Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services & Budgets

FROM:

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

SUBJECT:

Vancouver Maritime Museum
- 2002 Annual Review and Operating Grant Request; and
- Operating/Lease Agreement

 

RECOMMENDATIONS

GENERAL MANAGERS' COMMENTS

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 a grant requires eight affirmative votes.

The City's relationship with the VMM (excluding the St. Roch) is outlined in an operating/lease agreement which expired May 31, 2000. The Vancouver Maritime Museum Society is currently holding over. The agreement between the City and the VMM with respect to the St. Roch expired on June 30, 1997. A new comprehensive operating/lease agreement 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 expired agreements.

PURPOSE AND SUMMARY

This report provides a review of the Vancouver Maritime Museum's 2001 activities, and presents for Council's consideration its 2002 Operating Grant request, which includes operation of the St. Roch. In addition, this report seeks Council's authorization to enter into a new operating/lease agreement with the VMM.

The VMM had an excess of revenues over expenditures of $25,179 on a budget of $957,219. However, the VMM continues to carry a significant accumulated deficit ($220,672) and staff continues to be concerned about the size of the deficit and the abilities of the organization to eliminate it and move towards developing a more positive balance sheet. The VMM has developed a Deficit Reduction Plan which projects that the debt will be eliminated by 2006 through generating operational surpluses. However, the VMM's track record since 1991 demonstrates that this can be a long and challenging approach.

Council has approved supplemental funding for the St. Roch since 1995 when the Federal Government withdrew from its operations. At that time, Council directed the VMM to mount a fund raising drive to establish an endowment fund sufficient to offset the ongoing operations of the St. Roch. Staff believe that the VMM has made a very significant effort to meet Council's direction with the challenging St. Roch Voyage. The Voyage however, while a programmatic success, did not raise sufficient funds to offset the current operating costs. While the VMM does have other fund raising initiatives underway to contribute to the St. Roch fund, it is clear that an endowment fund is not a realistic option.

Staff have reviewed alternate options including closure of the St. Roch, seeking an alternate operator (unlikely to find one able to pay moving costs); or continued funding by the City. Given that the St. Roch is a City asset, and a signature artifact in the museum's collection, staff are recommending that Council convert previous supplemental support to an operating grant.

The VMM has received a request from the Campbell River Maritime Discovery Centre for the BCP 45 Seiner moored in the Heritage Harbour. While the VMM would like to keep the seiner in the collection as a working boat, the VMM does not have the resources for its ongoing maintenance. The VMM Board has therefore recommended the transfer of the ship to the Campbell River Maritime Heritage Society for a nominal fee. Because all artifacts of an historic nature held by the VMM are property of the City, this transfer requires prior City approval. Staff have reviewed the deaccessioning process and support the recommendation of the VMM Board.

The operating/lease agreement between the City and the VMM 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 "B". The VMM Society has reviewed and concurred with the draft lease terms.

BACKGROUND

The Vancouver Maritime Museum has operated in its current location in Kits Point since 1958. The VMM was operated by the City until 1972 when it became part of the Vancouver Museums and Planetarium Association (VMPA). In 1987, the VMPA devolved into three separate organizations: the Vancouver Maritime Museum Society, the Vancouver Museum Association and the BC Space Sciences Society (now the H.R. MacMillan Space Centre Society).

The City currently provides capital and operating support through grants to the Vancouver Maritime Museum, as well as janitorial services, utilities, grounds and building maintenance through the City's Building Management Department.

The St. Roch is also owned by the City of Vancouver and housed in a City-owned structure adjacent to the Vancouver Maritime Museum. In 1966, the City of Vancouver, under an agreement with the Federal Government restored and housed the ship in a temporary structure where it is still housed today. The Federal Government, through Parks Canada operated the St. Roch National Historic Site up until 1995. Since 1995, the City has provided operational funds through a series of supplementary grants to the VMM.

2001 Year In Review
New permanent exhibits completed in 2001 included K'ay'achtn (Our Hands Are Up To You), which was developed in partnership with the Squamish Nation and celebrates Squamish sea traditions. In addition to the permanent exhibits of maritime art and artifacts, the VMM hosted a series of temporary exhibits including:

· Maritime Heritage in Croatian Art, an exhibit from Zagreb, Croatia;
· The Vikings: Master Mariners, Traders, Colonists and Artisans, which featured artifacts from excavations in Europe and North America; and
· Biombos dos Portugueses, an exhibition of screens from Portugal featuring historical maritime scenes.

The VMM also installed new contextual exhibits around its Heritage Harbour, which has 12 `resident' vessels and is the site of the Museum's annual Heritage Boat Festival.

