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TO: |
Mayor and Members of Council |
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FROM: |
Barbara M. Roth, Director, Recreation and Culture
Services |
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PREPARED BY: |
David Scott, Manager, Theatre |
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DATE OF
MEETING: |
2004-Sep-13 |
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SUBJECT: |
Markham Theatre Expansion Feasibility Study |
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RECOMMENDATION:
That the report entitled
Markham Theatre Expansion Feasibility Study be received as information;
And that consideration for the Markham Theatre Expansion be deferred for a
period of five years.
PURPOSE:
The purpose of
this report is to inform the Mayor and Members of Council of the results of the
expansion study conducted in 2003 regarding the ability of the Markham Theatre
facility to meet the community needs.
EXECUTIVE SUMMARY:
The Recreation,
Culture and Library Master Plan commissioned in 1999 by the Town of
The proposed
location of the addition is directly south of the existing theatre, between the
Markham Theatre and the Markham Civic Centre.
The hall will be configured as a theatre seating 350 to 375 people or as
a hall (for banquets and receptions) seating 200 to 250 people. It would be less expensive for community groups
to use this new hall than the existing theatre.
The cost of the
building expansion is estimated to be $7.5M based on 2004 dollars.
The funding for this expansion is proposed to come from several sources including grants, a capital campaign, the theatre endowment fund and taxes. The project funding source would require a large capital campaign, and there currently are several campaigns underway in the community, such as
· YMCA
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· Markhaven building
·
Unionvilla expansion
We feel it would be prudent to defer the expansion until the existing major capital campaign programs have been completed.
Additionally, at the present time there are no provincial or federal funding sources available to help fund this project. We are proposing that the project be deferred for five years with the understanding that it is re-assessed bi-annually until that date to determine if any new sources of funding become available in provincial or federal grant programs that may act as a catalyst to undertake such a large capital program in the community.
BACKGROUND:
The final report from NOVITA Consultants strongly recommends building a
community hall space. The Town
commissioned this feasibility study as part of the 2002 capital, and it was
completed in 2003. Refer to Appendix A
for the detailed report.
The proposed design would incorporate multi-use lobby facilities,
service facilities and office space. It
could serve as a theatre as well as meeting space and/or banquet facility. This addition would maximize the use of the
existing theatre facility for larger events, while providing a smaller facility
to accommodate a host of community and educational demands that are not being
accommodated currently. It would share
with the larger theatre some of the existing resources such as box office and
booking system.
There are some synergies in having shared resources in one facility
being able to support the activities in two halls instead of just one. The box office, some lobby amenities such as
concessions and washrooms, will be shared for both facilities.
The planned hall would be a multi-use facility to be used for events
with catered dinners, receptions, meetings, etc. It would be geared toward community group use
and supporting longer runs of shows with smaller audience support. It would be more economical to use because it
would require less supervisory staff to operate than the existing theatre. The hall could also be used for Town and
corporate meeting space. The proposed
design is to also include a boardroom to better meet the increased demand for
meeting space.
The feasibility study also recommends that a fundraising consultant be
engaged to comment on the case for support of this project outside of any
potential municipal funding.
OPTIONS/DISCUSSION:
The addition and
needs of the growing community are projected in the strategic study completed
as part of the Towns long-term strategic plan, updated in 1999. This report recommended that a study be
conducted in 2002 investigating the needs in the community for another theatre
space.
During the study,
other options of locations were discussed and investigated. These options included placing a second
theatre elsewhere in Town and renovating the Rouge River Community Centre hall
to become a theatre. In both scenarios,
the cost savings were not significant and the efficiencies of operation by
requiring two separate infrastructures and sets of equipment did not make this
feasible.
The idea of
building a larger theatre in the community was considered. It was felt that the need for a larger
theatre could be met by other under-utilized halls in the area (Toronto Centre
for Performing Arts, Living Arts Centre, etc.).
It was also determined that the needs of the community are for a smaller
hall. The expense of building a larger theatre was also much higher with little
demand in the market place. It is also felt that a larger theatre would make
The Theatre is very
proud of the fact that we have a very high percentage of our rental customers
return from year to year. The current
theatre is highly utilized each year.
The high demand times for the theatre include pre-Christmas, May and
June and all weekends (Friday, Saturday, Sunday). In the consultants report (Appendix A, page 6
section 3.1), they indicate that there is a potential 20% additional demand
for theatre rental space, based on a two-week recorded period.
It is proposed that
the new hall would be a more economical space for community and educational
groups to use.
FINANCIAL CONSIDERATIONS:
CAPITAL COSTS
The cost of the building
expansion is estimated to be $7,500,000 based on 2004 dollars (refer to
Appendix B). An aggressive capital
fundraising campaign would need to be undertaken to assist with capital
construction since there is no federal grant program available at this time to
assist with the construction/expansion of cultural venues. Combined with the number of capital campaigns
currently underway in the community, staff recommend
not proceeding with the expansion until the economic and fundraising climates
change or a new federal or provincial grant program is introduced to undertake
such an expansion.
