SUPPORTS ITEM NO. 1
CS&B COMMITTEE AGENDA
JUNE 29, 1995
POLICY REPORT
FINANCE
Date: June 14, 1995
Dept. File: GR.17.01
TO: Standing Committee on City Services and Budgets
FROM: Directors of Social Planning, Legal Services and
Finance, and the Manager of Facilities Development
SUBJECT: City-Owned Cultural Facility Infrastructure Projects
RECOMMENDATION
A. THAT Council direct staff to enter into an agreement with the
Province under the Canada/B.C. Infrastructure Works Program
for funding to support renovation projects to City-owned
cultural facilities operated by the Firehall Theatre Society
and the Vancouver East Cultural Centre.
B. THAT Council direct staff to enter into agreements with the
non-profit societies which operate these City-owned facilities
whereby the societies assume the City's responsibilities under
the provincial agreements and upon other terms and conditions
satisfactory to the Director of Legal Services.
C. THAT Council approve a repayable grant of up to $241,000 to
the Firehall Theatre Society and a repayable grant of up to
$98,000 to the Vancouver East Cultural Centre to bridge
finance the proposed renovations, with the source of funds to
be Revenue Surplus. These grants are to be repaid with the
proceeds from the Canada/B.C. Infrastructure Works Program.
FURTHER THAT the Director of Finance be authorized to disburse
the funds to the societies generally as discussed in this
report.
D. THAT Council direct staff to release the final $100,000
instalment of the 1991 Capital Grant to the Firehall Theatre
Society, subject to the Society securing the necessary
development approvals.
CONSIDERATION
Staff submits a choice between E and F for consideration, noting that it
is normal policy to charge interest on loans for internal projects
financed from Reserves or Special Funds.
E. THAT Council forgive the interest loss to the City, estimated
to be a total of $7,191 ($5,116 attributable to the Firehall
Arts Centre project and $2,075 to the Vancouver East Cultural
Centre project) during the term of the bridge financing of the
Canada/B.C. Infra-structure Works Projects.
OR
F. THAT Council charge interest on the repayable grant to the
societies estimated to be $7,191 ($5,116 attribut-able to the
Firehall Arts Centre project and $2,075 to the Vancouver East
Cultural Centre project) during the term of the bridge
financing.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of A,
B and D and submits C and a choice between E and F for
CONSIDERATION.
Approval of C and E, both of which are grants, requires eight
affirmative votes.
COUNCIL POLICY
On April 28, 1994, Council endorsed a list of soft infrastructure
projects for City-owned facilities, including the Vancouver East
Cultural Centre and the Firehall Arts Centre for submission to the
Canada/B.C. Infrastructure Works Program.
In 1991, Council provided a Capital Grant of $200,000 to the Firehall
Theatre Society to assist in renovations and improve-ments to the
theatre. The project was divided into two phases, and the first
$100,000 instalment issued; the final $100,000 remains in the Capital
Grant budget.
The City has a lease agreement with the Firehall Theatre Society to
occupy and operate the Old Firehall No. 2 at 280 East Cordova Street as
an arts centre. The City has a lease agreement with the Vancouver East
Cultural Centre to occupy and operate 1885 and 1895 Venables Street as a
theatre and administrative offices.
PURPOSE
The purpose of this report is to seek Council's approval to:
enter into legal agreements for funding from the Canada/B.C.
Infrastructure Works Program to undertake renovations of two
City-owned cultural facilities;
enter into agreements with the non-profit societies which operate
these City-owned facilities whereby the societies assume the
City's responsibilities under the Provincial agreements and on
other terms and conditions satisfactory to the Director of Legal
Services;
provide interim financing for the projects; and
release the final instalment of a 1991 Capital Grant.
BACKGROUND
As property owner, the City submitted these two applications to the
Infrastructure Program on behalf of the operating societies, the
Firehall Arts Centre Society and the Vancouver East Cultural Centre
Society, for renovations to these cultural facilities. In December of
1994, the Canada/B.C. Infrastructure Works Program announced grants for
these projects as follows:
Firehall Arts Centre - $211,836 towards a total project budget of
$311,000 to upgrade the heating and ventilation system, improve
access for persons with disabilities, improve public washroom
facilities, provide flexible seating configurations, and upgrade the
entry and box office area.
Vancouver East Cultural Centre - $140,000 towards a total project
budget of $210,000 to upgrade sound and lighting systems, replace
the old boiler with an energy efficient furnace, install a "smart"
phone system, exterior painting, and replace the theatre seats.
In making the submission to the Infrastructure Program, Council did not
commit any new funds to these projects. Both projects required at least
one-third be contributed from "local share". Each project has differing
sources for their "local share".
The Firehall Arts Centre applied for and were granted a 1991 Capital
Grant of $200,000, of which $100,000 was released and the final $100,000
remains unallocated. They are seeking the release of this outstanding
1991 Capital Grant.
In their application, the Vancouver East Cultural Centre proposed to
use their existing ticket surcharge fund and private sector fund raising
to meet the "local share" of the project. Since the application was
made, they have already secured a $50,000 grant from the Vancouver
Foundation. The remaining $20,000 will need to be raised through a
combination of ticket surcharges and further fund raising efforts. They
have split the project into two phases, the second phase to commence in
the summer of 1996 which provides a full year to complete the necessary
fund raising.
