Vancouver City Council |
ADMINISTRATIVE REPORT
Date: June 8, 2004
Author: Rae Ackerman
Phone: 604 665 3020
RTS No. 04219
CC File No. 4251
Meeting Date: June 22, 2004
TO:
Vancouver City Council
FROM:
Director of Civic Theatres
SUBJECT:
Civic Theatres Ticket Surcharge Increase
RECOMMENDATION
THAT Council approve an increase in Civic Theatres ticket surcharge of $ 0.25 per ticket and increase the exemption to apply to tickets over $ 15.00 in face value, effective July 1, 2004.
COUNCIL POLICY
In 1982 Council approved a ticket surcharge on tickets sold to events at the Orpheum for the purpose of funding a capital improvement project. In 1985 Council approved including tickets sold for events at the Queen Elizabeth Theatre and Vancouver Playhouse. Surcharge revenue accrues to the Civic Theatres Capital Reserve and is dedicated to upgrades and improvements to the three theatres. Council must approve any increase in the surcharge.
PURPOSE
This report seeks Council approval to increase the ticket surcharge by $ 0.25 effective July 1, 2004. It also seeks approval to increase the exemptions on tickets from $12.00 to $15.00 in order to not burden lower priced tickets targeted at making events accessible to families, youth and seniors.
BACKGROUND
Revenue from the ticket surcharge, along with operating surpluses from the QET Parkade, accrue to the Civic Theatres Capital Reserve. Although there have been exceptions, the purpose of the Capital Reserve is to fund upgrades and improvements to the Queen Elizabeth Theatre, Vancouver Playhouse and Orpheum. Normal maintenance is funded from the operating budget and major maintenance is referred to the City Capital Plan.
The present program of capital upgrades to the three theatres began in 1991 with a consultative planning process involving all major users and staff followed by a feasibility analysis and schematic design. The plan is still current and guides all projects undertaken. Since 1991, more than $12 million has been committed to projects at all three theatres.
The most high profile recent project funded by the Reserve was the addition of the QET Salon/Meeting Rooms, Playhouse lobby expansion and air conditioning of the QET lobby in 1999. Other projects have included the acoustic upgrade of the Orpheum, reconfiguration of the Smithe St. lobby at the Orpheum, upgrades to the sound and lighting systems in all three theatres, and upgrades to concessions stations in all three theatres.
In recent years, the ticket surcharge has earned between $500,000 and $750,000 annually with the parking surplus contributing an additional $150,000 to $200,000 annually. The 2003 contribution to the Capital Reserve was $946,520.
The surcharge is now $1.25 for City-supported not-for-profit performing arts organizations and $1.50 for all others, on tickets over $12.00 in face value. With this increase the surcharge will be $1.50 and $1.75 on all tickets over $15.00 in face value.
DISCUSSION
Funding for large projects has been financed by loans from PEF. The balance owing at January 1, 2004 was $2.7 million. At the present interest rate and rate of payback, the loan would be paid down sometime in mid-2006.
The plan for the QET Redevelopment project, scheduled for the summers of 2006 & 2007 pending all funding being in place, calls for a contribution from the Capital Reserve of $5 million.
With this increase in the surcharge in 2004 and another $0.25 increase in 2006, at present interest rates, the current loan plus the planned new $5 million loan could be paid back by early 2012.
Impacts:
As a user-pay system, the ticket surcharge earns money from the end-users of the theatres, the audiences, without regard for where they live. This is significant given that 42% of our patrons live in the City of Vancouver and 58% live in the surrounding municipalities, and beyond.
On the other hand, some licensees of the theatres (the presenters and producers) are quite sensitive to an increase in the surcharge. They tend, with some justification, to see any increase as an increase in the ticket price over which they as the risk-taker have no control.
A letter went out to licensees two months ago to inform them of the probability of an increase. To date, there has been no response to that letter. At the time of the last increase, there was one objection registered with us.
Industry Standards
In fall 2003, a colleague in Edmonton did a small survey of mainly Western-Canadian theatres to compare surcharges. They range from $1.00 to $2.00, so this increase will put Civic Theatres in the middle of the range.
FINANCIAL IMPLICATIONS
Using 2002 as a model (600,000 paid attendance), an increase of $0.25 on July 1 should generate an additional $75,000 in 2004 and $150,000 in 2005 to the Civic Theatres Capital Reserve.
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