SUPPORTS ITEM NO. 3
   CS&B COMMITTEE AGENDA
   MAY 8, 1997


                             ADMINISTRATIVE REPORT

                                           Date: March 27, 1997
                                           H:WORK:REP:retent (hl)
                                           C.C. File No. 4004-1

   TO:       Vancouver City Council

   FROM:     Director of the Vancouver Public Library

   SUBJECT:  Retention of Revenues


   RECOMMENDATIONS

        A.   THAT revenues from fines and photocopying, etc. continue to be
             included in the annual budget estimates for the Vancouver
             Public Library in order to offset the City's support of annual
             operating costs.

        B.   THAT the Vancouver Public Library be allowed to retain 100% of
             all net revenues other than those previously identified
             (fines, photocopy, etc.) to be used at the discretion of the
             Library but within the Guidelines regarding service increases
             and new positions.

        C.   THAT Council formally approve the Vancouver Public Library
             retain 100% net revenues received by fundraising in various
             forms for expenditure at its discretion, so long as those
             expenditures do not commit the City to ongoing operating costs
             without Council's express permission.


   CITY MANAGER s COMMENTS

        The City Manager notes that the report of the Director of the
        Vancouver Public Library identifies three classes of income --
        those traditionally allocated to the City, referred to in
        Recommendation A, earned net revenues related to Library operations
        (Recommendation B), and fund raising (Recommendation C).

        Recommendation A maintains past practice.  These amounts are built
        into the City s based budgets, and parallel a number of similar
        practices in other departments.

        With respect to Recommendation B, the City Manager is concerned
        that incremental revenue generation may become a moderately
        significant source of revenue for the City.  All departments have
        been directed to identify potential fee for service areas in order
        to reduce budget pressures.  It has been suggested that the City
        could earn revenues through sponsorship arrangements that may be
        sufficient to justify some effort in developing sponsorship
        agreements.  There will be a report back on this subject later in
        the year, following Council direction last year.  Many of these
        sponsorship agreements could be applicable in several parts of the
        City s operations.  Accepting the Library recommendations for these
        revenues would simply favour those departments where the
        sponsorship generates revenue relative to those where it does not. 
        It makes little sense from the City Manager s perspective to
        increase services in some areas because operating revenues or
        sponsorships can be arranged if core services in other areas are
        being reduced for fiscal reasons.

        To the extent that Recommendation C is intended to cover
        unconditional donations or donations requiring only limited donor
        recognition, the City Manager supports this.  Donors are usually
        not enthusiastic about donating funds to cover operating costs to
        maintain existing levels of operation. The policy suggested by the
        Library will maximize their opportunity to obtain donations.
        However, if Recommendation C is intended to cover sponsorships in
        which a private sector organization will contribute funding in
        exchange for significant recognition   a form of advertising   the
        City Manager does not support it as written.

        Accordingly, the City Manager RECOMMENDS approval of an alternate
        set of recommendations, as follows:

           . THAT revenues from fines and photocopying, etc. continue to be
             included in the annual budget estimates for the Vancouver
             Public Library in order to offset the City s support of annual
             operating costs.  (Library Board Recommendation A)

           . THAT the Vancouver Public Library apply net revenues earned
             from City funded operations to the base operations of the
             Library, reducing the cost of those operations.


        .  THAT the Vancouver Public Library be allowed to retain two
           thirds of net revenues earned from operations which are fully
           funded by revenues.

        .  THAT the Vancouver Public Library be allowed to retain two
           thirds of sponsorship funds arranged by the Library (those
           contributions established on a multi-year basis involving
           identification of a commercial supplier as a sponsor) to be used
           at the discretion of the Library but within the Guidelines
           regarding service increases and new positions.

        .  THAT sponsorship funds arranged by the City on a global basis be
           directed to general revenue.

        .  THAT the Vancouver Public Library retain 100% of donations from
           individuals and unconditional donations or donations requiring
           minimal sponsor identification from commercial organizations.

   BACKGROUND

   Since 1995, two things have come together to necessitate a review of the
   Guidelines between the City and Vancouver Public Library vis a vis
   revenues generated by the Library: 1) a requirement on the part of the
   City to actively pursue revenue generation; and 2) the revenue
   possibilities opened to the Library by the new Central Library.

   The Vancouver Public Library Board currently operates under two separate
   mandates, the first being the Library Act (revised 1994), and the
   second, a set of Guidelines agreed to by City Council and the Library
   Board in 1985. (copy attached)

   The Act states, with regard to revenues:

   CLAUSE 11 (1) The library board has, subject to the approved budget,
                 exclusive control over the expenditure of
                 (a)  all money provided by the municipal council for
                      library purposes,
                 (b)  all money given to the library board,
                 (c)  the revenue derived from any source, including
                          (i)   fees,
                          (ii)   fines and
                          (iii)  money recovered by the library board for
                                 detention, damage or loss of library
                                 materials, and
                 (d)  all money received by the library board under an
                      agreement to provide library service.

