Wednesday, September 22, 2010

WMC zoning issue put on hold, BZA allows VHS more time

WMC had the zoning definition drafted up on their behalf back in 1989.  The BZA is giving the VHS an extension to hopefully get it right.

Not sure how more fair and reasonable the BZA could be than that?

Bottom-line, the Wellness Center does have an advantage over private-tax paying businesses by being tax-free.  Then it was realized the Wellness Center was making quite a bit of money with a large advertising campaign that was having some adverse affects on local private health clubs.

The zoning code within the medical center zone states recreational facilities and private health clubs or sports-medicine clinics services cannot be marketed to the public at large.

The local health clubs cannot afford those type of high dollar advertisements that VHS pays for on the Wellness Center.  The private local clubs just cannot compete with VHS's advertising campaign, they just have too much money.

Then a 50-yr agreement reached on March 4, 2009 requires the Wellness Center to pay 1/3 of their real estate tax just as long as the wellness center is operating as part of the medical center under the zoning definition that was drafted up on behalf of WMC.

If they are allowed to advertise, then that makes the playing field even more unbalanced.

Information from August, 4th WincStar article:

The issue arose when Diem determined that the wellness center was violating the city zoning code by marketing its services to the public via a website, direct mailings, and advertisements in The Winchester Star.

Diem sent WMC a letter stating that its marketing efforts must cease because they violate terms set for buildings in the Medical Center zone. Private health clubs are allowed in the zone, but they cannot be marketed publicly.

The zone's definition - including the prohibition on public marketing - was written and submitted on WMC's behalf in 1989.

Butler and hospital officials and board members argued before the BZA that "personal services" best describes the use of the wellness center, a use that allows public marketing.

The BZA quickly rejected that argument, but did not vote to make the wellness center immediately cease its marketing campaigns. Instead, it gave WMC four months to seek an amendment to the zoning code that would enable the center to be marketed publicly.
Information from September 8th WincStar article:

The wellness center issue stems from a determination made in May by Vincent Diem, the city's zoning and inspections administrator, that the center was violating the zoning code by publicly marketing its services.

The city zoning ordinance states that recreational facilities and private health clubs or sports-medicine clinics are permitted in the Medical Center District. However, the ordinance includes a provision that the facilities cannot be "marketed to the public-at-large."

Ironically, the restriction was included in an amendment written on behalf of WMC in 1989, and passed by the City Council in 1990.

Between the Winchester Star on April 9th and NVDaily's April 17th of 2010 front page articles, the following information was obtained:

(NVDaily) - The center, which opened in September 2008, brought in $1.1 million in revenue in its first three months of operation, according to tax records.

(WincStar) - Just before the wellness and fitness center opened in September 2008, it had collected 3,200 applications for membership.

Kent said the goal was to reach 5,000 members in three years, but it has moved beyond that. “We hit that number in a year,” she said, noting that the center now has 5,800 members.

After reading quotes and statement from the Quad State Business Journal article back in May of 2006, it is safe to say that VHS’s projections were somewhat conservative:

In projections used for COPN (Certificate of Pubic Need) approval, Valley Health said it is looking at a membership of 4,000 persons, targeting the 35-to 80-age group, especially people who don't exercise, said Kent.
"I have met with owners of the local clubs, and some say we will take members away from them," said Kent. "But we are hoping to attract people who don't exercise. In most markets, commercial clubs did not go out of business; their memberships actually went up because of the increased awareness of fitness."

Valley Health is projecting the wellness center business will break even in its second year, and after the third year will throw off cash flow of almost $1.3 million. Funding the cost of the center from Valley Health internal resources means there is no requirement for debt service.

"If it [wellness center] is such a big money maker, others would have come into the market."

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