“Here’s how I think of my money, as soldiers. I send them out to war every day. I want them to take prisoners and come home, so there’s more of them.”
That’s a quote from Kevin O’Leary of the hit ABC television show Shark Tank. Unfortunately, sometimes the City of Grapevine does not think about its money the same way. In the case of two new Visitor Shuttle Buses, Grapevine thinks of its money more like sheep headed for slaughter.
In last week’s City Council meeting, a request for two additional shuttle buses for the City of Grapevine was on the consent agenda. For the many of you who are not regular attenders of the council meetings, the consent agenda is a group of items that get approved with no discussion.
One brave soul attending the meeting asked the City Council to remove the over $300,000 shuttle bus item off the consent agenda. Basically, the brave man wanted to hear why we needed two more buses. The item was moved off the consent agenda and a roughly three minute discussion ensued.
The reasoning for the new buses went something like this: City employees have heard that people staying in Irving hotels were taking hotel shuttles to DFW Airport to catch Grapevine Visitors Shuttle Buses to ride into Grapevine. No figures were given on the amount of riders. No numbers were given at all really. The new buses would go to Irving to help pick up these people and eliminate their need to ride to DFW Airport.
Now in the real world, investments like this need more than a quick anecdote for approval. Even in the made for television real world of Shark Tank, this investment rationale would be laughed out of the room. In the City Council meeting last Tuesday night, this $300,000+ investment was quickly approved on no more than an anecdotal story.
We at Grapevine Texas Online have the luxury of working for a very successful, very efficient real world business. When this business wants to make an investment of any significance, a business case for the investment is required. This business case provides real numbers and support and leads to a conclusion of economic value added (which is just a fancy way of saying profit).
The reason investments require a business case is to achieve accountability. Someone has to present the figures and sign their name to them claiming that there will be a benefit or profit to the company.
Since no figures were provided on the two new buses, we thought it would be nice to do some quick math on the economic viability of the investment. Please follow along with our assumptions:
Currently, there are four Visitors Shuttle Bus routes that run 361 days per year. Our assumption is that those four routes require a minimum of four buses. In the last reported year of actual results, the shuttle buses earned roughly $100,000 in revenue. Their expenses were roughly $700,000 for a loss of $600,000 in a single year. Simple math would tell you that in addition to the $300,000+ up front cost of the new buses, the City of Grapevine can expect to lose an additional $300,000 per year on operations.
Let’s make a few more assumptions to come up with the number of riders the current buses actually service. If revenue is $100,000 per year and the average ticket price per rider is $5, you would have roughly 20,000 shuttle bus riders a year. That works out to just 13.85 riders per bus each day.
Estimates we have seen suggest Grapevine Mills Mall has 15 to 20 million visitors per year. Great Wolf Lodge has around 500,000 visitors per year. Lake Grapevine and Downtown Grapevine have over 1 million visitors a year each. And to support these huge attractions, four Grapevine Shuttle Buses carry around 20,000 passengers a year at a loss of $600,000 per year. And the City Council just approved two more.
So as we head into election season and two City Council seats are up for grabs, we ask those running for elected office to consider adding a business case requirement on city expenditures of a certain size. These business cases would add transparency and accountability which we desperately need.