Supports Item No. 1

CS&B Committee Agenda

September 9, 1997

INFORMATION REPORT

CULTURE

DATE: September 05, 1997

Dept. File: SH 05.01.97

TO: Standing Committee on City Services and Budgets

FROM:Director of the Office of Cultural Affairs

SUBJECT: Vancouver East Cultural Centre (VECC) - Financial Update

INFORMATION

The General Manager of Community Services submits a financial update as requested by Council for INFORMATION.

PURPOSE

The purpose of this report is to provide a review of the Vancouver East Cultural Centre’s current operations and financial recovery plan as requested by Council when an emergency grant was made to the VECC in October of 1996.

BACKGROUND

Since its opening in 1973, the 350-seat Vancouver East Cultural Centre has played a valuable role in the cultural life of Vancouver. It has been a producer and supportive rental house for the work of local artists and innovative touring shows, as well as a unique heritage facility located in a vibrant east side community. The City-owned theatre, located at 1896 Venables St., is operated by the Vancouver East Cultural Centre Society.

The VECC received a 1997 Operating grant from the City of $65,000. In addition, the City leases the Centre property to the VECC Society for $1 per year. The City has also assisted the VECC with a capital improvement project through the Canada/British Columbia Infrastructure Program. The City provided bridge financing for this project but not a capital grant.

In July of 1996 when the VECC’s newly appointed executive director took on his responsibilities, it became apparent that a combination of optimistic financial projections for 1995/96, inadequate accounting systems, and very poor box office revenues from the previous season had left the VECC in a financially debilitating situation with the very real possibility of closing its doors. With a projected net operating loss of $110,858 for the year ending May 31, 1996, the accumulated deficit had reached $182,897 (on an annual operating budget of $697,218).

In October of 1996 Council approved an emergency grant of $17,085 to the VECC to ensure continued operation of the theatre. This emergency grant, in conjunction with other public and private funding support, formed one part of a recovery plan implemented by the VECC Board and staff. The other part of the plan involved restructuring the VECC’s operations to seek efficiencies and strategic partnerships in order to continue to provide access for artists and audiences alike.

DISCUSSION

Staff have reviewed the operations of the VECC in detail. The VECC have submitted a six-month report including financial statements outlining their progress to date and plans to continue their financial recovery program. The unaudited financial statements for the year ending May 31, 1997 are attached to this report as Appendix "A". Audited financial statements for the year ending May 31, 1996 are on file with the City Clerk and the 1997 audit will be available by mid-September.

Staff believe that the VECC has made considerable progress in reducing their debt and deficit, in stabilizing their cash flow and in implementing stringent financial controls. Financial improvements include:

·410·accounts payable have been reduced by 50% and a debt reduction plan is now in place and agreed to by most of the remaining creditors;·410

·410·$130,000 in new funds and in-kind support has been secured towards the debt reduction plan and improved operating support;·410

·410·improved marketing has resulted in improved earned revenue;·410

·410·new accounting and box office systems have been put in place;·410

·410·financial controls include a monthly external audit by a team of volunteer financial advisers;·410

·410·the VECC’s _ share of the Infrastructure funds has been raised and replaced; the project is now 75% complete and the City has been fully reimbursed for bridge financing. ·410

As well, the VECC have sought operating efficiencies. The staffing structure has been reorganized, reducing costs while maintaining the Centre's ability to serve its audience, renters and artists. Additional reductions in the budget have been achieved by renegotiating agreements and cancelling proposed co-productions or presentations representing high risk.

The VECC has introduced a Resident Company Program, entering into arrangements with Touchstone Theatre, Holy Body Tattoo dance company, and the Modern Baroque Opera Company. These partnerships ensure a firm block of "pre-booked' rentals every year. Recognizing that declining audience have contributed to the Centre's financial difficulties, the Society will be working with the resident companies to develop joint marketing strategies to recapture the "Cultch’s" audience base.

In summary, the VECC through very stringent control of expenditures and improved revenues will end this fiscal year with a significant surplus which will be used to reduce the accumulated deficit.

CONCLUSION

While the financial picture is much improved, the VECC will still have a projected accumulated deficit of approximately $75,000 at their year-end, May 31, 1997 and will need to remain focused on their recovery plan. Staff commend the Board, staff and volunteers of the Vancouver East Cultural Centre for their progress and commitment shown to date.

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(c) 1997 City of Vancouver