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TableofContents

Executive Summary ......................................................................................................................... 4

1. Introduction ............................................................................................................................. 9

2. Review of Market Assessment .............................................................................................. 11

3. Facility Assessment and Estimated Capital Costs .................................................................. 20

4. Site Selection Options ............................................................................................................ 34

5. Potential Role for Theatre North West (TNW) ...................................................................... 36

6. Review of Proposed Operating and Business Plan ................................................................ 42

7. Assessment of Capital Funding Options ................................................................................ 75

8. Community & Economic Benefits .......................................................................................... 81

9. Potential Next Steps and Estimated Time Lines .................................................................... 85

Appendix A: Consultation List ....................................................................................................... 88

Appendix B: Example of Programming Budget for One Year ....................................................... 90

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Executive Summary

1. This Report is a request from the City of Prince George Council and is intended to be an

objective review and assessment of the Prince George Regional Performing Arts Centre

(PGRPAC) Society’s proposal presented to Council on November 18, 2013. This report

focuses on reviewing and assessing information provided by the six consultant reports

prepared for the PGRPAC Society and subsequently provided to City Council.

Administration’s review focuses on checking key assumptions and clarifying those as

needed, ensuring that capital and operating estimates are complete and updated, and

making sure reasonable options have been considered. Recommendations on whether

or not a Performing Arts Centre (PAC) should be built are beyond the scope of this

report. To gain a full understanding of the proposal, this report should be viewed along

with the consultants’ reports, which are available on the Society’s website:

http://www.pgperformingarts.ca/

2. A statistically valid market demand survey was conducted in March 2014 to assess the

market conditions for live entertainment and performing arts. The study obtained 450

telephone surveys from a random sample of 3,858 contacted Prince George residents.

The survey has a margin of error +/‐ 4.6 percent 19 times out of 20. This type of survey

and its methodology are consistent with marketing studies commonly conducted by

researchers, governments and the private sector. The study provides insight into

residents’ frequency and type of performances attended within the last 12 months,

their views on ticket pricing and their interests in future live entertainment in Prince

George. Eighty‐eight (88) percent of the respondents indicated they attended at least

one live performance or sporting event in the last 12 months. Excluding sporting events

and the popular large concerts at CN Centre, the study data also breaks down the Prince

George market into segments showing seven types of live entertainment suitable for a

PAC. Based on past behaviour, the study shows the relative interests in the different

market segments ranged from 13 percent for dance performances to 43 percent for

smaller‐venue music concerts. In terms of predicting behaviour, respondents showed

interests in attending more future live performances of interest to them, compared to

their attendance in the last twelve months. The results of the study suggest market

conditions capable of supporting the types of entertainment suitable for the proposed

PAC, and suggests the ability of the Prince George market to absorb additional live

entertainment.

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3. Assessing the estimated types and frequencies of touring performers indicates that a

PAC in Prince George would attract similar performances to theatres operating in

Kamloops, Kelowna, Nanaimo and Vernon. Trends have been consistent suggesting that

the proposed PAC would be able to program 18 – 20 national/international performers

in Prince George per year. Feedback from promoters operating through western

Canada indicate that Prince George’s geographical location is not an issue for most

performance tours and that the proposed PAC would allow more touring performances

to travel to Prince George. All programming theatres contacted during this review,

provided a mix of performances that catered to a wide range of interests from

performing arts, comedy, music concerts, cultural events, competitions, speakers,

theatre, and children and family performances.

4. The capital cost estimates for the PGRPAC Society’s proposed 67,027 sq. ft. (6,227m2)

performing arts centre with 800 seat and 250 seat theatres, has been updated to

$46,069,300 in 2017 dollars. Based on additional review and discussion with

consultants, additional cost estimates were added to include space requirements not

included in the original concept design and offsite works. This adds an estimated

$4,984,700 (2017 dollars) to the project. Therefore, the total project cost is estimated

at $51.05 million in 2017 dollars, not including the value of the land. These cost

estimates, based on schematic drawings (not detailed plans), are considered “Indicative

Estimates” (similar to Class C or D estimates) and are not sufficiently reliable for setting

budget targets. Substantive Estimates (similar to Class B estimates used for setting

budget targets) would require detailed drawings and engineering in the

Design/Development phase.

5. An assessment was conducted of other facility options, including renovations and

additions to Vanier Hall and the PG Playhouse. Various scenarios (combinations of new

build and renovations) were reviewed to examine pros and cons. A full renovation and

addition project to Vanier Hall to meet the same needs as the 800 seat theatre of the

proposed PAC, and also to provide a replacement space for the school, is estimated at

$31.2m in 2017 dollars. The review showed less capital costs for a renovation approach,

but the costs are still significant, and a number of risks, unknowns and constraints were

identified with this option. Further, renovating current facilities does not fully address

the gaps and needs identified by the theatre consultants. Constructing a new 800 seat

theatre (without the proposed 250 seat theatre) has an Indicative Estimate (Class C or D

level estimate) of $36.96m in 2017 dollars. The design of the PG Playhouse does not

lend itself to a renovation that would be aimed at significantly increasing its seat

capacity.

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6. The only downtown site owned by the City of Prince George and of sufficient size for the

proposed PAC is adjacent to City Hall (across George Street) and the Keg Restaurant.

This 9,848m2 (106,000 sq. ft.) site was one of two assessed options in the 2010 site

evaluation report (Dialog, BTY Group, Schick Shiner & Associates). The advantage of

this site, other than its ownership status, are proximity to site services, the ability to

contribute to a cultural precinct, and the ability to enhance public spaces in the area.

Challenges with the site include its location in the 1‐20 year flood plain (which can be

addressed through design), and parking. Although there is a need for 400 to 450

parking stalls at peak capacity, the residual site would only allow for 70‐80 stalls, with

the remaining parking needs addressed through street and parkade parking or City Hall

when available after hours.

7. Having Theatre North West (TNW) as a resident company of the PAC provides a number of benefits including budget support. A review was completed of the needs identified by Theatre North West. Meetings were held with TNW to discuss a range of possible options for their participation in the proposed PAC including as a partner/resident company. TNW has a number of significant outstanding issues and concerns and there currently is not an agreement to participate in the proposed PAC. Participation of TNW in the PAC is a critical component of the proposed operating model. TNW has a model which has sustained them well, and a partnership with the proposed PAC would need to ensure their continued success. The following key issues would need to be addressed before TNW could consider their involvement in the PAC operating model:

1. TNW’s control and exclusive use of the smaller (250 seat) theatre space.

2. No impact to TNW’s costs.

3. A high level of independence from the PAC.

4. Parking and security issues with a downtown location.

5. Maintaining control over ticketing.

8. The proposed operating model and business plan was reviewed, with particular

attention to the updated version (February 2011) prepared by Schick Shiner &

Associates. Through additional information and consultation from other theatres and

consultants, including Schick Shiner, the forecasted annual base operating budget was

revised to $782,384 (in 2017 dollars). When expenses related to the building were

factored into the budget, and if these are assumed to be the responsibility of the

operator rather than the owner, then the estimated operating budget would increase by

$58,600 to $840,984.

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9. The estimated annual operating revenues developed by administration are revised to

$736,651, assuming Theatre North West is a resident company, and that the $300,000

annual municipal grant for the PAC operations proposed in the Schick Shiner report is

maintained. Conservative assumptions were used in developing estimated revenues.

The difference between the estimated operational and building costs and revenues

suggests an operating deficit of $104,333 or about 14 percent, based on identified

assumptions. A sensitivity analysis was provided showing that even with a 20 percent

increase in revenues, the operating costs combined with the building costs could result

in a $36,803 operating deficit. Therefore, the review suggests that achieving a balanced

operating budget could require an annual operating grant from the City in the range of

$400,000, assuming TNW is a resident company.

10. The report maintained the assumption that $51.054m capital funding would be shared

between the federal, provincial and local governments and the private sector. Based on

other theatres and fund raising activities, a 10 percent target ($5.46m) was assumed for

the private sector and 30 percent for each order of government. When assuming that

part of the City’s share would include the $3.5m land value, the federal and provincial

governments contributing share would be approximately 31 percent each ($16.90m).

Currently, there are no Provincial government capital programs that would fit the

criteria for the proposed PAC. Likewise, many of the federal government infrastructure

programs (e.g. Build Canada, P3 Canada) are not providing capital funds for arts and

cultural projects. The exceptions are the Canada Cultural Spaces program that has

limited funding, and the recent changes making the use of Federal Gas Tax funds eligible

for cultural facilities. Gaining federal and provincial government commitments on

funding would require significant lobbying efforts and changes to funding priorities and

programs. Similarly, securing private sector funding will require significant effort.

11. The report describes options for consideration for the City of Prince George to address

its share of the capital project. Assuming that the land value ($3.5m) is part of the City’s

portion, the capital funds from the City’s share are estimated at $11.82m. Options

include:

1. Portion of the estimated $24m Legacy funding due in 2021 from the Terasen

Lease In Lease Out Agreement.

2. The Federal Gas Tax Fund.

3. A combination of options one and two.

4. Potential net revenues from land sales.

5. Financing through an increase in the tax levy.

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12. The economic benefits of the construction of the proposed PAC are estimated to be

$79.40m and 561 person years according to a report previously prepared by Initiatives

Prince George using BC Stats 2006 Input‐Output Model. The economic benefits of the

operation of the proposed PAC are more challenging to quantify. However, using the BC

Stats 2006 Input Output Model, Initiatives Prince George estimated that, based on

projected administration and salary costs, the annual economic impact from the

proposed PAC would be $945,730 and 13.7 person years direct and indirect

employment.

13. The City of Prince George Council requested administration’s options for next steps in

the project. Government of Canada local representative suggests that it may be 2 to 3

years before there is added funding for arts and culture capital projects. The Province

indicated that it may be as long as 5 to 8 years before funding opportunities could be

available. Given this funding uncertainty, it is not practical to provide a schedule or

timeline for the project to proceed. However, administration has provided a number of

options for consideration that allows the project planning to move forward such that,

the project may be better positioned to capitalize on future funding opportunities.

These include:

1. Conducting further discussions with Theatre North West and the PGRPAC Society

to determine TNW’s role in the proposed PAC.

2. Continue working on the groundwork towards securing federal and provincial

funding, including presenting at the upcoming federal finance committee

hearings.

3. Supporting the work of the PGRPAC Society in their community engagement and

private and corporate fund‐raising.

4. Proceeding, at the appropriate time when external funding is becoming

available, with design/development drawings, life‐cycle costing analysis,

engineering and refining cost estimates phase.

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1. Introduction On November 18, 2013, the Prince George Regional Performing Arts Center (PGRPAC) Society

presented their “Planning Study Task Force Report” to City Council. Council passed a resolution

to, “… declare the Prince George Regional Performing Arts Center as one of the City’s priority

projects and that it be referred to City administration to refine the project’s budget and

establish a timeline towards construction.”

The submission from the Society comprised 6 reports, including:

1. Downtown PG Market Implementation Plan (Harris Consulting, 2006).

2. Needs Assessment for a Regional Performing Arts Centre (Webb Management Services,

2008).

3. Physical & Business Plans for New Performing Arts Facilities (Webb Management

Services, 2008).

4. Prince George Regional Performing Arts Centre Site Evaluation (Dialog, BTY Group &

Schick Shiner & Associates Ltd., 2010).

5. Prince George Regional Performing Arts Centre Business Plan (Schick Shiner &

Associates Ltd., 2011).

6. Prince George Regional Performing Arts Centre Planning Study Task Force Report (Prince

George Regional Performing Arts Center Society, 2012).

It is recognized that this body of consultant work comprises important information at the

concept stage. This means that consultants must work with various assumptions and

information to provide their best estimates of the day. It is normal and expected that

additional refinement is necessary as large complex projects move towards further design,

engineering and more detailed costing phases.

The compendium of reports provides a good foundation for further assessment and refinement

of the capital cost estimates, business plan, site options, and market assessment. After

reviewing the consultants’ reports, administration prepared a scope of work and provided that

to Council on March 10, 2014. The scope of work includes:

1. Update of market conditions and reassessment of building design concepts:

Evaluate the assumptions used to develop the market analysis including potential

users (e.g. renters).

Undertake additional supply and demand market research.

Assess the range of options for “right‐sizing” a facility.

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2. Assess potential role for Theatre North West (TNW):

Re‐engage with Theatre North West to further refine requirements and assess

opportunities for a key role in a performing arts centre.

3. Review and refinement of estimated capital costs:

Revise and update the 2010 capital estimates.

Factor in capital costs that were not included .

Describe the level of reliability of capital estimates at this design stage.

Review other potential options.

4. Evaluate site options:

Update site options to reflect the changing conditions related to the two sites put

forward by the consultants.

5. Review and refinement of the business plan:

Update and factor in all potential operating costs, assess the assumptions used for

building the revenue models and refine where appropriate.

6. Review and assess current potential funding options:

Review current potential funding initiatives for both capital and operating, including

both private and public sectors and partnership models.

7. Define potential next steps and timelines:

Develop options for potential next steps and timelines.

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2. Review of Market Assessment

A “Needs Assessment for the Regional Performing Arts Centre” was completed by Webb

Management Services Inc. in February 2008 for the Society. Its methodology was to assess the:

1. Area’s economic development and growth projections.

2. Potential audience (market demand) for performing arts by examining the area’s

demographic characteristics and comparing to other markets, using the correlation of

higher levels of income and education infers higher likelihood for interest in performing

arts.

3. Review of facilities currently available and their assessment.

4. Current users and uses for performing arts facilities.

5. Community benefits and impacts.

The conclusions of the Webb report were that:

1. There is a “positive market demand” for a range of arts programming.

2. Current facilities are inadequate.

3. There are a “number of diverse organizations and entities that have expressed demand

for…small to mid‐sized performance and event space as well as classroom and rehearsal

space”.

4. There is a need for “high‐performance” opportunities to meet the demands of the high

levels of performance skills.

5. A new “cultural facility” would play a “significant and positive role” in community goals

around economic and community development, and downtown revitalization.

The Webb report draws upon findings from a 2005 Canadian cultural and activities study by Hill

Strategies, which reported that 41.2% of the Canadian population, 15 years of age and older,

attended a concert or performance by professional artists of music, dance, theatre or opera.

The study further broke down attendance by genre. The Webb report conclusions also rely on

past studies that statistically correlate higher income and education levels with increasing

demand for performing arts.

Assessing Market Demand:

Administration felt that additional market analysis was needed to adequately assess the

estimated future demand for live entertainment. This assessment is important in projecting

future ticket sales revenue that is included in the proposed operating budget for a new PAC. It

was important to assess how well the current market for live entertainment and performing

arts could absorb additional programming from a new PAC: i.e. is the market already saturated?

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As such, the City hired a market research firm to conduct a statistically valid, randomized

telephone survey to compile data on residents’ demands for live entertainment. Details on the

survey are provided in the Prince George Live Entertainment Market Demand Study (April 2014,

R.A. Malatest & Associates Ltd.).

The administration of the survey process yielded the following:

1. The study obtained telephone survey results between March 7th and 20th from 450

residents from a random sample of 5,000 residents of Prince George, supplemented with

1,000 working cell phone number from the Prince George region.

2. The results of the survey have a margin of error of +/‐ 4.6% at a confidence level of 95%.

This means that if the survey were repeated with multiple samples of 450, the results would

be accurate to a maximum of +/‐ 4.6%, 19 times out of 20.

3. The distribution of genders and ages is approximately representative of the population of

Prince George within each live entertainment type after the data has been weighted to be

representative of the population of Prince George.

Summary of Survey Results:

Types of Live Entertainment Events

1. The most common events that respondents had attended were: concerts (53.8%),

sporting events (51.1%), and live theatre (41.8%).

2. The most commonly selected events of interest were: concerts (85.8%), live theatre

(66.0%), and comedy acts (62.4%).

3. In general, respondents indicated they would attend more live entertainment events, if

they were available, than they have attended in the past twelve months.

4. The distribution of genders and ages is approximately representative of the population

of Prince George within each live entertainment type after the data has been weighted

to be representative of the population of Prince George.

5. Approximately three‐fifths (60.0%) of respondents indicated they would only attend

events of greatest interest to them, regardless of the type of live entertainment event.

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6. In general, most respondents currently use a personal vehicle to attend live

entertainment events, and would prefer to continue doing so.

Cost Per Ticket and Frequency of Attendance

1. Of those respondents that had attended a live entertainment performance by

nationally/internationally known performers (81.8%), 50% had paid between an average

of $50 and $100 per ticket, and of those respondents that had attended a live

entertainment performance by nationally/internationally known performers in the past

twelve months more than one‐half (65.7%) of respondents had attended one or two

events in the past year.

2. 50% of respondents indicated that they would consider anything between $45 and $80

a reasonable cost per ticket to see nationally/internationally known performers, and

50% of respondents would be willing to pay the reasonable amount they indicated

between two and six times per year.


the maximum cost per ticket to see performances by nationally/internationally known

performers, and 50% of respondents would be willing to pay the maximum amount they

indicated between one and three times per year.

4. Of those respondents that had attended a live entertainment performance by Northern

BC talent (57.3%), 50% had paid between an average of $20 and $40 per ticket, and of

those respondents that had attended a live entertainment performance by Northern BC

talent in the past twelve months more than one‐half (58.5%) of respondents had

attended one or two events in the past year.


a reasonable cost per ticket to see a performance by Northern BC talent, and 50% of

respondents would be willing to pay the reasonable amount they indicated between

two and six times per year.

6. The difference between past frequency (less than two times in the past year) and the

predicted frequency (up to four times per year) assuming a reasonable cost per ticket

suggests that there is a market for Northern BC talent.

7. The reasonable cost per ticket is higher than that respondents had paid on average for a

ticket to see Northern BC talent in the past twelve months.

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Review of Market Demand Study Results:

In order to focus on the key information that would best inform how much “room” there is in

the market, and estimating ticket revenues for the proposed PAC, the following results are

highlighted:

Past Attendance

Regional Performer:

89% paid up to $50

43% did not attend in last 12 months

17% attended once

30% attended between 1‐2 times

National / International Performer:

33% paid up to $50

54% paid between $51 and $100

18% did not attend in last 12 months

32% attended once

41% attended between 2 and 4 times

Predicted Attendance (using respondents maximum ticket price)1

Regional Performer:

Of the 38% of respondents that indicated their maximum ticket price is between $31 and $50:

21% would attend once

33% would attend twice

34% would attend between 3 and 6 times

Of the 36% of respondents that indicated their maximum ticket price is between $51 and $100:




National / International Performer:

Of the 12% of respondents that indicated their maximum ticket price is up to $50:




20% would attend more than 6 times

Of the 47%2 of respondents that indicated their maximum ticket price is between $51 and $100:

43% would attend once;

35% would attend twice;


Using the above summary, and the details from the survey study, we can infer the following:

1. A ticket rate of $45 for regional performers would be acceptable to 77 percent of the

market, and we could expect that 82 percent of that market would attend between 2 and 6

performances per year.

