Financial Support – Arts and Cultural Organizations (M. Phair)

Recommendation:
That the September 6, 2005, Community Services Department report 2005CSW035 be received for information.

Report Summary

This report provides a response to an administrative Administrative inquiry Inquiry regarding requests for funding from City of Edmonton sources for major art/museum facility projects.

Previous Council/Committee Action

  • At the September 27/28, 2005, City Council meeting, the September 6, 2005, Community Services report 2005CSW035 was referred to the October 11, 2005, Community Services Committee meeting.
  • At the May 31, 2005, City Council meeting, Councillor M. Phair made the the following inquiry:motion was passed:

“During the current fiscal year, additional financial support was provided to many of the arts and cultural organizations in the city. In recent discussions and information provided, it appears that there are major art/museum facility projects being pursued by local organizations over the next few years.

I would like the following information:

  1. Councillors have received extensive information and a request for funding from the Ukrainian Canadian Archives and Museum of Alberta. Has Administration had an opportunity to review and analyse the information, including the business plan? Please provide comments.
  2. The EdmontonArtGallery has met with Councillors in the past. What are the current financing plans proposed by the Gallery?
  3. If the City was to put together a facility funding package, how might this be done? Please list amount of City contribution, time period of contributions and time frame of development of buildings.
  4. For these two projects, outline total costs and contributions from other governments, the private sector and money that is currently committed.
  5. In the current review of the Downtown Plan, have these projects been considered?”

Report

  1. Ukrainian Canadian Archives and Museum of Alberta (UCAMA)
  • Administration has had an opportunity to review and analysze information provided by the UCAMA (Attachment 1).
  • The following reports have been supplied to the City by the UCAMA:
  1. Feasibility Study for a new Facility (November 2004)
  2. Business Plan for a New Facility (2005)
  3. Feasibility Study – Final Report (January 2005)
  • These reports were prepared by HIP Architects and David Murray Architect in association with JudyLarmour. The reports are very thorough and contain the type of information and analysis expected for this type of major undertaking.
  • Based on the information supplied to the City, the businessplan does seem reasonable and well thought out. A lot of research and analysis has been done to justify the assumptions made and for the projections of capital costs and future operating costs. However, Administration however, feels that there are some areas that require clarification. These are:
  1. There does not appear to be any set timelines or milestones for fundraising. The report does list numerous ways to raise funds and various sources for these funds. However, there is no set timeline for raising these funds or alternative strategies if fundraising is unsuccessful.
  2. Costs of construction of
    $6.25 million (excluding site servicing and other fees) are based on a construction start date of April 2005. The final feasibility study indicates “This estimate cannot be relied upon as a commitment that the contemplated project can or will be constructed for the estimated cost.” As there is presently no timeline for when construction is to start (or for raising funds), the final costs for the project will likely be higher than estimated and may have a significant impact on the current fundraising strategy.
  3. The final feasibility report indicates that “The final design will be dependent on a number of criteria that will form the brief and on the ability of the UCAMA and their partners to raise the required capital.” This seems to indicate that the final product and costs are still subject to change. The report does not indicate who will make this decision or when it will be made.
  4. The present museum is located at 9543 – 110 Ave. The reports indicate that the estimated fair market value is $160,000 but do not indicate what will happen to this facility (i.e. rented out to offset future operating costs or sold to offset capital costs).
  • Since there are not any specified timelines or milestones for fundraising, and it is uncertain when the determination will be made for the final design, it is difficult to determine what the capital budget for this project will be or when this project will start.
  • It would appear the earliest construction start date could be 2007. The UCAMA Feasibility Study – Final Reportstates: “It is estimated that once the construction budget has been confirmed it will take the consultant team about nine months to complete the design and prepare the required documents to construct the new facility. It is anticipated that once the construction begins, it will take two years to complete the new building, build and install the new exhibits and make the transition from the old facility to the new.”
  1. EdmontonArtGallery (EAG)
  • The estimated project budget is currently $48 million and includes a capital building project of $43 million and a
    $5 million operating endowment. Impact of inflation has been taken into consideration when costing the project. The budget has been corrected to reflect the anticipated inflationary trends in construction trades and materials in Edmonton over the next three years. The EAG has provided a revised Capital Project Budget (Attachment 2).
  • Funding for the project will come from federal, provincial, and civic governmentas well as private sources.
  • The City’s contribution is expected to be $6 million, which has been submitted in the Capital Program (Asset Management – Land and Buildings). This project is being considered for tax supported debt and that strategy will be presented to the October 11, 2005 Community Services Committee meeting.
  1. A City Facility Funding Package
  • Historically, a ‘facility funding package’ has been done on a case- by- case basis depending on the City’s relationship with the potential partner (e.g. City as landowner) and/or on the type of partnership.
  • Given the uniqueness of some of the partnerships, factors such as the amount of the City contribution, time period of contributions and timeframe associated with the development have varied depending on the project (eg. Winspear Centre, partnerships with the YMCA or Area Councils).
  • Should City Council decide to fund these requests, the City could choose to make a one-time contribution or spread it out over several years (similar to the YMCA). Possible funding sources include tax levy, tax supported debt, any operating surpluses or unused funds from completed capital projects.
  • Any City contribution toward the UCAMA project should be evaluated against all other capital projects seeking funding in the City’s 5 Year Capital Priorities Plan (CPP).
  1. Project Costs and Contributions
  • Facility Construction costs for the EAG is $43 million (based on a 2006 construction start date) and $9.95 million for the UCAMA (based on an April 2005 construction start date). In addition both of these organizations are establishing a $5million endowment fund for operating costs.
  • To date, the EAG has $17 million committed and the UCAMA has approximately $3 million committed. Attachment 3 outlines total costs and contributions from other governments, and the private sector.
  • The reports received from the UCAMA do not indicate a specific dollar amount requested from the City (reference is made to an arbitrary $3 million target) or a time frame for when this contribution would be required.
  • The EAG has a target date of September 2009 established for the opening of the new building. Attachment 4 references the current EAG Project Timeline.
  1. The Downtown Plan
  • The Ukrainian Canadian Archives and Museum of Alberta will be located in the Lodge Hotel at 9660 - Jasper Avenue which is within the boundaries of the Boyle Street McCauley Area Redevelopment Plan and is outside the boundaries of the Capital City Downtown Plan. The Boundaries for the Downtown Plan are:

