SUPPORTS ITEM NO.  4
                                                P&E COMMITTEE AGENDA
                                                SEPTEMBER 14, 1995   


                             ADMINISTRATIVE REPORT

                                           Date: August 31, 1995

   TO:       Standing Committee on Planning and Environment

   FROM:     The  Director  of  Civic  Theatres in  consultation  with  the
             Director  of Cultural  Affairs,   the Manager  of  Real Estate
             Services,    the Manager  of  Facilities  Development and  the
             Deputy Director of Finance.

   SUBJECT:  Vancouver Opera  Association - proposal to  develop portion of
             Queen Elizabeth Theatre Plaza  and Parkade as Opera Production
             Centre.

   RECOMMENDATION

   A.   THAT Council withhold  from development  an area on  and under  the
        Queen Elizabeth Theatre Plaza for  a period of  two years  to allow
        the Vancouver Opera Association to further develop their plans  for
        an Opera Production Centre.

   B.   THAT  Council  approve in  principle  a non-registered  lease  of a
        volumetric parcel  containing the proposed  Opera Production Centre
        under the following major terms;

        1.   Rent:   $1.00 per year  with no  charge for property  taxes or
             amounts in lieu of taxes. (As this arrangement is considered a
             grant, EIGHT AFFIRMATIVE VOTES are required.)

        2.   Term: 60 years.

        3.   The  City   has  the  right   to  terminate   the  lease   for
             redevelopment of the  site upon one year's notice,  such right
             of termination not  to be exercised for the  first 30 years of
             the 60 year term.

        4.   Further  terms  and  conditions  to the  satisfaction  of  the
             Director of Legal Services, the Manager of Real Estate and the
             Director of Civic Theatres.

   C.   THAT residual density on the site be retained by the City.

   D.   THAT Council direct staff to report back outlining the terms of the
        lease  as soon as the conditions  outlined in this report have been
        met to the satisfaction of the City Manager.

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   CITY MANAGER'S COMMENTS

        The City Manager RECOMMENDS approval of A, B, C, and D.

   COUNCIL POLICY

   In April, 1990 and again in December, 1991 Council approved the Cultural
   Facilities and   Projects Priorities Report which  included reference to
   civic support of  rehearsal/production/administration spaces,  including
   specific reference  to the Vancouver  Opera Association, subject  to the
   presentation of feasible proposals for their realization.

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   On  November 17, 1993  Council approved Vancouver  Arts Initiative (VAI)
   recommendations  including direction to staff  to review and report back
   on  "how  the   City  might  assist  arts   organizations  in  acquiring
   production, performance and/or administrative space through a variety of
   mechanisms including  no-risk loans, bonusing, long-term  lease of City-
   owned properties  at nominal rents,  and/or funding through  the Capital
   Grants program."

   With respect  to "purpose-built" facilities on  City property, Council's
   practice has been to provide the site with no charge for rent or amounts
   in lieu of taxes.  These arrangements are considered as grants.

   SUMMARY

   This report provides  staff evaluation  of a proposal  by the  Vancouver
   Opera  Association to  lease a  portion of  the Queen  Elizabeth Theatre
   Plaza, including the present  QET Restaurant location and  a significant
   area below  the Plaza,  and  to construct on  that site a  building that
   would  house the  VOA's operations,  an  expanded restaurant  and rental
   space for other arts organizations.

   The VOA are requesting;

   (a)  a 99 year lease at $1.00 per year;

   (b)  transfer of residual density rights on the site to VOA;

   (c)  exemption from property taxes;

   (d)  assistance  in some form (a share of parking revenues)with the cost
        of replacing parking spaces in  the QET parkade that would be  lost
        due  to  this  development.Staff    are  recommending  approval  in
        principle of  a 60 year  lease at $1.00  per year and  property tax
        exemption but do not support transfer of density rights nor sharing
        the  cost of replacing lost parking stalls.  Staff are recommending
        additional conditions  that include  the City's right  to terminate
        the  lease after  30  years for  redevelopment  of the  site and  a
        requirement for the VOA to demonstrate its ability to independently
        fund both capital and operating costs.  

   The  VOA are  including  provision for  community  access to  the  large
   rehearsal  hall-cum-performance space  and  rental offices.   Terms  for
   these  uses will also  need to be  developed to the  satisfaction of the
   City.

