that at minimum 3,200 housing units will be in existence by the time the center opens in 2005 and each will pay $215 (to as much as $250) annually in homeowners dues, of which 70% or $150 (it could be as high as 80% or $200) will be allocated to the project, this will produce approximately $500,000 (or $640,000) annually. It is also estimated that the total assessed valuation (single family homes, multi-family units, and commercial property) of the property in the Metro District will be at least $130 million in the year 2005. At the current rate of 18 mills this would generate over $2,300,000 annually. With approximately $1,000,000 currently being dedicated toward Castle Pines North Metro District operations, this still leaves a balance of $1,300,000 for the project.

The capital debt for the project is expected to be financed utilizing certificates of participation. Utilizing a variable interest rate (minimum 3% to a maximum 6%) and a 25 year payment plan for $10 million, the annual cost for principle and interest would gradually rise from $300,000 to $800,000 at 3% and $600,000 to nearly $1 million at 6%.

Utilizing the conservative scenario it is possible to fund the capital and operational debt for the project and still fund current Metro District operations plus have dollars available for other uses in the first 10 years. When the optimistic option is analyzed a substantial balance is left to fund other projects in addition to the recreation center project. The more likely scenario is somewhere in the middle between conservative and optimistic which will still produce a fund balance on an annual basis.

Clearly the financial feasibility of building and operating a recreation center in Castle Pines North is workable.

Castle Pines North Homeowners Association
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Telephone and Fax:
303-482-3078

Address:
CPN Association, Inc.
7402 Yorkshire Drive
Castle Rock, Colorado 80104

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