Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO: Standing Committee on City Services and Budgets

FROM: Directors of Finance and the Office of Cultural Affairs

SUBJECT: Pacific Space Centre - Annual Report and Operating Grant Request

RECOMMENDATION

A. THAT an operating grant of $443,000 be approved to the Pacific Space Centre Society, with the source of funds to be the 1998 `Other' Grants budget.

B. THAT the outstanding amount of $400,000 remaining in bridge financing for the Pacific Space Centre capital expansion, (net of a $100,000 City contribution) be converted to an interest-bearing loan from the City to the Pacific Space Centre as of December 31, 1997, to be repaid at a rate, of interest as determined by the Director of Finance, not later than December 31, 1999.

GENERAL MANGER'S 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. These grants are escalated each year by the negotiated wage increase in the CUPE 15 Collective Agreements. Any request for support above the base level is considered separately.

On June 1, 1995, Council approved a repayable interest free loan of up to $1.2 million to the Pacific Space Centre Society to bridge finance the Canada-BC Infrastructure Project. The loan is to be repaid with the proceeds from the Canada-BC Infrastructure Program.

In addition, on June 1, 1995 Council endorsed the City's support for 50% of the necessary upgrades and modifications to the building, as a direct result of the Canada-BC Infrastructure Project, up to a maximum of $100,000.

Approval of grants requires eight affirmative votes of Council.

PURPOSE

This report provides a review of the Pacific Space Centre Society's 1997 activities, presents for Council's consideration their 1998 Operating Grant request, and proposes a repayment plan for the outstanding bridge financing provided by the City for the PSC's capital improvement project.

BACKGROUND

In August 1987, Council agreed to the dissolution of the Vancouver Museums and Planetarium Association into three distinct organisations: the Vancouver Maritime Museum Society, the BC Space Sciences Society (now Pacific Space Centre Society), and the Vancouver Museum Association, now the Vancouver Museum Commission.

On September 13, 1994, the City supported an application by the Pacific Space Centre Society to the Canada-BC Infrastructure Program to expand their program area within the existing city-owned structure. In February, 1995, the Pacific Space Centre Society was awarded $5,706,158 representing 2/3 of the cost of the project. The remaining 1/3 of the cost of the project, $2,853,079 was to be raised by the Society. The newly expanded Pacific Space Centre opened in October 1997.

DISCUSSION

1. Operating Grant

In accordance with the terms of the operating agreement with the Pacific Space Centre Society, the organisation has submitted their 1998 grant request to the City. The major institutions' grant requests are based on the 1997 funding level, with a 1% inflationary allowance included at this time, in accordance with the grant funding ceilings approved by Council on March 3, 1998.

Pacific Space Centre Society $ 438,600 $ 443,000

The current operating agreement has lapsed and is in the process of being renegotiated. In the intervening period, the facility is being operated on the same terms and conditions as contained in the last operating agreement. One of the proposed changes to this new agreement will be the requirement for an annual performance review by Office of Cultural Affairs staff and a report to Council as part of their grant request. In addition to a financial evaluation, the PSC's performance will be measured against a set of cultural objectives developed together with the PSC. This is consistent with the staff review of the Vancouver Museum and Maritime Museum as part of their 1998 grant requests.

2. 1997 Year in Review

The major highlight of 1997 was the October opening of the expanded Pacific Space Centre with the overall theme "Finding our Place in the Universe". The Pacific Space Centre provides a multi-sensory voyage including state-of-the-art programming, Ground Station Canada, a multimedia theatre, a journey to Mars on BC's first full-motion simulator, and the Cosmic Courtyard interactive exhibition gallery. This project is part of a long range plan to complement the existing planetarium and observatory facilities in providing entertaining, and educational family programs and exhibits highlighting Canadian innovation and achievement in the exploration of science and technology.

As a result of the expansion, the PSC has begun the process of re-engaging with its members and expanding its reach to a larger market as a destination attraction. Public attendance has increased 100% over the prior three years with a corresponding increase in earned revenue. While this is a significant increase, it does not meet the targets set by the PSC in the planning phase. Consequently they have not met their projected budget targets and their financial statements indicate a loss of $79,601 on the year ending December 31, 1997. Staff believe that this is the result of a series of factors including overly optimistic projections, the need to develop market awareness over time and the reduction in public interest in the older core programs such as the laser shows. These factors are not unexpected and staff encourage the PSC to continue its marketing initiatives, both individually and in concert with the Vancouver Museum, and in seeking a replacement for the laser programming and revenues more in keeping with its educational mandate.

To maintain this new level of activity, the PSC will need to focus on increasing and diversifying its revenue sources. The PSC have been focused on increased ticket revenuesand private sector fund raising through their capital campaign. The PSC does not receive operating funding from either the provincial or federal government though limited project funds are available. Their challenge will be in maintaining and increasing earned revenue, ancillary revenue and private sector support to assist with the ongoing operations as well as the need for exhibit renewal to keep the experience fresh and current for the public.

The other major highlight of 1997 is the increased level of partnership with the Vancouver Museum in a range of areas - to improve customer service in a cost effective manner with joint Admissions and Guest Services departments; through a joint Health & Safety Committee; joint renovations for lobby and common areas; and for joint ticketing, marketing and promotions. Further collaborations between the PSC and VMC are being implemented in 1998 including co-ordination of the school programs' reservation, co-ordination of rentals, as well as joint and cross marketing initiatives.

The PSC are also active in developing closer relationships in the community with:
… Vanier Park institutions and attractions in a joint marketing initiative,
… Vancouver Aquarium and Science World in developing an "Engaging Science" program targeting elementary school teachers;
… Major exhibiting institutions and attractions in the "Great Escapes" marketing initiative to target Vancouver audiences in shoulder season.

The Pacific Space Centre Society's 1997 financial statements are attached as Appendix "A" (limited distribution - on file in City Clerk's Office) . A copy of the Society's 1997 Annual Report is on file in the City Clerk's Office.

3. Pacific Space Centre - Canada/BC Infrastructure Project Update

When Council approved bridge financing in June of 1995, the project was scheduled for completion, with the interim financing to be repaid, by the end of 1997. A variety of circumstance including a large scale Infrastructure grant audit conducted by the Provincial Government, and slower than projected community grant contributions have caused the project schedule to be extended. The final infrastructure repayments are now delayed until early 1999, by which time the major project expenditures will be complete. Interim financing of $400,000 remains outstanding to the City. Offsetting this amount is City funding committed to the project of $100,000, reducing the net outstanding to the City to $300,000.

The Director of the Pacific Space Centre and City staff have established a workable repayment schedule, not to extend beyond December 31, 1999. The schedule is flexible enough to deal with the volatility of community contributions and extends several months beyond the current cash flow projections adding further flexibility. The repayment scheduleincludes nominal interest at 6.5% for the remainder of the financing period. Interest charges will add an additional $19,000 cost to the project, less if the balance is paid out prior to December 31, 1999. Conversion of the outstanding amount from an interest-free loan to an interest-bearing loan, recognizes that the funding will be outstanding for up to 2 years beyond the original agreement and the need to establish a regular repayment commitments. It also provides an incentive for the Pacific Space Centre Society to repay the funds earlier than under an extended loan arrangement.

FINANCIAL IMPLICATIONS

The source of funds for the operating grant is the 1998 `Other' Grants allocation.

* * * * *

cs980917

Comments or questions? You can send us email.

[City Homepage] [Get In Touch]

(c) 1998 City of Vancouver