   BACKGROUND

   Civic  Theatres Department  conducted  a feasibility  study for  capital
   improvements of the three theatres   at the end of which,  in  September
   1994,  a workshop  was presented to Council.   The results of  the study
   indicated  possibilities  for adding  to  the  QET/Playhouse complex  to
   provide administrative and production space for resident performing arts
   companies.    Potential spaces  included  an addition  along  the Cambie
   Street facade extending  the full length  of the complex, three  or more
   stories  high; the potential to double the footprint of the existing QET
   Restaurant  structure and  add two  floors of  rental space on  top; and
   construction of  a new large  rehearsal hall below grade on the Dunsmuir
   Street side  of the complex.  These proposed upgrades were included in a
   preliminary development permit application  approved with conditions  on
   March 13, 1995.  

   During   the  same   time  period,   the  Vancouver   Opera  Association
   commissioned a study of  its needs for a  permanent home.  A  design was
   prepared  for a stand-alone building located on the former Greyhound Bus

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   Depot   site  on  Cambie  Street   and  presented  to   City  staff  for
   consideration.    Staff recommended that  it would be   inappropriate to
   encumber that site prior to a major  development proposal for the entire
   site.  As the time frame for such a development is beyond the objectives
   of the VOA, staff suggested they reconsider the QET Plaza location.

   DISCUSSION

   Over  the past several years the Vancouver Opera Association has enjoyed
   considerable  success   resulting  in  an  increase  in  the  number  of
   productions each season to five operas and an increase in  the number of
   performances of each  opera.  One consequence  of this success  has been
   the retirement  of their  operating deficit  at the  end of  the 1994-95
   season.

   During the same period the  VOA has also had to lease and  move into new
   administrative  and production facilities.   The term of  that lease has
   another three years  to run at which time they  will potentially have to
   move again.   Aside from  the unproductive expense  of moving,  suitable
   space  for a  performing arts  company is  extremely difficult  to find.
   "Suitable space" means that all of the Opera operations should be in the
   same building  and that building  should be  part of, or  in very  close
   proximity to,  the theatre in which they perform.  

   The Proposed Design

   The  VOA have  retained an  architect to  develop conceptual  designs to
   accommodate these needs,  incorporating them  with  other  needs of  the
   site and complementary community  uses as the basis for  their proposal.
   Some  work has  been  done with  Civic Theatres,  Social  Planning   and
   Planning staff  to accommodate various requirements of the site.

   In addition  to the spaces  required specifically for  opera production,
   the  VOA proposal  provides for  additional office  space for  rental at
   affordable  rates  to other  local performing  arts organizations  for a
   period of  ten years.   It is foreseeable that the VOA might  eventually
   need these  spaces for expansion.   If Civic Theatres is  able to expand
   the  complex  on  the Cambie  Street  side during  that  time,  then the
   companies accommodated in  the VOA  building would be  able to  relocate
   within the complex.

   A particularly interesting part  of the proposal is the  large rehearsal
   hall.   At the dimensions needed  for opera production, such  a room can
   also be used  as a studio or  "Black Box Theatre" of  up to 250 seats.  
   The  VOA proposal includes making  time available for  community uses at
   reasonable rates, outside of the time dedicated to Opera use.

   The  proposed development would take  up about one-half  of the existing
   250 parking  spaces  in the  QET  Parkade.   The  proposal provides  for
   excavating and constructing a new, third level of underground parking so
   there would be no loss of parking capacity.

   The proposal also includes  a restaurant space, double the  footprint of
   the present one.   This is  consistent with Civic Theatres'   programme.
   At  the larger  size, the  restaurant becomes  viable as  a full-service
   commercial operation, depending on market conditions at the time.

    The total  development proposed  including the expanded  restaurant but
   excluding  parking, is 77,710 square  feet.  Including  all parking (old
   and new) it would be a total of 123,670 square feet.

   The  Director  of  Civic  Theatres  views the  proposed  development  as
   complementary to the purposes of Civic  Theatres and a "best use" of the
   site in that it  provides an on-site home for  a major resident user  of

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   the  QET with  long-term security,   similar  to the  Vancouver Symphony
   Orchestra's  residency in the Orpheum;   it accommodates other community
   arts  uses;   it  supports  the development  of a  cultural  precinct or
   entertainment district; and in  total it supports the long  range vision
   for the QET/Playhouse complex to become a true performing arts centre.  


   The  Planning Department have reviewed the design at various stages and,
   while all  of the usual  approvals must still  be secured,   the overall
   view is that it is possible to proceed with the proposal.

   Project Funding

   The project will require  a significant fund raising effort on  the part
   of the  VOA. In   support  of that  fund  raising effort,  the Board  of
   Directors of the VOA are making several requests of Council, but are not
   requesting  a capital  grant from the  City.  The  requests contained in
   their  letter,   Appendix  "A",   have  been  somewhat   modified  after
   discussions with City staff.

