HealthFitness tells council it will make money, increase membership by 5 percent
A health fitness company vying to become the next provider of recreational services in the city says it will turn a major profit over the next five years, ending in the black to the tune of almost $600,000.
On Sept. 19, representatives from HealthFitness appeared before a packed audience at Sherwood City Hall, to explain their projections before the Sherwood City Council, saying their newest figures show that they would have a projected surplus after five years after they updated average monthly membership fees.
Originally, HealthFitness had projected a deficit.
"The main driver for the revenue is membership dues," Arch Hasler, HealthFitness vice president for business development and consulting, told the council.
At issue is who will provide future services for the city's recreation center, which has had a 20-year contract with the YMCA of Columbia-Willamette.
Earlier, after ranking proposals from both HealthFitness and the YMCA, the council agreed to pursue a contract with HealthFitness, which has drawn the ire of supporters of the YMCA, more than 100 who showed up to express support for the current recreation provider.
Hasler told the council that they hadn't initially figured in the correct considerations when determining the various categories of memberships the way the YMCA does. That changed their projections.
In a letter from HealthFitness sent to the city the week of Sept. 11, officials from the company said they were addressing council concerns with the negative net outcome of their initial 5-year budget plan and discovered that the company originally relied on a $47 per month membership unit fee to figure costs compared to the YMCA's monthly membership of $57.
HealthFitness updated its figures after discovering the YMCA had different monthly membership unit costs for adults, adult couples, seniors and family memberships.
As a result, HealthFitness said its new fee would be $52 per membership unit, an amount that would add to projected annual profits ranging from $2,544.11 in the first year and accelerating to a total of $596,415.60 in the fifth year.
Those numbers changed from original figures received from HealthFitness, which originally projected a $1.5 million loss, later changing that amount to a $480,700 loss over five years compared to YMCA officials who had predicted a surplus of $119,310 over that same time period.
In response to a question from Councilor Sally Robinson, HealthFitness representatives made it clear that they did not come up with the new figures at the request of the Sherwood City Council.
"We took a look at every single line item," said Hasler.
Company representatives also told the council that they manage over 300 facilities nationwide but that the city would put its own brand on facility if it gets the recreation contract with the city.
Among questions from the council were if the organization would pay higher wages (they said they would) and whether they would provide the same services as the YMCA (they also said that was their plan).
Still, Councilor Sean Garland said he was skeptical of the HealthFitness' projection showing 5 percent annual growth, something the organization said they felt very confident in projecting.
During public comments, Tim Rosener, a city resident who has been involved in numerous competitive bidding processes, said he saw deficiencies in the city's request for proposal process. He also said he felt it was unusual for a selection committee to actually be the council.
Meanwhile, a former YMCA employee said he had less concern about the process and more concerned about the "safety and well-being" of those attending the YMCA, saying he found the lack of leadership "appalling" during his time there.
At the same time, there were residents who said they were frustrated by the amount of conflict caused by those councilors who have supporting looking at a possible contract with HealthFitness.
City Manager Joe Gall said his staff hopes to have a contract from HealthFitness to present to the council on Oct. 3.