Page 19 - N. Richland Hills General Budget

Office of the City Manager
CITY OF NORTH RICHLAND HILLS

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July 1, the park suffered a significant financial loss this summer. Being a 4 quarter operation, 90% of the
revenue is generated during the summer when the park is open. However, 60% of the expenses occur during
the off season with repairs to the park, utilities, supplies and equipment, personnel costs and the hiring and
training of 400 seasonal employees to prepare for opening. There is also the annual debt service payment that
must be made regardless of revenue impacts.

NRH2O has an average operating season of 102 days. This year the park had a total of 16 operating days.
which means that we lost 86 days this season. On those 16 days the park was open, there were restrictions
in place including limited capacity. The annual Music Festival, which is the water park’s biggest event of the
year and attracts schools from all over Texas to compete in band and choir competitions, was cancelled in
May. This event nets the park approximately $600,000 each year.

Given COVID19 and the significantly reduced operating season, a subsidy and loan from the general fund will
be required for the park this season. This is the first time in the 25 year history of the park that that any kind of
subsidy has been necessary. It is also important to note that NRH2O has paid over $5.3 million to the General
Fund in technology allocations, vehicle allocations and other indirect costs over the last 25 years.

NRH2O revenue was estimated at $4.5 million in the current year adopted budget. Revenues have been
decreased to just under $600,000 as a result of the very limited season resulting in revenue loss of $3.9
million. To balance the budget, a loan from the General Fund reserves of approximately $2.3 million is
included. The interfund loan includes the annual debt service payment of $753,029. On the
expense side, total expenditures have been revised from $4.5 million to $2.9 million a reduction of
$1.2 million dollars. Staff continues to review expenses and operations to identify further cuts in an effort to
reduce the subsidy to the park this year.

The amusement industry, like most other industries has been hit hard by the pandemic. While it is expected to
recover, it may take 3-4 years for full recovery. Universal Studios has stated that it will take until 2023 to hit pre
COVID-19 attendance levels. In the DFW area, several smaller water parks didn't open at all this summer and
some of the privately owned and or operated parks may close or be acquired. The reality of post COVID-19 is
that changes are going to occur. For example COVID-19 cleaning and hygiene standards may become a new
norm. Social distancing may also be in effect in 2021 with required reservations and cashless transactions.
The outdoor water park industry is accustomed to the ebbs and flows of managing weather and all the forces
working against seasonal operations. Those that have good plans in place and continue to be responsive and
adaptive to change will continue to be successful.

We will continue to put good plans in place to adapt to the changing water park market as well as changes in
these challenging times. To this end, revenue growth will be a major focus of the park including planning for a
much needed upgrade to the park’s outdated point of sale system in order to capitalize on demand pricing
models to maximize revenues during peak times and incorporate a robust pre-purchase and reservation
system. Staff will continue to review operational changes to maximize efficiency and increase revenue, and will
present any proposed changes to the City Council in the coming months.

P.O. Box 82069  North Richland Hills, Texas 76182-0609
4301 City Point Drive  (817) 427-6003  Fax (817) 427-6016

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