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Council PKT 07-21-2009 Special .~ Federal Way AGENDA FEDERAL WAY CITY COUNCIL SPECIAL MEETING Council Chambers - City Hall JULY 21, 2009 - 5:30 pm www.cityoffederalway.com 1. CALL MEETING TO ORDER 2. PERFORMING ARTS CENTER DISCUSSION 3. EXECUTIVE SESSION a. Potential Litigation Pursuant to RCW 42.30.110(1 )(i) b. Property Acquisition or Sale Pursuant to RCW 42.30.110(1 )(b) c. Collective Bargaining Pursuant to 42.30.140(4) 4. ADJOURN ~ Federal Way SUBJECT: July 15,2009 City Council/....V Patrick DOhe~r.nic Development Director Report on Performing Arts and Conference Center DATE: TO: FROM: Background As you may recall, the City Council directed staff to engage consultants to study the feasibility of an integrated Performing Arts and Conference Center (P ACC) facility, including business plan, pro forma analysis, economic impact, etc. Webb Management Services of New York was chosen after interviews with three consulting firms from around the nation. The Report Attached you will find the final draft report from Webb Management Services. It includes the following components: . Review of work to date . Review of comparable projects . Market analysis . Competition within the regional marketplace for both performing and conference facilities . Working concept for the facility . Proposed governance and operations models . Proposed staffing plan . Multiyear activity schedule and pro-forma operating budget . Economic impacts This report will be presented in detail at a Council Study Session scheduled for 5 :30 pm, Tuesday July 21, 2009. There will be an opportunity to ask questions of our consultants at that time. Information analyzing and comparing five potential sites for the P ACC will be presented in Executive Session because public knowledge might adversely impact the City. This analysis has been conducted by LMN Architects. Next Steps With this information, as well as the comparative analysis of five potential sites, you will have the opportunity at the following regular City Council meeting (8/4/09) to deliberate whether to continue to pursue the development of a P ACC. Based on consideration and the status of the five potential sites, Council may also what site or sites to pursue further, provided that the public Memo re PACC July 15,2009 Page 2 of2 discussion would not have an adverse impact on the City. It is important to understand what further pursuit of development of the P ACC means at this time. As you know, the State has granted the City $500,000 for preconstruction-related expenses (design, environmental, permitting costs), while the Federal Way Coalition for the Performing Arts has also been awarded a grant for $325,000 for preconstruction costs. An affirmative decision at this time to pursue the P ACC further, as well as identification of a preferred site, would NOT necessarily constitute a commitment to construct the P ACC, but rather a commitment to begin the design and permitting process, using the State-awarded monies mentioned above. That process would proceed while work would continue over the next ten months with stakeholders, potential funders and the State Legislature to compile a capital funding plan to finance construction of the PACC. Key to that plan will be the Legislature's potential approval of a repurposing of the King County lodging tax revenues currently amortizing debts associated with sports facilities in Seattle that will become available starting in 2012. Work this past session led to a promising plan that would have potentially included substantial funding for a Federal Way P ACC, but the plan was not able to be approved this year by the Legislature in a political climate colored by sweeping budget cuts in the State's general operating budget. There are positive signs that during the 2010 session, especially thanks to the diligent work and fortunate representation by Senator Tracey Eide who co-chairs the committee charged with repurposing the King County lodging tax revenues, the plan may be passed by the Legislature. The Legislature's action in this regard will be a key component of any potential P ACC capital funding scheme. For this reason, by approximately May of next year staff would be able to present to Council a detailed construction cost estimate, based on design work completed by that time, as well as a more fully fleshed-out capital funding plan. This plan will include whatever potential contribution would be forthcoming from the Legislature (and approved by the Governor). For these reasons, May 2010 is time frame when a key go/no-go decision could be made by the City Council regarding further pursuit of the P ACC. And at that time the initial commitment could consist of approval to continue final design development and initiation of work leading to the public infrastructure improvements associated with the P ACC. You will recall that for these improvements the City has received a $5 million award from the State, which must be obligated by June 30, 2011. Please do not hesitate to contact Brian Wilson, Pat Richardson or Patrick Doherty at any time if you have questions about this report or require any other information. - ------------l manl!all.ent Feasibility Study for the Federal Way Performing Arts & Conference Center July 2009 Feasibility Study for the Federal Way Performing Arts & Conference Center table of contents 1. INTRODUCTION ................................................................................................................................................2 2. REVIEW OF WORK TO DATE...........................................................................................................................3 3. COMPARABLE PROJECTS REVIEW AND BENCHMARKING........................................................................8 4. THE MARKET FOR PERFORMANCE FACiLITIES........................................................................................14 5. THE COMPETITIVE SITUATION FOR REGIONAL PERFORMANCE FACILITIES........................................ 16 6. REGIONAL CON FERENCE FACiLITIES......................................................................................................... 19 7. THE FUTURE OF PERFORMING ARTS FACiLITIES..................................................................................... 22 8. FACILITY CONCEPT ....................................................................................................................................... 23 9. GOVERNANCE AND OPERATIONS .............................................................................................................. 28 10. STAFFING PLAN .......................................................................................................................................... 39 11. PRO-FORMA OPERATING BUDGET ..........................................................................................................42 12. ECONOMIC IMPACT .................................................................................................................................... 46 APPENDIX A: MULTIYEAR ACTIVITY SCHEDULE, PRO-FORMA OPERATING BUDGET AND REFERENCES Feasibility Study for the Federal Way Performing Arts & Conference Center 1. introduction The City of Federal Way has engaged Webb Management Services to conduct in depth research around the concept of a Performing Arts & Conference Center, which was first analyzed by C.H. Johnson and LMN Architects. Following is a review of the work completed to date, research pertaining to comparable venues, and a strategy for the successful operation of new facilities that considers the activity levels, operating policy and human and financial resources required to sustain new facilities. Many people from the community of Federal Way have informed this planning effort. We would like to take this opportunity to thank them for their input and advice on the plan, and for their commitment to the implementation of these recommendations. July 2009 2 Feasibility Study for the Federal Way Performing Arts & Conference Center 2. review of work to date The idea of performance facilities and conference facilities in Federal Way is generally recognized as one with great potential. Both components would support the revitalization of downtown, sustain local arts organizations and attract business to the area. In 2008, City leadership engaged C.H. Johnson to research both concepts, and ultimately approved the pursuit of an integrated facility that would support performance and conference activities. Historically, the Federal Way Coalition of the Performing Arts (FWCPA), a nonprofit formed by eight local arts organizations, has promoted the development of a performing arts center. Founded in 1989, the FWCPA advocates for local performance groups and the development of new performance facilities. In support of the project, the FWCPA has engaged the Collins Group to conduct a fundraising feasibility study. The City of Federal Way 2008 National Citizen Survey suggests that residents are supportive of downtown redevelopment, business enhancement and the construction of a new performing arts center. In response to the questions "What is the single most important thing the City of Federal Way can do to make this a better place to live?" business enhancement ranked number two, downtown redevelopment ranked fifth and a performing arts center ranked tenth. Additionally, 62% of survey responders strongly support or somewhat support the use of City funds to help develop a performing arts center in the downtown core to spur economic development and growth. In January 2008, C.H. Johnson and LMN Architects completed a feasibility analysis, which addressed market potential for a performance venue, conference facility and hotel. The study proposed and prioritized five scenarios for new facilities, considering the potential to renovate existing performance and conference facilities (Dumas Bay Center and the Knutzen Family Theatre), develop a new performing arts center or a conference center, or finally, a complex that would accommodate both performances and events. The project team then developed preliminary cost estimates, management structures, operating scenarios and economic impact projections for each development opportunity. The team recommended a combined Performing Arts & Conference Center with an adjacent hotel. The decision to pursue integrated performance and conference facilities was affirmed by Federal Way City Council on January 31, 2009 at its annual retreat. The project concept is also supported on the State level; the City has already secured significant funding for capital costs. This includes $500,000 from the State of Washington to pursue pre-construction activities related to the development of new facilities and $5 million for facility infrastructure construction costs. And finally, the FWCPA has secured an additional $325,000 to support pre-construction through the State's Building for the Arts program. July 2009 3 Feasibility Study for the Federal Way Performing Arts & Conference Center The following pages include our comments on the C.H. Johnson Performing Arts Center & Conference Center Analysis ("the Johnson Report"). Performing Arts Center The Johnson Report provides a broad overview of the performing arts industry, market and programmatic elements to determine the need for new performance venues in the City of Federal Way. Overall, these comments do not warrant or require significant changes to the facility concept developed in the initial analysis. However, there might be a need to refine the conclusions around what types of programming will take place in the facility, who the users will be, and how new facilities can support broader community goals. A. Performing Arts Audiences The Johnson Report makes inferences regarding propensity to attend the arts are based on age distribution; the report suggests that a high proportion of 0-19 year olds, adults 35 to 54, and adults 55 and over is a good indicator of audiences. We think that this information is inadequate to determine the likeliness of audience attendance for performing arts events in Federal Way. One of the best indicators of audience attendance is educational attainment, as determined by the National Endowment for the Arts (NEA) Survey of Public Participation in the Arts (SPPA). We provide analysis on potential audiences later in this report. B. Theater Capacity The Johnson Report notes that with the exception of the 234-seat Knutzen Family Theatre, there is a distinct lack of traditional performance venues in Federal Way. Local arts organizations requested a facility with 1,000 or more seats but draw audiences of approximately 500 per show. A 500 to 700-seat facility will accommodate these users, enable local arts groups to increase their presence, and hopefully their respective audiences. Seating on two levels will provide an intimate setting for smaller audiences and productions. Based on information gathered from local arts organizations and need for a venue this size in the local market, we agree that the capacity for a performance venue should be 500 to 700 seats. However, the Johnson Report inadequately tests the feasibility of a 500 to 700-seat theater within the highly competitive regional market. This is particularly important when considering how the Performing Arts Center should be positioned and programmed in the regional market. We will address this issue in the coming sections. C. Programming Based on insufficient demand from local arts organizations, the Johnson Report recommends that the facility engage the services of a commercial promoter to book the space. We think this should be reconsidered for the following reasons: July 2009 4 Feasibility Study for the Federal Way Performing Arts & Conference Center . The capacity of the facility (500 to 700 seats) is limiting in that it is not large enough for many commercial events and might restrict the quality and number of commercial events in the space. . Commercial promoters tend to utilize theater spaces for long blocks of time, which would take precedence over local arts organizations and other users, reduce flexibility of the booking calendar, increase booking horizons, and affect booking priorities. D. Support Facilities The Johnson Report recommends that facilities also include a number of support spaces, particularly those that sustain a resident company. The conceptual design for the facility includes a placeholder of 2,000 square feet for rehearsal facilities for a resident arts organization. As noted above, local arts organizations have a limited level of demand and ability to afford these spaces. We think that the space is more likely to be used for many uses and users. In that scenario, key support spaces should accommodate a combination of rehearsals, meetings and special event space. E. Front of House Facilities The Johnson Report recommends that new facilities have a box office if on-site ticketing is required. To fulfill audience expectations for a high level of customer service, we think that new facilities should include an on-site box office. The box office should: . Facilitate on-site ticketing, on the basis that performing arts audiences expect the ability to purchase tickets at the box office, over the phone, and pick up at will- call. . Have flexibility to update the space for new advances in ticketing technology and purchasing. F. Involvement of Local Arts Groups The Johnson Report indicates that current levels of demand from local arts organizations are inadequate to program new facilities year-round. Our one-on-one interviews with representatives from local and regional arts groups clarified the level of support they are able to dedicate to the facility, and their expectations for the space. Combined with presenting and demand from regional arts organizations, there was sufficient demand for performance facilities in Federal Way. Additionally, the new arts facilities should: · Provide professional facilities that enable local arts organizations to grow. · Encourage the development of new arts organizations and activities. July 2009 5 Feasibility Study for the Federal Way Performing Arts & Conference Center G. Community Goals and Economic Impact The Johnson Report broadly considers the benefits of these new facilities, particularly the tremendous value of performance facilities, as they increase quality of life, add to patronage at bars and restaurants and encourage visitation. The Johnson Report also indicates a combined performing arts center and conference complex would provide $20 million in total spending in economic impact in year 5 of operations, and 200 increased employments (FTE jobs). This development opportunity provides the greatest economic impact of the five scenarios. We think that there is a need to determine how new facilities would support the goals and objectives of the City