One of the VMM's major projects for 2001 was the completion of the St. Roch II: Voyage of Rediscovery. The St. Roch II was launched July 1st, 2000 from Canada Place and followed the original St. Roch's 1940/1942 transit through the Northwest Passage and the first circumnavigation of North America. The 24,000 nautical mile voyage was completed in 2001, as a result of a partnership between the RCMP and the Vancouver Maritime Museum, with support from the Coast Guard, the Department of Canadian Heritage Millennium Bureau, corporate sponsors and individual donors.

The VMM's exhibits, program and activities in 2001 attracted a total paid attendance of 31,560. Total attendance, including free admissions for members, seniors on Tuesdays, harbour visits, Kidsummer, Heritage Boat & other festivals reached 98,311. A copy of the VMM's 2001 Annual Report will be circulated under separate cover and available from City Clerk's Office.

2002 Plans
Operational planning in 2002 will focus on improvements to the existing physical plant. VMM plans include the continued renovation of permanent exhibition galleries and a new contextual exhibit for the St. Roch, which will relate the story of the St. Roch and the Voyage of Rediscovery. A travelling exhibition of the St. Roch II: Voyage of Rediscovery will also be developed and circulated. In addition, two temporary exhibitions are planned:
· The Watery Kingdom: China's Mariners from Antiquity to the Ming Dynasty, with unique collections of Chinese jade sculptures forming the centrepiece of the exhibit;
· Cruising the Fabled Inside Passage: The Life and Lore of the Cruise Ship, which focuses on the cruise ship industry in Vancouver.

Public programming in 2002 will continue with successful outreach programs such as the Waterfront Industries in Your Backyard, which teaches children about the working Port and waterfront industry, and a new school program that will focus on the historic and current use of the False Creek area. The VMM has an increasing role in community-based events and will participate in seven major events in the community in 2002 including the Wooden Boat Festival, Fraser Festival, Alcan Dragon Boat Festival and Port Day.

In 2002, the VMM will revise their collection policy using the B.C. and Canadian Museum Associations standards, and further develop the collections database to establish control over new accessions, deaccessions, incoming and outgoing loans.

DISCUSSION

Operating Grant Request
In 2001, admission revenues were up 22% and total revenues were up 11% over the previous year, which is a significant achievement in the context of managing the challenging St. Roch Voyage project, as well as external factors such as the transit strike and September 11th.

The VMM's financial statements for the year ending December 31, 2001 are attached as Appendix "A". The VMM had an excess of revenues over expenditures of $25,179 on a budget of $957,219. However, the VMM continues to carry a significant accumulated deficit ($220,672) or 23% of its operating budget. Much of the accumulated deficit is historical, having been originally incurred in 1991 ($200,237). While some progress has been made over the years, staff continue to be concerned about the size of the deficit and the abilitiesof the organization to eliminate it and move towards developing a more positive balance sheet.

The VMM has developed a Deficit Reduction Plan which projects that the debt will be eliminated by 2006. To accomplish this goal, the VMM intends to reduce its deficit by generating annual surpluses through expanded fund raising efforts (utilizing connections made through the St. Roch Voyage campaign), addressing it as part of a capital campaign for a new expanded museum and if necessary, through reductions in expenditures to achieve surplus targets.

While generating operational surpluses may contribute to deficit reduction, the VMM's track record since 1991 demonstrates that this can be a long and challenging approach. Further, staff are concerned that the strategy of including deficit reduction as part of a capital campaign is problematic. The organization would be better positioned going into a capital campaign on a sound financial footing and looking to build an endowment fund for future operations.

St. Roch Request
Council has approved supplemental funding for the St. Roch since 1995 when the Federal Government withdrew from its operations. At that time, Council directed the VMM to mount a fund raising drive to establish an endowment fund sufficient to offset the ongoing operations of the St. Roch. Staff believe that the VMM has made a very significant effort to meet Council's direction with the challenging St. Roch Voyage. This $1.2 million project was an enormous undertaking for the VMM involving all of the Museum staff, many volunteers and three years of planning. The Voyage however, while a programmatic success, did not raise sufficient funds to offset the current operating costs. The Voyage financial report shows an excess of revenues over expenditures of $33,064. A schedule of St. Roch Voyage Revenues and Expenditures is attached as page 15 of the financial statement in Appendix "A".

The VMM does have other fund raising initiatives underway to contribute to the St. Roch fund (percentage of revenues from an RCMP CD, sale of St. Roch books and merchandise, etc.). Staff commend the VMM for the efforts made to date and encourage the Society to continue with their fund raising activities. However, it is it clear that an endowment fund is not a realistic option.