1 This is what respondents said would be the maximum they would normally be willing to spend on a performance. Administration used this, rather than the “reasonable ticket price” in order to be conservative gauging the market. For example, if a respondent felt that $65 was a reasonable price for a ticket, they would likely attend more shows at that price than if a respondent felt that $65 was the highest they would be willing to pay. The results show that the frequency of attendance drops in the survey results covering maximum ticket pricing. 2 There were a total of 88% of the respondents that indicated that their maximum ticket price for a national/international performer was over $51.

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2. A ticket price of $80 for a national/international performer would be acceptable to 88

percent of the market, and we could expect that 43 percent of that market would attend

once and 34 percent of that market would attend twice, with the rest attending more than

twice.

It was also important to review the survey results in relation to the performances and

entertainment that would be suitable for the proposed PAC. For example, where 137

respondents attended a rock concert and 113 respondents attended a country concert, it is

assumed these would be at the CN Centre if attended in Prince George. Where respondents

indicated they attended a dance performance, or the symphony or a jazz concert, it is assumed

that these were at smaller venues such as Vanier Hall or the PG Playhouse or other smaller

sized venues. Based on this, and excluding the responses from the larger concerts, the

following respondents (+/‐ 4.6%) attended an event, in the last twelve months, at a venue

smaller than the CN Centre:

194 (43%) attended a music concert at a smaller sized venue.

71 (16%) attended the symphony or opera.

58 (13%) attended a dance recital or performance.

67 (15%) attended a children’s show.

188 (42%) attended live theatre.

81 (18%) attended a comedy show.

81 (18%) had not attended any performance in the last twelve months.

The data above looks at the Prince George market, segmented into different types of live

entertainment that would be suitable for a venue such as the proposed PAC. This information

shows the relative range of interest within the Prince George market depending on the types of

live entertainment.

In examining respondents’ choices between past attendance and predicted attendance, in

every category, the predicted attendance was higher, suggesting that there is a positive market

demand for live entertainment and performances of various genres. The survey indicated that

most respondents would only attend those performances of most interest to them: i.e.

although there is a positive market, generating ticket sales would need the “right” mix of

performances at the “right” ticket prices.

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Genre or Type of Performance / Entertainment

Indicated Attending in last 12 Months (+/‐ 4.6%)3

Indicated Interest in Future Attendance (+/‐ 4.6%)

Music concert 2434 (54%) 384 (85%)

Symphony / Opera 79 (18%) 158 (35%)

Dance recital or performance 58 (13%) 171 (38%)

Children’s entertainment 67 (15%) 140 (31%)

Live Theatre 188 (42%) 297 (66%)

Comedy 81 (18%) 280 (62%)

Other 27 (6%) 110 (24%)

None of interest 81 (18%) 9 (2%)

Based on information from other theatres (e.g. Kelowna, Vernon and Kamloops), a centre in

Prince George could target about 18 to 20 bookings for nationally / internationally known

performers. Based on a capacity of 800 seats, this would equate to a target of about 12,000

ticket sales for a 75% occupancy level. The 12,000 ticket sales target represents about 20

percent of the gross market5, but again this is very conservative since many in the market

would attend more than one event6. This also suggests that there is sufficient “room” in the

market to absorb additional high profile performances7.

The inferences above suggest positive market conditions and enough of a gross market to draw

ticket sales from. The actual market capture will depend on “competition” from other event

suppliers, addressing the varied market interests for types of performances, the quality of

shows, and other factors.

It should be noted that the market review is aimed at the potential to grow live entertainment

and performing arts markets. The proposed PAC would also host many performances, moving

from other venues that are already firmly part of the market. Further, this discussion does not

3 The total number of survey respondents (out of a sample of 3,858) was 450. The total percentage in this column is not meant to add to 100% as respondents may indicate more than one category. 4 Of 243 respondents, 194 had attended concerts that were likely at a smaller venue (e.g. Vanier Hall, PG Playhouse) than the CN Centre. 5 Since 18% of respondents indicated they did not attend a concert in the last 12 months, it may be inferred that the gross market is 74,000 x 82% = 60,680 for Prince George, not including the surrounding regional market. 6 The survey study indicated that 41% of respondents attended between 2 and 4 performances in the last 12 months. 7 If the mission of the new PAC is to use its programming (presenting role) to foster a growing appreciation for performing arts (as is the case in many theatres and centres) this means that revenue generating is not the primary motivation within the programming area (revenue generating is a primary role in other operational areas). However, while individual performances may not generate ticket revenue to cover costs, the intent of programming is to balance the budget over the whole season or portfolio. This balance is something that is a key responsibility for managers or directors of an operating theatre or centre.

19 | P a g e

include the demand from the regional market that would be expected to result in additional

ticket sales opportunities.

Assessing Market Supply

The demand survey indicates that there is additional market for a variety of live entertainment

and performing arts, but actual ticket purchases will depend on meeting the market’s interests.

Ticket revenue will depend on the genre or type, the quality, the profile (how well known) and

how many events they have already attended in the last 12 months. As such, a variety of

quality performances is the key revenue model strategy employed by most centres.

The assessment of the market supply looks at two categories. The first are touring

performances brought to Prince George through the PAC staff (acting in the role as presenter)

or through promoters, and the second are northern BC performances or events.

Touring Performances

Discussions with two key BC promoters (Gene Daniels Promotions & Shantero Productions)

indicated that the geographical location of Prince George, relative to the typical tour routes

through Kelowna, Kamloops and Vernon, would not pose an issue for their tours. They

indicated that the current limitations with the PG Playhouse and Vanier Hall (either size,

technical or scheduling) are resulting in a number of missed opportunities for their tours

coming to Prince George. Their feedback indicated that a new high quality PAC in Prince

George would open up opportunities for new tours and performances being attracted to Prince

George.

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3. Facility Assessment and Estimated Capital Costs

Assessing the PGRPAC Society’s Proposed Facility:

In November 2010, the BTY Group provided the PGRPAC Society with estimated capital costs

for a 67,027 square foot (6,227 m2) design incorporating an 800 seat theatre, a 250 seat

theatre, back of house and ancillary spaces. The 2010 estimate totaled $41,625,100, which is

equivalent to $621 / square foot, and includes the following break down costs:

Project Costs Estimates (2010 dollars)

Building Construction

Site Development

Furniture, Fittings & Equipment (FF&E)

Soft Costs8

$29,653,000

$912,200

$4,143,300

$6,916,600

TOTAL (Est.) $41,625,100

$621/ ft2 or $6,685/m2

These cost estimates, at this concept planning stage, are considered “Indicative Estimates”

(similar to Class C or D estimates) which can vary by 30% to 50%. As a normal practice,

estimates at this stage should not be considered as sufficiently reliable to warrant a “Cost

Objective”(i.e. a planned and approved cost limit within which the project’s scope is to be

delivered)9. This initial level of estimate is based on schematic designs (building organization,

area, massing, and character)10.

The 2010 project estimates did not include land acquisition costs and legal fees, nor costs for

offsite works, and environmental assessment or remediation (e.g. brownfield) since these are

difficult to estimate without additional information (e.g. knowing site location). The estimates

also did not include debt servicing costs, life‐cycle costing and factoring in replacement costs

for the facility.

8 Soft Costs include professional fees, connection fees, management and overhead and project contingencies. 9 The Canadian Association of Consulting Quantity Surveyors, Cost Management Best Practices, 2014. 10 In order to develop “Substantive Estimates” (similar to Class B or A estimates) that are sufficiently reliable to provide a Cost Objective, a project would proceed to the Design/Development phase. As a “rule of thumb”, the Design/Development phase can cost about 3% of the total construction costs.

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Further, the project estimates did not include a budget for cost escalation. As part of this

review, BTY Group provided a forecast for project escalation for 2017 dollars based on:

Added PST (new since 2010) +3.5%

Escalation for Building & Site Construction +9.5%

Escalation for FF&E and Soft Costs +2.0%

Updated Project Costs with Escalation to 2017

Building Construction

Site Development

FF&E

Soft Costs

$33,606,500

$1,033,800

$4,374,100

$7,054,900

TOTAL (Est.) $46,069,300

$687/ ft2 or $7,398/m2

Production & Storage Space:

The space needs identified in the “Prince George Regional Performing Arts Centre Site

Evaluation” (November 2010, Dialog, BTY Group, Schick Shiner & Associates Ltd.) did not

include set production or storage space (woodworking shop, painting, wood & materials

storage, prop and costume storage). This space was omitted because the consultant assumed

that if TNW rented the smaller theatre space, then TNW would supply their own off‐site

production and storage space. However, in recent discussions with TNW staff and Schick Shiner

& Associates, it is likely that if TNW were to be a resident company, there would be a need for

production and storage space on site. This is estimated at 3,000 sq. ft. with a gross‐up factor

estimated at 40% for a total of 4,200 sq. ft.

The shop space would need to be the same height as the performance space (2 stories) and

should be placed within close proximity to the theatre’s back stage and with direct sight lines

for ease of movement of set parts from the shop to the theatre stage.

Based on a project cost used by BTY Group and updated for this review, this added space would

increase the cost estimates by $2,886,678 in 2017 dollars.

The current planning phase design provided by Dialog uses 42,500 sq. ft. as the main 1st level

footprint of the building, with 15,000 sq. ft. being used on the 2nd level and 9,500 sq. ft. being

used in the 3rd level. If shop space is added (about 1,680 sq. feet) to the first level, and it

requires ceiling height to match the performance space, then this will likely reduce the space

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available on the 2nd level. If this loss of space cannot be reasonably found elsewhere at the

same building footprint, then the building design may need a slightly larger area. This type of

space reallocation would normally be addressed in the next phase of the design work.

Office Spaces and Rehearsal Spaces for Resident Company:

Similar to the discussion above, there was no space allocation identified in the proposed PAC

for TNW office space needs or rehearsal space (Black Box theatre space), as this was assumed

to be off‐site at that time. In discussions with TNW, they currently have a need for 8 office

spaces, which would require about 800 sq. ft. with a gross up factor of 65% for a total gross

space of 1,320 sq. ft. Rehearsal space should be at least 1,200 sq. ft. with a 40% gross up factor

resulting in a gross space of 1,680 sq. ft. Therefore, the total added space needs for office and

rehearsal are estimated to be 3,000 sq. ft. In recent discussions with Schick Shiner &

Associates, there may be space re‐allocations that could be found in the current conceptual

design in order to find some of this needed space.

For the purposes of this review, administration will assume that 50 percent of the space needs

can be found in a redesign and 50 percent (1,500 sq. ft.) would need to be added. Using BTY

Group’s revised project costs, this added space is estimated to add $1,030,956 in 2017 dollars

to project costs.

Loading Area Roof Cover:

The concept drawings provided by Dialog shows a covered loading area at the back of the

theatre (backing on to Queensway). This is probably an important factor for winter operations

in particular (not every theatre or centre, including CN Centre, has covered loading, but it is

highly recommended).

In the 2010 BTY Group cost estimates, the loading area was excluded from the Gross Floor Area

used to estimate project costs. However they did include cost estimates for a 100m2 (1,076 sq.

ft.) covered loading area. This is a significantly smaller area than shown on Dialog’s concept

drawings and may not be adequate.

BTY Group recommends using a unit rate of $1,650/m2 for each 100 m2 of covered loading area,

which includes structural steel, roof covering, soffit materials, and under‐roof lighting and

sprinklers. As such, every additional 100m2 (1,076 sq. ft.) of roof covering would cost an

estimated $182,617 adjusted into 2017 dollars. It is estimated that 200m2 would be sufficient

to protect loading and unloading activities. Future design work would be needed to address

the estimates for adequate roof covering in the loading area.

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Connecting to the District Energy System:

If the proposed PAC were located at the site adjacent to the Keg Restaurant and City Hall,

connection to the City’s District Energy System (DES) would offer long term benefits, including:

1. Reduced space required for the mechanical room (i.e. the DES heat exchanger uses

significantly less space than a boiler system).

2. Favourable life cycle (replacement) costing as an exchanger replacement is less

expensive than a boiler replacement.

3. The reduced upfront capital costs of using DES exchangers (one for heat and one for

domestic hot water), as opposed to the more expensive boilers, will defray a significant

portion of the hook‐up costs for the DES.

4. Natural gas prices are expected to rise in the long term, and are expected to become

more expensive to purchase natural gas than the heat from the DES. As such, over the

long term, annual heating costs should go down relative to equivalent natural gas costs

and this is a benefit to the annual operating budget.

Exploring Options for Designing for Future Expansion:

A review of the design concept considered options for engineering and design that would allow

for planned future expansion; i.e. growing the main audience chamber from 800 seats to 1,200

seats in two or three decades as demand grows. In general, consultations revealed the

following points:

1. Given the added engineering and construction costs (e.g. added engineering support

and space design for future addition of a balcony section), this can be a significant

upfront costs which would likely not provide the necessary added benefit if it would

only be an addition of 400 seats (i.e. high cost/seat project costs).

2. Designing for future expansion will involve tradeoffs that would likely have adverse

impacts on the quality of the immediate needs for the audience chamber. For example,

a design for a future balcony area could affect the height and volume of the audience

chamber, affecting the acoustics and atmosphere.

3. If considering future expansion options for future administrative / office space, this can

often be accommodated by future utilization of “dead storage” space (space used for

items that are rarely use or need to be accessed). There are other examples, where

inexpensive offsite dead storage space is found and the theatre storage space is

renovated into office space.

While there are draw backs and trade‐offs in designs that plan explicitly for future expansion,

this is something that would be considered and decided upon at the next design stage.

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Estimating Other Project Costs:

Administration has supplied estimates for additional costs that may be borne by the City. These

estimates will vary depending on the site chosen, but to provide related information on such

costs, the parcel next to City Hall and the Keg Restaurant is used. These costs reflect the

excellent location for water and sewer connections; however, the costs for connecting to the

DES are not included below.

Other Costs Related to City Offsite Works Estimate

Land administration and legal fees $011

Utilities12 $184,360

Road and sidewalk works13 $270,000

Environmental (brownfield assessment & remediation) $014

Engineering costs @ 12% project costs $54,523

Contingency @ 25% of project costs $127,221

Sub‐Total $636,104

Cost escalation to 2017 dollars $65,732

Total in 2017 dollars $701,836

A Note on Capital Estimates The capital estimates at this stage, referred to as Indicative Estimates (similar to Class C or D

estimates), are based on conceptual schematic designs, and could vary between 30 percent and

50 percent from actual costs. Indicative Estimates are not sufficiently reliable to set budget

targets.

In other words, the estimates provided here should not be interpreted as the established

budget cost for the project. Between the Schematic Design stage (now) to the Construction

Drawings stage (used for tendering), there are many process steps, design options, and

countless design decisions that would be made that will affect the final project budget.

11 This could be absorbed into land value assuming City land is used for proposed PAC. 12 Includes rough estimates for removal of asphalt, curb and sidewalk, installation of 1200 m water service looping from Patricia to 6th Ave, and replacing 150mm service connection from 6th Ave., and connection to storm sewer service on 6th Ave. Assumes existing sanitary 150mm sewer main through site is sufficient. 13 Assumes pavers on 6th Ave as per schematic drawings of proposed PAC 14 Assuming City land, near City Hall and Keg Restaurant is used, these are already covered in land value.

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Summary:

The Indicative Estimates, in 2017 dollars, for the overall PAC project capital costs are provided

below and based on the:

1. PGRPAC Society’s proposed PAC.

2. Updated space additions based on recent discussions.

3. Adding roof covering for the loading area.

4. Off‐site works provided by the City.

It should be noted that, in future design stages, refinement of the space needs and organization

of the spaces in the building will occur. This refinement could result in finding a portion of the

areas for the added production, storage and office spaces within the current 67,027 sq. ft. gross

area. If this were to occur, then the combined capital estimates below could be reduced.

Further cost savings could be realized by not using a certified LEED design and construction, but

rather using Design and Build Best Practices. Other theater design options for the studio

theatre should be reviewed that may also result in cost savings and also result in a more flexible

and usable space (e.g. Simon Fraser University School for the Contemporary Arts, Black Theatre

with flexible seating)15.

Project Component Estimate (2017 dollars)

A. Base project based on proposed PGRPAC Society’s proposed design $46,069,300

B. Added production & storage space $2,886,678

C. Office space & rehearsal space (for resident company)16 $1,030,956

D. Roof covering for loading area (est. for 200 m2) $365,234

E. Off‐site works $701,836

TOTAL (not including value of land) $51,054,00417

Administration reviewed cost estimates for other proposed theatres where available, and

provides details on the Massey Theatre reconstruction (in New Westminster and part of a

school rebuild) a proposed theatre in Cochrane Alberta, which was also prepared in 2010 (the

same year of BTY Group’s estimates) and two arts centres in Ontario, one completed in 2011

and one currently under construction. The value in doing this review is to look at the unit costs,

15 Trends in theatres designs for smaller studio spaces are moving away from fixed seating and moving to more flexible seating that can be adapted for many more uses and atmospheres. 16 Assumes that 50% of the added space needs can be found through reallocation of current space needs in a redesign, and 50% of the space needs would need additional space added to the building. 17 This estimate works out to $687/ sq. ft. with the 5,700 sq. ft. added area. The off‐site works and covered loading area have been removed from total project costs for this unit cost estimate.

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particularly the estimates for the construction component of the project. This determines how

well the proposed PAC estimates compare with other estimates.

Comparing such estimates can indicate whether estimates are within an expected range, but

should not necessarily be used to adjust estimates as the various building designs, materials,

and finishes of different projects have a significant influence on the construction costs. The

comparison of cost estimates for the Prince George PAC versus the other projects show that

BTY Group’s estimates, particularly when adjusted to 2017 dollars, are within the range of other

projects.

Comparing Project Estimates from Other Theatres

Theatre Area (Sq. ft.)