of Federal Way, and how those goals might influence the development of a concept for new cultural facilities. Additionally, the previous economic impact analysis does not sufficiently account for the induced expenditures by audiences and the impact of that activity on the local economy. This economic impact can be calculated using a model developed by Americans for the Arts within its The Arts and Economic Prosperity report, as discussed later in this report. H. Governance and Operations The Johnson Report does not identify or consider all of the ways in which performing arts facilities are currently operated and sustained. Operating models are more varied and complex than simply civic or commercial, and it will be important to select the model that is the best for the space, users and City. A number of models regularly utilized by performance facilities include non-profit, government-run, user-run, commercial theaters and educational institutions. Facilities may be owned and ope(ated through one of these options, but many facilities utilize a variation of one or more of these models. We will address governance and operation in the coming chapters. Conference and Hotel Facilities The consideration of market potential for conference facilities is accurate, assessing comparable facilities, the local competitive situation, top industries and businesses, and the quality of the Dumas Bay Conference facilities. Comments on this analysiS are as follows: . Based on local inventory, the proposed conference facilities will be significantly larger than any of Federal Way's professional conference and meeting facilities, and would not compete with existing local facilities. This is even more so the case if the Dumas Bay Conference facilities are demolished or closed. With 14,000 square feet of dedicated conference facilities, the assessment of market potential does not fully consider the regional inventory of conference facilities of comparable size. Positioning these facilities as available to trade shows, exhibitions and conferences will compete with regional facilities located in Tacoma, July 2009 6 Feasibility Study for the Federal Way Performing Arts & Conference Center Seattle and the region. An assessment of regional facilities is provided later in this report. · The Johnson Report recommends a 300-room 3-star hotel to fulfill demand that is "induced" by new conference facilities. As determined by the Johnson Report and reaffirmed by our own research, the current hotel inventory in Federal Way is lower than comparable markets. Additionally, only two out of nine hotels provide on-site meeting and conference space, something that has contributed to the shortage of proper meeting and event space in Federal Way. A hotel development in proximity to new facilities is mutually beneficial, and fundamentally a good idea. Based on the current conceptual design of the Center, conversations with event planners and representatives from convention and visitors bureaus, we would recommend a high- quality hotel with a range of 150 to 300 rooms. July 2009 7 Feasibility Study for the Federal Way Performing Arts & Conference Center 3. comparable projects review and benchmarking In order to test the viability of the performing arts paired with conference facilities, we have undertaken a comprehensive benchmarking exercise in which we researched a series of comparable facilities nationwide. Here are the steps we've taken to complete this exercise: . We developed a list of 9 comparable venues that contained both performance and conference facilities. . We reviewed this information with the client and then refined the list. . The most important criteria in selecting the facilities for our detailed analysis included the breadth and mix of programming, the size and characteristics of the market and the nature of the governance and operating structure. Clearly, there is no one venue exactly like the proposed Federal Way Performing Arts & Conference Center. However, we were able to select venues that share characteristics and that collectively consider most attributes of the project. . We created a short list of 5 comparable venues, with varying operating models, market characteristics, programming levels and annual operating budgets. . Finally, we interviewed managers and staff of these facilities and collected other data on activity levels, programming, financial resour.ces, rentals and governance. We do acknowledge that this exercise is somewhat limited, as none of the facilities have hotels included in their operations. The Eisemann Center has adjacent hotel operations, which complement existing facilities. When searching for performance and conference facilities that also included hotels, we discovered that very few facilities have this arrangement, and the facilities that do include hotels tend to be large capacity theaters with adjacent convention facilities. For example, the Cannon Center for the Performing Arts and Memphis Cooke Convention Center includes 300,000 square feet of meeting and conference space, a 2,100-seat theater and is connected to a 600-room Marriott Hotel. Following are descriptions of facilities we researched: July 2009 8 Feasibility Study for the Federal Way Performing Arts & Conference Center 1. Florence Events Center, Florence (OR) opened in 1994, and houses the 457-seat Events Center Theater. gallery and a 21,600 square foot Conference Center, which can be configured for sit-down dinners, weddings. exhibitions and breakout meetings. Florence Performing Arts, Kremlin Chamber Orchestra, Last Resort Players, and the Jazz Kings regularly use the facilities. The Florence Events Center is owned and operated by the City of Florence. The facility is supported by revenue from facility rentals and a 4% Transient Room Tax. Fundraising support is provided by the nonprofit organization Friends of the Florence Center, a volunteer group that also provides staffing. 2. Stafford Centre, Stafford (TX) opened in 2004, is located 15 miles from downtown Houston, and contains a 1,115-seat theater and a 20,000 square foot ballroom, a catering kitchen and breakout rooms to make up 25,000 square feet of conference space. The grounds also offer over 28 acres of outdoor festival green space. The facility is owned by the City and operated by a private management company. An outside presenter books about 15 events per year, including popular musical acts, and the Centre rents the theater space to groups for both private and public events. The conference spaces are used for corporate events. weddings and private parties. 3. Eisemann Center, Richardson (TX) opened in September 2002 and includes a 1,563-seat theatre and 3,150 square feet of conference space. Adjacent to the Center, the Renaissance Dallas-Richardson Hotel and Galatyn Park Conference Center provides over 30,000 additional square feet of meeting and banquet space. Additionally, the Eisemann Center's Prelude ~- Cafe is open for casual pre-show dining. The Eisemann Presents series includes comedy, music and dance, and presents about 25 events each year; subscriptions are available for certain series. The Eisemann Center is owned and operated by the City of Richardson. 4. Mcintyre Hall, Mount Vernon (WA), opened in 2004, was designed by LMN Architects, and referenced in the Johnson report as a facility similar in cost and design to that being proposed for Federal Way; Mcintyre Hall has a 651-seat theater and a 7,000-square foot large lobby and conference facility that can accommodate up to 350. The Hall has July 2009 9 Feasibility Study for the Federal Way Performing Arts & Conference Center additional meeting rooms for breakouts and intimate events. The facility is located on the campus of Skagit Valley College and is close to a 102-room Hampton Inn & Suites. Mcintyre Hall hosts events from Skagit Valley College, private events and local arts groups such as META Performing Arts, Northwest Ballet Theatre, and the Skagit Symphony. Mcintyre Hall is owned by the Skagit County Public Facilities District and is operated by Skagit Valley College. The facility is also supported by lodging tax funds from the City of Burlington and City of Mount Vernon, nonprofit organization Friends of Mcintyre Hall, and a building operating endowment. 5. The Center for Rural Development, Somerset (KY) The 100,000 square-foot Center for Rural Development opened in 1996 and has 760-seat theater, 26,000 square foot exhibition space, and five breakaway ballroom spaces that can accommodate meetings from 20 to 300. Programming at the Center includes performances by local arts groups such as CenterStage, School Time Theatre, Children's Prime Time Theatre and Lake Cumberland Performing Arts. The Center also produces youth education and leadership institute programs, and is the largest provider of videoconference services in Kentucky. The Center for Rural Development is owned and operated by a nonprofit organization. We will now work through the comparisons of the venues, and what this data suggests about the operation of proposed facilities. Benchmarking: Facilities location Local Population % local Pop with Bachelors Degree (age 25+) local Median Income CBSA CBSA Population % CBSA Pop with Bachelors Degree (age 25+) CBSA Median Household Income CBSA Per Capita Spending on Admission Fees/Ent. Owner Operator Number of Nearby Hotels Total Number of Hotel Rooms Theater Capacity Conference Center Square Feet Other Public Spaces FederalWav Federal Way 88,580 est. 26.24% $57.539 Seattle- Tacoma-Bell evue 3,3Bl,567 32.44% $64,239 $27,30 Stafford Centre Stafford. TX 19,872 36.41% $56,787 Houston-Sugarfand-Bay Town 5,819,069 26.88% $54.987 $22.60 City City 13 1089 1.115 25,000 1 visual arts space; lobby of 17,0005q It on 31e,e15; ballroom, outdoor green MdnIYIW Ha! Mount Vernon. WA 30,809 18.70% $46,647 Mount Vernon-Anacortes 118.415 20.60% $53,125 $22.60 Public Facilities District Skagit Valley College 9 733 651 7,000 A....... Events Cantor Rorence, OR 6,899 17.57% $37,000 Eugene-Springfield 348,614 25.79% $44,145 $20.80 City City 13 200 450 8.000 Full-service kitchen BsamannCa_ Richardson, TX 104,661 48.73% $68,084 Dallas-Ft. Worth-Arlington 6,348,826 29.41% $56,794 $23.80 City City 10 2030 1,563 3,150 3GB-seat; 1 visual arts space; Lobby of 17.000 sq It on 3 levels. Adjacent hotel offers 30,000 additional square feet of meeting space. 9 914 700 14.000 Multi-purpose room Demographics Sources: Claritas 2009 .Washington State Office of Financial Management CantIlrfof Rural DoooIo_ Somerset, KY 11,913 13.30% $25,298 Somerset 60,992 10.39% $33,980 $17.60 Nonprofit Nonprofit 8 402 760 26.000 Outdoor green It should be noted that the local population only includes households within the boundaries of the City of Federal Way. Although we would consider the areas surrounding the City be part of the primary market area, they have been excluded from the exercise. Conversations with City staff indicate that greater Federal Way's population is approximately 130,000. July 2009 10 Feasibility Study for the Federal Way Performing Arts & Conference Center We start with the basic comparison of the market and facilities. Federal Way is a relatively affluent and educated market. Notably, Federal Way has the highest CBSA per capita spending on admission fees and entertainment, the highest educational attainment levels, and the highest median household income as compared to these other markets. Like the Richardson and Stafford, Texas, Federal Way is an "edge city" within a much larger metropolitan region. Although Federal Way is located within a major metropolitan region, the number of nearby hotels is lower than both Richardson and Stafford. The three other facilities are located in rural communities and far from major metropolitan areas. Located on the coast of Oregon and outside the Eugene-Springfield metropolitan area, the Florence Event Center is in a rural community within the smaller Eugene-Springfield Core Based Statistical Area (CBSA). Both Mcintyre Hall and the Center for Rural Development are located in regions with populations under 150,000. Three of the comparable venues are owned and operated by cities, including the Stafford Centre, which contracts a management company to oversee day-to-day operations and bookings. Mcintyre Hall is owned by a Public Facilities District and operated by the Skagit Valley Community College, a unique partnership between an educational institution and the government sector. Finally, the Center for Rural Development is both owned and operated by a non-profit organization. Benchmarking: Activity Stafford Centre Number of Presented Events Number of Conference Space Rentals Non-profit Groups (%) Private Users j Commercial Users (%) Number oITheater Rentals Resident Arts Groups (%) Other Arts Groups (%) Other Events (%) Outside Presenter (%) Total Attendance Total Facility Uses Base Rental Rate for Nonprofit Perfonnance Oay . Data not available Mclntyre Hall 6 55 60% 40% 170 192 5% 95% 160 65% 15% 10% 10% 15,000 275 $4,800 Rorence Events Center 3 10 20% 80% 105 75% 25% EIsemann Center 27 78 41% 59% 354 8% 40% 52% 75% 25% 60,000 225 Average $940j6-hr 10,000 420 $600j8-hr 193,380 459 $1,500 - $1,650 Center for Rural Development 20 1,000 50% 50% 75 NjA' NjA' NjA' NjA' 100,000 1095 $640 Next we compare activity levels in each of the comparable venues. The Johnson Report projected that new facilities will generate rental income as the primary revenue source. The Stafford Centre is close to this model. renting facilities to resident arts groups, other arts groups, private users and to a local presenter. The Florence Event Center and the Eisemann Center also present non-theatrical events. although in both cases, theater rentals outnumber the level of other events. Accommodating nearly 500 total facility uses, the Eisemann Center is one of busiest facilities, and is particularly interesting because only 48% of rentals are attributed to resident arts groups - the theater is used frequently for other events as well. Mcintyre Hall's facility also accommodates a number of users and uses. Non-profit groups account for 60% of conference space rentals and 25% of theater rentals are non- performance events. July 2009 11 Feasibility Study for the Federal Way Performing Arts & Conference Center The chart below compares operating budgets and how facilities are supported. For reference, the Johnson Report estimates that the performing arts component will have an annual operating budget of $679,000 in the first year of operation, and the conference center will have an annual operating budget of $1.2 million. Each of the following City-operated facilities receives a significant level of funding from the City government, ranging from 32% to 44%. As a non-profit, the Center for Rural Development has more diverse funding sources, but does receive a significant portion of contributed income from the State of Kentucky in support of the Center's specialized Terrorism Prevention Certificate Program. Mcintyre Hall also has relatively diverse funding sources, including a modest City contribution. Overall, contribute income ranges from 25% to 58% of operating budgets. Benchmarking: Operating Budget and Contributed Income Mcintyre Hall Aorence Events Center Eisemann Center Operating Budget $778,560 $604,000 $3,451,519 Contributed Income City Government $26,000 $225,000 $1,508,532 Corporations $10,000 $13,945 Individuals $17,000 $10,702 Other $138,500 $36,000 Total $191,500 $261,000 $1.533,179 Contributed Income as % ofTotal Budget 25% 43% 44% City Contribution as % of Contributed Budget 3% 37% 44% Stafford Centre Center for Rural Development $1,266,270 $7,500,000 $401,718 $401,718 32% 32% $120,000 $60,000 $4,200,000 $4,380,000 58% 0% Next, we look more closely at earned income, considering rental income, ticket sales and other revenue generating activities. Benchmarking: Earned Income and Ticket Sales Mcintyre Hall Center for Rural Development $55,000 3,000 Rorence Events Center Eisemann Center $36,000 $563,408 $24,247 10,000 15,921 $100,000 $524,092 $16,848 $25,000 $10,286 $10,000 $305,882 $6,000 $4,000 $7,000 $169,000 $466,577 $350,000 $1,918,340 10% 29% TIcket Income Total Ticket Income Ticket Sales Ticket Service Fees Total Number of Tickets Sold Conference & Rental Income Rental Income Food & Beverage Income Catering Commission User Fees Selection of Other Income Sources Education & Outreach Programs Investment Income Concessions & Merchandise Other Income $330,760 $200,000 $5,000 Eamed Income Total Earned Income Ticket Income as % of Earned Income $590,760 9% Stafford Centre $99,000 15,000 N/A' $645,057 $19,462 $7,567 $179,467 $207,000 $70,000 $69,930 $90,000 $2,595,700 $851,553 0% $3.131.630 3% 'Oata not available July 2009 12 Feasibility Study for the Federal Way Performing Arts & Conference Center The Stafford Centre is the most comparable venue, generating the majority of its income from rentals and user