SUPPORTS ITEM NO. 3
CS&B COMMITTEE AGENDA
OCTOBER 19, 1995
ADMINISTRATIVE REPORT
Date: August 31, 1995
TO: Standing Committee on City Services and Budgets
FROM: Director of Civic Theatres, in consultation with the
Director of Cultural Affairs, Manager of Real Estate
Services, Manager of Facilities Development and
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
its 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 satisfac-tion 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.
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.
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 (VOA) 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 is 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; and
(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 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 foresee-able 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 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 improve-ments, 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 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 its 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 is 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 facilities priorities.
A copy of this report has been sent to the Vancouver Opera
Association.
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