Building Construction FF&E* Soft Costs Total**

PG Performing Arts Centre (2010 estimate)

67,027 $29,653,000=

$442/sq. ft.

$4,143,300=

$62/sq. ft.

$6,916,600 =

$103/sq. ft.

$40,712,900=

$607/ sq. ft.

PG Performing Arts Centre (2017 dollars)18

67,027 $33,606,500=

$501/ sq. ft.

$4,374,100=

$65/ sq. ft.

$7,054,900 =

$105/ sq. ft.

$45,035,500=

$672/ sq. ft.

Massey Theatre19 Project (2013 estimate)

42,980 $16,674,700=

$388/sq. ft.

$1,583,700=

$37/ sq. ft.

$3,017,000 =

$70/sq. ft.

$22,740,100=

$529/ sq. ft.

Cochrane Arts20 Centre Estimate (2010 estimate)

47,846 $17,055,000=

$357/ sq. ft.

$1,583,700=

$33/ sq. ft.

$4,512,000 =

$94/ sq. ft.

$23,150,700=

$484/ sq. ft.

Burlington Arts Centre (Actuals) Completed 2011

63,084 $29,300,000=

$464/ sq. ft.

$1,100,00021

= $18/ sq. ft.

$4,024,000 =

$64/ sq. ft.

$32,750,00022

= $519/ sq. ft.

18 In order to compare project unit rates, this estimate does not include the added production, office and storage areas or the covered loading area identified in the revised estimates. 19 The Massey Theatre project is part of a larger school construction project in New Westminster, BC. 20 The Cochrane Theatre proposes a 400 seat black box with flexible seating, which is assumed to be less costly to build. 21 Discussions with Burlington Arts Centre staff indicate that the FF&E budget was significantly under funded by 50%. 22 Staff from City of Burlington indicated they had unusual circumstances in Ontario at the time of tendering which resulted in lower than anticipated bids. They indicated that under current conditions, the costs would run about $50 to $100 per square foot higher.

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Theatre Area (Sq. ft.)

Building Construction FF&E* Soft Costs Total**

St Catherine’s Brock Arts Centre (Currently under construction)

95,000 $41,970,000=

$442/ sq. ft.

Break out for this unknown

Break out for this unknown

$60,700,00023

= $639/ sq. ft.

* FF&E refers to furniture, fittings and equipment.

** Does not include land costs, site development or off‐site work costs.

Assessing Other Facility Options

While the consultant reports provided by the PGRPAC Society provide discussion on the

technical gaps and issues with respect to the current facilities, there is little documented

information on any analysis with respect to options for renovating, in particular, Vanier Hall and

the PG Playhouse. In order to ensure a complete assessment of options, administration has

provided the following assessment which determines what would be required and what would

be the estimated costs in addressing the identified facility issues and gaps.

The following scenarios were examined:

Scenario Vanier Hall PG Playhouse New 800 Seat and 250 Seat PAC

New Single Theatre PAC

A24 Unchanged

Decommissioned Built Not Built

B Unchanged Stays with minor renovations

Not Built 800 Seat PAC Built

C Major Renovations and new

Management Structure

Stays with minor renovations

Not Built Not Built

D Major Renovations and new

Management Structure

Decommissioned Not Built 250 Seat PAC Built25

23 This figure reflects the total project costs which would include site development and offsite work not included in the other project totals in this table. This project includes 4 separate theatres/studios (775 seat, 210 seat, 187 seat, 300 seat). 24 This scenario was discussed at the beginning of this section and is the preferred PGRPAC Society’s option. 25 A capital estimate is not provided for a stand‐alone 250 seat theatre as the assumptions around space needs would need to be better defined. However, based on a rough estimate of 14,000 gross sq. ft. a theatre of this size could expect to be in the range of $10m in 2017 dollars.

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The following table highlights the key needs and objectives identified in the PGRPAC Society’s reports. These “needs” have been assessed against the various options discussed above.

Needs / Benefits 800+250 Seat PAC

800 Seat PAC26

Vanier Hall with Major

Reno

PG Playhouse with Minor

Reno

1. Enough seating to accommodate high

quality performances (keep ticket prices reasonably down).

Yes Yes Yes (Limited

availability)

No

2. Large stage and wings, sufficient back of house space, production and office space, and adequate w/c and storage, good foyer and entrance.

Yes Yes Yes No

3. Supports downtown revitalization and creates a focused area for the arts.

Yes Yes No No

4. Provides opportunities for partnership with TNW.

Yes No No No

5. Provides options for a range of audience sizes for different performances.

Yes Limited27 Limited Only if considered in conjunction with larger theatre

6. Opportunities for shared services and

connectivity with other arts organizations (create synergies and collaboration).

Yes Yes but reduced

Limited No

7. Creates a high quality, attractive facility that supports the arts.

Yes Yes, but reduced

Limited Limited

8. Meets design criteria for high quality acoustics, lighting, video and sets / backdrops.

Yes Yes Limited No

26 Another option is to build the 800 seat theatre in phase 1 and build the smaller theatre at a later date. There are risks and concerns about this strategy as discussed in this report. 27 This assumes the PG Playhouse is still operating. However, given the high value of the land where the Playhouse resides, there is uncertainty in its medium to long term future. If the PG Playhouse were to be decommissioned, and only an 800 seat theatre is built in the new PAC, then there would be a significant under‐supply of small theatre space available to the community.

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Scenario B: Construction of an 800 Seat PAC (no small theatre) & PG Playhouse Remains:

In assessing this scenario of building a PAC with a single 800 seat theatre, administration used

the revised BTY Group estimates for project costs. The space needs were estimated from the

Building Programme Summary included in the 2010 Site Evaluation report prepared by Dialog,

BTY Group and Schick Shiner & Associates. The area estimates included 28,025 sq. ft. for public

areas, audience chamber, stage, stage support, performer support and building services; 1,980

sq. ft. for administrative offices, and; 2,600 sq. ft. of multipurpose space and a 65% gross up

factor for a total of 53,798 sq. ft. The estimated project cost for this is $36.9628 million in 2017

dollars.

Since there will continue to be a demand for a smaller theatre, this scenario would assume that

the PG Playhouse would continue to operate as a Road House (rental facility) as is, or with

minor renovations to address a few technical issues. The need for considering a smaller

theatre construction in the future relates to the uncertainty about of long term future of the PG

Playhouse. Therefore, this scenario assumes that there is a potential future need for a small

theatre to be built on site. As such, this scenario may be viewed as a phased approach, building

the large theatre first and the smaller theatre in the future.

While this scenario achieves significant cost reductions in building a PAC (potentially 27 percent

reduction), there are issues that would need consideration, including:

1. It is more expensive overall to build two separate theatres as separate projects at

separate times.

2. The annual escalation costs forecasts out to 2017 are currently averaging 3 percent

per year. Because the cost escalation percentages are compounded, the effect is a

growing annual increase in costs. As such, it may become increasingly challenging to

fund the second phase (smaller theatre).

3. The PGRPAC Society is basing their proposal on a predication that there would be a

single window of opportunity to align community support, the political interests, and

the funders needed to move this project forward. The Society is concerned that a

phased approach with a future addition of the small theatre would be highly

vulnerable.

28 This figure uses the BTY Group revised estimate of $687/ sq. ft. which includes the FF&E costs. It is assumed in this rough estimate, that the FF&E associated cost reduction (with a single theatre) is addressed through the reduced space requirement. Since the majority of the FF&E would have been associated with the larger theatre, this approach should sufficiently provide an order of magnitude estimate that shows the comparative cost result of a single theatre.

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4. Without building the small theatre as part of the overall PAC, there would not be the

opportunity, in the first phase, to host a regional producing theatre as resident

company such as TNW.

5. Even assuming the PG Playhouse is not decommissioned with the building of an 800

seat PAC, there will be a long term risk of losing that small theatre space because of

the high real estate value of the land it sits on. If the PG Playhouse is eventually

decommissioned, and there is not small theatre at the new PAC, then there will be

numerous community groups, local producers and presenters, and other users that

will not have a suitable theatre space for their needs. This could seriously affect the

support and growth of community arts and culture in Prince George.

6. The small theatre, as part of the overall proposed PAC is an important part of the

operating budget for the PAC, with significant estimated use. The loss of rental

revenue would be a significant impact to the operating budget.

Scenario C: Vanier Hall Renovation & Addition:

This scenario reviews the estimated costs of a major renovation/addition to Vanier Hall, which

would be intended to meet the same space needs identified for the 800 seat theatre

component of the proposed PAC. The space needs were estimated from the Building

Programme Summary included in the 2010 Site Evaluation report prepared by Dialog, BTY

Group and Schick Shiner & Associates. Cost estimates are updated to 2017 dollars. The

assumptions used for this cursory estimate are that:

1. Major renovations, such as improved floor raking29, improving sight‐lines or major

acoustical improvements, of the audience chamber are not included.

2. The cost estimates assume that the audience chamber would receive upgrades to

lighting, minor acoustic improvements, sound and other technical aspects.

3. Vanier Hall would be run under a new agreement and structure, managed as a

separate entity from the school but still used by the school district30.

4. There would need to be a sound‐proof separation wall built between the school,

gymnasium and the theatre.

5. There would need to be a new entrance, front of house (FOH), offices and ancillary

spaces constructed.

29 Raking refers to the sloping floor in the audience chamber that is used to improve visibility. In some venues floor raking is at too low of an angle and does not sufficiently address visibility objectives for the audience. 30 Example includes Kamloops’ 706 seat Sage Brush Theatre which is co‐owned by the Kamloops/Thompson School District and the City of Kamloops and operated by the Western Canada Theatre Company Society.

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6. The back of house areas, performer and stage support, fly tower and production

areas would be significant add on space.

The Prince George Secondary School has developed a fine arts program that also supports

students from other schools and relies on Vanier Hall. Improvements to Vanier Hall would

enhance this educational component by providing more spaces for rehearsal and production

right at the school without having to travel. This potentially has opportunities for fostering

educational partnerships.

Estimated space for Vanier Hall as per space needs identified for the 800 seat theatre in the proposed PAC: Area Component Estimated SQ. FT.

Public Areas:

Public lobby

Bar & concession / storage

Public washroom (M & F)

Coat Check

Front of House (FOH) storage

Office – house manager

Usher room

Box office

Box office manager SUB TOTAL

Sq. Feet5,600300

1,400600100120120180120

8,540

Audience Chamber / Stage / Support:

Addition to stage wings and support area

Addition to orchestra pit area

Scenery dock

Office – production staff

Backstage w/c

Piano storage

General storage

Storage – lighting

Storage sound

Storage rigging SUB TOTAL

1,00045040012010075300120120120

2,805

Performer Support:

Green room

4 dressing rooms (2 rooms for 4; 2 rooms for 10) SUB TOTAL

4001,6402,040

Building Services:

Catering support / storage

Housekeeping closets

Backstage security (stage door)

Maintenance / storage / office SUB TOTAL

460120120240820

Other administration offices 2,600

Back of House (production / storage / holding/service dock & loading) 6,000

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Area Component Estimated SQ. FT.

Total net space 22,805

Gross Up Factor 65% of above spaces 14,823

Estimated minimum total area required (Square Feet) 37,628

Cost Estimates on Addition:

1. Based on BTY Group’s revised figures for 2017 dollars (using $687/ sq. ft.) the total

project cost for the 37,628 sq. ft. renovation / addition is estimated at $25.85m in 2017

dollars.

2. Other assumed renovation rough estimated costs include:

a. Fly tower construction $1.0m ‐ $2.0m

b. Lighting, sound and acoustics upgrades $1.5m ‐ $2.0m

c. Separation wall (sound proof) $0.5m ‐ $1.0m

3. Since the Vanier Hall auditorium is used frequently by PG Secondary School and other

schools, there will be a need to provide replacement spaces if Vanier Hall becomes used

more frequently by community groups and commercial presenters and promoters. This

replacement space (likely a rehearsal / studio or black box space) is estimated at 2,000

sq. ft. at a rough project cost estimate of $1.37m in 2017 dollars.

4. Therefore, the total project cost has an Indicative Estimate (i.e. Class C or D) in the range

of $31.2 million in 2017 dollars. This estimate does not include land administration

costs, or demolition costs. This also does not include any costs associated with

substantial improvements to the audience chamber nor improvements to parking. Cost

reductions could be realized in simplifying the 6,000 sq. ft. back of house production and

storage area.

Potential Issues with Vanier Hall Renovation:

1. There is risk of over‐runs on a renovation project. To a greater degree than new

construction, renovation projects can yield unexpected challenges, additional

professional fees, change orders and added costs.

2. Construction at an active High School would likely cause significant noise, dust, access

and safety issues for students and administration / teachers which would need added

project management attention. Vanier Hall would likely not be available for use a

significant period.

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3. There would need to be considerable negotiations to determine a new management

agreement that would work for the School District 57, the City, the PAC entity operating

the facility and the presenting and promoting sector.

4. More detailed assessment on space demands for Vanier Hall from the school district,

community groups, the operating entity (particularly if it will have a presenting role),

and commercial promoters and presenters needs to be conducted. If this would

become the only 800 seat theatre in Prince George, demand and reasonable availability

for space may not be met. The addition of the rehearsal/studio space to the school,

where many of the student activities could be located, may address this.

5. The cost estimates do not include major renovations to the audience chamber. Vanier

Hall was designed as an auditorium, rather than as a theatre. As such, it may be

challenging to overcome key functional issues such as sight‐lines and acoustics. While

some of these issues can be mitigated, further design assessment with trained

professionals would be required to determine the potential quality and standard

resulting from a renovation project. Another issue with the auditorium is that the wide

walkway separating the front 600 seats from the 200 back section seats means the back

section is not well positioned for performances. A designer would also likely need to

consider options to address this.

6. Parking may be an issue. Although there is a large parking lot available most evenings,

there will be overlapping periods when parking will be an issue (e.g. evening sporting

events). The parking lot will be well used during school hours. There are areas on the

school grounds where additional parking could be developed to address this issue.

7. Establishing the large theatre at this site does not assist with downtown revitalization

objectives nor does it contribute to developing a “cultural district” which, like a business

cluster model, can provide cross‐benefits.

8. There is still the outstanding potential need for the proposed 250 seat theatre which

this renovation project does not address. If a 250 seat theatre is built (e.g. PG Playhouse

is decommissioned), then the theatres would likely be separated from one another

meaning there would not be opportunities to share in some of the operating costs.

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Scenario D: PG Play House:

The City owned 295 seat PG Playhouse offers a well‐priced, comfortable and useable theatre

space, and is well used by a number of community groups, organizations, corporations, and

local presenters and promoters. It serves primarily as a Road House or rental facility. There is

no management fee provided to the operator, but the City pays for the building operating costs

(building envelop, HVAC, plumbing, fire alarm testing, etc.)

The primary issue with the PG Playhouse relates to uncertainty around its long‐term future, as

the land has high value for commercial purposes. Its location is also not preferred as there are

access issues and the theatre is removed from the downtown and therefore doesn’t benefit

from connections to other community arts and cultural spaces. While it serves a number of

uses well, it has some functional issues for certain users of small theatres31.

The PG Playhouse is built with the audience chamber sandwiched between the front of house

(foyer, box office) and the back of house and stage. As such, it has limited options for

expanding the seating capacity without major demolition and reconstruction. It could remain

as a small theatre, but an option for creating an 800 seat theatre out of this facility would

involve a substantial demolition and a new build. The site would also continue to have access

issues.

4. Site Selection Options

The Site Evaluation report from 2010 by Dialog, BTY Group and Schick Shiner & Associates,

focused on: 1) the parcels of land adjacent to City Hall and the Keg Restaurant, and; 2) the

parcel of land on George Street across from the Ramada Inn.

The latter parcel is now home to the Wood Innovation Design Centre building and would

currently not provide the required space for a new performing arts centre. The site adjacent to

the Keg Restaurant and City Hall is still available and was ranked as the preferred site in the

2010 Site Evaluation report. Other options would require purchasing, which would add

between $3m to $6m to the cost of the project. As such, administration did not evaluate non‐

31 This includes more storage space needed off the stage, improvements to dressing rooms, new lighting, sound and video projection. An addition of 100 seats would bring the capacity to a level allowing more of the events to be financially viable more consistently.

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City‐owned sites. Administration will continue to review other land options and opportunities

that arise.

The site next to the Keg Restaurant and City Hall is the only City owned property in the down

town that is large enough to accommodate the proposed performing arts centre. The true

value of the complete set of lots at this site, with the acquisition costs and improvements

(environmental assessment, demolition, site grading) is between $3.5m and $4.0m.

The positive aspects of this site include:

1. The City owns the site.

2. Proximity to utility services and the DES line.

3. Environmental issues will have been addressed.

4. Supports downtown revitalization.

5. Aligns with City plans and policies.

6. Has good potential for loading /unloading access and area.

7. Has some potential as a development catalyst.

8. Large enough to accommodate the building space requirements.

9. Creates connections with front area of City Hall to create a larger useable public space

(e.g. consideration of how a PAC could support the farmer’s market and other

community uses of public spaces should be included in the next design phase).

The potentially limiting aspects of this site include:

1. Limited potential as a development catalyst, because of its limited access and

connection to a number of other streets with commercial/retail businesses.

2. Limited on‐site dedicated parking stalls, although this is not dissimilar to theatres and

arts centres in other cities.

3. Is within the 1‐20 year flood plain, although designs can address this.

4. Limited pedestrian connectivity, as compared to other areas of downtown.

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5. Potential Role for Theatre North West (TNW)

The consultant reports provided through the PGRPAC Society review options for participation of

TNW in a new performing arts centre, from a renter to prime tenant to a full partner (resident

company). The reports also examined the implications for non‐involvement by TNW.

TNW is a well‐respected regional theatre that has built a successful operating model generously

supported by the community through their theatre space lease agreement, ticketing,

sponsorship and volunteer base. TNW currently operates as a “Category F” theatre which

influences the number of seats, the salary ranges, ticket pricing and other operational factors.

While there is an interest in TNW to find a long‐term “home”, their current situation works on

many levels, and it poses a challenge for TNW to deviate from “what works” to a potentially

new way of operating.

Administration reviewed the expressed “needs” provided by TNW in their “A Home for Theatre

North West”, and through consultations with various theatre experts, developed options that

could address many of the identified needs, and also described additional considerations to the

benefits of their involvement in a new PAC. This is summarized in the table below.