fees. Ticket income for the Stafford Centre is not included in the organization's total earned income because this number represents gross ticket sales generated by outside renters. With the exception of the Eisemann Center, comparable venues generate very little earned income from ticket sales, instead relying on rental income, food and beverage income, user fees and catering commission. The three City operated venues are either staffed by City employees or affiliated through a contracted management company. With 30 members, the Eisemann Center has the largest staff. All facilities rely on volunteer support for day-to-day positions including ushers, coat checkers and concessionaires, but also trustees and boards of directors. Benchmarking: Human Resources Mcintyre Hall Rorence Events Center Eisemann Center Stafford Centle Center for Rural Development Paid Employees City Employees? Total Staff Full Time Part Time Contract Staff Dedicated Fundraising Staff Dedicated Marketing Staff Dedicated Finance Staff Production/Technical Front of House/Ticketing Other Personnel Trustees No 33 4 27 2 Yes 4 4 Yes 33 26 4 3 Yes 21 6 6 9 No 12 9 3 as needed 7 6 18 6 1 1 1 1 2 Volunteers 8 College Trustees & 7 Public Facilities 80ard Members 120 - 150 11 7 12 60 180 15 25 Overall, the benchmarking exercise suggests several things about how one should expect these facilities to run, and also highlights several unique characteristics about the project. . Each of the City-operated facilities does very little fundraising. As indicated in the Johnson Report, City-operated facilities usually depend on the City to contribute a significant percentage of the annual operating budget. Theaters operated by nonprofit organizations have more diverse sources of contributed income, and they also solicit funding from the private sector and foundations. Each of these facilities generates the majority of revenue through theater and conference space rental to resident arts organizations, other arts organizations, event users and outside presenters. . Federal Way has significantly fewer hotel rooms and hotels than any of the comparable facility markets. . There is a distinct lack of fund raising personnel at each of these venues. July 2009 13 Feasibility Study for the Federal Way Performing Arts & Conference Center 4. the market fa cil iti es for performance As previously mentioned, the Johnson Report does not adequately address audience attendance at new performance facilities. To inform this research, and supplement the market research conducted in the Johnson Report, we evaluated educational attainment levels of Federal Way and the surrounding region. As determined by the NEA Survey of Public Participation in the Arts (SPPA), one of the best indicators of the propensity to attend the arts is education. The NEA conducts the Survey of Public Participation in the Arts every five years; the last survey was published in 2003 with an update expected later this year. The SPPA identifies the demographic characteristics of those who participate in the arts, both as audience members and as active participants in classes, performing groups and more. The following highlight some of the key findings of the SPPA: . Educational attainment is by far the best predictor of arts attendance: As seen in the chart below, the propensity to attend arts events among those who have completed college is at least three times greater than for those who have finished only high school; with each advanced level of education there is an increased probability of arts attendance. Rate of Participation: Education ~"' ::: C: Musicals -== Opera Ell, Classical Music ~ Jazz , I % 0 5 10 15 20 25 30 35 40 . HS Grad D Some College D College Grad D Grad School . Income and age also matter, but not nearly as much; those with higher incomes and those who are over 45 are more likely to attend. Race is not a predictor of whether a person is likely to attend the arts, but is a predictor of the genre of art likely to be attended. July 2009 14 Feasibility Study for the Federal Way Performing Arts & Conference Center By considering the previously described research along with the characteristics of Federal Way and King County and Seattle-Tacoma-Bellevue markets, we can understand the potential audience to be served by new performance facilities. Data used for this analysis comes from Claritas, a marketing research resources company that provides up-to- date demographic data as well as future estimates based on Census data. This chart shows levels of educational attainment by market segment. indicating that the population in Federal Way has education attainment levels comparable to national averages, with 19% of the population holding a Bachelor's Degree, and 7% holding a Graduate Degree and higher. Educational attainment levels in King County and the Seattle-Tacoma Bellevue CBSA are significantly higher than national averages; 27% of King County populations have a Bachelor's Degree, and 13% hold a Graduate Degree and Higher. Educational Attainment ~.- I I I I i '10~ I f 30~ "- I "~20% I ()~ Bachelors De-glee and higher Graduate Deg.ree and hi.;ht?r o USA 0 Sea:Ue-Tacoma-8elli'\'lIe CBSA 0 Kmg Coor,tl 0 Fe-deral'/ii) Based on this assessment of educational attainment levels, Federal Way's population of approximately 88,500 has a good propensity to attend the arts, and is likely to be the primary audience at new performance facilities. Both King County and the Seattle-Tacoma Bellevue CBSA are well educated, and there is good potential for new facilities to also draw from surrounding communities. July 2009 15 Feasibility Study for the Federal Way Performing Arts & Conference Center 5. the competitive situation regional performance facilities for To understand the competitive situation for regional performance facilities, we developed an inventory of existing facilities that could potentially compete with proposed spaces, interviewed facility managers of these spaces and toured regional performance facilities. An examination of the current inventory of performance facilities and their use is key to this analysis. Proposed performance facilities in Federal Way include a mid-capacity venue capable of accommodating many different types of uses and users-as a result. we have compiled and closely examined facilities located between Seattle and Tacoma with at least 500 seats but not more than 6,000. For the purpose of this exercise, we chose to exclude large-scale arenas, such as the ShoWare Center, Comcast Arena at Everett and the Qwest Arena because they accommodate a different set of users and uses. This analysis found 23 true performance venues that regularly accommodate live performance. Their capacities and types of activity are detailed below. Federal Way Regional Facility Activity Producing ActMty Pnlsenllng ActMty Rental ActMty ~ 1= ~~~~~~~~~ -- ~ --.- WaMu Theater Seattle ParamountTheater Seattle Marlon DINer McCaw Hall Seattle Benaroya Hall- Mark Taper Foundation Auditorium Seattle The 5th AvenueTheater Seattle Emerald Queen Casino Tacoma K1ngCatTheater Seattle The Moore Theater Seattle Meany Hall forthe Performing Arts Seattle Bremerton High School PerformlngArts Center Bremerton Broadway Centerforthe Performing Arts . Pantages Theater Tacoma PlU - Eastwld Auditorium Tacoma Auburn HS Performing Arts Center Auburn Town Hall Seattle Seattle Repertory Theatre. Bagley WrlghtTheater Seattle Broadway Center forthe Performing Arts. Rlalto Theater Tacoma MtTahoma High School Tacoma Kentlake HS PerformIng Arts Center Kent lake Renton IKEA Performing Arts Center Renton Uberty Theater PuyaUup Benaroya Hall. Nordstrum Recital Hall Seattle The AdmIral Theatre Bremerton PLU -LagerquIst Concert Hall Tacoma 6,000 3,000 2.900 2.500 2.115 2.000 1.500 1.384 1,210 1,200 1.169 1.100 1,100 850 847 742 600 583 540 537 534 502 500 ~ - - ~ - - ~ m -- - ~~~ m ~ - - ~~~~ - - - ~m~~ m~~~m~ __ = ~'ml ~~~ -- - ~ ~ ~ - - =- - ~ ~ m - - - - - - - . ~ ~ ~~~ - b ~ .. f f s ~ ~ E ~ b i i .. ~ ~ i "! ~ ~ i! I if 1 e i! ... ! i3 Q ,. j!; of ~ i i3 ~ 1 ~ c ! :2 ~ ~ i J i " ~ i --- --- .- - -- - - -- ~ i ~ S I j!; ~ ,. Q ::, 8 ~ This inventory indicates the following: JUly 2009 - - - - - - - - - - - f . 8 _.nd Promoten 16 Feasibility Study for the Federal Way Performing Arts & Conference Center . 10 of the 23 spaces have capacities of between 500 and 850. . Rental houses dominate the market: 95% of venues are rented by outside users, and the most common external users are corporate and municipal renters and local arts organizations, followed by regional arts organizations and other promoters or presenters. . 12 (52%) accommodate producing companies; the most common activities are theatre (35%), schools and colleges (35%), and music (25%). . 13 (57%) present events, how~ver this is market is quite fragmented. The most commonly presented events are music (30%), dance (26%) and theater (26%). Additionally, our interviews with facility managers and tours of regional performance venues provided insight into the competitive situation. Overall, the market for performance facilities in the region is highly competitive, particularly for rental facilities and touring product. Facility managers cited a number of issues that performance facilities are experiencing, including operating losses, a lack of demand from users, and difficulty attracting audiences. Following is a review of themes that emerged as a result of these interviews and tours. · Arts organizations based in Federal Way frequently perform elsewhere, taking their audiences with them. Not surprisingly, there is a distinct lack of performance facilities in Federal Way with an ability to accommodate traditional theater, dance and music. Conversations with local arts organizations combined with interest from regional arts producers and presenters indicates a level of activity sufficient to animate the theater. · Presenting competition is difficult for 500 to 1,000-seat facilities in that many of the regional spaces have not been able to compete for audiences or product with facilities in Seattle proper. As a result, facilities such as the Meydenbauer Center in Bellevue and IKEA Center in Renton have discontinued presenting. And the Edmonds Center for the Arts presenting program is currently losing money. · As determined above, the market for presenting is fragmented, and opportunities remain so as long as strategic decisions are made around the type of event and product booked in the theater. Based on information from representatives of regional facilities, we would also recommend that presenting at the Center occur at conservative levels. · Some performance facilities in the region are not meeting expectations for usage and are currently underutilized. Most of these facilities are rental houses that are failing to meet demand expectations from local arts organizations and outside users. However the Auburn Performing Arts Center is an incredibly busy theater and frequently turns users away. This affects the facility in how it operates financially but also the value that it brings to the community as an active and busy cultural facility. July 2009 17 July 2009 Feasibility Study for the Federal Way Performing Arts & Conference Center . The Center has potential to overcome previously mentioned challenges because it will have a diverse mix of activity. The theater will accommodate a set of active performing arts organizations based in Federal Way, attract occasional presenting and producing from regional arts organizations, have a small but targeted presenting series and be aggressively marketed as an event venue. . Facility managers cited difficulty attracting technical labor. Some performance venues are union-affiliated, but this makes it more difficult for venues that are not. Generally, more active facilities hire and retain the skilled personnel who look for more frequent and regular employment. The development of a technical training program in association with new facilities could help combat these issues. . Within the market, there are a few outside operators and performing arts organizations that program and/or manage publicly owned facilities. For example, Village Theater operates Everett Theatre and delivers a high quality product there and in Issaquah. 18 Feasibility Study for the Federal Way Performing Arts & Conference Center 6. regional conference facilities To understand the potential for new conference facilities to succeed within the regional market, we researched existing convention facilities and event spaces, interviewed facility managers and toured a number of these facilities. Finally, we spoke with representatives familiar with the local business community and the conference and meeting industry. Following is a review of the market for regional conference facilities and the potential for new facilities in Federal Way to succeed. Initially, we researched conference facilities in proximity to Federal Way, including large-scale facilities that regularly accommodate trade shows, exhibitions. meetings, conventions and conferences. We gathered information from Convention & Visitors Bureaus and our through Facility City Washington State Convention & Trade Center Seattle Qwest Field & Event Center Seattle ShoWare Events Center Kent Bell Harbor International Conference Center Seattle The Museum of Flight Seattle GreaterTacoma Convention and Trade Center Tacoma Puyallup Fair and Events Center Puyallup Meydenbauer Center Bellevue Seattle Center Exhibition Hall Seattle DoubleTree Hotel Seattle Airport Seattle Comcast Arena at Everett (Edward D. Hansen Conference Center) Everett Lynnwood Convention Center Lynwoood Hilton Sea-Tac Hotel & Conference Center Seattle Cedar Brook SeaTac Doubletree Guest Suites Seattle Airport/South Center Seattle Seattle Center Northwest Rooms Seattle Seattle Airport Marriott Seattle Holiday Inn Seattle/ Sea-Tac Airport Seattle own research. Total Square Feet 307,000 425,000 153,000 100,000 141,000 136.680 92,000 53,000 34,000 34,000 57,000 34,000 38,808 18,664 29,916 34,000 18,000 9,075 Largest Space 205,700 165,370 153,000 85,387 82,000 50,000 38,272 36,000 34,000 13,600 11,835 11,748 11,000 10,523 6,100 6,000 5,000 5,000 The inventory indicates that there are many facilities in a range of sizes operating within the market. Although we have included them for reference, it should be noted that large-scale facilities such as the Washington State Convention & Trade Center and the Qwest Field & Event Center accommodate events such as trade shows and conventions and are not likely to compete with proposed facilities because they attract a different clientele. Based on the conceptual design developed by LMN Architects, the conference center would include 14,000 square feet of conference space. including an 8,000 square foot event space that would also function at the theater's lobby, and breakout rooms. Based on the largest space July 2009 19 Feasibility Study for the Federal Way Performing Arts & Conference Center in each regional facility, we have highlighted facilities most likely to compete with proposed facilities. There are 18 facilities that currently accommodate meetings, conferences, exhibitions and trade shows. The inventory indicates the following: . The Washington State Convention & Trade Center has the largest event space in the region and is able to accommodate events up to 205,700 square feet. . 7 of 18 facilities have their largest event space between 6,000 and 13,000 square feet and would potentially compete with proposed conference facilities. . Not surprisingly, none of these facilities are located in Federal Way. The closest conference facilities are more than ten miles away. . The ShoWare Events Center in Kent, WA and the Greater Tacoma Convention and Trade Center are the closest facilities to Federal Way. Both of these spaces are far larger than proposed facilities and would likely attract a different clientele. Specifically, the ShoWare Events Center is a 153,000 square foot facility that is primarily used for sporting events and has a flat-floor configuration for trade shows and exhibitions. . There is significant competition in the region from hotel operators with event space, as these facilities tend to offer free meeting and conference space with a guaranteed minimum number of occupied hotel rooms. To gather information on the level of demand for conferences and meetings in Federal Way and the region, we interviewed representatives from the Seattle Convention & Visitors Bureau, Southside Seattle, the Tacoma Convention & Visitors Bureau and local business leaders. We collected opinions and empirical information on the state of the meeting and events industry, the events that proposed facilities might attract and challenges that might face the project. These interviews indicated that: JUly 2009 . The current economic climate has caused event organizers to cut catering costs, postpone events and scale back the size and number of conferences and conventions. In particular, this trend is prevalent among corporate clients and consumer shows. It is expected that this is a temporary trend and that sales will improve as the economy improves. . If a hotel is attached (as opposed to adjacent), the conference center could gain an advantage. Hotel facilities should be designed in a way the properly accommodates travelers to meetings and events, and should range from 150 to 300 rooms. It should provide amenities for business travelers and out of town guests, potentially a fitness center and pool, on-site dining, business center, room service and on-site parking. 