Middle of 105 Avenue in the north.

Middle of 97 Street in the east.

Middle of 97 Avenue and Rossdale Rd. and the north shore of the North Saskatchewan in the south (including Louise McKinney Park).

½ block west of 109 Street (south of Jasper Avenue) and middle of 111 Street (north of Jasper Avenue) in the west.

  • A map of the Downtown Area Redevelopment Plan (Attachment 5) depicts the above mentioned boundaries.
  • The Edmonton Art GalleryEAG is located adjacent to Churchill Square and lies within the Downtown Plan boundaries. EAG representatives have been active participants thus far in the first stage of the program to update the Downtown Plan.

Budget/Financial Implications

  1. The EAG request for $6 million has been identified in the unfunded portion of theis being considered in the City’s 2006-2010 Capital Priorities Plan with tax-supported debt being a possible funding source.
  2. No specific operating or capital funding sources have been identified for the UCAMA proposal.

Background Information Attached

  1. Administration Review of Ukrainian Canadian Archives and Museum of AlbertaBusiness Plan and Related Information
  2. Edmonton Art Gallery – Capital Project Budget
  3. Project Costs and Contributions
  4. Edmonton Art Gallery Project Timeline
  5. Map - Downtown Area Redevelopment Plan

Background Information Available on Request

  1. Ukrainian Canadian Archives and Museum of Alberta Business Plan and Feasibility Studies for a new building.
  2. Agreement Between The City Of Edmonton And The Edmonton Art Gallery, Dated May 2, 1967

Others Approving this Report

  1. J.Tustian, General Manager, Corporate Services Department
  2. W. D. Burn, General Manager, Asset Management and Public Works Department

(Page 1 of 444444)

Attachment 1

Administration Review of Ukrainian Canadian Archives and Museum of Alberta Business Plan and Related Information

The Ukrainian Canadian Archives and Museum of Alberta (UCAMA) announced in April 2004 their intention to build a new museum in the recently acquired Lodge Hotel in downtown Edmonton. This is a joint project of the UCAMA; the museum of the Ukrainian Catholic Women’s League of Canada (UCWLC), Edmonton Eparchy; and the Ukrainian Folklore Centre at the University of Alberta.

The following reports have been supplied to the City by the UCAMA:

  1. Feasibility Study for a new Facility (November 2004)
  2. Business Plan for a New Facility (2005)
  3. Feasibility Study – Final Report (January 2005)

These reports were prepared by HIP Architects and David Murray Architect in association with JudyLarmour. The reports are very thorough and contain the type of information and analysis expected for this type of major undertaking.

The overall conclusion of the analysis of the present facility from the initial feasibility study was that “…it is totally impractical, and ultimately would be false economy, to attempt to improve the building sufficiently for UCAMA to meet its mandate. It is strongly recommended that UCAMA move to another facility as soon as feasible”.

In addition to the above, the reports contain information and analysis pertaining to the following elements:

  1. Collections Analysis
  2. A Vision for the Future
  3. New Museum Site
  4. Facility and Space Requirements
  5. Program and Services Plan
  6. Staffing Requirements
  7. Community Impact of a New Facility
  8. Market Analysis
  9. Visitation Analysis
  10. Capital and Operating Budget Projections
  11. Comparative Facilities Survey
  12. Fundraising Strategy

The estimated capital cost (April 2005) to renovate the Lodge Hotel is $7.645 million with an additional $2.3 million required for equipment and furnishings for a total of $9.945 million. Present estimates supplied indicate a yearly operating deficit of up to $212,000. The fundraising strategy proposed by the UCAMA is to address both Operating and Capital requirements.