OPERATING IMPACT
The proposed addition will allow the theatre operations to have a
larger core of operations and allow enough of a critical mass of similar
business in one location to become more financially successful in
operation. The development of a customer
base for the use of the proposed new hall and the ability to rent the existing
theatre to new customers should existing client want to move to the smaller
theatre are both factors that will impact the operational costs. There will be additional operational costs
associated with the theatre expansion.
The staff complement
required at the theatre would need to be increased by approximately four FTEs
to meet the proposed operational requirements in the first year of
operation. This would be achieved
through both casual part-time and some full-time staff positions. These
positions would earn offsetting revenues associated with the hours worked.
In the last year, several of
the rental clients could have been accommodated in a smaller theatre
space. The chart below shows that in
2003, 88 of the 270 uses by educational and community groups could have been
accommodated in a theatre the size of the proposed theatre. These figures exclude the professional
season.
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2003 |
#
of Days Rented |
#
of performances with less than 350 seats sold |
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Educational |
99 |
39 |
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Community |
87 |
28 |
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50 |
6 |
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Other |
34 |
15 |
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270 |
88 |
Chart excludes the professional series shows.
Existing Theatre In 2003, there were 88 performances with less then 350
seats sold, which equates to 30%. If 30% of the current users (88 rentals)
in the existing theatre switched to the new theatre, and no new rental activity
replaced the activity in the existing theatre, the net reduction in revenue
would be approximately $150,000, as outlined in Appendix C.
New Theatre Theatre staff forecast 150 rentals in the first year. While a demand
exists in the market for theatre rental facilities, one cannot quantify whether
there is sufficient demand to offset both the potential of backfilling the 88
rentals transferring from the larger venue to the new smaller venue in addition
to picking up 62 new rentals to meet the forecasted 150 rentals.
Even if there was no transference or loss of rentals in the existing
theatre, the question would be if there is sufficient demand to generate 150
new rentals in the proposed theatre space.
The proposed budget for years one to three (refer to Appendix D) is
based on the following assumptions:
The shortfall for the new theatre would be approximately $63,000 in
year one. By year three, if there was an
additional 10% rental activity generated each year, the subsidy would decrease
to approximately $22,000.
The overall operating
subsidy at the theatre in year one would increase from $132,000 in the 2003
budget to approximately $345,000 (refer to Appendix E). These numbers reflect the existing 2003
operating subsidy of $132,000, the existing theatre potential loss of revenue
due to 30% of current users transferring to the smaller space and being unable
to backfill the existing rentals at an estimated $150,000, and the new theatre
space being able to generate 150 rentals in year one with an operating subsidy
of $63,000.
Exhibit 1 summarizes the
revenues and expenses over the first three years of operation.
Exhibit 1
The financial
performance of the theatre will be affected by these three main factors:
The theatre performance can
be significantly enhanced if the three factors can be accomplished.
The speed at which the
theatre rental business could be built up is dependent on a number of
factors. Although estimated at a
three-year growth term, the market, the economy, and community growth will
dictate how soon the theatre rental market business will become established for
both the existing and the proposed new theatre.
It is expected that the additional theatre space will improve the
financial bottom line for the theatre operations in the long run.
The proposed theatre expansion
is expected to position
NEXT
STEPS:
It is recommended, because of the number of different major fund raising projects for capital building programs currently underway in the Town and because of the financial risk involved with recuperating the anticipated loss of revenue from the main theatre, that the project be deferred for a period of five years, and that it be re-assessed bi-annually until that date to determine if any new sources of funding become available that may act as a catalyst to undertake such a large capital program in the community. At that time a study will need to be undertaken to research the feasibility of fundraising for the capital expenditures of this proposed expansion.
BUSINESS UNITS CONSULTED AND AFFECTED:
Theatre rental clients
NOVITA Consultants
Theatre staff
Town Planning
Department staff
Town Financial
Services staff
Theatre Board
Theatre Future
committee
ATTACHMENTS:
Appendix A
Theatre Expansion Feasibility Study
Appendix B
Proposed Capital Building Budget 2004 dollars
Appendix C
Potential Operating Impact on Existing Theatre
Appendix D
Three-year Projected Operating Budget for Proposed Theatre Addition
Appendix E Potential
Net Financial Impact on Theatre Operations
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Barbara M. Roth, R.D.M.R. Director, Recreation & Culture Services |
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Jim Sales Commissioner of Community and Fire Services |
Q:\Recreation\SITES\SIT029\Reports\Theatre Expansion
Study.doc