20 Feasibility Study for the Federal Way Performing Arts & Conference Center · Locally, Federal Way lacks mid-size to large-scale event spaces for events. The Dumas Bay Center, a City operated facility, is perceived as too small to accommodate major events, in poor condition, and out-of-the way. There is a need for facilities to fill this gap, particularly a centrally located space capable of accommodating larger gatherings and offering the amenities of a proper event space. · Federal Way's largest facilities are located in community centers, churches and schools, spaces that cannot properly accommodate events such as weddings, fund raisers and large meetings, as they do not offer amenities such as on-site catering, a liquor license, media technology and event production staff. · Seattle's major conference and convention facilities accommodate a variety of uses and users, particularly larger conventions and exhibitions. Tacoma hosts mostly 2-day or 3-day events. Other facilities in the region host mostly not-for-profit users and events including banquets, fund raisers and more. The conceptual design of the Federal Way conference facilities is not large enough to accommodate overflow from larger conventions and events in the region. · Facilities in Federal Way are likely to compete with existing facilities near the Sea-Tac Airport for overnight meetings. Conference and meeting facilities in proximity to the airport have a competitive advantage because they are well established, attached to hotels and are convenient for out-of-town travelers. July 2009 21 Feasibility Study for the Federal Way Performing Arts & Conference Center 7. the future facilities of performing arts In April 2007, Webb Management Services hosted a conference in New York City to consider the future of performing arts facilities. Over the course of two days, forty performing arts facility managers from around the country worked through a series of presentations and discussions on audiences of the future, where performing arts disciplines are headed, what is happening in the area of arts funding and how, then, buildings should be planned and developed in order to succeed some twenty-five years from now. Across the United States, performing arts organizations and facilities are under increasing financial pressure. With limited potential to improve productivity (a symphony takes the same time to rehearse and perform as it did 300 years ago), arts organizations face a never-ending cost squeeze which forces them to become more reliant on fundraising, more willing to seek operating efficiencies through collaboration, and more focused on education programs as a means to attract funding and audiences. Younger audiences are less committed to the performing arts, particularly the established disciplines (classical music, ballet, opera) presented in traditional facilities. So, what, overall, did we conclude about facilities of the future? On the whole, performing arts spaces will become smaller, more flexible, less permanent and less formal. Equally important is the idea of designing facilities that support amateur community programs and attract younger audiences with spaces that are accessible, affordable and welcoming, offering the possibility of an enriching social experience. For the Federal Way project, we would therefore encourage a maximum level of flexibility in an inspiring environment and an operating organization that can minimize costs and maximize programming and partnership opportunities. July 2009 22 Feasibility Study for the Federal Way Performing Arts & Conference Center 8. facility concept Based on a review of the Johnson Report, our own research and experience with similar projects, we conclude that: July 2009 A. The 500 to 700-seat theater is feasible, so as long as new facilities are strategically programmed and positioned within the marketplace. . We would discourage hiring a commercial promoter to program the space (as recommended in the Johnson Report), and instead will offer some alternative scenarios for consideration in the coming chapters: o The operator of new facilities should partner with an existing regional presenter to selectively book touring acts. There are a number of existing presenters in Seattle, Tacoma and the region, so there is potential to collaborate with an existing regional presenter, the benefit being that this organization is already familiar with the region's audiences and could successfully program new facilities on the basis of that experience. o The operator of new facilities should be the presenter and have control to book events into the space, allowing for greater flexibility and a balance between local arts organizations and touring acts. . The market for regional facilities is already highly competitive, with a number of theaters producing, presenting or renting to other groups in the region. New facilities should strategically position themselves within the market place, focusing on gaps identified in our regional facility inventory. There is potential to enter the market as a presenter, offering: o Small-scale musicals and theater productions o Other theatrical touring productions with a dramatic theme o Family-oriented events o Comedy o Spoken word o Music concerts, such as classical and chamber music, world music, folk and blues o Popular music, including regional and national talent . While there are a number of performance rental facilities in the region, we think that the theater can successfully rent the space for a variety of uses and users. The theater is likely to accommodate a diverse set of renters, including local arts organizations, regional producers and presenters and meetings and events. 23 Feasibility Study for the Federal Way Performing Arts & Conference Center B. Based on our initial review, a 500 to 700-seat theater still makes sense for the City of Federal Way. New performance facilities in Federal Way would sustain local arts organizations, allow regional arts organizations to expand their audiences and presence, fulfill local demand for conference and meeting space and have a diverse set of users and uses. But in our minds, the issues of quality and flexibility are more important than the question of 500 vs. 700 seats. On that basis, limited resources should be expended on a high-quality space that is very flexible and has at least 500 seats to: · Accommodate touring acts. · Allow local arts organizations to grow audiences. · Provide a secondary event space that could accommodate events and exhibitions utilizing conference facilities. C. New performance facilities should fulfill the needs of local arts organizations, providing a larger space with sufficient support facilities. · Demand for space from local arts organizations is positive though insufficient to fully animate the theater. · Recognizing that most local arts organizations draw audiences of 400 to 500 per each show, we recommend that theater seating be split onto multiple levels such that one or more can be closed for smaller events. · Instead of a rehearsal facility for a resident company, facilities should include a multi-purpose space that is available to the local arts community and for events. D. An attached or adjacent hotel would benefit the project. As determined by the Johnson Report and reaffirmed by this work and our own experiences as consultants, a hotel connected to the Performing Arts & Conference Center will provide the following benefits: · Meeting and Events: The presence of a hotel will complement demand for event rentals and the theater, ballroom and meeting spaces. · Food Service: A hotel would offer a professional and integrated food service for both the conference center and the theater. · Perception: Combined with the Performing Arts & Conference Center, a hotel creates a critical mass of daytime and nighttime activity that drives business and community development. · Conference Services: The convenience of an attached hotel provides amenities that are attractive to meeting event and convention planners. · Audiences: Hotels provide a built-in audience for the performing arts center and an additional audience for promotion. In Richardson, Texas, the Renaissance Hotel is the concessionaire for the Eisemann Center, as well as the preferred (but not necessarily exclusive) caterer. Additionally, sales and events staff marketing proposals for conference related activities use the Eisemann July 2009 24 Feasibility Study for the Federal Way Performing Arts & Conference Center Center as an option for additional meeting space when they are unable to accommodate groups. The Eisemann Center event staff market the hotel in the same manner when potential client groups have the need for both exhibit/reception space in addition to meeting space. Finally, guests at the hotel frequently go to events at the Eisemann Center, driving audience attendance. The Renaissance Hotel and the Eisemann Center do not have a formal agreement, but have instead "playoff each other in our efforts to get larger events with multiple needs." E. New facilities should support broader community goals. As well as serving audiences, local arts groups, local businesses and meeting planners, the project can also serve a range of community goals, including: · Drive economic and community development in Federal Way. · "Induce" additional demand for lodging, and increase occupancy rates at all Federal Way hotels. · Increase the quality of life for Federal Way residents, providing opportunities to support local arts organizations but also be exposed to nationally and internationally recognized artists, productions and talent. · Attract visitors from the neighboring communities. · Support operations at the Conference Center, providing a unique event space for meetings and lectures. Overall, we feel that the information developed in the Johnson Report, along with our own additional research, confirms that the facilities should include: Performing Arts Center · A high-quality, flexible 500 to 700-seat theater · 2,000 square foot multi-purpose space accessible to local arts organizations and the community · Backstage dressing rooms and support area · Administrative space · Box office with the capability to handle on-site ticketing · Sufficient parking The performing arts center will support local arts organizations, offer some presenting and operate as an additional large conference space for lectures and presentations. The market for performance facilities in the region is relatively competitive, but interviews with local and regional arts organizations suggest that the Center would be utilized at sufficient activity levels to sustain the facility. Presently, higher education facilities do not have an established presence in Federal Way, particularly for the performing arts. The Center presents an opportunity to engage a partner as a user in the project. We think that there is good potential for the performing arts JUly 2009 25 Feasibility Study for the Federal Way Performing Arts & Conference Center component to work as an attractor for a community college. This would also support the City's downtown redevelopment goals. Conference Center · An 8,000 square foot large lobby and conference center · 6,000 square feet of additional meeting space to be used as breakout rooms or for standalone events · Sufficient parking It will be necessary to carefully position and aggressively promote the Center, as the market for conference and meeting facilities in the region is highly competitive. New facilities should first cater to daytime meetings and evening events, including fundraisers, banquets, education workshops, training seminars, private parties, weddings and rehearsal dinners, social events, board meetings, product launches, and local association gatherings. Once the Center has established an identity and brand with local and regional businesses and meeting planners, staff can begin to market the facilities as a destination for overnight meetings. The market for this type of business is correlated to the development timeline of the hotel. Locally, the Center will provide the largest gathering space in Federal Way. Presently, adequate large capacity spaces are limited, and a number of the largest facilities are in churches, schools, the Dumas Bay Center and the Federal Way Community Center. There is a need for larger facilities in excellent condition and location that offer on-site catering, audio/visual capability, trained support staff and more. On a regional level, the market for conference and meeting facilities is relatively saturated, and a number of existing facilities are not being utilized to their capacity. This situation is likely to change with the improvement of the economy. As we see it today, there are challenges to competing in this market. Nevertheless, there is potential for the Center to succeed, if marketed at first to local users, and then to regional meeting and event planners. The success of the facility relies on the ability for conference and hotel facilities to be high quality and meet expectations of m.eeting and event planners. The Center should be marketed to these users as an affordable hotel and conference facility centrally located between Tacoma and Seattle and in proximity to 1-5 and the Sea-Tac Airport. Hotel · 150 to 300-room hotel · 3-sta r rati ng The hotel should fulfill a number of community goals, realize the City's downtown vision, drive demand for the conference center and support local business.. The hotel should support activity at the Center, but it will also add to the local hotel inventory. Information from the Johnson Report and our own research indicates that for a community of its size, Federal Way has an unusually low hotel inventory. July 2009 26 FeaSibility Study for the Federal Way Performing Arts & Conference Center To gain competitive advantage for regional meetings and overnight conferences, the hotel should be attached rather than adjacent to the facility, and should be high-end. While many conference facilities in the region have adjacent or nearby hotel operations, meeting planners actively seek facilities with an attached hotel; positioning the hotel in this way would provide an amenity that most facilities in the region do not offer. Finally, the development of an attached hotel could be approached in phases, or could be built in concurrence. with the Center. Building the Center's regional and overnight business will take time, so there is 'potential to develop the hotel in a second phase of construction. July 2009 27 Feasibility Study for the Federal Way Performing Arts & Conference Center 9. governance and operations Governance Options There are several different models that describe how performing arts and conference facilities are governed and operated. 