Ever wonder why there are so many activities and kids at the Burgess Park pool, especially in the summer?
Turns out that for many years, Menlo Park's private pool operator, Team Sheeper Inc., has been fighting a battle to turn a profit in the notoriously non-lucrative business of aquatics.
A new contract signed in March between the city of Menlo Park and Team Sheeper, a private company headed by local aquatics coach and athlete Tim Sheeper that has operated Menlo Park's pools since 2006, shifts responsibility for maintaining the pool to the city, while allowing Sheeper to continue to run programs out of the city's two pools at Burgess Park and in Belle Haven.
Outsourcing public pool operations to a private operator has in the past come with some controversy.
In 2006, Menlo Park signed a five-year lease with Team Sheeper, in which the business would operate and maintain the pool while running programs at the then brand-new aquatics center at Burgess Park. At the time, it was believed that no other Bay Area city had privatized its pools.
"From a business standpoint, it doesn't make sense to keep (pools) open," said Menlo Park Community Services Director Derek Schweigart. "It's an expensive operation. This is why you don't see private operations building pools."
But from a community standpoint, he noted, pools do provide a valuable offering to the community.
In 2011, the city renewed its contract with Team Sheeper on a five-year extension. But then, as the contract was winding down, negotiations for a new contract hit a wall.
As early as May 2015, the city agreed to negotiate with Sheeper to extend the lease agreement. But negotiations continued in a stalemate for much of the next two years.
The City Council approved extensions to the lease agreement a number of times between the five-year contract's original expiration date of May 2016; the first extension was to December 2016, the second, to March 2017. The agreement was repeatedly extended: to February 2017, April 2017, September 2017, and January 2018.
The city wanted Team Sheeper to step up its contributions for pool operations and maintenance, including potentially covering some capital costs, according to Schweigart.
"It was the city's intention to require more from the Sheeper operation," he said. Team Sheeper, Schweigart said, did not agree.
"Because everything around the business has changed, and the environment has changed, that was not sustainable moving forward," Sheeper said.
Around September of last year, Sheeper approached the city saying his business could no longer operate under its contract setup. He gave several reasons for this: First, as the Burgess Park pool gets older, it degrades and needs more, costlier maintenance.
Second, staffing was becoming harder and costlier for the business. Sheeper said he's had to put a lot more effort into recruiting staff. Very few, if any, year-round staff members can afford to live in Menlo Park, he said.
Schweigart said summer hires, like high school and college students who typically formed the backbone of the staff, are spending their summers doing other things and often have limited availability to work.
"I can't say we've found the secret sauce," Sheeper said, referring to his recruiting strategy.
Things took on a new urgency last summer, Schweigart said, when Team Sheeper saw a decline of 16 to 20 percent in swim school enrollment – a significant hit for a business with already narrow margins.
Schweigart theorized that the enrollment could have shrunk because of fewer kids, because of lowered enrollment in local schools, and because increased traffic makes taking kids to activities more time-consuming.
Staff costs begin to add up too when one considers the hours at which the pools are open. Schweigart said it's rare for a public pool to remain open for as many hours as Menlo Park's pools are – typically 6 a.m. to 6:45 or 8 p.m. on weekdays, and 8 or 9 a.m. to 5 p.m. weekends for the Burgess Park pool; and noon to 7 p.m. at the Belle Haven pool, on weekdays.
"That's a model that does not exist anywhere," Schweigart said.
Sheeper said he makes it work by offering a wide variety of programs at the pools and keeping a versatile staff.
"You have to have a lot of people who multitask, and keep the work force, especially at the management level, lean," he said. Team Sheeper also runs a series of uncommon programs beyond most pool basics, like an adult triathlon team, an underwater hockey team, water safety classes, boot camps, a women's water polo team, aqua fit programs, and a spectrum of kid-friendly summer camps.
In the September 2017 extension of the contract, the City Council approved new lease terms that stipulated that Team Sheeper would no longer have to pay rent on the pools, though it would still have to pay pool maintenance costs; the city would pay for the pool chemicals.
"That's because they were hemorrhaging," Schweigart said."Tim has had to be very creative in generating revenue in order to pay the bills."
Part of that has involved expanding the variety of available pool services. Public pools, it turns out, are nearly always money leeches, Schweigart said. Utilities for the pools alone run about $13,900 a month, according to a staff report. Add on about $8,600 a month for chemicals and pool supplies, $5,000 a month for maintenance and repairs, and $400 a month for internet and telephone services, and the city now faces a monthly bill of $27,900.
Another challenge associated with the pool operations is that the city's Belle Haven pool makes no money, Schweigart said.
Sheeper said he and the city rely on a range of funding sources to keep the pool open year-round. "Our business could not afford to do that," he said, without extra funding.
Two sources that supplement city funding for the pool are Facebook, which pays about $5,000 a month to keep the pool open year-round, as part of the terms of a development agreement it made with the city, and the Beyond Barriers Athletic Foundation. The foundation helps provide swim lessons, education and activities to disadvantaged children and teens in Belle Haven, East Palo Alto and North Fair Oaks, among other nearby parts of San Mateo County and Mountain View.
If the city were to reassume responsibility for pool programs, Schweigart said, "we couldn't do the same level of programming. ... We could not do what (Sheeper) does."
The new contract include revenue-sharing terms. The city will claim 30 percent of any revenue Team Sheeper brings in beyond $3.14 million in a calendar year a step Schweigart hopes will help cover the added costs the city will incur with the new contract.
The new contract will run through Aug. 31, 2020, and will have the option for continuous annual renewals.