ADMINISTRATIVE REPORT

Date: June 16, 2001
Author/Local: S. Harvey/6001

RTS No. 02112

CC File No. 2201/4003

CS&B: July 12, 2001

TO:	Standing Committee on City Services & Budgets
FROM:	Director, Office of Cultural Affairs in consultation with Director of Financial Planning & Treasury
SUBJECT:	H.R. MacMillan Space Centre Society - Annual Review and 2001 Operating Grant Request

RECOMMENDATION

THAT an operating grant of $449,667 be approved to the H.R. MacMillan Space Centre Society, with the source of funds to be the 2001 `Other' Grants budget.

GENERAL MANAGERS' COMMENTS

The General Managers of Community and Corporate Services RECOMMEND approval.

COUNCIL POLICY

Council has approved annual operating grants to the major exhibiting institutions to support their ongoing operations since their formation as independent non-profit societies in 1971.

The current operating/lease agreement between the City and the Pacific Space Centre Society has lapsed and is in the process of being negotiated. In the intervening period, the relationship is being continued on generally the same terms and conditions as contained in the last operating agreement.

Approval of grants requires eight affirmative votes of Council.

PURPOSE

This report provides a review of the H.R. MacMillan (formerly Pacific) Space Centre Society's 2000 activities and presents for Council's consideration their 2001 Operating Grant request.

BACKGROUND

In 1967 as part of the City's Centennial celebration, the Vancouver Museums and Planetarium Association was relocated to a prominent new building in Vanier Park. Over the years the facility has been expanded to include the H.R. MacMillan Planetarium and the Southam Observatory. In 1987 Council approved the dissolution of the VMPA and the creation of three new societies including the Pacific Space Centre Society. In 2000, the Pacific Space Centre Society changed its name to the H.R. MacMillan Space Centre Society.

The Space Centre shares a City-owned building in Vanier Park with the Vancouver Museum, and presents educational programs and exhibits in the areas of astronomy, space science, space technology, remote sensing and earth management.

2000 Year in Review

The MSC continued to offer a series of exhibits, programs and activities with a focus on educational family programming. The permanent exhibits and galleries include:

· H.R. MacMillan Planetarium;
· Gordon Southam Observatory;
· Groundstation Canada - a multimedia "mission control" theatre;
· Cosmic Courtyard - interactive displays on a range of space-related topics; and
· Virtual Voyages - a motion simulator ride.

In addition the MSC has developed a series of successful outreach and extension programs mostly targeted at children and youth such as The Great Mars Rover Race and Sharing Space - a mentoring program for secondary school students.

2001 Plans

2001 plans include the continued array of space science programs in addition to the permanent exhibits. New initiatives include a partnership with the Abbotsford Air Show, partnership with the Vancouver Museum and the Children's Festival, as well as a VanierPark Canada Day celebration in partnership with the Vancouver Museum and Vancouver Maritime Museum.

The MSC have completed an 5-Year Strategic Plan (2001 - 2006) which focuses on expansion of building services and marketing. As well, the MSC is working with the Canadian Council of Science Centres to develop a national strategy to raise the profile, and future funding for science centres from the federal government.

In 2001 the MSC will also be working with City staff to conclude a new operating lease agreement. Staff will be reporting back to Council in the fall with terms and conditions for new operating lease agreements for each of the major exhibiting institutions.

DISCUSSION

Staff are recommending to Council a 2001 operating grant of $449,667, based on the 2000 approved funding level. The 2001 grant has been increased by 1% over the 2000 grant to cover inflation based on Council policy.

Cultural Affairs and Finance staff have reviewed the budgets and assumptions and support the financial projections as reasonable in relation to recent experience at the MacMillan Space Centre, as well as other local exhibiting institutions. The MSC's Annual Report will be circulated to Council. Financial statements for the year ending December 31, 2000 are attached to this report as Appendix "A".

The MSC had an excess of expenditures over revenues of ($43,020) at their fiscal year ending December 2000, on a total operating budget of $3.23 million. The deficit arises from ongoing costs associated with the 1997 Space Centre expansion. The MSC continues to carry a $625,000 loan from the simulator manufacturer and are committed to significant monthly loan payments through 2005 including a $250,000 lump payment due in 2002. Excluding these capital costs, the MSC had an excess of revenues over expenditure of $44,024.

Paid attendance in 2000 has continued to decline. Total paid attendance (117,359) was down 14% over 1999 - a 33% decline since opening the renovated Space Centre in 1998. Some of this decline is attributable to an opening attendance peak experienced by all new attractions. While sustained decreases are cause for concern, the MSC has invested significant energy and resources in developing new programs and activities to attract repeat and new visitors and begin to replace revenues from admissions. They have successfully balanced their 2000 budget by increasing revenues from an expanded range of programs. While this is a creative and responsive solution to the decline in core attendance, staff are concerned that this continued level of program expansion is difficult to sustain.

Staff are also concerned about attendance over the summer of 2001. With both the transit strike and the major construction in the Museum/Space Centre parking lot arising from the City's dedicated fire protection system installation, attendance and ticket revenues for all of the cultural facilities in Vanier Park will continue to be depressed.

Further, with a $250,000 loan payment due in September 2002 on the simulator purchased as part of the 1997 expansion, staff are concerned about the MSC's ability to absorb the payment within its current level of operation. The Space Centre is exploring a range of options -- from continued capital fund raising to extension of the loan. Staff will review these options with the Space Centre and report back to Council in the context of their 2002 grant request.

The MSC is focussing on growing its operations through increased event programming, through new corporate sponsorship programs and by maximizing ancillary revenues (facility rentals, software licensing etc.). In concert with the Vancouver Museum, they are exploring additional revenue opportunities through pay parking and on-site food services. While these ancillary services may in time assist financially - they will not generate significant net returns. A National Survey of Science Centres indicates that gift shop/food services represent an average of 5% of revenues for medium size facilities while programs, admissions and memberships represent 43%.

Staff support the MSC's strategies to seek additional and increased revenues from senior governments in addition to the important work done to date in securing additional revenues from programs and activities.

FINANCIAL IMPLICATIONS

The source of funds for the operating grant is the "Other" Grants allocation in the 2001 Budget.

CONCLUSION

Staff recommend continued operating support for the MacMillan Space Centre Society in the amount of $449,667.

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APPENDIX A NOT AVAILABLE ELECTRONICALLY - COPY AVAILABLE FROM THE CITY CLERK'S OFFICE

(c) 1998 City of Vancouver