1. Nonprofit-run facilities are the most common model of operation for performing arts facilities. These organizations are independent 501(c)(3) corporations that have been created to serve key constituents and audiences. Most often, organizations are created for the specific purpose of operating new facilities. These organizations vary in size and focus, acting as producers, presenters or as service organizations facilitating the activities of other groups. Often it is some combination of the three. In all cases, these organizations are mission-driven. The benefit of this model relates to its orientation towards public service. As 501(c)(3) organizations, their operations are relatively transparent, which allows for greater public accountability. As mission-driven organizations, they often have significant community impact, including arts education and outreach programs. Their nonprofit status also allows for a strong fundraising infrastructure. which can reduce their reliance on earned revenue and provide greater curatorial flexibility; this flexibility can ultimately benefit the quality and availability of arts programs in the community. The most significant downside of this operating model is the lack of a guaranteed source of contributed income available to these organizations. Nonprofit-run facilities must compete each year with a range of charitable organizations in the nonprofit sector. With fluctuations in the economy and in the policies and commitment of philanthropists and corporate sponsors, this model is not always the most viable approach to ensure long- term stability of operations. Despite these factors, discussions with representatives from FWCPA, non profits, local arts organizations and business leaders indicate that there's confidence in the community around this type of operator, particularly for its ability to fundraise and reduce the obligation of the City. 2. User-run facilities represent a slight variation on the nonprofit-run model. Here we have the principal users of the facility as the operator, as opposed to a nonprofit created specifically for the purpose of operating the facility. This is an attractive model when there is one user that dominates the hall or complex. We are not optimistic about this option in Federal Way. Center Stage Theatre is probably the only organization that might conceivably take over the space, but the proposed facility is too large for their needs. They are currently managing the KFT, and they themselves are a lean organization without the resources to all of the other elements of the job. July 2009 28 Feasibility Study for the Federal Way Performing Arts & Conference Center 3. Commercially-run facilities are operated by an independent, professional management team. There are three primary examples of a commercial operating model. The first is a for-profit entity that owns and operates a facility for a profit. In the second case, the facility is owned by either the public sector or a nonprofit organization that enters into a management agreement with a commercial organization, allowing them to run the facility and share in the operating results. One example of this scenario is the Lynnwood Convention Center, which is owned by a public facilities district, which then contracts the operation of the facility to SMG. In facilities with performance venues, the commercial operators present (and occasionally produce) entertainment programming. Operating expenses and revenues vary significantly from year-to-year depending on the level of risk exposure taken by these organizations and the success of their programs. The third type of commercial venture happens when the facility owner or managing organization subcontracts with commercial operators to manage the facility on their behalf. In this scenario, commercial operators are contracted to provide professional staff and experience and to guide overall facility operations. In this case, the facility is usually made available to outside renters, which can include nonprofit cultural organizations and commercial presenters. There is some potential for the City of Federal Way to enter into a management agreement with an independent management company, particularly for the operation of and marketing of conference facilities. However, the theater has a capacity that is limiting for commercial presenting or producing, and booking by a commercial promoter could limit access and availability of performance facilities to local arts organizations. 4. Other Performing Arts Centers: The other option we are encountering more often is the operation of multiple performing arts spaces by one organization. This makes sense when one organization is able to apply its skills and resources to secondary facilities in the same or a neighboring market, usually on a fee-for-services basis. For example, Village Theatre operates a facility in Issaquah and manages the Everett Performing Arts Center. 5. Government-run facilities are generally managed by a department or agency of local government. They are often managed by convention and visitors' bureaus, usually as part of a larger portfolio of publicly accessible facilities. By-and-Iarge, government-run venues operate as rental facilities, making performance venues available to local cultural organizations and for local and regional presenters to bring touring activity to the market. The principal benefit of a government-controlled operation is the relative guarantee of publiC funding to support ongoing operations. The vehicle for such support may vary, including enterprise taxes, hotel/motel tax funds and/or line-item budget allocations, but the assurance of annual public sector support provides a significant operating cushion. Management's orientation toward public service can provide significant benefits to local cultural organizations in terms of cost and scheduling. Management's access to resources that often extend to the operation of other facilities can also help keep costs down. July 2009 29 Feasibility Study for the Federal Way Performing Arts & Conference Center Governance Recommendations The Performing Arts & Conference Center supports the City's long-term goals, supporting downtown redevelopment, enriching quality of life, and driving business in Federal Way. To ensure that the facility supports these objectives, we would suggest that the City retain ownership of facilities and select one of the following operating scenarios: · A new nonprofit entity should be formed to oversee the management of facilities. · If an existing nonprofit performing arts organization with experience operating comparable venues emerges as a viable operator, then the City should consider contracting management of the facility. A nonprofit operator is the preferred choice for new facilities because it would instill the ability to fundraise, reduce the level of risk assumed by the facility, and could establish stand-alone policies and procedures. For the purpose of this study, we have developed the governance and operations policy on the basis that new facilities are operated by a nonprofit, 501(c)(3) entity. The benefit to partnering or contracting facilities to an existing performing arts organization would be that organization's existing audience base, knowledge of the market and experience as an operator. In this scenario, there is likely to be an annual management fee for services. Operating Goals We can now proceed to consideration of how the Center will be operated on a day-to-day basis, starting with some goals to guide operations. In our minds, the facility should: · Operate as an active and community-oriented performing arts and conference facility offering a variety of programs, events and spaces that serve a range of local and regional constituents. · Present a broad spectrum of arts and entertainment events that will attract audiences to downtown Federal Way. · Operate in a manner that is friendly to the environment and to the development of downtown Federal Way and enhances local business. · Provide accessible and affordable performance, rehearsal and education spaces to support the growth of local and regional artists, arts organizations, and the programs and mission of the Center. · Encourage arts education partnerships for students of all ages, particularly the Federal Way School District and possibly a higher education institution. · Operate on a sound financial basis. Each one of these sounds relatively straightforward and achievable. But it is the combination of these goals that makes the job of arts facility management endlessly challenging and rewarding. July 2009 30 Feasibility Study for the Federal Way Performing Arts & Conference Center The Role of the Board The Board of the new nonprofit entity should consist of a selection of community members, City staff and professionals representing diverse backgrounds and constituencies. All board members should bring a number of assets to the Center including the following: · Passion and commitment for the mission and programs of the Center. · The ability to individually contribute to the Center as well as the ability to garner financial support for the organization and its programs through significant individual, corporate or in-kind contributions. · Intellectual capital in the form of professional skills and expertise that can guide the successful and solvent operations of the Center, both in terms of the Theater and the conference spaces. · The ability and willingness to act as an ambassador and advocate for the Center and its programs and services. In addition, the Board as an entity should: · Employ term limits in order to bring new skills and insight to the organization on a regular basis. · Be required to contribute financially to the Center (in terms of donated or raised funds). This is often referred to as a "give or get." An initial "give or get" might be set between $5,000 and $10,000 for each board member. · Not only fundraise, but also govern the organization. This includes hiring, evaluating, and if necessary, firing senior management, ensuring results-oriented goal-setting and high performance. · Empower staff to manage the details of facilities management, fundraising, programming, marketing and more. It is critically important that a board not micro- manage staff or operations. · Include a committee structure to provide broad strategic oversight for facilities, fundraising, marketing, senior staff and board development (or nominating) and planning. A staff person should sit on each committee. Building on the roles and responsibilities detailed above, a board development/nominating committee should develop a manual including the organizational bylaws and detailing the roles, responsibilities and expectations of each board member including responsibilities unique to executive board members and committee chairs. This manual should be distributed to each board member at the beginning of his/her term and discussed at length. Advisory committees may also be developed to engage members of the community, students, funders, businesspeople, artists and other friends and constituents that do not meet all of the board member criteria. The role of this committee is much less formal, simply inviting advisory board members to provide expertise when called upon and to serve as an ambassador and advocate for the organization. July 2009 31 Feasibility Study for the Federal Way Performing Arts & Conference Center The makeup and function of the Board will be critical to its operation, its fundraising capability, and perception within the community. As Alan Weiss, consultant and nonprofit board member, recently expressed in an op-ed piece in the Providence Journal: 'Nonprofit' doesn't mean 'non-professional.' We're dealing with huge amounts of public money and public trust. Boards have to be led, and themselves, lead, so that the money and the trust are confidently given... It's an issue of stewardship." Elements of Operating Polley Now we proceed to offer more specific recommendations on operating policy. These suggestions are intended to guide City staff and the Center's eventual leadership as they prepare for new facilities. Recommendations are built based on our prior work with similar organizations and also on our work thus far with the City of Federal Way. Utilization and Access The key to success for new facilities is to make them as busy as possible with a range of activities. We see the following types of activity as being important, listing activity in order of scheduling priority for each programmable space: Theater and Multi-purpose Room The theater will have a set configuration but will accommodate a variety of uses and users. It should be central to the Center's mission to animate this space with the right mix of programs and access to outside users. Following is a list of activities in the space, in order of scheduling priority: · Presenting would both activate the space and bring in ticket revenues; these shows will be booked well in advance and therefore given priority. · Partnerships and educational programming would allow the community to utilize the space on a year-round basis. · Local arts organizations and resident arts organizations would occupy the space as needed, potentially developing and rehearsing a production and then offering a number of days or weeks of public performances. · The theater would also be available to outside to local arts, nonprofits, community groups, for commercial arts rentals and as a conference and meeting space. · An adjacent 2,000 square foot multi-purpose room will provide support for performance facilities, and would be available for rehearsals and meetings. The Center's largest conference and meeting facility is also the theater's lobby. Understandably, large-scale conferences cannot be scheduled at the same time as performances as they would disrupt activity in the theater. Therefore, we recommend that performance events have priority over meetings and events. July 2009 32 FeaSibility Study for the Federal Way Performing Arts & Conference Center Conference Center Available for meetings and conferences, private events or parties, the conference center will be busy community spaces available to local and regional businesses, residents, artists and arts groups. Following are potential types of users, listed by scheduling priority: · The conference rooms would be available to rent for meetings, events and more by commercial businesses and various organizations, local, regional and national. · The rooms would be made available to local arts and community groups for meetings, classes and activities. · The facility would also be available for private events including parties, weddings, meetings, and other rentals and activities. Resident Organizations We would recommend that a group of community-based organizations have the opportunity to seek classification as residents of the Center. Resident groups gain preferred rental rates and status for booking in exchange for bringing a certain amount of activity and benefit to the venue. Performances and events produced by these groups can guarantee a relatively consistent level of activity to attract residents, students, audiences, and other visitors. They can also help to build an image of the facility through consistent use, supporting ongoing marketing and fund raising efforts. We generally favor a process where organizations qualify as residents through an open application process. In such a process, the selection criteria should be publicly available, and might include some of the following: · Level of programming: The organization agrees to bring a significant portion of their annual performance and rehearsal activity to the facility. Specific levels of use may be required within policies and criteria for resident groups. · Mission: The organizational mission is worthy and consistent with the goals of the City and the Center. · Quality: The organization creates work of quality (however the organization wishes to define it) that will enhance the image and reputation of the Center. · History: The organization has a track record of success, financial stability and stable growth. · Organizational Development: The organization has made a commitment to organizational development that will bring their administrative skills and resources to a high level. Outside Rentals Research indicates interest from local groups to use space at the Center. Projected activity levels suggest that both the theater and conference center will be relatively busy spaces July 2009 33 Feasibil ity Study for the Federal Way Performing Arts & Conference Center used by a number of external users. To maintain the quality of the facility and its equipment, we would suggest the development of facility policies to ensure the following guidelines are in place. · Explicit policies must be established which define how facilities are booked. Policies should cover booking horizons and procedures, rental rates, scheduling priority, cancellation fees and other charges and stipulations. · Policies should address use on the part of presenters and presenting programs, resident programs, and outside users. · Rental rates should be scaled to favor some combination of local-based groups and nonprofit organizations. Food Service We would suggest that a contract be negotiated that provides appropriate food service to audiences and renters, while also benefiting the operation of the Center. This should include basic concessions for those attending performances, catering capabilities to support meetings, conferences and special events in the building, and backstage catering for artists and others working in the building. Leadership should consider how patrons might be attracted to the facility for pre and post-show socializing in order to build a connection and comfort with the facility and its offerings and perhaps to generate increased concession income. Efforts might include pre and post show cocktail hours that may include live music or performance that promote the lobbies as a gathering space for patrons. We would also suggest considering a local, sustainable food provider as described in the section about Green Operating Practices (below). Ticketing There are literally dozens of ticketing systems available to performing arts organizations and venues, each claiming to offer unique features and benefits. The Center should