Table 1: TNW Expressed Needs & Opportunities in a Performing Arts Centre

Expressed TNW Operational Needs

Potential Options for Addressing TNW Needs32

Control over when and how to use space; theatre booking and scheduling

As a resident company, agreements between the PAC and

TNW would assign blocks of time for the small theatre to

TNW to meet its needs (approx. 140 days) and would have

those secured.

The small theatre could be made available to other

community users between plays by providing adjacent

spaces for production and rehearsal for TNW. A period of

time is needed by TNW for load‐in, fit up of the set and

technical rehearsals prior to opening. Based on TNW

current schedule, this could free approximately 20 days,

depending on the play, between plays and more days during

off‐season.

This is a different model than what TNW currently uses, but

other theatres use this model successfully33.

32 These options are based on reviews of other theatre operations, discussions with theatre consultants and architects, discussions with TNW staff, and other consultations.

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To ensure high TNW identity & visibility

TNW signs could be placed on the exterior and interior

spaces to ensure the TNW identity is visible.

As in other theatres, having a professional resident theatre

company is something that is well promoted and advertised.

A space with specific requirements over size, function & form

TNW could participate with the PAC design team to ensure

proper technical specifications are identified.

TNW identified space needs are similar to those defined in

the 250 seat theatre dedicated spaces of the proposed PAC.

As in most theatres, sound control (proofing) would be a

major consideration in the design of the PAC.

There could be added benefits for TNW – a use of a fly

tower, added technical components, increased off‐stage

areas (stage support), new seating, etc.

A 250 seat theatre could be managed in a way to maintain

its current Category F theatre category.

Controlling access for staff and public

As with other resident companies, TNW would have secure

access and be able to come and go as needed.

Arrangements could be made to ensure proper security of

TNW used spaces.

Key access doors would have shared keys with PAC.

Need to further explore why there needs to be “totally

independent controlled access”.

Control over HVAC – environmental controls

HVAC and general lighting systems can be designed to

operate in multiple zones allowing space users (TNW) to

have independent controls.

Working off the larger PAC HVAC system allows for

significant energy efficiencies and savings in construction.

The PAC may be able to access capital funding to increase

overall energy efficiency which would reduce the long‐term

operating costs.

33 Currently TNW has exclusive full‐time use of their leased theatre space. Between plays the space is used for both rehearsals and set building. This model has worked well for TNW. However, other theatres have demonstrated that it is technically feasible to use other spaces for the major portions of the set construction and rehearsals. The interest in moving to a new model in order to take advantage of the opportunity provided by the proposed PAC would require significant discussion with the TNW Board.

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A separate lobby Designs could incorporate entrances and lobby areas that

create a connection and flow to the smaller theatre without

being completely separated.

Having a separate public entrance for the TNW used theatre

may lose opportunities that a shared lobby space could

provide (art space, larger are for mingling, access to more

bathrooms, promotion of other culture and arts, etc.

TNW has own Box Office to control added ticket charges

If the business model for a PAC did include a box office

function, then there would need to be discussions around

TNW using that service in a manner that works for their

clients and their ticket pricing.

There are models where this works (Western Canada

Theatre Company, Kamloops).

Has office space for theatre management and administration

It would be reasonable to assume that a resident company

would be provided administrative offices as part of the

agreement.

This would need to be addressed further in discussions with

TNW and in the design phase of the PAC.

There is an interest in the PAC providing a synergistic and

collaborative environment.

Has production, rehearsal and storage spaces that meet TNW’s needs

The intent is to design space for production, rehearsal and

storage in the proposed PAC that would meet the needs for

TNW.

Has good free parking If the PAC is placed downtown, it will rely on street, parkade,

and off‐street lots for parking.

This is not as convenient as TNW’s current situation, but

theatre consultants’ examination of other theatres in

Canada indicate this would not generally be an issue for the

operations of the PAC. They have indicated that those that

are “put off” by parking issues would likely be offset by

those that are attracted to the high quality facility.

The PAC design would allow for parking stalls located close

by for those with mobility issues.

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Public feel safe coming to and leaving the theatre

Measures can be put in place to help address potential

public safety issues – the situation with a PAC in a

downtown core is not unique to other theatres in Canada.

The placement of the PAC in developing a “cultural” district

will help improve perceptions around public safety in that

area.

Managed as an independent entity (in order to have more control over operations and costs)

The recommended model is for the City to own the building,

but for another entity (e.g. Society) to manage the PAC.

This provides more flexibility in staffing, developing a strong

volunteer base, hours of operation, managing costs, and

accessing grant funding.

OTHER CONSIDERATIONS & OPPORTUNITIES

Shared services and equipment While TNW is used to being an independent entity, there

would be opportunities for saving operating expenses

through shared services and equipment, such as

administration, custodial, volunteer coordinator, Front of

House (FOH) staff, etc.

Policies would need to be put in place that ensures

standards that meet the expectations of TNW and its

customers.

Board membership As in other examples of resident theatre companies, it

would be reasonable to assume that TNW would have

representation on the PAC Board as well as other building or

operational committees.

Upgraded Facility Opportunity to provide TNW patrons with a high quality

theatre facility that is in keeping with the quality of the

theatre productions themselves.

Synergies & Collaboration TNW role as a resident company of the PAC would

strengthen opportunities for synergies and collaboration

between managers, artistic directors and staff from other

arts and culture organizations – not unlike business clusters

that similarly benefit from such connections.

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Mutual Support TNW’s involvement with the PAC would lead to mutually‐

supportive arrangements as it is in both parties interest for

each to succeed and flourish.

A combined facility (two theatres) reduces the competitive

landscape for fund‐raising for capital dollar grants, funders

may be more inclined to support a combined approach with

TNW.

While TNW supports the proposed PAC, their participation in the facility raises a number of

issues that would need to be further explored in a comprehensive manner. The TNW Board

would be interested in holding further discussions at the appropriate time.

The following is administration’s summary of the key significant concerns of TNW that would

need to be resolved if TNW were to consider becoming a participant of the proposed PAC. The

key issues include:

1. The position of TNW as needing continuous and exclusive use of the theatre space for

the full theatre operating period (August to May). This would mean that the theatre

would not be available between plays as rental space for other community groups and

performances. TNW would also need production, storage and office space.

2. Ensuring that a partnership arrangement with the proposed PAC would not adversely

affect the business and operational model of TNW, including its costs, revenue streams

and their current operating classification as a regional theatre in Canada.

3. Issues around parking and security for its patrons and ticket holders if the proposed PAC

were to be located downtown.

4. Maintaining a high level of visual and operational independence from the proposed PAC.

5. Control over managing ticketing in a manner that is customer focused and does not add

costs to the tickets.

One option for consideration, raised by TNW, is a strata title. This would allow for the two

theatres to be built together, under the BC Strata Property Act, with a strata plan showing

parcels that are owned separately and those parcels commonly held, the establishment of a

strata corporation with bylaws. Another option could be a long‐term lease with future options

to own. However, in both of these cases the lease charges could be significantly higher than

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what TNW is paying now if the full capital cost of the small theatre is taken into account. There

may also be issues with other potential funders for the overall PAC project in a complicated

ownership model.

A key issue with exclusive and continuous use (August to May) of the small theatre by TNW, is

that the space would not be available for other community groups, local productions,

presenters or events. If it is assumed that the PG Playhouse would eventually be

decommissioned, then there will be a significant under‐supply for small theatre space for other

users. While theatre consultants and managers / directors confirm that it is technically

achievable to undertake portions of the set production and rehearsal away from the theatre’s

stage space (freeing up the theatre for other rentals between plays), this has been identified as

a key issue by TNW Board as it deviates from their current operational model that works well

for them. Future discussions with TNW may find solutions in resolving this divergence in

operating models.

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6. Review of Proposed Operating and Business Plan

The 2011 Schick Shiner Report provides the most recent business plan information. The report

proposes, in the first full year of operation, a $753,000 annual operating budget, with $453,000

coming from earned revenue and other revenue sources. The consultant’s proposed budget

also suggested a $300,000 annual civic grant which was likely arrived at in order to balance the

budget. In subsequent years, the consultant suggests that the budget is estimated to grow in

both revenues and expenses as the centre takes on more programming and use is increased.

Administration’s review focuses on the first year of full operation. A scanned copy of the

summary of the business plan from the Schick Shiner Report is provided on the next page.

First, administration agrees with the rationale provided for recommending an operating model

as a “Rental/Presenter Model – City Owned and Society Operated”, with the advantages being:

1. City ownership provides greater assurance of the viability of a long‐term community

asset.

2. Society operated allows more flexible, responsive and cost‐effective management

structures.

3. Provides for programming flexibility supporting conservative approaches to riskier

events (i.e. fulfilling the role of growing performing arts).

4. Is able to provide rental incentives and support community groups.

5. In a position to take advantage of arts grant funding.

6. Supports community involvement through building a base of volunteers.

7. Model has a proven successful track record in a number of centres.

Secondly, the report’s recommendations around organizational structure, governance, policies

and staffing are consistent with other centres and theatres. Administration has not focused its

assessment in these areas as this would be considered and addressed at later stages of the

project.

Administration’s main focus for this assessment is in the business planning and estimated

revenue and expense budgets provided by the Schick Shiner report. The estimated level of

annual earned revenue versus grant and sponsorship funding is a key consideration. Earned

revenue is examined in three main areas34: programmatic (ticket revenue), rental income, and

ancillary revenue.

34 This assumes that the PAC would operate not just as “road‐house” providing rental opportunities, but would also have a key role in developing programming and presenting performances.

Proposed

d Operatingg Budget fromm 2011 Schiick Shiner Reeport (scannned from or

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iginal)

a g e

Category Start up Budget Budget Budget Budaet Year1 Year 3 Year 5

REVENUE Civic Allocation 180,000 300,000 300,000 300,000 Theatre Rental Revenue (net) 0 108,000 145,800 182,300 Studio Rental Revenue (net) 0 47,000 56,400 68,000 Multi-purpose Room Rental (net) 0 19,000 25,700 36,000 Concession Bar (net) 0 10,000 13,500 16,900 T icket Sellina Revenue (net) 0 29,000 39,200 51 ,000 Facility Fee 0 92,000 124,200 155,300 Sponsorship 0 35,000 38,500 42,400 Foundations and Grants 0 3,000 3,300 3,600 General Fundraisinq (net) 0 60,000 75,000 93,800 Allocation from Endowment 0 40,000 40,000 40,000 Allocation from Programming 0 0 5,000 10,000 Other Misc Revenue 0 10,000 10,000 12,000 TOTAL 180,000 753,000 876,600 1,011,300

ADMINISTRATION EXPENSES Staff (including benefits)

General Manager 75 ,000 75,000 78,800 82,700 Adm in Assistant 0 35,000 36,800 38,700 Accountant (PT) 5,000 25,000 26,300 27,600 Marketing/Development/Fund Raising 20 ,000 45,000 47,300 49,700 Audience Services Manager 0 40,000 42,000 44,100 Technical Director 20 ,000 50,000 52,500 55,100 Maint Mangaer 0 40,000 42,000 44, 10D Volunteer Coordinator (PT) 10,000 25,000 26,300 27,600 Benefits (15%) 19,500 50,000 52,800 55,400

PT Technical Staff 0 10,000 15,000 20,000 PT Box office staff 0 20,000 25,000 35,000 Professional Fees and Memberships 0 2,000 2,300 2,500 Delivery/Postage 500 2,000 2,000 2,500 Office Supplies 4 ,000 15,000 16,500 18,200 IT and Web Manaaement 15,000 10,000 11 ,000 12,100 Bank Charges 500 3,000 3,300 3,600 Technical Suppl ies 0 15,000 20,000 25,000 Telephone (Local and Lona Distance) 1,000 5,000 5,500 6,100 Travel and Professional Development 0 5,000 7,500 10,000 FOH Supplies 0 3,000 4 ,000 5,000 Volunteer Expense 1,500 4,000 5,400 6,800 General Marketing and Newsletter 8,000 35,000 47,300 59,100 Minor Capital Purchase 0 10,000 12,000 20,000 SUBTOTA.L 180,000 524,000 581 ,600 650,900

MAINTENANCE EXPENSES Janitorial 0 60,000 69,000 79,400 Janitorial Supplies 0 11 ,000 12,700 14,500 Garbage and Recycle 0 8,000 10,800 13,500 Heat, Light and Water (assume green building 0 150,000 202,500 253,000 Service Contracts 0 City budget City budget City budget Building Maintenance and Repairs 0 City budget City budget City budget Insurance 0 City budget City budget City budget

SUBTOTAL 0 229,000 295,000 360,400 TOT AL EXPENSES 180,000 753,000 876,600 1,011,300 PROFIT (LOSS) 0 0 0 0

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These three revenue areas are inter‐related (e.g. ancillary revenue is tied to level of

programmatic revenue). A key point is that there are about 236 prime days for bookings and so

about 35% of the year (e.g. holidays, summer months, Sundays) is more challenging for earned

revenue through ticketing and rental and, therefore, ancillary revenue as well.

In reviewing a number of consultant reports and in discussions with other theatre and centre

managers, it is common practice to use 75% of seating capacity in estimating future ticket

revenues. Administration agrees with Schick Shiner’s approach in providing even more

conservative estimates and using between 65 and 50 percent ticket sales to estimate revenues.

A. Review of Estimated Operating Expenses:

A review of the proposed operating budget from the 2011 Schick Shiner report estimates, in

year one of operations, expenses of $524,000 for operations and $229,000 for maintenance,

utilities and services for a combined $753,000. The budget shows $415,000 (79%) of the

operating budget comprising full‐time and part‐time staff salaries and benefits. The remaining

operating expenses are associated with marketing, office supplies, various business charges and

memberships, minor capital purchases and other expenses. The $229,000 maintenance budget

takes into account janitorial, garbage and recycling, and utilities. However, the Schick Shiner

budget assumes that the City would cover such costs as service contracts (e.g. elevator

inspection and repair), building maintenance and repairs, and insurance.

Administration’s review of the estimated operational expenses involved discussions with

various facility and theatre operators, discussions with Schick Shiner & Associates, and updating

figures to reflect 2017 dollars, assuming an average 2.0 percent per year increase.

It is important to under‐score, that this operating budget reflects a centre that plays a

programming role which is broader and more complex than strictly a rental facility. As a

“presenting” PAC, it takes on the additional roles associated with programming that brings

performances to Prince George that might not otherwise be available to the community and

surrounding region. If the PAC does host TNW as its resident regional theatre company, then

the PAC would also support a “production” component, although the operations for this role

would be contained within TNW itself.

The base operating budget for the proposed PAC in 2017 dollars is estimated to be $815,658.

Although some of the basic service contract charges and basic maintenance costs are included

in the base operating budget, there are $73,000 estimated in costs associated with the building

itself, and these are identified as an add‐on portion of the budget. Depending on the theatre,

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there are agreements between the municipality (owner) and the Society (operator) which have

negotiated who takes on these building costs. It is common for local government to take on the

costs associated with maintaining and repairing the “envelope” of the building and the building

insurance. For this review, it is important to identify the costs and add them to the operational

costs in order to fully understand the budget implications.

Comparison of Updated Estimated Costs with Schick Shiner (2011) Estimates

Expense Updated35

Estimates

(2017 dollars)36

Estimates from Schick

Shiner 2011 Report

(Operational Year 1)

Staff salaries & benefits (assuming same complement as

proposed in operating budget: 6 FT staff, 6 PT staff)37

$423,225 $415,000

FT Staff benefits @ 11%38 $33,933 Included in above

Work Safe BC (at 0.72%) $2,900 Not identified

Professional fees and memberships $3,847 $2,000

Delivery, postage, courier $8,277 $2,000

Office supplies & leases $13,058 $15,000

IT & web management (computer & peripherals) $11,995 $10,000

Bank charges $1,910 $3,000

Technical supplies (stage services) & technical staff

training

$21,967 $15,000

Telephone & long distance $5,584 $5,000

Travel & professional development $9,673 $5,000

Front of House (FOH) supplies Netted out in

FOH revenues

$3,000

Ticket Centre39 Netted out in

ticket centre

revenues

Included elsewhere

Society administration, including audit, board expenses,

volunteer expenses (general) and recognition

$26,530 Not identified

35 Administration’s updated estimates take into account new information from Schick Shiner, and a review of other theatre operating budgets including the Port Theatre in Nanaimo. 36 Using average salaries from 2013 National Professional Presenters Compensation Survey. Starting in 2014 to 2017, assumes a 1.5% annual pay increase (4.57% compounded). For other expenses, using a 2% increase per year from 2014 to 2017 or 6.12% compounded. 37 There are 2 PT positions (FOH Manager; Bar staff) identified in Schick Shiner’s organization chart but not in their operating budget. They have been included in the updated estimates. 38 Schick Shiner used 15%, but review of operating budgets at other Society operated theatres, suggests using 11%. 39 Typical expenses include bank and credit card charges, phone/internet order fees, box office fees, interac equipment, ticket stock, printing and part‐time wages and benefits. For the purposes of this review, these charges are assumed to be recovered in the ticket charges and revenues from the Ticket Centre / Box Office are net. Typically, Ticket Centres / Box Offices are revenue positive.

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Expense Updated35

Estimates

(2017 dollars)36

Estimates from Schick

Shiner 2011 Report

(Operational Year 1)

Volunteer expenses (at events) $637 $4,000

Membership and fundraising (printing, design, postal,

advertising)

$11,673 Partially included

elsewhere

General marketing, newsletter and advertising $15,918 $35,000

Office contingencies (minor capital purchases, leases,

repairs) – 20% of office expenses

$2,612 $10,000

Janitorial (minor maintenance, cleaning and

garbage/recycling)

$35,020 $60,000

Janitorial supplies $8,490 $11,000

Garbage & recycling Included above $8,000

Heat, light and water (assume connected to DES)40 $135,835 $150,000

Tenant’s / Occupiers & liability Insurance $4,500 Not identified

Building security – alarm monitoring & video $4,800 $0

Sub‐Total A of Base Operating Expenses $782,384 753,000

Expenses Related to the Building:

Service contracts41:

Security & Fire Alarms / extinguisher testing $1,425 $0

Sprinkler system testing $625 $0

Elevator service & inspection $7,000 $0

Building maintenance & repairs42 $14,550 $0

Building Insurance (would be included in lease payments) $35,00043 $0

Snow clearing (City responsibility) $0 $0

Sub‐Total B (Costs associated with building and systems) $58,600 0$

TOTAL $840,984 $753,000

40 Based on reviewing charges for civic facilities and adjusting for PAC size and use and adjusting for a 2.0 percent increase per year. City’s estimate includes sewer charges. 41 Key service contracts are listed here and included in the budget to show the full costs of maintaining the building and its systems. 42 An allowance for regular building maintenance and repair would be defined (scope) and priced as part of a lease agreement. This estimate is based on other facilities such as the Civic Centre and Exploration Place. This estimate is also based on in‐house skills to undertake a number of the basic maintenance requirements, thereby limiting added charges of contractors. 43 Estimated at $0.07 per $100 insured value.