Staff have reviewed alternate options including the closure of the St. Roch while maintaining public viewing through glass walls (some capital investment; limited public benefit; decreased earned revenue to VMM); seeking an alternate operator (unlikely to find one able to pay moving costs); or continued funding by the City to the VMM. Given that the St. Rochis a City asset, and a signature artifact in the museum's collection, staff are recommending that Council convert previous supplemental support for the St. Roch to an operating grant.

Transfer of Ownership of the BCP 45
The VMM has received a request from the Campbell River Maritime Heritage Society for the transfer of the BCP 45 Seiner moored in the Heritage Harbour. While the VMM would like to keep the seiner in the collection as a working boat, it is estimated that $90,000 in repairs are required to keep her afloat. The VMM Board has therefore recommended the transfer of the ship to the Campbell River Maritime Heritage Society for a nominal fee. Because all artifacts of an historic nature held by the VMM are property of the City, this transfer requires prior City approval. Staff have reviewed the deaccessioning process and support the recommendation of the VMM Board.

Operating/Lease Agreement
The agreement between the City and the VMM 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 "B".

FINANCIAL IMPLICATIONS

Staff are recommending a 2002 operating grant of $274,108 as well as $84,269 in St. Roch operating funding for a total operating grant of $358,377. The source of funds is the "Other" Grants allocation as provided for in the 2002 Budget. This is based on an increase of 1.75% over the 2001 operating and St. Roch supplementary grant funding levels to cover inflation based on Council policy.

CONCLUSION

Staff recommend continued operating support for The Vancouver Maritime Museum Society in the amount of $358,377, which includes $84,269 for the operation of the St. Roch.

* * * * *

cs020627.htm

APPENDIX B
Page 1 of 4

Agreement between the City of Vancouver (City)
and
the Vancouver Maritime Museum Society (VMM)

DRAFT TERMS

Term: Fifteen years commencing June 1, 2002

Rent: $1.00 payable in advance

Premises: 1905 Ogden Avenue including

Grant of Lease and License:
The City to grant:
· a lease of the VMM Building as outlined in the plan attached as a schedule to the agreement for purposes set out in the Use section below;
· a non-exclusive license to use the St. Roch for purposes set out in the Use section below;
· a non-exclusive licence to use the Grounds, Heritage Harbour and Breakwater Area generally for the purposes set out in the Use section below;
· a non-exclusive license to use the Federal Artifacts for the purposes set out in the Use section below; and
· a non-exclusive license of a portion of the Vancouver Academy of Music building for storage.

Use:
Permitted use of the Premises include:
K. operation of a maritime museum within the Mandate and Cultural Objectives established by the VMM, appended to the agreement as a Schedule, and approved by the City (see below);
· purposes necessarily incidental to the operations of a maritime museum, and permitted within the zoning including a gift shop, venue rentals and fund raising activities in accordance with an Occasional Third Party Use Policy (see Occasional Third Party Use section).

APPENDIX B
Page 2 of 4

Related Agreements:
A. An agreement dated March 31, 1995 between the Federal Government and the City grants the City permission to use, and share with the VMM the use of certain marine artifacts, ("the Federal Artifacts"); and
B. The Head Lease agreement dated August 15, 1966 between the Federal Government and the City leases Vanier Park to the City which includes the area on which the Vancouver Academy of Music is situated.

Cultural Objectives:
As part of the lease agreement the VMM's Mandate and Cultural Objectives, established by the VMM, appended to the agreement as a Schedule, and approved by the City will be included and used as annual and periodic performance measures. The VMM may amend the Cultural Objectives from time to time, subject to City approval.

Public Access:
The agreement will set a standard for equitable access for the general public to exhibits, programs and rental opportunities including minimum hours of operation etc..

Collection & Equipment:
The VMM holds art and artifacts, including the St. Roch which belong to the City (the "Collection"). The VMM also holds the Federal Artifacts which belong to the Federal Government. The VMM will manage the Collection in accordance with a Collections Policy, which will be based on "industry" standards such as the Canadian Museums Association or BC Museums Association, and subject to City review and approval. The VMM will manage the Federal Artifacts in accordance with a Collections Policy and with the March 31, 1995 Agreement which shall always prevail in the case of any difference between the two requirements.

The VMM may amend the Collection Policy from time to time, subject to City approval.

Equipment, fixtures and furniture which do not form part of the base building, and are not part of the Collection or the Federal Artifacts will become the property of the VMM.