take advantage of new technologies in ticketing, including online services, in order to best serve users and audiences and to collect data with which to market the facility and its programs. The actual box office at the Center could also be expanded to take on the role of a community ticket outlet for a range of off-site programs. The next step in the evolution of ticketing will be to replace home-printed and preprinted paper tickets with an electronic ticket that can be sent to a mobile phone via short message service (SMS). This mobile ticket (m-ticket) consists of a bar code that can be quickly read and validated directly from the mobile device's display screen. M-tickets represent a huge advance in ticketing efficiency and versatility. A significant advantage of mobile ticketing for event organizers is that they are able to continue to sell tickets right up to, and during, the event. In addition, they can track attendance at an event automatically and in real time. Mobile ticketing also cuts down on the illegal trade of scalping, because a barcode on a mobile phone text message cannot be resold (it may however be transferred). The Center's ticketing system should be specified to accommodate mobile ticketing. Juiy 2009 34 Feasibility Study for the Federal Way Performing Arts & Conference Center Our experience with groups and facilities across the country suggests that ticketing systems must meet a few non-negotiable criteria. Ticketing systems should be: · Convenient for patrons. This means tickets should be available in-person, by phone or online at all convenient times of day. · User-friendly, with a simple interface and clear instructions. · Affordable. Ticketing systems should not require significant costs and resources. Instead, any associated fees should be passed on to the ticket buyer. However, patrons should not be punished for convenience. While a level of ticket fees has become commonplace and expected by ticket-buyers, extraneous fees and surcharges can cause disillusionment and frustration in many patrons. · Flexible, allowing for events to be set up quickly, easily and in various ways (general admission vs. assigned seating, etc). Reporting should also be flexible, allowing managers to track sales and attendance on moment-to-moment basis. · Integrative, with the ability to support marketing and fundraising functions, keep track of a buyer's attendance and donor history and simplifying e-marketing, direct mail and other marketing tactics. Ticketmaster currently has approximately 50 percent of the market share for online ticket sales in the United States. In the U.S., performing arts presentations represent a very small portion of Ticketmaster's activity and revenue, with the large majority coming from large scale, multi-city concert tours. The Ticketmaster interface is designed to best facilitate those tours. As a result, the system's search function, calendar and seating features are not well suited to arts ticketing or for ticketing exclusive to a facility. However, Ticketmaster has just developed a system called Artix, which is a CSR function that combines ticket buying and fund raising data, with one record for each customer. In response to Ticketmaster's shortfalls, a number of other systems have been developed performing arts events and venues-and more are coming. Some of the most popular and well-revered models that serve performing arts venues include: · ProVenue from Tickets.com · TICKETsage · The Patron Edge (can be used in conjunction with Raisers Edge fundraising software) · Tessitura · TlcketAnnex We would encourage the Center to conduct a RFP process for ticketing services so that features, costs and arrangements for each system can be considered. Volunteer Opportunities Though the Center must rely on a professional staff, we would encourage the development of a volunteer labor force to support Center operations. Local volunteers often play an important role in supporting the operation of arts and entertainment facilities. Additional human resources are nearly always helpful to the organization, but committed volunteers July 2009 35 Feasibility Study for the Federal Way Performing Arts & Conference Center can play an even more important role as ambassadors, guerilla marketers, and even financial supporters for the organization. Staff should identify opportunities for volunteers to serve in such roles as ushers for performances, tour guides for the facility and roving helpers for unexpected situations. This particular task should be closely coordinated and perhaps integrated with volunteer operations of key user groups or resident organizations. We would also take the position that volunteers should be treated like employees in terms of how they are trained, monitored, and evaluated. This will help to ensure that, in turn, they offer professional customer service and represent the Center to the public in the best light possible. Scheduling Polley and Procedures We would suggest that formalized policies, procedures and systems be put in place from the beginning of operations to manage utilization within the facility. This should include detail on how far in advance dates can be secured, current rental rates, scheduling priority, cancellation fees and any other charges related to scheduling. All of these policies should be placed in writing and available onsite, as well as published on the Center's website, for the public to access and understand. In addition, programs should adhere to schedules and policies in order to allow ample time for rentals to be booked around internal offerings. And a web-based scheduling system should track utilization of each space and details that inform ticketing functions, house management, volunteer scheduling and more to create easy access for staff and to streamline planning and client relations. Green Operating Practices Though performing arts and entertainment facilities have traditionally been slow to embrace energy efficiency and sustainability, changes are occurring in the field and there is an opportunity for the City to use the Center as a test-bed for green operating practices. Here are some ideas coming from other performing arts venues and conference centers: Transportation: If possible, the facility should be located near public transportation and encourage its use. If it is not near public transportation, bicycling should be encouraged. This can be done by offering ticket discounts to audience members who use public transit or bike, providing space for bicycles to be locked up during performances, encouraging carpooling and offering funding subsidies for employees to use public transit. Energy Efficiency: Facilities should use renewable energy, such as green electricity, and minimize the amount of energy being used. This can be achieved by using energy- efficient light bulbs in the office and on stage, reducing the hours of use, purchasing energy-efficient equipment, replacing desktops with laptops, and instituting a policy July 2009 36 Feasibility Study for the Federal Way Performing Arts & Conference Center regarding "stand-by" mode on computers. Organizations also need to consider the Iife- cycle cost impact of the materials that are used during a performance and choose green options for scenic and prop materials as often as possible. Consumables: Facilities can make a big impact by consuming less and using recycled, Earth-friendly goods, such as paper and cleaning products. Some other ideas to reduce the use of consumable goods include printing double-sided when possible, setting copiers to double-sided as a default, sending materials and other correspondence electronically and encouraging staff, users and performers to use mugs and bottles instead of plastic glasses for beverages, including water (which should be provided via a cooler rather than individual bottles). Energy-Conscious Conference Facilities: The facility can lower the carbon footprint of its conference rental operations by championing recycling efforts, reducing energy and resource consumption and contracting with caterers who provide locally grown and sustainable foods. Also available on the market are eco-friendly ergonomic conference chairs composed of 100% recycled steel and plastic. Community Awareness and Participation: A facility should not only implement "green" policies for itself, but also should also make the community aware of its efforts and encourage them to participate by using similar methods. Facilities can post information about its green initiative and guidelines on the web site, include green slogans wherever possible (playbills, ads and posters) and organize forums on green practices, possibly combining with artist talkbacks or special events. Marketing Strategy Here are some preliminary recommendations as to how marketing should be approached: The Theater · Marketing and programming functions must work closely together at the Center to identify the message and the media most likely to work for each presentation and artist. · It will be critically important to build an online community of customers and supporters through email lists, social networking sites, and other "push" technologies. · Young people, particularly those of college age, must be partners and advocates for various types of viral marketing. The Conference Center · Awareness must be generated for conference facilities via online forums and databases, publications and marketing campaigns. The Center's conference July 2009 37 Feasibility Study for the Federal Way Performing Arts & Conference Center facilities must be integrated as an option for companies and private parties looking for space to rent. · A number of spaces at a variety of price points are available to the local community and regional businesses. The flexibility of the space can accommodate a variety of configurations and users. · The branding and positioning of the facility and its programs should stress the following attributes: o That this is one of the best conference venues in terms of the quality and character of its meeting and event spaces. o That it supports a wide variety of programs that serve a larger mission for the City and community. o That it is the largest gathering space in Federal Way. o That it is professional, fully equipped, aesthetically pleasing, and accessible for conferences and events. o That it is easy to find, easy to park, and professionally staffed. July 2009 38 Feasibility Study for the Federal Way Performing Arts & Conference Center 10. staffing plan It is crucial that a professional staff, with specific experience in programming and operating arts and conference facilities, be hired to run the Center. In addition, professional staff can be supplemented with contract labor and volunteers to support front-of-house and administrative operations. Here are job descriptions for key positions; compensation levels are recommended in the pro- forma operating budget. · Executive Director: The manager of the Center is responsible for administering the facility on a day-to-day basis, overseeing operations and staff, overseeing a presenting series, preparing annual budgets and capital improvement plans, monitoring performance, and overseeing all programs and rentals. Marketing the facility to audiences, users, and other elements of community leadership will be a particularly important duty, as it relates to both audience development and fund raising. We would suggest that this position should be filled as soon as possible, to assist with planning, construction, commissioning, and preparation for operations. · Development Director: Reporting to the Executive Director, key responsibilities for the Development Director will include the planning, implementation and oversight of activities that attract contributed income. This includes annual fund development, corporate and individual underwriting, grant writing and special fundraising events. Specific duties include: cultivate, develop, manage and maintain relationships with donors; plan and administrate special fundraising events as needed; solicit and manage volunteers and staff in executing fundraising activities; oversee solicitation and acknowledgment process; recommend fundraising policies and procedures to the Executive Director and Board; oversee grant applications to federal, state and local government agencies that provide arts funding; conduct prospect research and develop applications for private foundation and corporate arts grants (including any sponsorship). This position should be in place at least six months before the building opens. · Technical Director: In charge of technical operations of performance, conference and rehearsal spaces, and the backstage aspects of production in the facility. He/she is charged with backstage maintenance, the safe and responsible use of stage equipment and facilities, scheduling all crew calls including load-ins, changeovers, show calls and load-outs, and coordinating with front of house activities. The position requires experience with stage, sound, lighting, mechanical rigging and electronics systems, as well as theatrical equipment set-up, operation, July 2009 39 Feasibility Study for the Federal Way Performing Arts & Conference Center and maintenance. The position should be in place at least six months before the building opens. · Operations Manager: Responsible for the day-to-day planning and delivery of activity in the Center, including promoting and coordinating rental events, negotiating supplier contracts and maintaining the physical plant. Particularly important are those skills related to facility management, personnel, and fiscal responsibility, and customer service. This staffer should be in place at least six months before the opening of the Center, reporting to the Executive Director. · Marketing Director: Primarily for the marketing and promotion of events to be presented in the Center, including the development of promotional materials, media buying, public relations and publicity, and the use of various online marketing tools. Other duties include supporting the marketing efforts of renter's programs and events. This we see as a critical function in order that these other users of the Center are able to find audiences and sell many tickets, thus ensuring their ability to pay rent for access to these facilities and broadening the visibility of the Center. The position also reports to the Executive Director and should be in place at least six months before the building opens. · House Manager: This part-time position recruits, trains and mobilizes ushers and ticket takers for events in the theater and multipurpose rooms. This position requires a strong orientation to customer service training, as well as the ability to train and motivate paid and volunteer staff to deliver a high level of service at events. · Ticket Office Manager: This individual runs the ticket office and is accountable for a high daily volume of cash and credit transactions, working closely with the Executive Director to prepare daily audit reports and maintain accurate records and account balances. The position also works closely with renting organizations to coordinate their ticketing needs. The Ticket Office Manager is a part-time position that reports to the Marketing Director. Organizational Structure We would recommend the following structure for the organization of staff and leadership. Full-time positions are highlighted pink; part-time positions are highlighted green. Contract positions are highlighted blue and volunteer leadership is highlighted purple. July 2009 40 Feasibility Study for the Federal Way Performing Arts & Conference Center Board of Directors -. ~"~~ ~ Development Operations Director Manager I ~ Mai ntenance ~ Event Security II Event Clea nlng IVor1<er I Mar1<eting Director L TlckelOfflce Manager L Ticket Office Starr July 2009 lj , Administrative Assistant Technical Director I , '1 tL::J ~M~'''' J ~.