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Memo - Update on Art Center Facility Charge Discussions• MEMORANDUM • • To: Honorable Mayor and Members of the City Council FROM: Jay Strachota, Facilities Director CC: Steve Mielke, City Manager DATE: March 18, 2004 SUBJECT: Update on Art Center Facility Charge discussions The purpose of discussing the Arts Center Facility Charge at the March 23rd work session is to report to the City Council what has been learned through discussions on a "Facility Charge" with tenants and partners. Background At the first work session in November of 2003 the City Council and staff discussed the possibility of a "Facility Charge ", that is a charge applied to each ticket sold at the Hopkins Center for the Arts. The Council expressed a desire to explore the utilization of a facility charge to help fund the Arts Center. After discussing the known issues with such a charge it was decided that staff and a Council representative(s) would meet separately with representatives from each Art Center Tenant and Partner organization. The purpose of these meetings was to introduce the Facility Charge concept and open discussions on the topic as well as open discussions on any other ideas that the tenants or partners might have to improve the bottom line of the Arts Center's finances. Discussions took place in December and February. The results of the discussions The range of discussion topics beyond the facility charge was a broad as the missions of our tenants and partner. At the March 23 work session those that experienced the discussions can express what they heard. I'II lie out a few generalizations from the discussions. Stages Theater Company We met with Steve Barberio of Stages Theater Company first. In general he said that: • Stages Theater Company is facing very hard financial times at the moment. Were times better he and the Stages Board of Directors would certainly entertain exploring new ways to help fund the Arts Center. • Stages position on a facility charge is that it is a tax, and a non - profit cannot be taxed. • Steve would rather spend Stages energy and resources in a collaborative effort to improve the finances rather than the implementation of a facility tax. • The Main Street School is an example of Stages working toward a collaboration that could eventually bring the Arts Center $25,000 - $30,000 in lease revenue • Stages would be willing to look at an increase is technical fees as a pass though facility funding mechanism. HCA, Inc. We met with Susan Hanna - Bibus, Mary Jo Bartos, and Barb Westmoreland of HCA, Inc next. They generally expressed the following: • • • • As HCA, Inc looks at the Cooperative Agreement and the way funding is returned to the City, a facility charge may make sense as a component of the way revenues are returned to the City. • HCA, Inc would fold a Facility Charge into their ticket price so as to not have their customers see the charge. • HCA, Inc is interested in finding ways to fund additional staff support. This is to free up some of Susan's time to work on funding and marketing thereby strengthening HCA, Inc.'s finances and ability to contribute back to the City. Hopkins School District Finally, we met with Ted Sauer, Director of Community Education for the Hopkins School District. Ted generally expressed the following: • The Mainstreet School will help with lease dollars at the Arts Center and will also bring more economic development and arts focus to the downtown area. • Hopkins School District is working on a Conference and Events business plan which will include the Arts Center and Pavilion as well. This should increase rental income and exposure for these facilities. • Ted stressed "new money ". That is finding new revenue streams not trying to go deeper into existing streams. With that there was a discussion of expanding /improving the Arts Center and the possible revenues that might produce. • The school district doesn't sell tickets to events and an increase in technical charges would only bring in an additional $800 or so. Conclusion At the end of the work session discussions on a facility charge staff and council will need to identify what steps, if any, should be taken toward a facility charge, and /or what other options resulting from these discussions should be pursued /explored /implemented.