Loading...
Memo-Facillity Change DiscussionMemo Page 1 of 3 von To: Honorable Mayor and Members of the City Council From: Jay Strachota, Facilities Director Date: 11/05/03 Re: Facility Charge discussion Hopkins Center for the Arts The "Facility Charge" is a charge applied to each ticket sold at the Hopkins Center for the Arts. The City Council has a desire to explore the utilization of a facility charge to help fund the Arts Center. The purpose of a facility charge discussion is to further develop the concept at the council level before opening formal discussions with the tenant and partners, and to explore how the charge might be - applied to the occasional users. BACKGROUND AND RESEARCH • The leases and agreements signed by the tenants, partners, and the City do not speak to any additional charges such as a facility charge. • Attached you will find the Arts Center's annual main stage attendance figures for the past year by user groups. • Also attached you will find a website & phone survey of arts venues and their additional fees above the base ticket prices. ISSUES Under what role does the City Council approach the Tenant and partners? In the role of the City, asking tenants to collect a fee for the city, in the role of the Landlord seeking a rent increase through a facility charge, or in the role of a partner in the project asking the other partners for additional assistance. Is the Council asking that a facility charge be applied to all tickets or are there exceptions? Stages Theatre Company has a variety of ticket types - adult, senior, child, season tickets, group sales, etc. Another method of dividing out ticketing to Stages events is the weekday school matinees and the evening /weekend performances. Would a facility charge apply to all Stages tickets or only some type of tickets? All of Hopkins School Districts events in the theater are free. HSD events generally fit into three categories - student performances /ceremonies, speakers /public forums, and adult performances ( Westwind Band). Except for the Westwind Band concerts the school district does not ticket for any event, so there is not ticketing in place to add the charge too. HCA, Inc has a fixed pricing structure for all their events and offer group and season ticket packages. Page 2 Would there be exceptions to the charge based on whether the event is a fundraiser, educational, a community based civic organization, public forums, etc.? Should ticket sales to the JC Studio events include a facility charge? The JC Studio is second only to the main stage theater in actual and potential revenue production for the Arts Center. It's the only other room at the Arts Center that has ticketed seating. Stages, HCA, Inc, Shoestring Players, and occasional users have sold tickets to events in this room. Does it make sense to spread the charge over more event attendees by including this space? How much? How much can the fee amount too? People setting the ticket price for an event say their customers are very price sensitive, marketing people say pricing structure affects sales, ticket buyers may say they are price sensitive or they are not if it's an event they really want to attend, and some will say what's a buck or two more. What is appropriate? What will the proceeds of the Facility Charge fund? Operations? Capital improvements? Equipment replacement? Are there other revenue sources to consider beyond a facility charge? A rental rate increase and a fee added to technical services fees could be incorporated with the facility charge to gather additional revenue fairly across the customer base. THE TENANTS, PARTNERS, USERS, AND REVENUE RECOMMENDATIONS Stages Theatre Company • Soft ticket sales the last few years • Lost significant contributed revenues the last few years • Feel school matinees need to be as inexpensive as possible Recommendation: May have room to negotiate a charge on weekend /evening tickets and include JC Studio ticket sales at a lower charge HSD • Do not ticket for events • New fee payments need to be approved by the School Board • May have policies against charging for some types of events • May use the space Tess if teachers need to set up ticketing Recommendation: Add $10.00 per hour to the technical services charges through CPT Services, and explore other options through negotiations. HCA, Inc & "Community Use" occasional users • Still building programs • HCA, Inc Performing Arts Committee volunteers wrestle with pricing and feel pricing is directly related to number of seats sold • A ticket fee is an easy way for HCA, Inc and Community User customers to contribute to the Arts Center budget Recommendation: Seek a ticket charge on all HCA, Inc and Community Use events (JC Studio at a lesser rate). Note: In negotiations HCA, Inc will probably want this revenue to apply toward their revenue sharing with the city. SUMMARY OF REVENUE INCREASES $33,000 Facility charge @ $.50 6,700 Additional theater rent and fees on those occasional users not ticketing in Box Office 4,200 Rental rate increase on rooms other than theater 800 Increase of $10 in technical service fees to HSD $44,700 Estimated total revenue increase Occasional users • No way to collect