Monday, September 24, 2007

Better Analysis Needed on YMCA Proposal

The discussion about whether Charlottesville should have swimming and other recreation services provided by the YMCA in McIntire Park, or should invest in its own facilities seems to be primarily focused on comparing the capital costs of the alternatives - but I believe it is essential to compare both the costs and benefits over the full life cycle of these facilities. I was pleased that Councilor Kendra Hamilton expressed this concern at the most recent council meeting, but I am not confident that this information will be considered - if even developed by staff - before a decision on the YMCA proposal is reached by council. One of the advantages of having a Triple-A bond rating is that large capital investments can be made with money borrowed at favorable interest rates. Spread over the life of the projects, even at higher capital costs, replacing the pools may have significantly higher recreational benefit and may well be superior to the YMCA alternative.

I am very interested to see what the cost and benefit streams would be for a twenty year (or whatever is appropriate) period under the competing alternatives. Certainly the capital cost of replacing the city pools is higher than having the YMCA provide much of the capital investment, but the city would then have the ability to provide recreation services to more people for more hours every day. Without some reasonable life cycle analysis, I don't see how the economics and recreation benefits to our community of the alternatives can be adequately compared.

If capital cost was our only consideration, we would always choose the alternative with the lowest initial investment. One doesn't need to study economics to know that this is not always the best investment strategy.

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