Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services & Budgets

FROM:

Directors, Office of Cultural Affairs and Finance, in consultation with Director of Legal Services

SUBJECT:

H.R. MacMillan Space Centre Society
- Annual Review and 2002 Operating Grant Request, Supplemental Grant Request and Operating/Lease Agreement

 

RECOMMENDATION

A. THAT an operating grant of $457,536 be approved to the H.R. MacMillan Space Centre Society; source of funds to be the 2002 `Other' Grants budget.

B. THAT Council authorize the Director of Legal Services to execute on behalf of the City a sublease/operating agreement granting to the H.R. MacMillan Space Centre Society:

C. THAT Council defer consideration of the one-time supplemental grant request for $250,000 from the H.R. MacMillan Space Centre Society as outlined in a letter of request attached as Appendix "B".

CITY MANAGER'S COMMENTS

RECOMMENDS:

D. THAT Council direct staff to review and report back on supplemental grant requests in the context of a comprehensive review of the issues facing, and the City's relationship with the Major Exhibiting Institutions.

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. Approval of grants requires eight affirmative votes of Council.

The operating/lease agreement between the City and the B.C. Space Sciences Centre (now H.R. MacMillan Space Centre Society) dated January 1, 1988 has expired.

PURPOSE

This report provides a review of the H.R. MacMillan Space Centre Society's 2001 activities, presents their 2002 operating grant request as well as a supplemental grant request. This report also seeks Council's authorization to enter into a new operating/lease agreement for a portion of the City-owned building in Vanier Park.

SUMMARY

Staff have reviewed the Space Centre's 2001 operating budget and programs and are recommending to Council a 2002 operating grant of $457,536, based on an increase of 1.75% over the 2001 approved grant level to cover inflation. However, staff note that thereare some areas of concern around the long-term decline in attendance and the challenges facing the organization with regard to diversifying its revenue streams.

The Space Centre has made a supplemental grant request for $250,000 to repay a portion of the financing made with the manufacturer of the simulator installed by the MSC as part of their 1997 expansion project. Their anticipated repayment plan was contingent on substantially increased admission revenues which have not materialized. Staff support the MSC's efforts to increase their attendance and recognize the implications of the recent trend in attendance caused by external events - September 11th and the teachers labour dispute in particular, which many of the City's cultural and exhibiting organizations are experiencing.

However, the City's ability to offset the financial consequences of these external events for any one organization or group of organizations is limited. Staff therefore recommend that this supplemental grant request be reviewed concurrently with supplemental grant requests that have been received from other Major Exhibiting Institutions in one report back to Council.
Finally, staff seek Council's authorization to commence negotiations for a new operating/lease agreement with the H.R. MacMillan Space Centre Society on the terms and conditions as generally outlined in this report. The Space Centre Society has reviewed and concurred with the draft lease terms as outlined in Appendix "C" of this report.

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 Gordon Southam Observatory. In 1987, Council approved the dissolution of the VMPA and the creation of three new societies including the B.C. Space Centre Society. In 2000, the Society changed its name to the H.R. MacMillan Space Centre Society.

MSC shares a City-owned building in Vanier Park with the Vancouver Museum. In addition to occupancy of the facility at a nominal rent, the City provides an annual operating grant as well as janitorial services, utilities, grounds and building maintenance through the City's Building Management department.

2001 Year in Review

MSC continued to offer a series of exhibits, public programs and activities in the areas of astronomy, space science and technology, remote sensing and earth management. Interactive exhibits, demonstrations and events take place in five different areas of the facility: H.R. MacMillan Planetarium; Gordon MacMillan 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 2001, MSC produced three new planetarium shows including Nightwatch: The Astronomer's Passion, which provides a brief introduction to astronomy followed by a live presentation by local astronomers. An innovative component of this public program is the creation of a position shared by the Space Centre and UBC to have a teaching astronomer interact directly with the public to present current information about developments in astronomy. The new GroundStation Canada show Colour of Fire: An Astronomer's Tool was also a highlight in 2001, giving audiences an entertaining demonstration of how astronomers use colour to determine the composition and properties of stars.

In addition, MSC has developed a series of education and extension programs, many of which enhance school curriculum and are supported by sponsorships and bursaries, some of which include:
· Canadian National Marsville - uses electronic and distance learning technologies with traditional classroom learning
· Starlab - an inflatable and portable planetarium and Community Astronomy - which takes telescopes and a slide presentation out to communities - are two cornerstone outreach programs
· The Great! Mars Rover Race - a competition for high school students to design and create a vehicle which would survive a Mars exploration
· Sharing Space - a mentoring program for secondary school students
· Engaging Science program - a joint venture with Science World and the Vancouver Aquarium, continues to present professional development workshops to BC teachers

In 2001, MSC enhanced its resources in staffing operations, guest services and program development. New marketing initiatives and program offerings had a positive impact in the first three quarters of 2001 when attendance and program participation showed solid growth over the previous year. MSC's 2001 Annual Report will be circulated to Council under separate cover and is available through the City Clerk's office.