a facility fee per ticket when tickets are not sold or sold independent of the box office • A ticket charge could make the rental more complex. Easing the complexity of rentals is a goal of the council and Arts Center staff Recommendation: Raise the rental rate of the theater and add $5.00 - $10 per hour to the technical services. The combination of these increases would be calculated with a goal of raising revenue equal to what would be gathered from the occasional users if a per ticket charge were applied. A second option would be to have a split rental rate schedule. A rental schedule for those that ticket through the box office with a facility charge and another rental schedule with higher rental costs for those that ticket on their own or don't ticket. This option does raise the rental complexity factor. Overall this could amount to a $14,000 in additional revenue. (Note the division of this revenue as rental income, or rental income and facility charge, would depend on which scenario is implemented). Other Revenues • Increase room rental rates - A 10% increase in rental rates means a room that rents for $25/ hr. and $100 /day go to $27.50/hr., $110 /day. Not a significant enough increase in cost to affect the number of rentals. The rental rates at the Arts Center have not been increased since the facility opened. In fact more time has been spent on trying to decrease rates than increase rates. A 10% increase in room rental rates on all rental rooms (not including the theater which would see a rental fee increase as part of the facility charge) amounts to $2,800 per year. Recommendation: Raise rental rates an average of 15% ($4,200 net increase in rental revenues) and revue rental rates semi - annually. What is the appropriate amount for a facilities charge? • Typical ticket prices at the Arts Center range from $6.00 to $22.50. Over 80% of the tickets sold are in the $6.00 to $11.00 range. • A 5% facility charge equals $.45 on a $9.00 ticket, $.55 on an $11.00 ticket, $1.13 on a $22.50 ticket. • A 10% facility charge equals $.90 on a $9.00 ticket, $1.10 on an $11.00 ticket, $2.50 on a $22.50 ticket. Recommendation: A flat rate $.50 per ticket facility charge per ticket. If applied to Stages evening /weekend tickets, all HCA, Inc and Community Use tickets, and all occasional users that ticket through the box office this could amount to $33,000. Here are the approximate attendance figures for the main stage theater over the past year broken down by user group: Stages Theater: 95,000 (roughly half these admissions are weekday school groups) HCA, Inc.: 5,000 HSD: 9,050 (all free admittances) Occasional users who ticketed through the Box Office: 16,350 Occasional users that sold tickets on their own: 6,500 Raspberry festival events: 1,400 Occasional users free events: 5,500 Approximate total number of people last year who entered the theater: 138,100 Approximate total number that paid for tickets through the Box Office is: 116,350 • Guthrie - $1.75 Service fee for phone or web orders. No service fee for walk in ticket purchases. Reif Center (Grand Rapids, Mn) -$2.00 Service fee for phone or web orders. No other fees. Maplewood Community Center -No additional fees Children's Theater Company - $3.50 Convenience fee (See attached ticketing information for pricing) Stages Theatre Company - 6% service fee Historic Orpheum Theater Seating Capacity: 2,600 Tickets to "Momma Mia" Ordered through Ticket Master Tickets are mailed out Base price range $37 - $72 Venue Fees Information collected via phone & web pages Historic State Theater Seating Capacity: 2,150 "Dora the Explorer Live" Ordered through Ticket Master Tickets are mailed out Base price range $22.50 - $15.50 One ticket base price $72.00 One ticket base price $15.50 Convenience Charge 5.25 Convenience fee 3.50 Facility Charge 3.00 Facility Fee 2.00 Tax .37 Tax .25 Order processing fee 3.75 Order processing fee 3.75 Total $84.37 Total $25.00 Historic Pantages Theater - Same pricing structure as State & Orpheum - Seats 1100 - Facility Fee $2.00 per ticket Phipps -$2.00 processing fees for phone and web orders. Brave New Workshop - $1.00 per ticket convenience fee Bloomington Civic Theater - $2.00 handling fee Northrop Auditorium - U of M - $2.00 Discount if you order over the website Orchestra Hall - $2.00 per ticket facility fee on $42.00 tickets. $1.75 processing fee • November 7, 2003 • • Overview 2004 BUDGET DISCUSSIONS The City of Hopkins is in the process of establishing the 2004 special revenue and utility fund program budgets. Each division within the city will bring forward its 2004 program needs. The city council reviews with the division managers, finance and the city manager, the goals and objectives for the programs and together we decide on approprations for 2004. The goal is to ensure the cities priorities and objectives are being met and the funding sources and expenditures are reasonable and available. This evening we will examine 2004 bugets for Chemical Assessment, Economic & Community Development, Hop -a -Ride, Housing & Redevelopment, Parking, Section 8, TIF districts and all Utility funds. Each division will provide information on the various funds.