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B. Review of Estimated Revenue:

i. Review of Estimated Revenue from Theatre Rental

The 2008 Webb report estimates that by the 4th year of operation, the large theatre

would project 133 performance days (full rental of space) for the large 800 seat theatre

and 166 performance days for the small 250 seat theatre. There are also a limited

number of estimated preparation days where rental is usually charged at half price.

These numbers are derived from estimates of live performances, film, resident rentals,

nonprofit renters, special arts private, civic events and by UNBC and CNC. The Webb

report does not explicitly state how these estimates are arrived at. It is likely estimated

use was derived through looking at bookings at current venues and discussions with

stakeholders.

The 2011 Schick Shiner report suggests that the Webb estimates are low since the “2009

PG Playhouse bookings alone were 219 events”44. Schick Shiner recommended the

estimated bookings as:

1. 98 event days and 44 setup days for the large theatre.

2. 156 event days and 54 setup days for the small theatre (assumes TNW would be a

resident company).

A review of booking estimates is important since this is used to estimate a significant

portion of the earned revenue. As such, administration undertook the following research

and assessment to better reinforce the booking estimates:

1. Obtained multi‐year booking information for the PG Playhouse, Vanier Hall and

other key venues and through discussions with local renters, presenters and

promoters estimated the number of bookings that would move over to the new PAC

based on similar fee structures.

2. Assessed bookings with and without TNW as a resident company.

3. Through data and information from the market study, other theatres in BC and from

western Canada promoters, administration derived estimates for the number of

touring performances that could be presented at the PAC.

A review of bookings (rentals) for PG Playhouse over the past 5 years shows an annual

range of between 130 to 219 booking days, with an average annual booking rate of about

44 There is only one year (2009) of rental records for the PG Playhouse provided in the Schick Shiner report, although they may have estimated use from other phone conversations with rental facilities.

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171 days per year (includes both performance days and set up / rehearsal days). These

bookings included, film, theatre and dance productions, live concerts and performers,

corporate meetings and conferences, variety and children shows, religious congregations,

orchestral, competitions, cultural events, awards, and speakers.

For Vanier Hall, renters external to SD57 accounted for 16 bookings in the last 4 months of

2011, 38 bookings in 2012, 48 bookings in 2013 and 29 bookings in the first 6 months of

2014. This represents an average of about 44 bookings annually. These bookings included,

the Prince George Symphony Orchestra, dance and theatre productions, and live concerts

and performers.

UNBC’s Canfor Theatre had 15 external bookings in 2011, 26 bookings in 2012 and 22

bookings in 2013. These bookings included, film, concerts, conferences, theatre/drama,

corporate meetings, public speakers, training meetings, and awards.

Theatre Northwest holds 4 plays per year with between 71 and 87 performances annually.

On a typical annual cycle (August to May) the theatre space is used about 74 days for set up

and take down of the sets, and 63 days for rehearsals. This results in their theatre space

being used about 224 days through August to May or about 80% of the total number of

days in that period.

Other venues such as the Prince George Civic Centre, CN Centre, CNC, Arts Space at Books

and Company, the Treasure Cove Show room, downtown restaurants, St Michael and All

Angels Church and St Andrews United also host a variety of small to large performances of

various genres appealing to different audiences.

Two scenarios were assessed to gauge the changes in estimated bookings for rental space:

1. Scenario 1 most resembles the option provided in the Schick Shiner Business Case

report of 2011 in that the two theatre PAC is built, the PG Playhouse is

decommissioned and TNW is a resident company in the 250 seat theatre.

2. Scenario 2 reviews the two theatre proposed PAC, with the PG Playhouse

decommissioned, and without TNW as a renter or resident company.

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Scenario Assumptions (Full PAC with TNW as a resident company):

1. As in the Schick Shiner report, this estimate will assume that the PG Playhouse is

decommissioned and that most event bookings would transfer to the new PAC.

2. In an effort to be conservative with the booking numbers, the following will be used:

a. 80 percent of the average annual bookings (170) at the PG Playhouse would

rent space at the new PAC, and of these it is estimated that 50% (68) would

rent the 800 seat theatre and 50% would rent the 250 seat theatre45.

b. Half (50%) of the external renters for Vanier Hall would transfer to the new

PAC including the Prince George Symphony Orchestra and concert promoters

and presenters46. This equates to an estimate of 22 bookings.

c. Half (50%) of the external bookings from UNBC’s Canfor Theatre would move

their event to the new PAC. This equates to an estimate of 12 bookings per

year.

45 Likely most of the renters of the PG Playhouse may prefer the smaller size theatre (250 seat) that was comparable to the PG Playhouse. However, in this scenario, TNW will be using the small theatre and there may be scheduling issues for other renters. As such we are assuming that a number of these renters could be accommodated in the larger 800 seat theatre. An 800 seat theatre can be designed to be used for smaller audiences (seating lay out, lighting, audience chamber design, etc.) as well as full capacity. 46 The City staff managing performances at CN Centre also take opportunities to present performers at smaller venues such as Vanier Hall, and would use a new PAC theatre.

Note: These scenarios are used to estimate the baseline rental bookings for theatre space. The estimates are considered conservative, and are based on rental information from current venues in Prince George. Theatre consultants and directors suggest that the act of bringing together skilled and dedicated staff and volunteers within a well‐designed centre creates the foundation for fostering growth in both supply and demand for live entertainment and performances. Therefore, research suggests that theatre spaces will grow in demand over time, and rental levels will likely be higher than those projected here.

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d. Other potential renters currently using other spaces have not been included,

but it is likely there would be some bookings from these groups.

3. That two rental fee structures would be assessed to estimate the effect on the

revenues.

4. There are no indicated rental revenues from the programming area of the PAC as

this is normally assigned to the programming budget, which is kept separate from

the base operating budget.

5. That 1/3 of the total booking days are rehearsal or dark days (charged less rental)47

6. That on average, 53% of the bookings were standard fees (non‐discount)48 and the

remaining would be at a discounted rate.

7. That TNW is a resident company and utilizes alternate spaces for the days working

on set building and rehearsal, thereby freeing up about 20 days between plays for

other renters49. A column for separate rehearsal (multi‐use / black box room) and

production space is included and would be available to TNW and for rental to others

when not used by TNW. Instead of daily rental rates for TNW, an annual resident

company lease fee of $90,000 was used that is in keeping with their current budget.

47 This is based on averages over 3 years from the Prince George Playhouse booking records; 48 Discounted fees generally go to local not‐for‐profit organizations where the primary purpose is community service and where the local community is a beneficiary. This estimate average is derived from records from the PG Playhouse. 49 TNW currently utilizes their theatre from late July continuously through to late May allowing for set building and rehearsal to be carried out in a sequenced manner in the same theatre space as the play is held. From a technical perspective, it is possible to free up for rental about 20 days between plays by shifting much of the set building and early rehearsal to other ancillary spaces. The actual days that TNW would need to occupy the theatre space would be a block of 34 days 4 times per year. This is a technical option that would need to be explored in a partnership negotiations with TNW.

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Estimated Rental / Bookings

User

Large Theatre (800) Small Theatre (250) Rehearsal &

Production

Spaces

Performance

/ Event

Rehearsal /

Set Up

Performance

/ Event

Rehearsal

/ Set Up

Renters moving from decommissioned PG Playhouse – Standard Fee

24

1250

24

12

5

Renters moving from decommissioned PG Playhouse – Discount Fee

21

11

21

11

5

Renters moving from Vanier Hall – Standard Fee

8

4

2

Renters moving from Vanier Hall – Discount Fee

7

3

Renters moving from Canfor Theatre UNBC – Discount Fee

12

0

Theatre North West – Negotiated Partnership Fee

100

40

80

PAC Presentations – Standard Fee

20

7

TOTAL

92

37

145

63

92

GRAND TOTAL 337 Booking Days (Does not include rehearsal and

production spaces)

Using these estimates for bookings (rentals), the first analysis involves maintaining

charges to levels currently offered to PG Playhouse and Vanier Hall renters based on

similar fee structures for commercial / out of town renters versus not‐for‐profit renters.

Assessing this rental fee scenario is important, because a basic premise of the estimated

number of rentals assumes that renters would continue at current levels as long as 50 This estimated value is derived by taking the 50% of the renters from PG Playhouse (85) x 53% (the proportion that is estimated to be in the standard fee category) x 33% (the proportion of booking days estimated to be rehearsal, black out or set up days. This is the approach used for other values.

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rental fees did not significantly increase beyond their ability to pay. The following rental

rates were used in this scenario:

1. For PG Playhouse, used:

a. $515/day standard rate for ticket and non‐ticket events.

b. $190/day for subsequent days after first rental day.

c. $242/day for rehearsal days.

d. $432/day for discount ticket events ($159/day for subsequent rental days).

e. $350/day for discount non‐ticket events ($133/day for subsequent rental

days).

2. For Vanier Hall, used:

a. $900/day for out of town renters ($450/day for subsequent rental days).

b. $450/day for in town groups ($300/day for subsequent rental days).

3. For Canfor Theatre, used:

a. $484/day.

Estimated Rental Revenue Based on Current Fee Structures in Prince George

User

Large Theatre (800) Small Theatre (250) Rehearsal

&

Production

Spaces

Performance

/ Event

Rehearsal /

Set Up

Performance

/ Event

Rehearsal /

Set Up


$12,360 $3,600

$12,360 $2,904 $980


$9,072 $2,156

$8,25251 $2,156 $980


$7,200 $1,800

$392


$3,150 $900


$5,808 0

Theatre North West – $90,00052

51 This assumes that ½ of the renters would be for ticket events and ½ would be charged for non‐ticket events, based on data from the PG Playhouse. 52 Assumes a fixed annual lease or rental based on the current TNW budget.

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User

Large Theatre (800) Small Theatre (250) Rehearsal

&

Production

Spaces

Performance

/ Event

Rehearsal /

Set Up

Performance

/ Event

Rehearsal /

Set Up

Negotiated Partnership Fee

PAC Presentations – Standard Fee Part of

Programming

Part of

Programming

SUB‐TOTALS $37,590 $8,456

$110,612 $5,060 $2,352

GRAND TOTAL $164,070

Schick Shiner’s report estimated revenue from theatre rental at $155,000 in year one

and $202,200 in year 2 of operations. As such, administration finds that the estimates

are relatively consistent.

In order to determine the effect on increases to rental rates, the numbers were run with

the following assumptions:

1. Rental fees for the 800 seat theatre reflect the averages from Nanaimo’s Port

Theatre, Vernon’s Performing Arts Centre, and Kamloops’ Sage Brush Theatre:

a. $1,051/day for commercial renters of the 800 seat theatre.

b. $748/day for discount rate for the 800 seat theatre.

c. Use ½ charges from above for rehearsal rates.

2. Rental fees for the 250 seat theatre reflect those of the Mary Irwin Theatre in

Kelowna (part of the Rotary Centre for the Arts) at $875/day for commercial and

$480/day for not‐for‐profit renters.

a. ½ fee rates will apply to rehearsal days.

3. TNW annual lease payments would stay the same (in order to look at the effect of

higher rental fees from other users).

4. Since this scenario looks at higher rental fee charges, it is likely that some

community renters will not be able to afford the higher fees, even when the

discount rate is applied. For this scenario, will assume a 30% reduction in the

number of rentals from not‐for‐profit groups.

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5. Will assume that all of those falling under the standard rate (commercial renters)

would continue renting at the same level, since there is more opportunity to absorb

fees increases through slight increases in ticket prices. However, the exception to

this is the standard renter (non‐discounted) that moves over from the PG Playhouse

and uses the 800 seat theatre: i.e. many of these renters may not need the full

capacity of the large theatre and could not recoup costs through increased ticket

pricing. For this rental group, the assumption is also a 30 percent drop in rental

bookings.

Estimated Rental Revenue Based on Current Average Fees in other BC Theatres

User

Large Theatre (800) Small Theatre (250) Rehearsal &

Production

Spaces

Performance

/ Event

Rehearsal /

Set Up

Performance

/ Event

Rehearsal

/ Set Up


$17,867 $4,208

$21,000 $5,256 $2,190


$11,220 $2,992

$7,200 $1,920 $720


$8,408 $2,104

$876


$3,740 $748


$5,984 0

Theatre North West – Negotiated Partnership Fee

$90,00053

PAC Presentations – Standard Fee Part of

Programming

Part of

Programming

SUB‐TOTALS $47,219 $10,052 $118,200 $7,176 $2,910

GRAND TOTAL $185,557

53 Assumes a fixed annual lease or rental based on the estimated amount currently budgeted by TNW for space.

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Discussion:

Based on the above assumptions, this scenario resulted in an estimated $21,487 or a 13

percent increase. This scenario, based on average rental fees from other BC theatres, is

likely the highest current rental fees that could be reasonably charged – they reflect the

industry rates.

In all likelihood, the operator of the PAC would need to balance off the rental fee

structure with the impacts to community groups. For ticket events, rental fees, amongst

other costs, are covered within the ticket prices. An increase in standard rental fees for

the 800 seat theatre from $515/day (similar to PG Playhouse rate) to $1,051 would

translate into an increase of $0.89/ ticket based on a 75 percent sold ticket rate. Using

the current rental fee for Vanier Hall ($900/day) this same increase to $1,051 would

cause a $0.25/ticket increase based on 600 sold tickets.

However, theatres and centres also charge a “facility surcharge” that ranges up to $2.00

per ticket. In addition, theatres and centres have additional fees in cases where staff

are needed, technical equipment is rented, extra spaces are used, and ancillary services

are requested. Where theatres and centres have their own box offices, there would

also be added charges to cover those services. In consideration to rental fees and the

impact to ticket prices, the operators of the PAC will need to consider these other

charges that could affect the ticket price.

If TNW was not a partner in the PAC and therefore not paying the lease payments, the

estimated revenue from TNW would be reduced by $90,000. However, this would free

up rental periods (140 days) that could accommodate other renters. Some of the

renters (moved from PG Playhouse) that are shown renting the 800 seat theatre, would

likely move to the smaller theatre, so this would be a movement of revenue from one

theatre space to another. Having more available rental dates within the small theatre

would likely result in better schedule options for local groups and presenters. If there is

a 50% increase in the number of renters of the small theatre, based on current rental

fees, then this may provide approximately $10,000 in revenues. As such, the loss of

TNW as a revenue source from rental/lease payments would more likely cause a

reduction of revenues in the range of $80,000.

Summary:

The review of revenues from theatre space rental is fairly consistent with the

consultant’s estimates, using similar assumptions and providing conservative estimates.

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If TNW is a lease holder for the small theatre, total base revenues from both theatre

rentals are estimated to range between $164,070 and $187,557 per year. If TNW is not

a lease holder in the small theatre, the total revenues are conservatively estimated at

$84,070 to $107,557 per year.

It should be noted that about $18,000 to $21,000 equivalent worth of rental revenue

does not show up in this part of the operating budget, because it is the 20 times a year

that the PAC’s programming area uses the 800 seat theatre. As noted previously, the

costs and revenues associated with the programming budget are normally kept

separate.

ii. Ticket Selling (Box Office) Revenue

Revenue from selling tickets (box office fees) for PAC performances were estimated at

$28,875 in the Schick Shiner report, using 98 events in the large theatre and 56 events in

the small theatre at an average of 50% sold tickets per event.

In administration’s review, the following assumptions are made based on data from

current facilities, performances and renters:

1. That 5054 percent of the total rentals, that move from the PG Playhouse are ticketed

events.

2. That 50 percent of renters moving from Vanier Hall and Canfor theatre, who also

receive the discount fee (not for profit groups) are ticketed events.

3. That there is no inclusion of ticket selling revenue from TNW tickets, as this is an

unknown.

4. There is no ticket selling revenue shown from the 20 performances presented the

PAC programming area55, as this would be accounted for in the programming

budget.

5. Based on the assumptions above, total estimated ticketed events, excluding PAC

presentations, are 59 for the large theatre and 22 for the small theatre.

54 Information from PG Playhouse bookings shows a significant number of bookings are events where tickets are not sold. Using a 50% for ticketed events to estimated ticket selling (box office) revenues is conservative. 55 Based on 20 PAC presentations at an average 65% ticket sale rate and an average ticket price of $65, gross ticket sales are estimated at $676,000, generating $16,900 in box office fees at 2.5% fee rate.

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6. Based on market surveys for local and regional performers, the following are the

estimated average ticket prices56:

a. For the 800 seat theatre:

i. $35 for the 20 performances that would have been standard rate

rentals (commercial) at the PG Playhouse and Vanier Hall.

ii. $18 for the remaining 19 estimated ticketed events.

b. For the 250 seat theatre:

i. $35 for the 12 commercial performances.

ii. $18 for the remaining 10 performances.

7. Using the same 2.5 percent box office fee as suggested by the Schick Shiner and

other theatres.

8. Using the conservative 50 percent sold ticket rate for all events.

Number Events /

Performances

Capacity Ticket Sold

Rate (%)

Ticket

Price

Gross Ticket

Sales

Fee @

2.5%

20 other commercial

present.

800 50% $35 $280,000 $7,000

19 other community

events.

800 50% $18 $136,800 $3,420

12 commercial 250 50% $35 $52,500 $1,313

10 non‐commercial 250 50% $18 $22,500 $563

TOTAL $12,296

Summary:

Based on administration’s analysis, using current data, the estimated revenue from

ticket selling (box office) is $16,579 less than estimated by Schick Shiner’s 2011 report.

This is due to a difference in the estimated number of events where tickets are sold.

The data from the PG Playhouse over three years suggests that a conservative number

for estimating ticketed events should be used.

56 These lower average ticket prices represent the market for local and regional performances, whereas the majority of the national and international performances, and higher average ticket prices, would be generated through the PAC programming.