   The Guidelines between the Board and Council are now sadly dated, but
   reflected a need of the day to agree on how the Library would relate to
   the City, particularly in the area of fiscal responsibility.  While the
   guidelines do not specify what happens to revenues generated by the
   Library, the practice has been that additional income (except donation
   and gifts) is used to offset the City's contribution to the cost of
   operating the Library.  The Library unlike the Park Board (which has an
   agreement of 66/33) does not have a specific agreement re revenue. Until
   1996, the Library has had only two major sources of revenue - fines, and
   fees for photocopiers.  Some income is received for charges for lost
   books, booksale, sale of photos and other items. 

   Further to the above, all "gifts" of cash or kind to the Library have
   traditionally NOT been treated as line revenue.   These funds have been
   expended as the donors have requested, usually on books for the system
   or for a specific branch or department.

   Since 1995, the Library has also been in receipt of funds donated by the
   Friends of the Library (formed at the time of opening of the new Central
   Library) - again these donations are not being used to offset operating
   expenses, but rather to purchase books in specific areas or equipment
   needed by the Library and not funded through recent capital funds.

   With the Library about to enter into an annual fundraising campaign, and
   with the potential for revenue generation at the Central Library
   growing, through Facilities and partnerships the Board needs to clarify
   with Council how those revenues will be handled in the future.

   Traditional Sources of Revenue: 

   The Library Board does not wish to change the current arrangement
   regarding those revenues which are currently used by the City to offset
   the operating cost of the Library.  These include fines, photocopying,
   10% of net revenue from Promenade rental to the PEF, lost cards, lost
   books, etc.

   Recommendation:  THAT revenues from fines and photocopying, etc.
   continue to be included in the annual budget estimates for the Vancouver
   Public Library in order to offset the City's support of the  annual
   operating costs.

   Facilities and New Fee for Service Opportunities:

   The Library Board believes that other than fines, photocopiers, and
   facilities rentals, the Board's ability to generate revenues is quite
   limited.  The Library does have a unique opportunity with the Promenade
   area of the new Central Library for rental and currently contributes 10%
   of these net revenues to the Property Endowment Fund.


   Through pilot projects such as fees for enhanced reference service and
   some insourcing of binding from other libraries, the Board is exploring
   its ability to charge fees for certain services.  The Board is also
   exploring ways of making sophisticated services pay for basic services
   as we are doing with Internet Training courses:  the more intensive
   course is charged for, and pays for the basic course which is offered
   free of charge (and for which donations are accepted but not required). 
   The Library charges users of the computer lab on an hourly basis, and
   the revenue pays for the cost of the staff member, maintaining the
   Community Organization Directory, supplies, paper, software, and enough
   to provide a reserve for equipment and software replacement and/or
   upgrades with some profit.

   The Library however, may not charge for its basic services -the
   circulation of materials and the provision of reference materials -
   under the Library Act.  What the Library HAS done is to provide as much
   self-service to users as possible in order to minimize the impact of
   user needs on the staff available.  We are continually exploring ways to
   become more efficient and still provide good public service to our
   users.

   Because our potential is limited, the Vancouver Public Library proposes
   that it be able to retain 100% of all revenues generated from all
   sources other than those specified in the preceding recommendation.  The
   Board would still be required to bring to Council for approval any
   upgrading in services that required ongoing staffing or other financial
   support, and to identify the funding which would be provided by the
   Library for such services.

   Recommendation:  THAT the Vancouver Public Library be allowed to retain
   100% of all net revenues other than those previously identified (fines,
   photocopy, etc.) to be used at the discretion of the Library but within
   the Guidelines regarding service increases and new positions.

   Fundraising:  

   The Library Board believes that donors to the Vancouver Public Library
   will give because they believe in the Library and wish to support and
   enhance its services and collections.  The Board believes that donors
   will not give if their gift will be used to offset the cost of operating
   the Library.  The practice has been to allow the Library to keep
   donations and gifts.

   The Library will be keeping the Council informed of its plans for its
   first annual fundraising campaign, and of the vehicle designed to
   generate a lasting endowment for the Library.

   Recommendation:  THAT Council formally approve Vancouver Public Library
   retain 100% of net revenues received by fundraising in various forms for
   expenditure at its discretion, so long as those expenditures do not
   commit the City to ongoing operating costs without Council's express
   permission.


   CONCLUSION

   The Board believes that permitting the library to retain 100% of new
   revenues and fundraising revenues would reflect the recognition that the
   Library has relatively limited access to such revenues, and would
   provide a strong incentive for the Library to generate new revenue
   alternatives.


                               *   *   *   *   *