SUPPORTS ITEM NO. 1 CS&B COMMITTEE AGENDA JULY 24, 1997 POLICY REPORT FINANCE Date: July 8, 1997 Dept. File: ALW06.08 CC File: 4663 TO: Standing Committee on City Services and Budgets FROM: Director of the Office of Cultural Affairs in consultation with the Directors of Finance, Land Use & Development and Legal Services, and the Manager of Real Estate Services SUBJECT: Allocation Plan and Lease of a Donated Artist Studio - 2050 Scotia Avenue (325 East 5th Avenue) RECOMMENDATION A. THAT Council accept the gift of an artist studio, #141, 325 East 5th Avenue from the Aragon Group to be held as a Capital Asset, and on registration of title, staff issue a municipal Income Tax receipt to The Aragon Group accordingly; and B. THAT Council approve the lease of the City-owned artist studio, #141, 325 East 5th Avenue to Public Dreams Society for a period of ten (10) years at a nominal rate ($1), subject to the terms and conditions being to the satisfaction of the Director of Legal Services in consultation with the Director of the Office of Cultural Affairs. GENERAL MANAGERS' COMMENTS The General Managers of Community and Corporate Services submit A and B for Council's CONSIDERATION. COUNCIL POLICY Section 152 of The Vancouver Charter enables the City to accept gifts of property. In November 1993, City Council approved Vancouver Arts Initiative recommendations, including recommendations that the City investigate how the City might assist arts organizations in securing affordable space including the long-term lease of City-owned properties at nominal rates. In May of 1993 Council directed that City-owned properties occupied by non-profit organizations be held as assets in the Capital Fund, and be charged a nominal rental rate ($1). At least eight affirmative votes are required for approval of below-market rental rates. While this space was not acquired through an amenity bonus, staff have been guided by Council policy with respect to encouraging the provision of cultural facilities in the IC-3 district, and the selection of an appropriate non-profit tenant. PURPOSE This report seeks Council's approval to accept the gift of a 2,600 sq.ft. artist studio at 325 East 5th Avenue, and to allocate it to an appropriate non-profit arts organizations for a period of 10 years. BACKGROUND The Aragon Group has offered the gift of an artist studio in their development at 325 East 5th Avenue to the City of Vancouver for use by a non-profit cultural organization. A letter from the donor confirming their intention to make this gift is attached to this report as Appendix "A". The studio is a large (2,684 sq.ft.) ground floor unit in artist live/work development currently under construction at the corner of East 5th and Scotia Avenue in the IC-3 "Brewery Creek" district. DISCUSSION Acceptance of a Gift of Property: The developer, the Aragon Group have offered the studio as a gift to the City with the intent that it be occupied by a non-profit arts organization. The proposed gift is not connected to the City's zoning or development approvals process. The development application was approved in 1995 within the permitted zoning in effect at that time. It is proposed that the City accept the gift with the intention of sub-leasing the unit to a Council-approved non-profit arts organization. The sub-lease would be reviewed periodically to ensures that the space continues to be occupied and operated according to the cultural policies of the City for the life of the building. The Aragon group have requested a tax receipt for the market value of their gift. Finance staff have indicated that the donation of a strata lot to the City would qualify for a municipal tax receipt when title to the strata lot is transferred to the City free and clear of all financial encumbrances, and when a valuation of the strata lot is prepared by a certified real estate appraiser. Should Council approve Recommendation A contained in this report to accept the gift, staff will undertake the necessary steps to secure the unit and issue a tax receipt accordingly. Selection of Tenant: The donor has indicated that they wish to be involved in the selection of an appropriate tenant. While staff have consulted with the donor, and the donor concurs with staff's recommendation, the decision with respect to the allocation of the unit is presented in this report for Council's approval. While the unit is not being secured as an amenity bonus, staff used the City's bonussing and facilities priorities policies to guide their recommendation. Staff reviewed the opportunity and need within the neighbourhood and arts communities and developed a set of criteria to select a tenant for recommendation to Council. The permitted use of the studio is "Artist Studio" which means the use of the studio for the production of paintings, drawings, pottery, sculpture, ceramics, video, moving or still photography, creative writing, dance or music. Given the large size of the unit, Council's direction to encourage cultural facilities in the IC-3 district, and the permitted use, staff determined that a non-profit organization involved in the production of art as defined under the Artist Studio By-law would be most appropriate. This focused the selection to non-profit arts organizations rather than individual artists; to an arts organization rather than a non-profit social service or community organization; and to an arts organization which needs space for the production rather than presentation of their art. Finally, staff reviewed arts organizations which had a demonstrated need for studio space; had a current Mt. Pleasant community presence and could become a long-term resource to the burgeoning Brewery Creek neighbourhood. Based on the criteria identified above, staff recommend lease of the unit to the Public Dreams Society. Best known for "Illuminaires", Public Dreams is a community-based arts organization with a mandate to create and present art events. The City has provided annual funding for the society's pubic events since 1988. They are currently based in Mt. Pleasant at 2616 Main Street and perform throughout the City in parks ( "Courage in the Park" at Robson, John Henry, Douglas, Grandview Parks), streets (annual "Parade of Lost Souls" on Commercial Drive at Halloween) and Community Centres (annual "Illuminaires" event at Trout Lake). They have located their production, workshop and storage facilities through the City as large, free-span space can be found and afforded. Public Dreams have a long and successful track record of community collaboration and offer opportunities for both professional and community-based artists. The society needs stable, long-term space within an east-side community. This space will enable them to centralize their operations, create the large scale sculpture, puppets, banners and art which they use in their pageants and events, and provide opportunities for creative workshops in the space. Term: Staff propose a ten-year lease to the society, at a nominal rate ($1) the terms and conditions to be to the satisfaction of the City's Directors of Legal Services and Office of Cultural affairs. A ten year term is recommended as the space is shell-only, and the Society will need to raise funds to finish and equip the space. Community Access: Staff will be recommending that one of the conditions of their lease, will be that the society agree to provide a reasonable number of hours per week of access to the studio to other neighbourhood non-profit groups for meetings and events as appropriate under the zoning. FINANCIAL IMPLICATIONS Real estate staff estimate the cost to transfer the strata unit from Aragon to the City at $50. Under the lease agreement with the society, the City will transfer ongoing operating expenses (strata fees, repairs and maintenance, insurance, etc.) to the society. As well, the society would be responsible for any fit-up or finishing costs associated with occupying the studio. CONCLUSION Staff recommend that Council accept the donation of the unit and direct staff to enter into a lease agreement with Public Dreams Society for occupancy on completion of the development, to the satisfaction of the Directors of Legal Services and the Office of Cultural Affairs. * * * * * APPENDIX A on file in the City Clerk's Office