Grant:
Council will consider an annual operating and/or periodic capital grant submissions and may make a grant, subject to the will of the Council at the time of application and available resources.

Occasional Third Party Use:
The VMM may contract with third parties for occasional use of the Premises as set out in an Occasional Third Party Use Policy which will be subject to City approval. Occasional Third Party Use will be required to be appropriate to, and support the Mandate of the VMM. The VMM may amend the Occasional Third Party Use Policy from time to time, subject to City approval. The VMM

APPENDIX B
Page 3 of 4

agrees to abide by any rules or regulations imposed by the City provided that such rules and regulations are consistent with the Third Party Use Policy. The VMM may not assign or sublet any portion of the Premises without the City's permission.

Insurance:
The City will indemnify the directors, officers, staff and volunteers of the VMM for up to $3 million under terms satisfactory to the Director of Legal Services.

The City will insure the Building and St. Roch Structure against fire, vandalism etc. as determined by the City's Director of Risk Management.

The VMM will be responsible for insuring the Collection, the Federal Artifacts, all equipment, fixtures and furniture and will be required to maintain comprehensive general liability insurance as well as all risk broad form tenant's legal liability insurance in the amounts and types to the satisfaction of the City's Director of Risk Management.

Utilities, Janitorial Services, Maintenance, Repairs and Security:
Subject to the availability of funds, the City will pay for heating, lighting, fuel, water and garbage removal and provide janitorial, maintenance and repair as outlined in a Service Agreement which shall be appended to the lease agreement. An annual budget will be established and costs will be first and only allocated to the museum operations. All ancillary activities will be required to contribute to a share of utilities, maintenance, repairs and security.

The City will be responsible for the maintenance and monitoring of the security systems to a standard determined by the City. The VMC may not install any additional equipment or change the existing system without City's approval. The VMM will be responsible for any additional security required as a result of any programs, events, exhibits or activities, including rentals, to the satisfaction of the City's Manager of Security Services. The City may increase or add security infrastructure and services in consultation with the VMM.

The VMM will be responsible for all telephone and cable services and associated repairs, maintenance of the Collection and the Federal Artifacts in accordance with the Collections Policy and the March 31, 1995 Agreement; and maintenance and repair of equipment, fixtures, and furniture owned by the VMM.

The City may consider future proposals from the VMM for alternate janitorial options. The City reserves the right to set standards, monitor performance and terminate service if standards are not met to the satisfaction of the City's Director of Building Services.

Subject to the will of Council and the resources available the City will make such major capital
repairs to the Premises as the City deems necessary. The definition of major capital repairs shall be detailed in the Service Agreement.

APPENDIX B
Page 4 of 4

Improvements:
Consent is required to alter, erect, or modify (hereinafter referred to as "improvements") the VMM Building, Grounds or Heritage Harbour, Breakwater Area. In the event consent is given, the City may attach conditions or deadlines as it sees fit and the VMM will be responsible all cost of improvements and claims or liabilities of any kind arising from the improvements.

Reporting to the City:
On or before April 30th of each year, or at any time requested by the City, the VMM will provide to the City the following:
· audited financial statements for the previous year, prepared at the VMM's expense by a firm of chartered accountants and to include all operating, capital and special purpose funds;
· an annual budget, approved by the Board of Directors, and including an estimate of all revenues and expenditures; and
· such other financial reports requested by the City from time to time;
· a summary of activities for the past year demonstrating how they have fulfilled their Cultural Objectives;
D. a summary of activities for the coming year detailing how such activities will work towards accomplishing the VMM's Cultural Objectives; and
E. any changes that the VMM may wish to make to its Cultural Objectives, Collection Policy, Occasional Third Party Use Policy, Service Agreement, or other Policies or Schedules which form part of the lease agreement require Council approval. Changes will be reviewed by the City and reported to Council along with any annual review and grant requests.

Further, the VMM will regularly submit minutes of all Board meetings to the City.

Early Termination:
The City may terminate the Agreement prior to the end of the Term on the happening of any one or more of the following events:
· VMM is in default on any payments owed to the City following 30 days notice;
· VMM defaults in performing any other provision of this agreement;
· the Premises are closed to the public for 30 days without the City's consent;
· the Premises are not used in the operation of a maritime museum to the satisfaction of the City;
· VMM becomes bankrupt, is wound up or dissolved; or
· with mutual consent.

And such other terms and conditions as may be satisfactory to the Directors of Legal Services, Real Estate and the Office of Cultural Affairs.

Comments or questions? You can send us email.
[City Homepage] [Get In Touch]

(c) 1998 City of Vancouver