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Administration’s estimates do not include ticket fees earned through providing box

office services to other venues in town. Currently, Ticket Master is used for CN Centre

bookings.

iii. Multi‐use Room Rental

This 2,400 sq. ft. room, in the concept drawings are off the lobby area and can be rented

out for meetings, presentations, and workshops. Schick Shiner estimated 124 booking

days at a rate of $200 and then reduced the gross revenue amount by 25 percent to

show the net revenues.

Given the potential for added meeting rooms available to groups at the new Wood

Innovation Design Building and other places in the vicinity (e.g. library, civic centre,

hotels, etc.), administration suggests the estimated bookings day may be high. In an

effort to be conservative, the estimated booking days are reduced to 80 days (estimated

2 days/week, excluding the months of August and December) of standard rentals. The

standard rental rate has been adjusted upwards to $250 which is closer to the rental

rates for comparable rooms at the Civic Centre.

As part of the overall goals of the proposed PAC, the centre is playing a role in

supporting community groups and, in particular community arts and culture

organizations. As such, a discount rate for the multi‐purpose room is suggested for

local, not‐for‐profit groups involved in arts and culture. Estimate 44 booking days per

year (1 per week, excluding August and December) at $50/day rental fee.

Administration agrees with providing a 25 percent cost recovery that covers extra staff

and janitorial expenses for room use.

Multi‐use Room Days Booked Rental Rate Gross

Revenue

Net Revenue (25% expense reduction

Standard rate 80 $250 $20,000 $15,000

Discount rate 44 $50 $2,200 $1,650

TOTAL $16,650

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iv. Foyer Rental (special events)

The concept design for the proposed PAC shows a large (11,140 sq. ft.) lobby/foyer area. This is in high demand during theatre events, often in the evening. Use for this space in other theatres suggests that, if built as an attractive and open environment (an atrium design), this area becomes popular for weddings, and other special events. There is potential for using the space for catered events as long as there is access to a server room57 off the lobby. It is difficult to gauge the potential rental opportunities, so estimates are conservative.

A discount rate is provided for local, not‐for‐profit groups involved in the arts and culture. A 25 percent expenses reduction to the gross revenues are applied to cover extra staffing and janitorial.

Foyer / Lobby Days Booked Rental Rate Gross Revenue Net Revenue

(25% expense reduction

Standard Rate 10 $800 $8,000 $6,000

Discount Rate 4 $400 $1,600 $1,200

TOTAL $7,200

v. Programming & Presenting

Budgets related to a theatre playing the role of presenting performances and

developing a seasonal program are, as an industry practice, usually kept separate from

the base operating budget of the centre. This is because there are typically many

variable costs associated with each particular presentation. This is the riskier part of

the centre’s operations and, as an standard practice, the risk is applied across a portfolio

of presentations, rather than individual performances.

It is expected that some presentations will have high ticket sales (e.g. popular

entertainment) and some may have lower ticket sales (innovative, new or experimental

performances that appeals to a narrower market), but over the course of a season,

artistic directors and managers provide the balance to address risk. In the end the,

balancing act of theatre programming is to provide a wide range of performances that

serve different experiences for audiences through programmatic decisions leading to a

balanced budget or generating net revenues from an entire season or portfolio.

57 This is not referring to full catering facility, but rather, a small kitchen area for keeping items warmed and receiving catering from outside the PAC.

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While some of the fixed costs (e.g. staff salaries, utilities and overhead) are absorbed

into the programming budget, and can be estimated, other expenses can vary

significantly between events. As the Schick Shiner report states, “It is this

[programming] budget which is hardest to control and it will be the place where deficits

and surpluses are possible. Although it is the “risk area” of the operation, it is where the

real work of the centre will take place.” Schick Shiner & Associates provided a typical

example of a pro forma annual programming budget which is shown in Appendix B.

In discussions with Schick Shiner & Associates, it was agreed to keep the allocation of

revenues from the programming area to be conservative. It is understood that the

operator of the PAC would make decisions on the extent of its annual programming

based on the assumed level of risk, its available resources, and the available

performances that are of interest.

vi. Facility Fee

The facility fee is added on and collected on each ticket sold for a ticketed event held in

the PAC. Schick Shiner (2011) uses a $2/ticket for their estimates and this is consistent

with other similar theatres. These estimates use the same assumptions as for the

number of tickets sold in estimating box office revenue. While the revenue from the 20

PAC performances are accounted for separately in the programming budget, they are

shown here for information.

Number Events /

Performances (Ticketed)

Capacity Ticket Sold

Rate (%)

Gross

Tickets Sold

Facility Fee

@ $2/ticket

20 PAC presentation 800 65% 10,400 Part of

Programming58

20 other commercial

present.

800 50% 8,000 $16,000

19 other community

events.

800 50% 7,600 $15,200

12 commercial 250 50% 1,500 $3,000

10 non‐commercial 250 50% 1,250 $2,500

TOTAL $36,700

58 This amount is estimated at $20,800 and included in the programming budget.

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vii. Concession & Bar

A review of bar and concession sales data from the Kelowna Community Theatre, reveals significant differences in revenue depending on the types of performances. For example, music and comedy performances provided higher bar sales than other performances, such as the symphony. By looking at various samples for different shows, and taking an average, it is possible to estimate the potential gross bar and concession sales. Kelowna’s information suggests a rough average estimate of $2.80/ticket sold for the bar and $0.56/ticket sold on the concession. Applying these numbers to the predicted number of ticketed performances provides a rough estimated of gross sales. This is a conservative estimate since, there would also be some other non‐ticketed events that could result in bar and concession sales. As in other budget items discussed, bar and concession revenue from the 20 PAC performances are not included here.

In order to estimate net revenue from the bar and concessional sales, a reduction of 58 percent of gross sales is used, accounting for a 33 percent costs of products (assuming a 2/3rds mark‐up) and 25 percent reduction for added staffing costs (assumes that there are also volunteers servicing the bar and concession). This estimate also assumes that no revenues are derived from TNW events, as their operating budget currently includes revenue from this source. Where there are combined theatre performances on the same evening, a mechanism would need to be developed to share the bar and concession revenues and costs.

Number Events / Performances (Ticketed)

Gross Tickets Sold

Average Bar Sales / Ticket (@$2.80)

Average Concession Sales/Ticket(@$0.56)

Total Estimated Gross

Revenue

Total Net Revenue (less 58% Expenses)

20 PAC presentation 10,400 Part of programming budget

20 other

commercial present.

8,000 $22,400 $4,480 $26,880 $11,290

19 other community

events.

7,600 $21,280 $4,256 $25,536 $10,725

12 commercial 1,500 $4,200 $840 $5,040 $2,117

10 non‐commercial 1,250 $3,500 $700 $4,200 $1,764

TOTAL $25,896

viii. Production Space

The Schick Shiner estimates assumed that if TNW was a resident company, they would

supply their own off‐site storage, production (workshop). Based on updated

discussions, administration’s review assumes that the proposed PAC would incorporate

space for production and storage.

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This review assumes that, as a resident company, TNW would have priority access of the

production spaces and this would be included in their annual lease fee. However, it is

assumed that other groups may need to rent the production space when not being used

by TNW. In order to be conservative and understanding that there could be scheduling

conflicts59, estimated revenues are conservative.

Based on the estimated rental numbers for the theatres (which also includes estimated

times for rehearsal and set up) shown in previous sections, an estimate of 12 days of

rental was also provided for theatre renters needing to rent space for production or

rehearsal. Assuming half of these days are for production space needs and half are for

rehearsal space needs (included in next section), an estimate of 6 days are provided at a

rate of $110/day provided $660 in revenues. These estimates could increase if TNW

was not a resident company and using the production spaces.

ix. Black Box Theatre / Rehearsal Space

The Schick Shiner report assumed that if TNW was a resident company, they would

supply their own off‐site rehearsal space. Based on updated discussions,

administration’s review assumes that the proposed PAC would incorporate a 1,680 sq.

ft. space for off‐stage rehearsal. This area could also be designed for use as a black box

theatre.

There are a number of theatres that incorporate a Black Box theatre space, which is

basically a shell that can be darkened, has rigging for lighting and sound, and is flexible,

in that the space can accommodate a variety of stage and seating configurations. This is

a relatively inexpensive space that can be used by the resident company (TNW) for their

off‐stage rehearsal60, or for a multi‐use space for groups to rent. In theatres, these

spaces are rented by smaller community theatre groups, by those needing special

spaces for workshops, innovative theatre (such as improve) and for other rehearsals.

59 For example, if a local company rents the small theatre for a production at a time when TNW does not have it booked, then the production area may not be available, as this is likely the time when TNW would be using the production spaces between their plays. 60 While this is technically possible, it should be pointed out that, at this time, TNW has not agreed to this concept of conducting a portion of their set build and rehearsals away from the theatre stage.

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Estimates on rental revenues from Black Box theatre / rehearsal space:

Black Box Theatre Days Booked Rental Rate Gross Revenue Net Revenue (25% expense reduction

Standard rate 10 $400 $4,000 $3,000

Discount rate 10 $200 $2,000 $1,500

TOTAL $4,500

These estimates could increase substantially if the resident company (TNW) was not

using the spaces, as this scenario would free up considerably more rental days available

to other groups.

x. Other Office Space

There is an interest in bringing arts and culture organizations together to build a

“cultural district”, similar to what certain business sectors do in establishing “clusters”.

The obvious organizations that could be considered in office space allocation for the

proposed PAC are the PG Symphony Orchestra and Prince George Community Arts

Council. With support from the City of Prince George, the two organizations currently

receive below market leased space, and tax exemptions on their Studio 2880 space as

well as annual grants.

In addition, the City also provides an annual grant to TNW. If a workable, mutually

beneficial arrangement is reached that would facilitate TNW becoming a resident

company in the PAC, then part of this grant could be seen as supporting their lease

payments at the PAC, which would include their office spaces. In this scenario, the City

grant funding would be supporting both TNW and the PAC.

While no specific options have been identified at this time, there may be potential

opportunities bringing together currently subsidized arts organizations under one roof

in the PAC’s office spaces. This might provide opportunities to cluster grant and

subsidies in a way that supports the organizations as well as the PAC’s operating plan.

Further discussions and review of options around this would be needed. There would

likely also be opportunities for operating efficiencies through shared services,

maintenance, supplies, janitorial and utilities as well.

The previous discussion on capital costs provided estimates on their potential space

needs and how this might affect the capital project budget.

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The following are the three key arts and cultural organizations that receive either

subsidies or grants from the City of Prince George and that might be considered in

future space allocation designs for the proposed PAC:

Organization Subsidy Annual Grant

Theatre North West

$113,000

Prince George Symphony Orchestra Reduced Office Rental61

$58,000

Prince George Community Arts Council Reduced Office Rental

$35,000 (2015)62

xi. Other Rental Space Options – Visual Arts

Under the model used by Kelowna’s Rotary Centre for the Arts, studio space can be

rented for $200/day as a standard fee and $100/day at a discounted rate. These spaces

can be used for workshops/drop‐in classes/instruction art lessons, community painting

groups, art therapy groups, live drawing sessions, photography sessions, and after

school programs.

For non‐theatre use groups (those not also renting theatre space), a conservative

estimate of 60 rentals at an average of 4 hour periods for $26/hr. standard fee and

$18/hr. for discounted fees, estimating 20 rentals at standard fee and 40 rentals at

discounted fee results in an estimated gross revenue of $4,960. The use of these types

of spaces may grow in demand depending on what happens with other facilities

supplying such spaces (e.g. Studio 2880)

xii. Café Lease

The foyer and lobby offers an excellent opportunity for a café lease. Based on market

estimates of this type of high quality space, for a 1,000 sq. ft. space at $25/sq. ft. (all

operating costs borne by the lease holder), this could provide an estimated $25,000/yr.

61 The Prince George Community Arts Council use of the Studio 2880 space provides benefits in reduced taxes (falling under a permissive tax exemption) and being charged far under the market value for their lease payments, which are also passed along to the PGSO. 62 In 2016, the City of Prince George grant to the Prince George Community Arts Council will increase to $43,800.

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in net revenues. Future designs would need to determine space allocations to meet

this space requirement.

This could provide a potential opportunity for a private sector operator for a café (not a

full service restaurant) within a high quality space.

xiii. Education & Lesson

Theatre companies such as the Western Canada Theatre Company in Kamloops have

classroom areas dedicated to an educational component focusing on theatre skills. This

could complement the theatre, music and dance instructional opportunities already

provided in Prince George through private lessons, not‐for‐profit groups and the School

District 57. Further research and consultation would be required to determine how this

component can be complementary, rather than competitive, in the Prince George

market. No estimated revenues are suggested here, but this should be investigated

further as an operational role.

xiv. Fund‐Raising, Sponsorship, and Grants

It is common in theatres and performance centres across Canada that a significant

portion, between 20 and 40 percent, of the operating revenues come from private fund‐

raising, corporate sponsorship and government grants. Fund‐raising is an area of

significant responsibility for the operator (Society) of the PAC and the operations will

rely on successful strategies.

Schick Shiner’s 2011 report suggested a target of $60,000 (net) for this revenue

allocation. In examining current fundraising strategies and generated net revenues

from groups such as Prince George Community Foundation, Spirit of the North Health

Care Foundation, Northern Medical Programs Trust, and Theatre North West, the

following are key considerations in forecasting revenues from fund‐raising.

1. While fund raising in Prince George has been successful for a number of

organizations, it requires a significant amount of management and coordination,

volunteers, and resources. Often experienced people are dedicated to fund raising

activities full‐time.

2. In a number of examples, highly successful fund‐raising events can expect to raise an

estimated $20,000 ‐ $40,000 after expenses are covered. Therefore, a target of

$60,000 net revenues would likely require multiple fund‐raising events or strategies

every year, which will require significant dedicated resources and volunteers.

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3. TNW is successful in its fund‐raising, through charitable donations as well as their Wine

Festival event and other strategies such as prize draws. For example, in 2012‐2013

TNW raised over $157,00063 in donations, comprising about 17 percent of their

operating budget. Adding annual fund‐raising activities for the proposed PAC may be

competing with TNW for similar market shares, whether they become a resident

company or remain independent. Fund‐raising strategies would need to be developed

for the proposed PAC that would not adversely affect TNW, through targeting a

different pool of potential donors or other strategies.

Schick Shiner’s report further suggests a target of $35,000 per year in revenues from

sponsorships. Based on information from other local organizations, administration views

this as a conservative target. Further, experiences of other performing arts centres,

where they exhibit high profile and visibility in the community, demonstrate that they

do tend to attract corporate sponsorship.

Given the discussion above related to both “fund‐raising” and “sponsorship”,

administration’s revised assumption is to lower the fund‐raising target and raise the

sponsorship target. It is also assumed that if TNW was a resident company, that they

would continue their sponsorship and fund‐raising activities independently and apply

those to their operating budget as they do currently.

In terms of grants, Schick Shiner & Associates state that many of the grant programs are

not aimed at supporting base operations for facilities such as performing arts centres.

Organizations such as the Canada Council for the Arts are aimed at supporting aspects

such as artists, performers, programming, travel, development and technical upgrades.

As such, the estimated target for grants in the proposed budget is kept at a conservative

level of $3,000/yr. It is expected that the PAC would be successful in securing grants for

their programming budget, but those are not included in the operating budget.

63 Information can be found through Canada Revenue Agency search for return information from registered charitable organizations.

67 | P a g e

The following are the possible sources of grants for programming to assist with operations.

1. The Canadian Cultural Investment Fund provides incentives for cultural and arts

organizations to encourage private donations in order to create a foundation

fund.

2. The Canadian Arts Presentation Fund (CAPF) is to assist arts and culture

organizations that provide access to a variety of professional artistic experiences

in their communities. The CAPF recognizes that arts presenters are key partners

in achieving this objective by providing financial assistance to organizations that

professionally present arts festivals or performing arts series, as well as their

support organizations.

3. The BC Creative Spaces funding program provides small grants to improve a

facility (e.g. upgrade lighting or sound).

4. The BC Arts Council has numerous grant and funding programs to support the

operations of an arts and culture organization.

5. BC Creative Futures will help foster a creative workforce by providing more arts

opportunities for young British Columbians and by building a comprehensive,

sector‐wide vision to support the development and growth of B.C.’s creative

industries.

xv. Endowments

Schick Shiner (2011) uses the assumption that a $2.0m endowment be set aside from

the capital funds to provide an estimated annual allocation of $40,000 depending on

investment returns of the endowment. Given the uncertainty of this revenue strategy,

administration assessed the budget and operational implications of not including this

revenue source.

xvi. Civic Grant

Schick Shiner identified a $300,000 annual civic grant. By comparison, this level of civic

grant is higher than the City of Kamloops provides to the Sage Brush Theatre ($132,000

& $56,600 from the School District) and higher than the Regional District provides to the

68 | P a g e

Vernon & District Performing Arts Theatre ($200,000). However, in both of these cases

the municipality covers building costs, so these could be seen as an added subsidy.

The City of Kelowna provides $140,000 for the operation of the Community Theatre, but

it is run by a City staff and operates as a rental facility64 and all expenses (e.g. building

maintenance) are covered by the City. The City of Nanaimo provides a “management

fee” of $460,000 to the Society operating the Port Theatre which is about 24 percent of

their operating budget65. The newly opened (2011) Burlington Arts Centre, which is

similar in size to the proposed Prince George PAC, receives an annual grant of $650,000

from the City of Burlington66.

For the purposes of this review, administration has left the consultant’s suggested civic

grant allocation unchanged at $300,00067 to determine its effect on the budget.

Summary of Estimated Potential Revenues (Shown as the Average):

Revenue Source With TNW as

Resident

Company

(2014 dollars)

Without TNW as

Resident

Company

(2014 Dollars)

Estimates from

2011 Schick

Shiner Budget

(Year 1)68

Theatre rental (both theatres) $174,814 $94,814 $155,000

Utility Maintenance Fee to Resident

Company69

$5,500 $0 $0

Ticket sale fees (box office) $12,296 $12,296 $28,875

Facility fee charges $36,700 $36,700 $92,400

Multi‐Use room rental $16,650 $16,650 $19,000

Programming / Presenting $5,00070 $5,000 0

Foyer / Lobby rental (special events) $7,200 $7,200 $10,00071

64 This theatre used to run as a presenting theatre and rental facility (road house). However, budget reductions from the City of Kelowna, meant that this level of service was not achievable. 65 The Society operating the Port Theatre and the City of Nanaimo have signed a co‐management agreement where the Society is responsible for inside building maintenance and heat and hydro, and the City takes on responsibility for the building envelop and HVAC system maintenance. 66 The City of Burlington, with a population of 176,000, increased property taxes by $6/person (on average) per year to cover the grant. 67 As an example, this is the level of grant provided by the City to the Charles Jago Northern Sports Centre. 68 Schick Shiner’s (2011) estimated budget used the scenario with TNW as a resident company. Using year 1 as a comparison, as this is the most conservative budget estimate provided. 69 The estimated revenue amount is consistent with TNW’s current budget. 70 Schick Shiner shows this revenue starting in year 3 of their budget estimates. 71 Schick Shiner also includes rental of theatre equipment in this estimated revenue.