~'~'"'M I House Staff Il Ii , Ushers , 41 Feasibility Study for the Federal Way Performing Arts & Conference Center 11. pro-forma operating budget In this chapter we offer a description of the format and structure of the pro-forma operating budget we have developed for the City of Federal Way and its new facilities. The pro-forma makes assumptions based on the current conceptual design developed by LMN Architects, which includes a 700-seat theater, 8,000 square foot lobby and conference center, and 6,000 square feet of meeting room space. The pro-forma, attached as Appendix A, projects how the Center will operate financially. We included columns for fiscal 2011 through 2015, showing the year before new facilities open, the first year of operations and then the next three years as operations grow and stabilize. The completed budget should be considered a "live" model, one that can be adjusted based on changing circumstances and assumptions. It is fundamentally a tool to help the City and project leadership prepare for and succeed in new facilities. The first section of the budget is a summary of activity, both current and future. Following is a description of those programs and how they develop: July 2009 . Live presenting will be held in the 700-seat venue at the new facility. This potentially includes concerts, plays, dance performances, film screenings, and more. Presented events are separated into Tiers A, Band C to represent varying levels of performers and price points. . For live presenting, we assume 21 events in year one, and slight increases overall in subsequent years. However, a drop in the second year from two to one large-scale presentations accounts for a big opening year followed by a more modest second season. Attendance is kept to a conservative 7,350 in year one with small increases over time. . The average ticket price for Tier A events is $50; for Tier B, $35, for Tier C, $25, and for film presentations, $11, with inflationary increases in subsequent years. . It is expected that the theater and multi-purpose room will be rented regularly to resident companies, and on occasion to outside groups and individuals, including nonprofit organizations and commercial ventures. Due to the high level of usage by resident companies, we have suggested a relatively small level of outside rentals to both nonprofit and private renters. Rental rates are based on research of comparable performance and event facilities. . We have also projected rental activity for conference and meeting spaces, including the usage of the 8,000 square foot lobby space as a conference center. Estimates 42 Feasibility Study for the Federal Way Performing Arts & Conference Center are based on our assessment of the region and activity of comparable venues. For the lobby, we anticipate that approximately 60% of rentals will be from nonprofits and community-oriented organizations and 40% will be corporate rentals. The following chart summarizes activity levels, theater and multi-purpose room. Perfonnance Space Totals OPENING YEAR 2012 174 169 100 269 55,620 $1,378,270 $132,850 Perfonnances Event Days Prep Days Use Days Attendance Ticket Revenue Rent Paid audience attendance and income at the 2013 189 180 105 285 52,605 $1,307,614 $141,388 2014 207 196 111 307 58,083 $1,505,984 $156,459 2015 221 207 118 325 62,107 $1,659,047 $167,514 And this chart summarizes rentals at the conference center, including the lobby and meeting rooms. Conference & Meeting Space Totals OPENING YEAR 2012 2013 2014 2015 Non-profit Rentals 483 535 560 585 Commercial Rentals 472 520 540 565 Conference and Meeting Participation 52,305 58,575 63,360 69,300 Rental Income $226,200 $259,818 $289,760 $327,530 Attendance rates for conference and meeting spaces have been estimated using the number of rentals and the assumption that facilities are utilized an average of one-third the maximum occupancy for each space. The actual operating budget is broken down into three major sections: earned income, contributed income and operating expenses. Each and every item relates to activity estimates, or to a formula detailed in the final section of the budget. Here are key assumptions for the earned income section: · Most of the earned income numbers are based on the activity projections in the activity spreadsheet. We have proposed that the organization grow its live presenting steadily but very gradually, with just a few additional events each year in the theater and a more substantial increase each year in the multipurpose room. · Film presentations are expected to scale up significantly each year, and revenues increase by a greater percentage each year as the program grows. · There is an increase in rentals and user fees in year two, as the Center becomes more widely utilized by members of the community and the region. This will happen in response to the Center's marketing campaigns, visibility of current offerings and rental events, and word of mouth. July 2009 43 Feasibility Study for the Federal Way Performing Arts & Conference Center · Live presenting will offer opportunities to attract sponsorships. Corporate sponsors should have choices to sponsor certain performances, themed films, or series. This will effectively provide corporate supporters with a customizable approach and a greater level of engagement, service, and branding. · Concessions income in the first year is based on an attendance rate of 70% for Live Presenting and 50% for rental events at the Center, and assumes a $. 50 gross per capita concessions. The contributed income section of the budget is the most difficult to project, and the growth in these various sources of income is critical to the future success of the organization. Specifically: · In the first two years, the City of Federal Way contributes $200,000 towards the operating of the Center. In subsequent years, the annual contribution decreases by 5% per year. · It is expected that the Center will fundraise for other government support, which might include annual funding in the form of grants from sources such as the Washington State Arts Commission, the National Endowment for the Arts and more. This type of support increases by 10% in each year following the first year of operation. · Special fundraising events are a significant source of income, and are expected to raise more money with each passing year, as events gain visibility with more new donors and members of the community. · In the pre-opening year, the Center receives a $160,000 allocation from the capital budget, which decreases to $150,000 in the opening year and $75,000 in the second year. After year three of operations, the allocation from the Capital Budget is no longer required. · In the opening year, the Center will receive interest income from a $1 million operating endowment. It is expected that the Center will actively grow the endowment in subsequent years. As a result, income from the endowment is expected to triple in the first three years of operations. And here's a summary of contributed income sources. July 2009 44 Feasibility Study for the Federal Way Performing Arts & Conference Center Contributed Income Summary OPENING YEAR 2011 2012 City of Federal Way $100,000 $200,000 Other Govemment $15,000 $30,000 Individual $15,000 $30,000 Foundation $15,000 $30,000 Corporate $15,000 $30,000 Special Fundraising Events $25,000 $100,000 Allocation from Capital Budget $160,000 $150,000 Endowment Income $0 $50,000 $100,000 $150,000 $150,000 Total Contributed Income $345,000 $620,000 $542,000 $606,200 $623,320 The operating expense section of the pro-forma is extensive, as it outlines all staff, programming, infrastructure, marketing and facility costs going forward. Following are key assumptions: 2013 $200,000 $33,000 $33,000 $33,000 $33,000 $110,000 2014 $190,000 $36,300 $36,300 $36,300 $36,300 $121,000 2015 $180,500 $39,930 $39,930 $39,930 $39,930 $133,100 · Staffing expenses are the Center's most significant cost. A team of ten full-time and part-time employees will manage programs, operations, and development of the Center. Contract employees are hired to handle technical and event-related work. · Direct costs of presenting, which are calculated on a per event basis, are the next largest expense. · Expenses are increased from the first to the second year of operations using a 3% escalation rate; for the years following, we have adjusted the rate to a still- conservative 4%, mirroring the anticipated rates of inflation. · New facility expenses are also substantial. Base occupancy costs and common area charges are calculated on a per-square foot basis. The following chart provides a summary of operating activities from 2011 to 2015. Operating Budget Summary OPENING YEAR 2011 2012 174 55,620 $970,342 $620,000 $1,590,342 $1,569,710 $20,632 62% Total Performances Total Attendance Earned Income Contributed Income Total Income Operating Expenses Surplusj(Deficit) Earned Income as % of 0 Ex $0 $345,000 $345,000 $344,500 $500 0% 2013 189 52,605 $996,169 $617,000 $1,613,169 $1,595,943 $17,227 62% 2014 207 58,083 $1,193,087 $606,200 $1,799,287 $1,797,268 $2,018 66% 2015 221 62,107 $1,342,681 $623,320 $1,966,001 $1,927,060 $38,942 70% Overall, the pro-forma shows gradual steady growth in activity driving new revenues and operating expenses. Earned income grows to represent 62% of total operating expenses in the first year of new operation of new facilities, and increases to 70% by the third year of Center operation. Rentals and live presenting programs generate a number of earned income streams, ultimately creating a sustainable operation. The biggest risk will be growing programming in a way that does not exhaust the human resources of the organization and with exciting content that fills seats in the theater and multipurpose room. JUly 2009 45 Feasibility Study for the Federal Way Performing Arts & Conference Center 12. economic impact Economic impact means that something has happened to increase economic activity, which includes new sales, new earnings for workers and new jobs in the local economy. These impacts are caused by the impacts of construction of new facilities (which are counted as one-time impacts) and then by the ongoing impacts of the new or expanded operating organization (the entity making expenditures in the local economy), as well as the expenditures made by their audiences. All economic impacts are also split between direct and indirect impacts. Direct impacts (which also include the induced impacts of audiences) are the measure of the economic effect of the initial expenditure within a community. Then there are the indirect impacts, which occur as people and businesses receive and then re-spend those initial direct expenditures locally. The indirect impact is the effect of this re-spending on sales, jobs, and household earnings. It is often referred to as secondary spending or the dollars "rippling" through a community. When funds are spent outside the market area, they are considered to have "leaked out" of the community and therefore cease to have a local economic impact. Indirect impact is then the sum of the rounds of local spending after the initial expenditures. The shift from direct impacts to indirect impacts is measured by employing multipliers developed by the Bureau of Economic Analysis, part of the Department of Commerce in Washington DC. Multipliers translate an input into an output: for example, a dollar spent on food (input) has an impact on the local economy by virtue of new sales in that industry, new earnings for people associated with that industry and new jobs created in that industry (output). There are three multipliers for each industry. The output multiplier is the estimate of total new sales associated with the initial expenditure. The output is higher than the input because that expenditure spurs incremental economic activity through the rippling effect described above. The earnings multiplier is the sum of three components of personal income-wage and salary disbursements, supplements to wages and salaries, and proprietors' income. It is not a sub- category of the output estimate, but rather the resulting impact of sales on what is earned by local workers. And then, there is the employment estimate, which forecasts the jobs created in each industry as a result of new expenditures. Multipliers are obtained for a defined market area, in this case King County. Finally, we review the benefits a the Center will have on the City of Federal Way, particularly the downtown. July 2009 46 ----l Feasibility Study for the Federal Way Performing Arts & Conference Center Construction Impacts The following chart shows the sum of construction expenditures and resulting impacts. ~One.time Impacts of Construction on King Cou'nty, WA (Industry Code 230000) Output Earnings Employment (person-years of employment) Construction Budget Final Demand Multipliers 1,8961 0.4753 11.7916 $50,000,000 Project Outputs $94,805,000 $23,765,000 590 Fifty million dollars spent on construction will yield, over the course of the construction project, new economic activity (Le. sales) of over $94 million and new earnings for regional workers totaling $24 million, as well as 590 person-years of new employment in the County. Operating Impacts We calculate the ongoing impact of Performing Arts & Conference Center's operation using what is called the bill of goods approach, shown in the following chart. We estimate expenditures by the organization on everything from utilities and hotels to waste management and advertising, and then use the three types of multipliers to calculate new output, earnings and jobs in each of those industries. Expenditures New annual expenditures of $985,000 in 2012 (as per the operating pro-forma) equal the total spent by the organization on everything but staff. Adding up the outputs for each industry affected, we project that the expanded organization drives $1,796,492 in new sales, $491,636 in new earnings, and creates 17.3 new jobs (not including those employed directly by the Center). Bill of Goods Approach (2012) Inputs )mpacts of the New Organization on King County, WA - - _ - - - - _ -. Cat 0 Power Generalion and Su I Retail Trade Transit & passe" Sf transportation Couriers and Messe" ers Sound recordin industries Telecommunications Data recesSI" services Insurance A encieslBrokera e Funds, trusts, other finanical services E ui men! Rental La al Services Accountin & Bookkeepin Services Com uter related services Mana affiant consuJtin services Advertisin & related services Travel arran aments & reservations Office administrative services Business su art services Securi services Services to buildin Waste mana ement Performin arts companies Promoters of rformin arts Hotels & motels Food services Averages and Totals Pro,forma Purchases 85,000 40,000 25,000 25,000 25,000 25,000 50,000 50,000 25,000 25,000 50,000 25,000 25,000 10,000 100,000 10,000 25,000 50,000 25,000 50,000 75,000 100,000 25,000 25,000 15,000 - $ 985,000 Juiy 2009 Multipliers Eamings Output (dollars) (dollars) Empl't Gobs) 1.4451 0.2480 4.3088 1.9125 0.5086 17 .3378 1.9412 0.5420 23.5313 1.7990 0.4837 15.3870 1.6755 0.2865 7.8886 1.8175 0.3716 7.3837 1.9423 0.6635 13.3526 1.6712 0.4248 9.4582 2.1844 0.4591 100440 1.5569 0.2797 6.7392 1.9836 0.7175 13.1316 1.9399 0.6931 20.612 1.8280 0.4551 9.8780 1.9467 0.6890 20.5434 1.8488 0.5325 13.3334 2.0309 0.5673 15.0271 1.8415 0.5767 14.1045 1.7418 0.4569 17.4103 1.7799 0.6190 24.1876 1.8991 0.5123 21.6579 1.8718 0.4392 9.9898 1.9079 0.5996 49.9906 1.8646 0.5216 29.0418 1.7845 0.4955 17.3118 1.9403 0.5439 27.3583 1.8462 0.5075 16.7604 OUlputs New Sales New Earnings New Empl't ($OOO's) ($OOO's) Gobs) $ 122,834 $ 21,080 0.4 $ 76,500 $ 20,344 0.7 $ 48,530 $ 13,550 0.6 $ 44,975 $ 12,093 0.4 $ 41,888 $ 7,163 0.2 $ 45,438 $ 9,290 0.2 $ 97,115 $ 33,175 0.7 $ 83,560 $ 21,240 0.5 $ 54,610 $ 11.478 0.3 $ 38,923 $ 6,993 0.2 $ 99,180 $ 35,875 0.7 $ 48,498 $ 17,328 0.5 $ 45,700 $ 11,378 0.2 $ 19,467 $ 6,890 0.2 $ 184,880 $ 53,250 1.3 $ 20,309 $ 5,673 0.2 $ 46,038 $ 14,418 0.4 $ 87,090 $ 22,845 0.9 $ 44,498 $ 15,475 0.6 $ 94,955 $ 25,615 1.1 $ 140,385 $ 32,940 0.7 $ 190,790 $ 59,960 5.0 $ 46,615 $ 13,040 0.7 $ 44,613 $ 12,388 0.4 $ 29,105 $ 8,159 0.4 $ 1,796,492' $ 491,636 17.3 47 Feasibility Study for the Federal Way Performing Arts & Conference Center Ancillary Impacts The second component of operating impacts is the ancillary spending by facility audiences and meeting attendees. To calculate these numbers, we start with the estimated 55,000 paying audiences for events in the theater and the multi-purpose room in 2012. Then we add the additional 53,000 attendees to events in the lobby and meeting rooms. Both of these numbers come directly from the pro-forma. In order to calculate the most accurate level of economic impact, we start by making several adjustments to the attendance figure. First of all, we reduce the total attendance by estimating what portion of attendees, whether from the County or beyond, would come to a performance or meeting in Federal Way that would have otherwise been held elsewhere in the County. Those attendees are simply relocating from another County facility, and the economic impact to the County is not new but simply shifting from one part of the County to another. We then adjust this number by those attendees who are re-captured; that is, new audiences that previously attended events and performances outside the County (due to a lack of facilities) that would prefer to attend events and performances in Federal Way. Lastly, we account for dollars that are redirected to Federal Way that would have been spent on other activities. Economists would hold that a County's residents have a fixed amount to spend, so their expenditures are simply moving around the County, as opposed to creating new economic activity. For example, attendees to a new performance in at Performing Arts and Conference Center may otherwise spend those dollars on dinner and a movie. For the purpose of the exercise, the preceding assumptions related to relocated and recaptured attendees, and redirected expenditures result in a reduction of approximately 50% in the total projected attendance for the purposes of economic-impact calculation. Then we split the number of attendees further by estimating the in-County audience as opposed to those attendees coming from outside the County, as the spending habits of these two groups are different. We will discuss this information on the following page. rEstim~t;d-A~-dj~nces and Event Attenders _ _ _ _ . _ _ _ . _ _ _ Total Projected Performance Attendance (2012 Relocated less Recaptured Attendance Projected Incremental Audience King County Attendance New Non-King County Attendance 50% 108,000 54,000 54,000 36,180 17,820 67% 33% Now, we input those attendance estimates into ancillary spending formulas, which are taken from the 2008 Arts and Economic Prosperity Report published by Americans for the Arts. That report provides significant data on how much people spend on various things in conjunction with their attendance at performances, exhibits, films and related events. We then apply these multipliers to these direct impacts and add the totals for each industry to arrive at total impacts associated with the expenditures of audiences. July 2009 48 - . , I I 'Ancillary Spending Impacts . 