2002 Plans

MSC has been using their 5-Year Strategic Plan (2001 - 2006), which was developed in 2000, to guide both last year's initiatives and those of the coming year. One of these goals was to increase program development and sponsorships. Building upon the efforts of 2001, MSC continues to develop program sponsorships, including a recently confirmed $75,000 Climate Change Action Fund grant to support the production and delivery of Spaceship Earth and Earth Watch programs. Other new program plans include the French languageinitiative designed to respond to the needs of French immersion schools, and evening music events targeted to replace declining laser show revenues.

Project Northstar is an new initiative that is being developed with science centres across Canada and sponsored by the Canadian Space Agency, NSERC and corporate sponsors to produce bilingual fact sheets on the International Space Station and a stage presentation entitled What A Blast! 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.

DISCUSSION

Operating Grant Request

In spite of successful programs and exhibits, and good attendance results in the first three quarters of 2001, paid attendance numbers dropped significantly in late 2001. Staff continue to be concerned with MSC's longer term trend in paid attendance - down 13% over 1999 and down 33% since opening the renovated Space Centre in 1997/8.

However, MSC has managed its resources well and continues to generally offset the decline in earned revenues through very successful private sector fund raising initiatives. MSC ended 2001 with an excess of revenues over expenditures of $49,058, before amortization at their fiscal year ending December 2001, on a total operating budget of $3.33 million. After amortization, MSC had a annual operating deficit of ($26,905) and an accumulated deficit of ($41,615) which arises from the ongoing capital costs associated with the 1997 Space Centre expansion. The audited financial statements for 2001 are attached to this report as Appendix "A".

MSC's challenge continues to be in building its budget to provide for a more diversified revenue stream. MSC continues to focus upon growing its operations through increased event programming, through new corporate sponsorship programs and by maximizing ancillary revenues (facility rentals, software licensing etc.). While expanding program offerings is a creative and responsive solution to the overall decline in attendance, MSC is vulnerable to unforseen external forces such as the transit strike, labour disputes and world events that impact visitor attendance. As the impact of some of these events is anticipated to carry over into 2002, staff are concerned that continued program expansion is difficult to sustain and may not mitigate the continued decrease in attendance.

Staff support the important work MSC has done to date in securing additional revenues from programs and activities, as well as their efforts to establish long term funding relationships with senior governments. Staff are recommending to Council a 2002 operating grant of$457,536, based on an increase of 1.75% over the 2001 approved grant level to cover inflation based on Council policy.

Supplemental Grant Request

MSC continues to carry a $631,500 loan from the manufacturer of the simulator installed as part of their 1997 expansion project. MSC entered into a financing agreement with SimEx which committed the Society to significant ongoing monthly loan payments through 2006 including a $250,000 payment due in September of 2002. The Society's expectations were that the increase in attendance resulting from the major expansion project (estimated at 660,000 visitors per year) would offset the financial obligations of the loan. Actual attendance, 117,952 in 2001, is now lower than pre-expansion levels and therefore unable to generate the revenues needed to make the loan payments.

As of December 31, 2001, MSC does not have sufficient cash reserves to make the loan payment in September 2002 without going into deficit. As noted in last year's report, staff have been concerned about MSC's ability to absorb the payment within its current level of operation. Last year, MSC indicated that it planned to renegotiate the loan with SimEx. MSC is now seeking Council's support for a supplemental grant in order to make their loan payment. MSC's letter of request is attached to this report as Appendix "B".

Staff recognize the implications of the recent trend in attendance caused by external events - September 11th and the teachers labour dispute in particular, which many of the City's cultural and exhibiting organizations are experiencing. However, the City's ability to offset the financial consequences of these external events for any one organization or group of organizations is limited. Staff therefore recommend that the MSC renegotiate its loan with SimEx to provide a payment schedule which is manageable within their existing resources,
and that this supplemental grant request be reviewed concurrently with supplemental grant requests that have been received from other Major Exhibiting Institutions.

Operating/Lease Agreement

The agreement between the City and MSC has expired and staff are proposing to enter into a new operating/lease agreement under the terms and conditions appended to this report as Appendix "C". The MSC Society has reviewed and concurred with the draft lease terms.
Subject to Council authorization, staff will negotiate with MSC, and concurrently, with the Vancouver Museum, the co-tenant in the building to conclude agreements which are independent yet complementary. Staff anticipate that this process will take the balance of 2002.

FINANCIAL IMPLICATIONS

Source of funds for the operating grant is the "Other" Grants allocation in the 2002 Budget.

CONCLUSION

Staff recommend continued operating support for the H.R. MacMillan Space Centre Society in the amount of $457,536. As discussed above, staff propose to defer consideration of the current request for a $250,000 supplemental grant. Rather, to ensure an equitable process, staff propose to review supplemental grant requests from the Major Exhibiting Institutions concurrently, and make recommendations in one report back to Council. Finally, staff seek Council's authorization to commence negotiations for a new operating/lease agreement with the H.R. MacMillan Space Centre Society on the terms and conditions as generally outlined in this report.

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