69 | P a g e

Revenue Source With TNW as

Resident

Company

(2014 dollars)

Without TNW as

Resident

Company

(2014 Dollars)

Estimates from

2011 Schick

Shiner Budget

(Year 1)68

Bar / concession / café (net) $25,896 $25,896 $10,000

Production Area $660 $660 0

Black box theatre area / rehearsal $4,500 $9,000 0

Visual arts studio rental72 $4,960 $4,960 0

Café lease $25,000 $25,000 0

Office space rental (other than PAC

and resident company offices)

$unknown $unknown 0

Sub‐Total (2014 dollars) $319,176 $238,176 $315,275

Sub‐Total A (2017 dollars)73 $338,651

Donations & Fundraising $45,000 $45,000 $60,000

Grants $3,000 $3,000 $3,000

Sponsorship $50,000 $50,000 $35,000

Allocation from Endowment $0 $0 $40,000

Sub‐Total B $98,000 $98,000 $138,000

Sub‐Total A+B $436,651 $336,176 $453,275

Civic Allocation $300,000 $300,000 $300,000

TOTAL 736,651 636,176 $753,275

Based on the assumptions for the operations, the difference between the total

estimated base operating expenses ($782,384) and total estimated revenues (in 2017

dollars) is a projected short fall of $45,733 or about 6 percent of the budget. If the full

costs associated with the building (estimated $58,600) are added to the operator’s

budget, through the lease payments for example, the estimated budget shortfall would

increase to $104,333 or 14 percent of the revenue budget. The estimated budget

deficit is further increased to $204,808, or 32 percent, in the scenario where TNW is not

a resident company.

The estimates on revenues provided by administration are intended to be conservative

in order to illustrate a baseline scenario without factoring in growth in interest and

72 In future design/development phases, the option of designing the foyer/lobby/atrium area to incorporate space for a galleria could also support visual arts. 73 This sub‐total is provided prior to the inclusion of non‐earned revenue which includes fund‐raising, donations, endowments, grants and other misc. revenues as identified by Schick Shiner’s 2011 report. The 2017 dollars estimate assumes an annual increase of 2% per annum in fee increases across the board.

70 | P a g e

demand that would be expected to come about through the work of staff (e.g.

managers, marketing, artistic director) and the quality of the facility. The table below

provides the range of estimated budget impacts based on the base‐line conservative

estimates.

E1 Base Expenses

$782,384

E2 Base Expenses with Building

Costs $840,984

R1 Revenues with TNW

$736,651

R1‐E1

($45,733)74

R1‐E2

($104,333) R2

Revenues without TNW $636,176

R2‐E1

($146,208)

R2‐E2

($204,808)

It is important to determine if administration has been overly conservative on

estimating revenues. As such, the next table shows the impact on the estimated budget

deficit with a forecasted growth of 15 percent in earned revenues (rentals and ticket

sales) plus a 5 percent increase in charges providing for a total 20 percent increase in

earned revenue. Even with a substantive increase in earned revenue, there would still

remain an estimated budget deficit in scenarios involving the operator absorbing

building costs and with TNW not being a resident company. Therefore, these two

conditions have a significant effect on the viability of the operating budget based on

described assumptions.

E1 Base Expenses

$782,384

E2 Base Expenses with Building

Costs $840,984

R1 (+20%) Revenues with TNW

$804,18175

R1‐E1

$21,797

R1‐E2

($36,803) R2

(+20%) Revenues without TNW

$683,611

R2‐E1

($98,773)

R2‐E2

($157,373)

74 Figures within brackets are deficit amounts. 75 This is the base revenue amount + 20% of the earned revenue estimated at $337,651

71 | P a g e

Budget differences of 5 percent can be reasonably expected to be manageable, but a

budget shortfall of 15 percent or higher is significant and would likely pose a challenge.

As such, there are options that would need to be considered in addressing this

estimated potential shortfall:

1. Determine the City’s position on a lease arrangement with an operator in recovering

costs associated with the building.

2. Determine if additional revenues could be identified either through additional

spaces for rental, or through sponsorship and fund‐raising.

3. Determine, as Schick Shiner & Associates suggest, if there would be funding through

the capital program to establish an endowment fund.

4. Undertake further budget analysis to determine more accurate estimates

5. Determining if any operating cost savings can be identified without significantly

affecting the role of the PAC.

The revenue estimates indicate that the proportion of earned revenue for base

operations (not including the programming budget) is about 46 percent of the total

revenues, with the remaining 54 percent coming from fundraising, sponsorship and

grants76. The percentage of total earned operating revenue varies widely among arts

centres in Canada. It is not uncommon for arts centres to receive over half of their

budgets from government (primarily municipalities) sources. Performing art centres

that are able to earn 70 percent or more of their budget through their operations are in

larger centres and in major cities77.

76 The operational earned revenue from rentals has been estimated conservatively. It is expected, from experiences at other arts centres, that a new centre will foster a regional and community growth in performing arts and entertainment, and therefore, demand for theatre space is likely to increase over time. 77 Martin Vinik Planning for the Arts LLC, 2011.

72 | P a g e

The following table is provided in order to compare the proposed PAC’s sources of

revenues and the proportions of expenses with that from a sample of currently

operating theatres78:

Financials79 Proposed

PAC80

Port Theatre Vernon &

District PAC

Western

Canada TC

TNW

REVENUES

Donations81 $95,000 $58,946 $105,003 $275,016 $157,572

Government Funding $303,00082 $712,376 $266,708 $556,447 $251,159

Other Revenues83 $318,17684 $1,012,437 $483,363 $1,202,748 $524,554

TOTAL $716,176 $1,783,759 $855,074 $2,034,211 $933,285

EXPENSES

Management /

Administration

$845,37185 $305,890 $25,000 $207,521 $173,409

Programming86 Not included87 $1,400,211 $817,907 $1,712,319 $687,998

TOTAL $773,68788 $1,706,101 $842,907 $1,919,840 $861,407

STAFFING

Full‐time 6 13 7 9 2

Part‐time 4 56 26 59 19

The comparison of operating theatres with the proposed PAC is limited in that, for the

PAC, there is no revenue and expenses from programming included, and, in the case of

the operating theatres, the reporting under programming likely includes expenses that

are not shown in the amounts reported for “management / administration”. However,

this comparison does show that the revenue estimates for the proposed PAC are

relatively conservative compared with other operating theatres.

78 Sample theatres are those that provide either presenting or production roles (i.e. more than just a rental facility). 79 Using 2013 or 2012 figures. 80 Assuming TNW is a resident company. 81 Both receipted and non‐receipted. 82 This amount includes the civic grant and $3,000 estimated amount from federal or provincial art and cultural grant programs. 83 Includes rental income, ticket sales, and ancillary revenues. 84 Figure does not include revenues derived from programming. 85 Included costs associated with base operating budget. 86 While theatres often keep “programming” budgets separate, for the purposes of filing with Canada Revenue Agency, some of the operational costs of a centre may be reported here as they contribute to programming. 87 This is not provided here as it is an unknown amount in a non‐operating theatre – as explained in the report, programming is kept as a separate budget. 88 Figure does not include programming.

73 | P a g e

Review of the Port Theatre’s 2013 Operating Budget

Administration was able to review the detailed budget for Nanaimo’s Port Theatre, which

provides an opportunity to compare forecasted costs and revenues of the proposed PAC

with an actual operating budget. This 804 seat theatre had an operating budget of $1.441m

in 2013 with 40 percent of the budget coming from a “management fee”, mostly from the

City of Nanaimo, and a portion also coming from their Regional District. Administration

costs (which also included Society administration) accounted for 64 percent of the expenses

and building services (heat, hydro, HVAC repairs and janitorial) accounted for 10 percent of

the expenses. Stage services and marketing combined accounted for about 2 percent of the

budget. Other expense areas, including Front of House services, the ticket centre (box

office), and fundraising each contributed net revenues after expenses and comprised 17

percent of the budget. Programming comprised about 7 percent of the budget, and some

years this portion of the budget contributed net revenues to the operating budget and

other years it did not.

A comparison of the proposed Prince George PAC with actual budgets of the currently

operating Port Theatre offers an assessment of the break down in core expenses and

revenues. For the purposes of this review, the following assumptions were used:

1. Focused on core expenses and revenues that make up the greatest proportion of a

theatre’s budget, and did not include programming.

2. Used the base operating budget for the Prince George PAC in order to compare similar

budget scope as the Port Theatre.

74 | P a g e

Core Areas of Expenses Port Theatre Prince George PAC

1. Administration & overhead 80% 72%

2. Building Services 10% 23%

3. Stage / Technical Services 1% 3%

4. Fundraising & Membership 1% (Included in admin.)

5. Marketing 1% 2%

TOTAL $1.33m $782,384

Core Areas of Revenues

1. Rental 19% 31%

2. Grants or Management Fees89 53% 38%

3. Ticket Centre (net) 3% 6%

4. Front of House (Concession / Bar) (net) 2% 3%

5. Fundraising & Membership (net) 6% 12%

TOTAL $1.35m $735,651

The review illustrates a few highlights:

1. That 90 to 95 percent of a theatre’s or centre’s base operating budget (not including

programming) is accounted for by administrative expenses and building services (heat,

hydro and basic maintenance).

2. That there is a significant reliance (between 38% and 53%) on government (civic

government) grants / management fees and local fundraising revenues.

3. That most of the earned revenue comes from rental and that there is only modest net

revenues provided through front of house and ticket centre operations.

4. That the proposed Prince George PAC estimated budget is more reliant than the Port

Theatre on revenues from the ticket centre, rentals, and from fundraising.

89 In the case of the Port Theatre, the $493,000 in funds provided by the City of Nanaimo is referred to as a “management fee”.

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76 | P a g e

Government of Canada

In discussions with Member of Parliament Richard (Dick) Harris, there was general support

given to the proposed PAC project. The current direction and focus of the federal

government’s capital funding is expected to continue on programs addressing Canada’s core

infrastructure needs. However, there was an indication that the federal government is aware

of the cross‐Canada demand for arts and culture capital projects and that once the federal

budget is balanced, there may be future opportunities where funding becomes eligible for such

projects.

PPP Canada & Partnerships BC:

A private‐public partnership (PPP or P3) is a procurement tool that is based on a long term,

performance‐based contract where appropriate project risks are allocated to the partner

best able to manage them cost effectively. These risks can include construction, schedule,

and functionality of design, financing, and the long term performance of an asset. There

are a number of ways P3’s can be structured with varying amounts of risk transferred to the

private sector. These typically range for design and build agreements to design, build,

finance and operate agreements. There is also federal funding available for approved P3s.

In January 2009, the City of Prince George received from Partnerships BC, an “Early Project

P3 Screening” report based on the PGRPAC Society’s proposed Performing Arts Centre. The

conclusion from the screening was that “…that the project possesses key characteristics

that make it likely to benefit from procurement as a P3”. The report suggested next steps

including conceptual plans, confirm capital estimates, identify the preferred procurement

option, and establish the proposed sources of funding.

In June 2011, the City submitted to P3 Canada, an application into the “Round 3”

application process. In September 2011, P3 Canada provided a letter to the City indicating

that the application “…will not be retained for further consideration as the project requires

further development and identification of other necessary funding sources”. P3 Canada

further indicated that there may be sufficient potential for the project to succeed as a P3

and suggested reapplying to future application rounds.

The P3 Canada Round Six application process closed June 13, 2014. Cultural infrastructure

is considered an eligible project category; however these projects are not being considered

a priority at this time. Administration has held conference calls with Partnerships BC and P3

Canada to update information on the application process and requirements:

77 | P a g e

1. The federal government has directed P3 Canada to consider only project applications

that fall under water/wastewater, transportation, and solid waste

infrastructure. This direction was put in place after Round 3. Since 2010, numerous

applications falling under “cultural and arts infrastructure” were still being submitted

to P3 Canada from across the country and not one application was approved since

the federal government direction.

2. Administration did not submit a Round 6 application, because of the federal

government direction and that the reasons for rejection of the Round 3 application

have not been addressed at this time.

3. P3 Canada confirms that there will be a Round 7 application intake next year between

April and June 2015. However, there is no indication that the federal government will

change its current direction to P3 Canada on eligible projects.

Under Infrastructure Canada, the New Build Canada Plan funding programs were reviewed

including the Provincial and Territorial Infrastructure Component (PTIC), and the Small

Communities Fund. Currently, under these programs, infrastructure related to arts and

culture are not eligible projects.

Under the new Build Canada Plan’s Community Improvement Fund, the Federal Gas Tax

Fund has changed in 2014 to allow for a broader range of eligible projects and now includes

cultural projects. Currently, the City receives on average $3m per year and has been used

for incremental infrastructure improvement projects that improve air quality, energy

efficiency, and water quality. Recently gas tax fund revenues have been used for road

rehabilitation as well.

Canada Cultural Spaces Fund:

The Canadian Cultural Spaces Fund seeks to improve physical conditions for artistic creativity and

innovation. It is also designed to increase access for Canadians to performing arts, visual arts, media

arts, and to museum collections and heritage displays. The Fund supports the improvement,

renovation and construction of arts and heritage facilities, and the acquisition of specialized

equipment as well as conducting feasibility studies.

Bill Halliday, of the Port Theatre in Nanaimo, reports that this fund has an estimated $30m annually

to allocate for capital projects over all of Canada, and it places its emphasis on smaller capital

amounts focused on renovations and updating facilities. There is a possibility of a small amount of

the capital funding coming from this program. The recently completed (2011) Burlington Arts

78 | P a g e

Centre received $2.5m spread over three years from the Canada Cultural Spaces Fund. It is unlikely

that this fund would be accessible to meet the full assumed federal government share of the capital

project.

Government of British Columbia

There are no available grant funding programs through the BC provincial government that

would fit the criteria of the proposed performing arts centre capital project. Currently,

discussions with the province have indicated limited ability to commit to funding for such a

capital project at this time given other pressing funding priorities of the government.

Discussions with local MLAs have indicated that it is likely 5 to 8 years before the Provincial

budget may allow for capital funding on arts and culture capital projects.

Local Government ‐ The City of Prince George

If the assumption remains that the City of Prince George would provide 30 percent of the

capital funding, or between $11.82m and $15.32m (depending on how the land

contribution is addressed), then there are five potential funding areas for Council’s

consideration.

Federal Gas Tax Fund

As identified above, under federal funding options, Federal Gas Tax Fund revenues are

allowed to be used for cultural projects starting in 2014. The City’s use of this funding

(currently at approximately $3.0m) is subject to Council’s approval.

Based on financing $11.82m over 20 years, through the Municipal Finance Authority (at

current rates), the annual debt servicing payments would be $810,636, which is 27 percent

of the City’s annual estimated Federal Gas Tax funding.

Terasen Gas Ltd. Lease In Lease Out Agreement:

In November 2021, the Legacy from the “Lease In Lease Out” agreement with Terasen Gas

Inc. will come due and is expected to be $24m. This agreement covers the natural gas

distribution system within the City of Prince George, where Terasen (now Fortis BC)

operates the system and pays the City semi‐annual lease payments. The City uses the lease

payments to repay debt and the net revenues are placed in a reserve account.

When the Legacy comes due in 2021, Fortis BC can opt to either pay out the full Legacy

amount, or renew the lease. If the lease is renewed (i.e. the Legacy is not paid out), the

annual revenues from the lease would be available to the City, and Council (in 2021) would

determine how to use those funds. As on option, Council could consider using a portion of

79 | P a g e

the Legacy payment or, if the case may be, revenue from the lease payments, in order to

service the City’s capital portion of the proposed PAC90.

Combination of Federal Gas Tax Fund & Terasen Gas Ltd. Lease In Lease Out Agreement:

In the event that external partnership funding (e.g. Federal and Provincial governments and

private sector) is secured prior to the anniversary of the 2021 Legacy Terasen Lease In Lease

Out Agreement, a portion of the Federal Gas Tax rebate could be used as bridge financing

until the Legacy funding becomes available. This option could be a consideration if there is

a compelling reason to capitalize on a specific funding opportunity “window”.

If this scenario were to arise, bridge financing, using a portion of the Federal Gas Tax rebate,

would be needed for the City’s 30 percent of the capital share of $11.82m. Bridge financing

this amount would cost $810,636 per year until the Legacy funding is available. This

amount is about 27 percent of the annual Federal Gas Tax rebate received by the City.

City of Prince George Potential Proceeds from Land Sales

If the land occupied by the Prince George Playhouse is sold, the City could consider applying

a portion or all of the net proceeds of the sale towards the proposed PAC. A rough estimate

of the value of the land and improvements is between $4.5m and $5.0m, but this does not

include any costs associated with the sale of the land. This is an unknown currently.

City of Prince George Tax Levy:

In order to provide all options for consideration, the estimated annual debt servicing costs

on the City’s capital share through a tax levy are also provided, based on the 2014 budget

and estimated for a 20 year period:

a. The tax levy increase to take on the $1,050,672 annual payments on the $15.32m

City share of the capital costs, assuming no reduction from land value, is estimated

at 1.21 percent.

b. The tax levy increase to take on the $810,636 annual payments on the $11.82m City

share of the capital costs, assuming a reduced capital share from land value, is

estimated at 0.93 percent.

90 It is interesting to note that $14.9m (41%) of the capital project costs for the City of Burlington Arts Centre project came from their Hydro Reserve Fund, where the City is the sole shareholder of their hydro utility, and receives dividends that are “…used for special projects that enhance the quality of life in the community but are outside of the normal capital work projects”. In addition, $6.3 million for the project came from property taxes and $11.0m was raised through private and corporate fundraising.

80 | P a g e

It should be noted that the costs for providing an annual operating grant to the PAC, if

provided through a tax levy increase, is estimated at:

a. Based on the $300,000 annual grant or management fee provided to the operator of

the PAC, the annual tax levy increase is estimated at 0.35 percent.

b. Based on the amount of annual grant or management fee of $404,333, ($300,000 +

$104,333) which would be required to balance PAC’s operating budget, the annual

tax levy increase is estimated at 0.47 percent.