The first objective will be the Capital Fundraising Campaign. The primary targets for this are the three levels of government and the business sector. The $3 million financial targets for each of these targets are arbitrary. However, they are based on the fact that the provincial government has already committed $3 million through the Community Facility Enhancement Program. The City of Edmonton has provided $300,000 (2001/2002) for the restoration of the facades of both the Lodge Hotel and the Brighton Block. (These costs are not included in the estimated capital costs for this particular project.) The UCAMA has indicated (in the reports supplied) that there are presently no active federal programs that they have applied for funding from. The reports are also unclear as to how much has been raised from the business sector.

The secondary targets for the Capital Fundraising Campaign include donations, planned giving, gifts in kind and special events. No specific financial targets have been set for these targets and the reports are also unclear as to how much has been raised to date.

The second objective of the financial campaign is the creation of an endowment fund of $5 million. The intention of this fund is to provide annual revenue to offset the projected operating deficit. The primary targets for fundraising are planned giving and special events while the secondary target is the business sector. The financial forecasts provided presently indicate revenue generation from this fund in year 3. The reports supplied are unclear as to how much has been raised to date for the endowment fund.

Based on the information supplied to the City, the business plan does seem reasonable and well thought out. A lot of research and analysis has been done to justify the assumptions they have made and for the projections of capital costs and future operating costs. There are, however, some areas that require clarification.

  1. There does not appear to be any set timelines or milestones for fundraising. The report does list numerous ways to raise funds and various sources for these funds. However, there is no set timeline for raising these funds or alternative strategies if fundraising is unsuccessful.
  2. Costs of construction of $6.25 million (excluding site servicing and other fees) are based on a construction start date of April 2005. The final feasibility study indicates “This estimate cannot be relied upon as a commitment that the contemplated project can or will be constructed for the estimated cost.” As there is presently no timeline for when construction is to start (or for raising funds), the final costs for the project will likely be higher than estimated and may have a significant impact on the current fundraising strategy.
  3. The final feasibility report indicates that “The final design will be dependent on a number of criteria that will form the brief and on the ability of the UCAMA and their partners to raise the required capital.” This seems to indicate that the final product and costs are still subject to change. The report does not indicate who will make this decision or when it will be made.
  4. The present museum is located at 9543 – 110 Ave. The reports indicate that the estimated fair market value is $160,000 but do not indicate what will happen to this facility (i.e. rented out to offset future operating costs or sold to offset capital costs).

The following quote regarding the construction time frame is taken from the Feasibility Study – Final Report: “It is estimated that once the construction budget has been confirmed it will take the consultant team about 9 months to complete the design and prepare the required documents to construct the new facility. It is anticipated that once the construction begins, it will take 2 years to complete the new building, build and install the new exhibits and make the transition from the old facility to the new.”

Based on the above, it would appear the earliest construction start date would be 2007. However, since there are not any timelines or milestones for fundraising, and it is uncertain when the determination will be made for the final design, it is difficult to determine what the final capital budget will be or when this project will start.

Any City contribution toward this project should be evaluated against all other capital projects seeking funding in the City’s 5 Year Capital Priorities Plan (CPP).

Attachment 1 - Page 1 of 222222

Attachment 2

EdmontonArtGallery – Capital Project Budget

EDMONTONARTGALLERY - NEW VISION TOTAL PROJECT BUDGET (May 2, 2005)
New VisionBuilding Construction (April 2005 Value) / $24,000,000.00
Design Contingency (5%) / $ 1,200,000.00
Construction Contingency (5%) / $ 1,260,000.00
Escalation Reserve (1 Year 9%, 1 Year 7% - Spring ’07 Start) / $ 4,400,300.00
Subtotal = / $30,860,300.00
Architectural and Engineering Design Fees (10% of Building Cost) / $ 3,086,000.00
Project Management Fees (5%) / $ 1,543,000.00
Furniture and Equipment (5.5% of Building Cost) / $ 1,697,000.00
Rounded Off / $ 700.00
Subtotal = / $37,187,000.00
Competition Costs / $ 600,000.00
Collection Services Facility / $ 750,000.00
Tenant Improvements (15,000 SF x $50 / SF)
  • Collection Move Costs
/ $ 250,000.00
  • CSF / Furniture / Equipment
/ $ 150,000.00
  • Collection Services Facility Operating Costs
/ $ 300,000.00
Temporary Gallery Space / $ 1,500,000.00
Tenant Improvements (30,000 SF x $50 / SF)
  • Gallery Relocation Costs to Temporary Facility
/ $ 250,000.00
  • Temporary Gallery Furnishing / Equipment
/ $ 150,000.00
  • Temporary Gallery Operating Costs
/ $ 750,000.00
Marketing and Development Capital Campaign / $ 500,000.00
Contingency / $ 350,000.00
Subtotal = / $43,000,000.00
Endowment / $ 5,000,000.00
Project Total Cost = / $48,000,000.00

Attachment 2 - Page 1 of 111111