DISCUSSION
Staff are seeking Council's direction on a series of steps which will
facilitate the completion of these capital improvement projects. Both
projects are scheduled to commence in May and plan to undertake the
required work in the summer months to minimize the effect on the public
of down time in the theatres. The Firehall project is proposed to be
completed in September of 1995. The Vancouver East Cultural Centre has
divided its project into two phases; the first to be completed this
summer, and the second phase to be completed by September 1996.
Legal Agreements
The Province of British Columbia has agreed to provide the grants for
the Firehall Arts Centre and the Vancouver East Cultural Centre provided
the City agrees to enter into an agreement with the Province. This
agreement provides for the City to ensure the funds are used for the
projects and it also requires the City to agree to certain other matters
with the most significant being to indemnify and save harmless the
Province against all liability for the project. While it would have
been preferable to have the societies enter into the agreements directly
with the Province, because the City made the application as landowner,
the City must be party to the agreement with the Province. Subject to
Council's approval, staff will be preparing an agreement for the
societies to assume all obligations of the City under the agree-ment
with the Province. There is a risk that if the societies fail to fulfil
these obligations, the City will have to fulfil these obligations
directly to the Province. To minimize these risks and ensure compliance
with the Provincial and City require-ments for the project, staff
propose to keep close control of the societies' fulfilment of these
obligations through the Project Management Process and the monitoring of
the Release of Funds both as further detailed in this report.
Project Management Process
To ensure that this work on the City's buildings is carried out in a
satisfactory manner, Facilities Management (Corporate Services) staff
will establish a process to monitor the renova-tions and review the
contract documentation and program draws without taking on the full
project management as set out and agreed to in the Infrastructure
Upgrade Agreements. Staff have previously provided similar services to
non-profit organizations for projects funded by City grants.
Release of Funds
The Provincial agreement calls for a series of quarterly payments to the
City for the agreed upon work on receipt of invoices for completed work.
The Infrastructure Upgrade Agreement sets out a process and method of
approvals prior to the City's release of funds to the society. On a
quarterly basis, the Societies would submit invoices to the City for
approval. The City would then submit the approved invoices to the
Infrastructure Program for payment. When funds are received by the
City, they would then be turned over to the Societies after any
outstanding bridge financing is paid back to the City (see below). It
is proposed that work commence as soon as the organizations' project
budgets and schedules and construction contracts are approved by City
staff.
Interim Financing
When Canada/B.C. Infrastructure Program submissions were made in May of
1994, eligible costs and payment schedules were not defined.
Subsequently, the Program has clarified its process -- funds will not be
released until work is completed, and interest charges on interim
financing are only eligible to lock up. This does not serve renovation
projects, and consequently, these two projects will have to absorb the
cost of interim financing within the approved project budget.
Further, because the Infrastructure funds are directed to the City and
not the societies, they are not able to use them to secure interim funds
from their financial institutions. Consequently, the societies have
submitted requests to the City seeking the necessary bridge financing on
infrastructure funds, without interest, during the term of the project.
The Vancouver East Cultural Centre is planning their renovation in two
phases. The first phase is scheduled to take place May - September 1995
and requires bridge financing of up to $25,534 as outlined in the
attached cash flow projection (Appendix A). The bridge financing can be
repaid quarterly with the receipt of the Infrastructure Program funds by
September 1995. The second phase is scheduled for July - October, 1996
and will require bridge financing of up to $72,122. This can be repaid
by December, 1996.
The Firehall Arts Centre plan to complete their renovation by October
1995. They will require bridge financing of up to $240,754 which will
be able to be repaid with funds from the Infrastructure Program by
December, 1995.
The Director of Finance proposes that the required bridge financing to
the Vancouver East Cultural Centre and the Firehall Arts Centre could be
provided in the form of a repayable grant, for up to a maximum of
$98,000 to the Vancouver East Cultural Centre, and up to $241,000 for
the Firehall Arts Centre. The source of funds for the repayable grant
would be Revenue Surplus, to be repaid from the proceeds of the
Canada/B.C. Infrastructure Program. The estimated cost to the City in
approving these re-payable non-interest bearing grants is about $7,191
in foregone interest earnings.
ENVIRONMENTAL IMPLICATIONS
Both projects call for the replacement of inefficient heating and
ventilation systems which will conserve energy.
SOCIAL IMPLICATIONS
Both theatres are important resources within the City as well as within
their east-side neighbourhoods providing family and children/youth
programming as well as employment opportunities.
PERSONNEL IMPLICATIONS
Administering these projects will require some staff time from Social
Planning, Facility Development and Finance, which can be accommodated
within existing workloads.
CONCLUSION
The implementation of renovation projects to the Firehall Arts Centre
and Vancouver East Cultural Centre will enhance the City's civic
cultural infrastructure with little or no financial implications for the
City. Both facilities offer important programmes and employment
opportunities and, with the proposed upgrades, will provide greatly
improved venues and services for Vancouver's artists and audiences.
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