As such, the total tax levy increase for both debt servicing the capital costs and providing an

operating grant or management fee would be estimated at ranging between 1.28 percent

and 1.68 percent.

Other Local Government

Regional District of Fraser Fort George

In August 2011, the President of the PGRPAC Society presented the proposed PAC to a

regular meeting of the Regional District Board and requested a repayable grant of $1m

towards the project, impingent on the City and the Society being successful in their P3

Canada application. The Board requested that a report be prepared regarding funding

options available to the Regional District. That report was provided back to the Board in

October 2011 describing several borrowing, reserve savings and tax options. No further

action has been taken.

Northern Development Trust Initiative

Under the Economic Diversification Infrastructure program, the project may be eligible for

up to $250,000 grant and may also be eligible for additional funds through their loan

program.

Corporate and Private Sponsorship

Schick Shiner & Associates identifies a number of general fund raising strategies employed

by other arts centres and theatres including:

a. Providing opportunities for naming rights either for the PAC itself or theatres and

other individual spaces, or a combination of the two.

81 | P a g e

b. Providing opportunities for donation levels through a seat sponsorship program,

where donors are acknowledged with plaques on the seats.

c. Portions of the project (subject to conditions of the overall project), could provide

opportunities for in‐kind donations of materials that could reduce the capital costs

of the project.

d. Fund raising events, membership drives and general donation campaigns can assist

with the capital project although these strategies are largely employed for

operational funding. As an example, when the Vernon and District Performing Arts

Theatre was moving ahead, local fund‐raising efforts raised $700,000 to be used as

an endowment fund to offset operating costs.

Based on discussions with other theatres, local fund raising organizations and consultants, a

10 percent target for private sector capital funding contribution is suggested. This figure is

also in the range for national averages of private sector funding (philanthropy)

contributions to not‐for‐profit and volunteer organizations across Canada91. Of course, the

private sector also contributes to sponsoring operations.

8. Community & Economic Benefits

The consultant reports have provided discussions highlighting the benefits of supporting a

growing arts and culture sector within a community and how a performance centre and

theatre can contribute to this support. While there have been no empirical studies (Martin

Vinik, 201192) drawing a direct link between the level of arts and culture in a community and

the success in attracting new residents, it is a widely held understanding that arts and

culture is one of the factors that new residents consider in making decisions about moving

to their new community. This is particularly true for professionals and higher income

earners.

91 Source: Johns Hopkins Comparative Nonprofit Sector Project, National Survey of Nonprofit and Voluntary Organizations, 2005 92 Martin Vinik Planning for the Arts LLC, Levitt Goodman Architects Ltd., and Urban Strategies Inc. authored the “Academic and Cultural Arts Centre for Downtown St. Catherine’s”, references a number of studies that provide useful information.

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83 | P a g e

prepared by Initiatives Prince George in 2008 entitled “Economic Impact Assessment‐Prince

George Performing Arts Centre”.

The following are the revised economic impact estimates in 2017 dollars:

Economic Impacts from PAC Construction Output Multiplier95 Estimate

Construction output – based on $39.07m 1.5796 $61.34m

Professional & Engineering Services $7.61m

1.50 $11.42m

Furniture, Fixtures and Equipment $4.37m

1.52 $6.64m

TOTAL $79.40m

Employment (person years) based on $39.07m construction estimate

10.0597 393 person‐years

Professional & Engineering Services $7.61m

15.56 118 person years

Furniture, Fixtures and Equipment $4.37m

11.37 50 person‐years

TOTAL 561 person years98

As such, the estimated economic impact of the PAC project would be $79.40m with an

estimated 561 person years of direct employment.

The Webb Management Services report (2008) also provided quantitative and qualitative

estimates on economic impacts from the operations of the proposed PAC. Using estimated

leakages, it is reasonable to use them in this assessment of the local impact of activity surrounding the proposed Prince George Performing Arts Centre. 95 These multipliers were provided through Initiatives Prince George sourcing the Input‐Output Model developed by BC Stats in 2006. These should be considered approximate estimates. 96 Each dollar spent is expected to result in a total of $1.57 circulating through the economy; $1 direct spending and $0.57 as a result of the original dollar being re‐spent throughout the economy. 97 Each million dollars spent is expected to result in a total of 10.05 person years of employment. 98 A unit of measurement based on an ideal amount of work done by one person in a year consisting of a standard number of person‐days. This figure represents the direct and indirect labour produced through the life of the project.

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operational expenditures with multipliers for different categories of expenditures, their

report suggests new annual economic output (not including PAC staff wages) of $1.32m and

14 equivalent jobs.

The Webb report also describes new economic impacts from incremental (new) PAC

attendees, however, there are a number of assumptions in the Webb report that should be

reconsidered (e.g. 25% of the new PAC attendees come from outside of BC). The Webb

report also references US statistics from larger cities to draw conclusions about the

predicted spending habits of PAC attendees and this may not reflect our regional behaviour.

In general, a number of studies have described the difficulty in providing meaningful

estimates on predicted new economic activity from the operations of a new PAC. Martin

Vinik (2011) states that, “…quantification of actual economic impacts of existing arts

activities is extremely difficult. It depends on a detailed understanding of the movement of

money through the arts organizations and on reliable estimation of the indirect influence

that those organizations and their activities have on economic activity in the community

that surrounds them.”

However, studies do suggest that the following areas receive positive levels of economic

impact:

1. Net new employment.

2. Net new taxes (GST/HST and PST).

3. Spending on goods and services by PAC patrons.

4. Spending on goods and services by PAC renters.

5. Retail and ancillary spending by employees and volunteers.

6. Related tourism.

Initiatives Prince George, in 2008, provided an analysis of the economic impact from the

operations of a new PAC using provincial multipliers provided by BC Stats (2007). Based on

a breakdown of estimated $603,000 annual PAC expenditures (e.g. printing & publications,

advertising, business services, and salaries), the total estimated economic impact would be

$945,730 annually and resulting in an estimated 13.7 person years of employment.

A 2007 Conference Board of Canada study reported that, on average across Canada, every

dollar a municipality spends in the creative sector, results in $7 to $13 in economic activity.

A 2010 UBC study titled “The Creative Sector in Kelowna, British Columbia: An Economic

Impact Assessment” reported that their creative sector generates 1,199 direct full‐time and

part‐time (870 FTE) jobs, creating the equivalent of 409 indirect and induced full‐time

equivalent jobs resulting in a total economic output (direct+indirect+induced) of $143.8m.

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Similar figures are currently not available for Prince George, but the study illustrates the

important economic contributions, through multiplying effects, of a sector such as arts and

culture.

Studies also show that arts centres attract visitors to a community creating additional

expenditures such as accommodation, food and beverage and retail. The economic impact

can be estimated by looking at the effect of just 5 percent of the total PAC attendees in the

visitor class. This assumes that 5 percent are coming to Prince George with their prime

motivation to attend a performance at the PAC, and that they will need accommodation

and food and beverage services. Based on a conservative total annual ticket sales of

28,750, the 5 percent visitor class would account for 1,438 added visitors to Prince George.

Using data from Initiatives Prince George, and multipliers from BC Stats the total economic

impact is estimated to be $436,807 annually. Future studies would be needed to

determine more refined estimates on the percentage of visiting PAC patrons.

Although beyond the scope of this administrative review, it is expected that there will be

new economic impact to the local economy by each of the above categories. Further

economic impact study would be needed to determine refined estimates.

In terms of more qualitative economic impacts, the Webb report describes the positive

effects a new PAC would have in supporting the downtown through increasing restaurant

demand, retail businesses extending hours, increasing public safety and connection with

downtown by giving additional reasons to frequent the area. Other studies of arts centres

in Canada also point to “catalytic effects” related to increased commercial property values

and development stimulation with the injection of private and public funding into an area.

Administration agrees that, if the PAC was located in the downtown, the facility and its arts,

culture and entertainment would have a positive effect on the Prince George downtown.

9. Potential Next Steps and Estimated Time Lines

City of Prince George Council has added the proposed PAC to the capital plan as an

unfunded project, and has asked administration to provide information on potential next

steps. Government of Canada local representatives suggests that it may be 2 to 3 years

before there is added funding for arts and culture capital projects. The Province indicated

that it may be as long as 5 to 8 years before funding opportunities could be realized. Given

the uncertainty around the funding, it is not practical at this time to provide a schedule or

timeline for the project to proceed.

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However, administration has provided a number of options for consideration that may keep

the project planning moving forward such that, when other funding opportunities do come

available, more components of the project planning are complete, and the project may be

better positioned to attract funding:

1. Continue working with the Theatre North West Board and the PGRPAC Board, and

any necessary technical advisors, to fully investigate options towards a partnership

in the PAC. Determining whether or not TNW would be a resident company (or

some other involvement) in the proposed PAC is a fundamental question to the

design, capital costs and operating plan and budget of the proposed PAC.

Addressing this question is likely one of the next key steps of the planning process.

This may require significant discussions, closer review of similar theatre models and

additional technical advice to support the discussions. Administration estimates this

may need a minimum of 6 months to a year to fully address.

2. Depending on the outcome of the question on TNW’s involvement in the proposed

PAC, there may be a need to revisit the design, business plan and operating model

and building options.

3. Continue to work with the PGRPAC Society in laying the groundwork in anticipation

of future funding opportunities from the federal and provincial governments. This

would include presenting to the Government of Canada Finance Committee (pre‐

budget consultations) in the fall of 2014 in order to present a case for capital funding

for performing arts centres. This was recommended by MP Richard (Dick) Harris.

4. Support the work of the PGRPAC Society in community engagement and private and

corporate fund‐raising. Facilitate a review of fund‐raising strategies with TNW, the

PGRPAC Society and other key arts and culture organizations, to ensure a

complementary approach.

5. Once the TNW question has been addressed, there is agreement on the concept

design and site location, and there is favourable movement on external partnership

funding, then there is an option of seeking Council’s approval to proceed to the

Design / Development drawings and cost estimates phase:

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a. This would deliver drawings and engineering of sufficient reliability to

provide a Substantive Estimate (Class B estimates99) that would be suitable

for setting cost objectives.

b. This is estimated to cost in the range of $1.5100m and would include a design

team, a consultation process to review design options as part of the process,

a 3D Flyby Model rendering, systems design, engineering, and specialized

consultants including theatre lighting, acoustics and other technical aspects.

c. At this stage, life cycle costing analysis would be introduced in order to

optimize operational, maintenance and replacement costing over the entire

expected life of the facility.

d. This stage would require the establishment of a design team which would

include key local expertise and specialists, and key stakeholders such as, but

limited to, the City, PGRPAC Society, and Theatre North West. Performing art

centres and theatres are usually complex buildings with many different

specialized technical design elements and engineering. These facilities often

employ complex architecture, and need to balance many completing user

demands. The design/development stage is a critical step involving

consultation with stakeholders and users, and various technical specialists

and consultants. Every theatre consultant and operator consulted has

indicated the great importance of giving this phase of the project its full

attention to “get it right”.

e. Through this process, advice on the construction scheduling would be sought

to determine, as much as possible, a potential forecast (2‐3 years out) of

other regional construction projects coming on‐line. If possible, scheduling

construction projects (shifting the timing) to avoid high demand periods can

assist with managing construction costs (i.e. labour, transportation and

materials costs tend to be higher during peak construction periods).

99 At this stage, the estimates would be refined enough to set budget targets (Class B), but this stage would not produce drawings and specifications used for tendering (Class A) purposes as this would be developed in the following stage. 100 Fees can vary depending on the complexity of the project, but a “rule of thumb” is that 15% of the construction costs should be budgeted for architectural and engineering fees. For the Design/Development phase, an allocation of about 25% of the total fees is expected. Therefore, about 3% to 4% of the total fees are needed for this phase.

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Appendix A: Consultation List

1. Kirk Gable, Chair, Prince George Regional Performing Arts Centre Society

2. Prince George Regional Performing Arts Centre Society Board

3. Gene Daniels Promotions

4. Samantha MacDonald, Artistic Director, Theatre North West

5. John Reilly, Theatre North West

6. Theatre North West Board

7. Ted Price, Co‐founder and former Artistic Director Theatre North West

8. Richard Schick, Schick Shiner & Associates

9. Bruce Hayden, Dialog Architects

10. Gail Brade, School District 57, Vanier Hall

11. Jim Martin, CAO, Regional District Fraser‐Fort George

12. City of Prince George staff from the following areas:

a. CN Centre

b. Civic Centre

c. Facilities

d. Engineering

e. Real Estate Services

f. Planning & Development

g. Community Services

h. Finance

13. Exploration Place

14. Heather Regan, Western Canadian Theatre Company

15. Lori Marchand, Western Canadian Theatre Company

16. Pamela Resch, Vernon & District Performing Arts Theatre

17. Marnie Hamagami, Prince George Symphony Orchestra Society

18. Brian Pepper, Superintendent, School District 57

19. Allan Reed, School District 57 Treasurer

20. Bruce Halliday, General Manager, Port Theatre, Nanaimo, BC

21. Brian McCurdy, Executive Director, Burlington Arts Centre, Ontario

22. Randy Zahara, Kelowna Community Theatre

23. Bill Russell, Manager PG Playhouse

24. Susan Tinker, Partnerships BC

25. Rob MacKay, Director, P3 Canada

26. Toby Mallinder, VP, BTY Group

27. Enchainement Productions, Judy Russell

28. Prince George Conservatory of Music

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29. Prince George Community Arts Council

30. Dick Harris, MP

31. UNBC Conference Services

32. Rob Van Adrichem, VP Community and External Relations

33. Janine North, Northern Development Initiatives Trust

34. Terry McRae, Shantero Productions

35. Prince George Community Foundation

36. Shirley Bond, MLA Prince George‐Valemount

37. Mike Morris, MLA Prince George‐Mackenzie

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Appendix B: Example of Programming Budget for One Year Provided By Schick Shiner & Assoc.

Adult Programming - Variety across genres

ACCOUNT SUBS SHOW #1 SHOW #2 SHOW #3 SHOW #4 SHOW #5 SHOW #6 TOTAL REVENUE 80% 60% 50% 50% 60% 50% Subscription Ticket Sales 56,000 9,333 9,333 9,333 9,333 9,333 9,333 56,000 Single Ticket Sales 19,800 7,000 4,200 4,200 7,000 4,200 46,400 Box Office Surcharges Subs 1,680 280 280 280 280 280 280 1,680 Box Office Surcharges Singles 360 200 120 120 120 120 1,040 Sponsorship - Series 10,000 1,667 1,667 1,667 1,667 1,667 1,667 10,000 Sponsorship - Single Show 2,500 750 750 750 1,500 750 7,000

Programme Advertising 1,000 750 750 750 750 750 4,750

TOTAL REVENUE 34,940 19,980 17,100 17,100 20,650 17,100 126,870

EXPENSE Subscription Tx Marketing Exp 7,500 1,250 1,250 1,250 1,250 1,250 1,250 7,500 Single Tx Marketing Exp 2000 1000 1000 1000 1000 1000 7,000 Sponsorship Exp - Series Tx 1,000 167 167 167 167 167 167 1,000 Sponsorship Exp - Single Tx 180 70 70 70 140 70 600 Programme Advertising Exp 600 600 600 600 600 600 3,600 Box Office Exp Part Time Staff (night of) 80 80 80 80 80 80 480 Ticket Fees - Subs 0 Ticket Fees - Singles Credit Card Fees - Subs 1,680 280 2,800 2,800 2,800 2,800 2,800 14,280 Credit Card Fees - Singles 594 210 126 126 210 126 1,392 FOH Exp Part Time Staff (night of) 300 300 300 300 300 300 1,800 Materials 0 Artist Fees Artist Fees 20,000 7,800 5,500 6,245 30,000 7,000 76,545 Artist Expense (Travel, Accom) 1,000 600 600 400 2,000 400 5,000

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Production Costs Technical Staff 300 300 300 300 600 300 2,100 SOCAN Fees 874 490 406 406 490 406 3,072 Production Materials 0

Rental Equipment 150 200 200 300 1000 200 2,050

TOTAL EXPENSE 27,775 15,867 13,399 14,044 40,637 14,699 126,419

PROFIT (LOSS) 7,165 4,113 3,701 3,056 (19,987) 2,401 451 Break even at approx 55-60% of gross tx sales

Family Series

ACCOUNT SUBS SHOW #1 SHOW #2 SHOW #3 SHOW #4 TOTAL REVENUE 1 perf 2 perf 1 perf 2 perf Subscription Ticket Sales 19,200 4,800 4,800 4,800 4,800 (subs across two shows) 19,200

Single Ticket Sales 2,063 6,875 2,063 6,875(single tix spread across two) 17,875

Box Office Surcharges Subs 1,600 400 400 400 400 1,600 Box Office Surcharges Singles 150 500 150 500 1,300 Sponsorship - Series 2,000 500 500 500 500 2,000 Sponsorship - Single Show 500 700 500 700 2,400

Programme Advertising 300 300 300 300 1,200

TOTAL REVENUE 8,713 14,075 8,713 14,075 45,575 EXPENSE Subscription Tx Marketing Exp 7,500 1,875 1,875 1,875 1,875 7,500 Single Tx Marketing Exp 750 1,000 750 1,000 3,500 Sponsorship Exp - Series Tx 1,500 375 375 375 375 1,500 Sponsorship Exp - Single Tx 250 250 250 250 1,000 Programme Advertising Exp 150 150 150 150 600 Box Office Exp Part Time Staff (night of) 300 450 300 450 1,500 Ticket Fees - Subs 0 Ticket Fees - Singles Credit Card Fees - Subs 576 144 96 144 144 528 Credit Card Fees - Singles 62 206 62 206 536

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FOH Exp Part Time Staff (night of) 300 450 300 450 1,500 Materials 0 Artist Fees Artist Fees 2000 7184 3000 7200 19,384 Artist Expense (Travel, Accom) 500 500 500 500 2,000 Production Costs Technical Staff 300 600 300 600 1,800 SOCAN Fees 205.875 350.25 205.875 350.25 1,112 Production Materials 300 300 300 300 1,200

Rental Equipment 200 200 200 200 800

TOTAL EXPENSE 7,712 13,987 8,712 14,051 44,461

PROFIT (LOSS) 1,001 89 1 25 1,115

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