   In summary, the requests are:

   1.   A volumetric parcel   lease to the Vancouver Opera  Association for
        99 years at $1.00 per year.

   2.   Transfer of residual  density rights  for the portion  of the  site
        leased to the VOA.

   3.   Exemption from property taxes for the life of the lease.

   4.   A share of revenue  from the parking operation in  compensation for
        the capital costs associated with replacing the parking stalls that
        would otherwise be eliminated by this development.

   Staff Position

   1.   Staff  support   a non-registered  volumetric  parcel lease  for 60
        years  with option  to renew at  $1.00 per  year, for  an area that
        includes all of the proposed  VOA development except the restaurant
        and parking.

        Staff  are recommending that,  in the  event the  City may  wish to
        redevelop the site at some  time in the future, a lease  be subject
        to termination upon one  year's notice, such termination not  to be
        exercised during the first 30 years of the 60 year term.

   2.   The  VOA  will  be  required  to  construct  the  restaurant  space
        including restaurant infrastructure  (services, support  facilities
        etc.) but not including leasehold improvements, to the satisfaction
        of the Manager of Facilities Development.

   3.   The  VOA will be required  to construct, at  a minimum, one-for-one
        replacement of all parking  stalls removed for this project  to the
        satisfaction of the Manager of Facilities Development.

        The  Development Permit  Board  will  determine whether  additional
        parking  will  be required  because  of  this development.    Staff
        believe that the VOA must comply with  the parking requirements  at
        no  cost to the City and that no revenues should be diverted to the
        benefit of  the VOA.    The net  revenues from the  present parking
        operation,  (up to  $300,000  annually), accrue  to Civic  Theatres
        Capital  Reserve.   Reducing  this income  simply puts  pressure on
        Civic Theatres  to replace that  income with other  and potentially
        more controversial  kinds  of income  to  support upgrades  to  the

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        theatres.   

   4.   Staff do not  support the transfer  of density  rights to the  VOA.
        This  kind  of  transfer of  density  is  not  consistent with  the
        established principles in support  of heritage preservation.  Staff
        believe  that the  available  density on  the  QET site  should  be
        retained  for eventual  use in  support of  Civic Theatres  capital
        improvements.

   5.   Staff support  the requested  exemption from property  tax for  the
        life of the lease. 

   Conditions

   Staff recommend that, prior to entering into a long term lease, a set of
   conditions concerning project funding and  facility operations be met to
   the satisfaction of the City Manager as follows:

   1.   The  VOA  must  demonstrate  that  the  funding  has  been  secured
        sufficient for  the entire  capital cost  of the project  including
        finishing  and furnishing  of the  large rehearsal  hall to  public
        performance standards.

   2.   The  VOA must  demonstrate  their  on-going  ability  to  fund  the
        operation  of  the facility  without  additional  civic support  or
        operating debt.

   3.   Agreement must be reached on terms that will form part of the lease
        providing for community access for non-profit arts organizations to
        the rehearsal  hall/performance spaces and rental  offices at rates
        based on recovery of operating costs. 


   FINANCIAL IMPLICATIONS

   The VOA are not requesting a capital grant from the City at this time.  

   During construction the QET  garage and restaurant would be  closed. The
   foregone  revenue to  Civic  Theatres  could be  as  much as    $300,000
   annually, impacting the Capital Reserve which provides funding for Civic
   Theatres upgrades.  It is possible  that construction could be staged in
   such  a way  as to  re-open the  garage before  completion of  the whole
   project and  reduce the loss.   This matter of foregone  revenue will be
   addressed more accurately when staff report back on lease terms.

   SOCIAL IMPLICATIONS

   The development  could be seen  to represent a lost  opportunity for the
   City to develop the property and retain all revenues that might  result.
   Civic Theatres and Cultural Affairs staff view this proposed development
   as a  "best use"  of the  site  in view  of the  significant social  and
   cultural benefits  which include; providing  long term security  for the
   Vancouver  Opera Association;  providing  additional  accommodation  and
   performance  facilities   for  the  performing  arts   community;    and
   supporting a valuable  addition to the developing downtown  cultural and
   entertainment district.
    
   CONCLUSION

   Assuming the conditions outlined in this report can be satisfied by  the
   Vancouver  Opera Association, staff  view the proposed development of an
   Opera Production Centre on  and under the Queen Elizabeth  Theatre Plaza
   as being mutually supportive of the VOA, Civic Theatres, the development
   of the downtown cultural/entertainment  district and the City's cultural

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   facilities priorities.

   A copy of this report has been sent to the Vancouver Opera Association.

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