1. King County Attendance (36,180) Food Services Retail Trade Transportation Overnight Lodging Miscellaneous Sub-total 2. Non-King County Attendance (17 ,820) Food Services Retail Trade Transportation Overnight Lodging Miscellaneous Sub-total Non-King County Attendance Feasibility Study for the Federal Way Performing Arts & Conference Center Per Capita Expenditure Output Total New Earnings Total New Job Creation Total New Outputs Estimate Multiplier (Sales) Multiplier Earnings Multiplier Jobs $8.15 $294,867 1.9403 $572,130 0.5439 $160,378 27.3583 8.07 $2.80 $101,304 1.9125 $193,744 0.5086 $51,523 17.3378 1.76 $4.27 $154,489 1.9412 $299,893 0.5420 $83,733 23.5313 3.64 $0.96 $34,733 1.7845 $61,981 0.4955 $17,210 17.3118 0.60 $0.60 $21,708 1.8462 $40,077 0.5075 $11,016 16.7604 0.36 $607,100 $1,167,826 $323,860 14.42 $15.28 $272,290 1.9403 $528.324 0.5439 $148.098 27.3583 7.45 $8.70 $155,034 1.9125 $296.503 0.5086 $78.850 17.3378 2.69 $5.82 $103,712 1.9412 $201,327 0.5420 $56,212 23.5313 2.44 $19.97 $355,865 1.7845 $635,042 0.4955 $176,331 17.3118 6.16 $3.29 $58,628 1.8462 $108,238 0.5075 $29,752 16.7604 0.98 $945,529 $1,769,433 $489,244 19.72 lTotallmpact of Ancillary Spending " Total(1+2} " ..~ $1,552,630 - ~. $2,931,258 . - $813,104 34.14 _ .'_ _... _ _ . . ExcludingJn.County ~ttendance Ronly} $945,529 $1,169,433.. $489,244 . 19.72 At the bottom of the chart, we show these total impacts, adding section 1 and section 2. Then we show just the section 2 total, which counts only audiences coming from outside the County. For that outside group, their estimated expenditures of $945,529 in 2012 lead to new annual outputs of $1,769,433, another $489,244 in new earnings and another 19.72 jobs created on an ongoing basis. The final chart below summarizes economic impacts by showing first the total impacts of construction and then total operating impacts. 'Summaryof Ec'on-oiTiic Impacts'on King County - - - .- - --- ~ One.time Impacts Input (Construction $) $50,000,000 Construction Output (Sales) $94,805,000 Earnings $23,765,000 Person-years 590 Ongoing Annual Impacts Input (Expenditures in 2012) $985,000 Operation Output (Sales) $1,796,492 Earnings $491,636 Jobs Created 17.3 Ancillary Spending Input (2012 Customer Spend) $945,529 (excludes In-County Attendance) Output (Sales) $1,769,433 Earnings $489,244 Jobs Created 19.7 Total Annual Operating Impacts Output (Sales) $3,565,924 Earnings $980,879 Jobs Created 37 The construction of the Center, the new operating entity and the expenditures of audiences will bring new economic activity to King County and create new jobS over the life of the project. Impacts in Federal Way Beyond those quantitative impacts at the County level, it is clear that new conference and performing arts facilities in Federal Way can have additional impacts, as follows: July 2009 49 Feasibility Study for the Federal Way Performing Arts & Conference Center Downtown Economic Development: The preceding economic-impact analysis considered the impacts on a County-wide basis. Setting aside that perspective and focusing on Federal Way and its City Center, we direct our attention to the direct expenditures by the up to 108,000 annual attendees at the Federal Way Performing Arts and Conference Center. Based on the per-capita expenditure estimates found in the preceding tables, 108,000 annual attendees could create approximately $3 million in annual expenditures in the City Center. In order to present a conservative estimate of this impact, one has to account for the potential for some events and performances that already occur within Federal Way simply shifting to this new in-city venue. Those events, of course, would not create new impacts within the City. In consideration of this, we can conservatively estimate that approximately $2.25 million in new annual expenditures may be expected in Federal Way. What's more, from the perspective of the development and/or business community, the construction of the the Center and its in-city economic impact will have a positive impact on the downtown, in the following ways: · Restaurants will start, expand and prosper in service to audiences before and after performances and to serve those attending meetings and conferences. · Retail businesses will open in response to the street and pedestrian activity around new facilities. · Having the lights on in new facilities will change the perception (and reality) of downtown safety, which will encourage more commercial and potentially residential development, including lodging. · Of particular importance will be the presence of young people around the facility, perhaps associated with local colleges. Their presence will likely motivate the development of new urban amenities (bars, clubs, coffee shops, bookstores) that fit in a downtown core. The Meeting and Event Business: One particular industry to be directly impacted by new facilities would be the meeting and event business. The corporate meetings and event business will grow, as well as the wedding and private event business. In fact, we see this in many performing arts facilities around North America - an aggressive push to become a wedding location given the quality of the space for special events and given a strong food service capability. Corporate Recruitment: Performing arts facilities are important amenities to offer to corporations considering where to locate their business. The presence of these facilities is often seen as an indicator on a community that has an educated workforce and offers a high quality of life. Richard Florida and "The Creative Class:" Celebrity-economist and author Richard Florida, has turned a simple idea into an empire. The simple idea is that people (particularly people with interesting jobs and skills) like to live and work in creative places, and that cities ought to promote culture and creativity as a means to recruit these desirable people and thus drive economic development. Cities all over North America (and not just big ones) are now pursuing economic development goals by promoting the presence of arts and culture and the people who prefer those amenities. Of course it's all easier said than done. The July 2009 50 Feasibility Study for the Federal Way Performing Arts & Conference Center trick is to help artists in ways that don't stifle creativity, and then surround that creative core with a concentration of more commercially oriented industries (advertising, design, media) that benefit from and feed off of that creativity. Cultural Tourism: Tourists and tourism could represent an even more important element of the Federal Way economic development strategy. And it turns out that cultural tourists (those interested in attending and participating in cultural programs) are very attractive in that they tend to spend more and stay longer in a given community. Thus, the presence of new arts facilities can playa role in developing and promoting Federal Way as a destination for cultural tourists. Teaching Innovation and Creativity: Finally, we would raise one last economic development benefit, which is that the teaching of the arts is now being recognized as a fundamental need for the North American economy and its workforce, given the automation of many jobs and growing competition from lesser-developed economies. Or, as some commentators are now suggesting: "The MFA is the new MBA." Daniel Pink, in his March 2008 Nancy Hanks Lecture on Arts and Public Policy, said the following: "The argument for the arts is that the fundamental cognitive abilities, the fundamental abilities of the workforce today and into the future, the fundamental abilities that our kids are going to be deploying at work are at their core artistic abilities, that arts are neither an avenue to something else, nor are they a nicety, but they are fundamental to how the economy functions. And unless our kids have this broad, robust suite of artistic capabilities, they are going to be in a world of hurt, yes, as human beings, but also as productive members of the economy." The Role and Impacts of Culture in Small and Mid-size Communities: Before leaving this set of arguments, let's be clear that the arts and culture can have significant impacts in smaller communities, not just in larger cities. According to a recent study for the Ontario Ministry of Research and Innovation1: Recent research suggests that while creative and cultural activities are very prominent in large urban centres, it is not to the exclusion of smaller urban centres (Scott 2004). For example, Norcliffe and Rendace (2003) use the case of comic book artists to demonstrate that, due to changes in the organization of production, it is possible for creative workers to locate outside of major metropolitan centres and continue to work in creative fields. Gibson (2003) also points to the emergence of communities of musicians and other artists in rural and small towns in Australia. Markusen and King's (2004) work on the role of artists in the regional economy also demonstrates this point quite succinctly. Their study clearly shows that geographical distribution of artistic activity within the US economy is decentralizing towards second-tier cities. Specifically, the traditional dominance of artistic and creative centres such as New York and Los Angeles is declining, as artists appear to be spreading out towards cities such as Minneapolis-St. Paul, San Francisco, Albuquerque and Seattle. lVinodrai, Tara and Gertler, Meric: Creativity, Culture and Innovation in the Knowledge-based Economy, Program of Globalization and Regional Innovation, University of Toronto (2006) July 2009 51 Feasibility Study for the Federal Way Performing Arts & Conference Center If such a trend continues this may bode well for mid-sized cities, as well as smaller centres within proximity to large urban regions. Many such places pride themselves on their 'good quality of life at affordable prices', while also supporting a vibrant cultural scene. Such characteristics may provide a solid foundation on which to build and maintain successful urban economies. Approaching the Project as an Economic Development Tool Having established the significant role that new arts and cultural facilities can play in achieving the economic development goals of Federal Way, we would finally offer a few pieces of advice as to how the community should proceed: 1. Don't Do It Alone: Our most important advice is that these new facilities are not sufficient to be the catalyst for the economic development of Federal Way. The project needs to be viewed as one piece in a larger plan, with all of those pieces connected and valued for their particular roles and impacts. 2. Make Sure Everyone Understands: Some of the arguments for the economic development value are more complicated than others, but they are all important and they need all be communicated and explained clearly in order that they all be understood. 3. Tour Communities: As much as we enjoy reading and writing long reports, there is nothing more important than seeing facilities and how they drive economic development in other communities. Thus it is important to take community leaders on trips to comparable communities to see other facilities and districts and talk with elected officials and other leaders about their experiences and aspirations. 4. Connect to Community Goals: An effort must be made at the beginning of the project and also along the way to make and maintain connections between the project and community goals. This relates closely to #2 above, but it also means that advocates for the project must be at the community development table, continuing to remind leaders of the role and value of the project. 5. Think of a District Rather than a Place: It will be important to help others advance their thinking about what the project might be - from the traditional idea of a performing arts center and conference facility to the more progressive and impactful concept of a cultural district that is developed over time in a number of steps, including adaptive re-use as well as new construction of facilities for performance, rehearsal, exhibition, teaching and production, creating a hive of activity that drives additional commercial and residential development. July 2009 52 APPENDIX A: PRO-FORMA OPERATING BUDGET Federal Way Performing Arts and Conference Center MULTI-YEAR ACTIVITY ESllMATES OPENING YEAR 2012 2013 2014 2015 COMPONENTS Theater Multi-purpose Room Capacity 700 100 120 200 250 700 200 100 Gross Square Feet 7,800 2,000 Lobby Large Meeting Rooms (2) Small Meetim! Rooms (4) 8,000 2,000 1,000 Confil!uration Theater-style Theater-style Banquet Meeting Reception Reception Meeting Meetin~ RENTAL RATES Theater Resident/Education Event Day $700 $721 $750 $780 Prep Day $350 $361 $375 $390 Nonprofit Event Day $1,050 $1,082 $1,125 $1,170 Prep Day $525 $541 $562 $585 Commercial Event Day $1,575 $1,622 $1,687 $1,755 Prep Day $788 $811 $844 $877 Multi-purpose Room Resident/Education Event Day $240 $247 $257 $267 Prep Day $160 $124 $129 $134 Nonprofit Event Day $80 $82 $86 $89 Prep Day $40 $41 $43 $45 Commercial Event Day $240 $247 $257 $267 Prep Day $120 $124 $129 $134 Lobby Nonprofit Four-hours $700 $721 $750 $780 Commercial Four-hours $1,050 $1,082 $1,125 $1,170 Large Meeting Rooms Nonprofit Four-hours $200 $206 $214 $223 Commercial Four-hours $400 $412 $428 $446 Small Meeting Rooms Nonprofit Four-hours $100 $103 $107 $111 Commercial Four-hours $200 $206 $214 $223 ATTENDANCE Capacity Sold Presenting 70% 66% 67% 68% Rentals 50% 45% 46% 47% ACTIVITY Theater Facility-presented Events Perfonnances 2 1 2 2 TierA Event Days 2 1 2 2 Prep Days 0 0 0 0 Use Days 2 1 2 2 Attendance 980 462 938 952 Ave Ticket Price $50 $52 $54 $56 Ticket Revenue $49,000 $23,793 $50,239 $53,029 Rent Paid 0 0 0 0 Facility-presented Events Perfonnances 3 2 3 3 TierB Event Days 3 2 3 3 Prep Days 0 0 0 0 Use Days 3 2 3 3 Attendance 1,470 924 1,407 1,428 Ave Ticket Price $35 $36 $37 $39 Ticket Revenue $51,450 $33,310 $52,751 $55,680 Rent Paid 0 0 0 0 Facility-presented Events Perfonnances 4 5 6 7 TierC Event Days 4 5 6 7 Prep Days 0 0 0 0 Use Days 4 5 6 7 Attendance 1,960 2,310 2,814 3,332 Webb Management Services, Inc. Page 1 7/14/09 Federal Way Performing Arts and Conference Center MUL11-YEAR ACTIVI1Y ESTIMATES OPENING YEAR 2012 2013 2014 2015 Ave Ticket Price $25 $26 $27 $28 Ticket Revenue $49,000 $59,483 $75,359 $92,800 Rent Paid 0 0 0 0 Facility-presented Film Perfonnances 6 8 10 12 Event Days 3 4 5 6 Prep Days 0 0 0 0 Use Days 3 4 5 6 Attendance 2,940 3,696 4,690 5,712 Ave Ticket Price $12 $12 $13 $13 Ticket Revenue $35,280 $45,683 $60,287 $76,361 Rent Paid 0 0 0 0 Resident Company Rentals Perfonnances 122 124 126 128 Event Days 118 120 121 122 Prep Days 32 33 34 35 Use Days 150 153 155 157 Attendance 42,700 39,060 40,572 42,112 Ave Ticket Price $25 $26 $27 $28 Ticket Revenue $1,067,500 $1,005,795 $1,086,518 $1,172,870 Rent Paid $93,800 $98,417 $103,478 $108,787 Nonprofit Rentals Perfonnances 10 11 12 13 Event Days 8 8 9 9 Prep Days 4 4 5 5 Use Days 12 12 14 14 Attendance 3,500 3,465 3,864 4,277 Ave Ticket Price $25 $26 $27 $28 Ticket Revenue $87,500 $89,224 $103,478 $119,120 Rent Paid $10,500 $10,815 $12,935 $13,452 Private and Corporate Rentals Perfonnances 0 0 0 0 Event Days 8 9 10 11 Prep Days 0 0 0 0 Use Days 8 9 10 11 Attendance 0 0 0 0 Ave Ticket Price $0 $0 $0 $0 Ticket Revenue $0 $0 $0 $0 Rent Paid $12,600 $14,600 $16,871 $19,301 Commercial Arts Event Rentals Perfonnances 2 3 5 5 Event Days 2 3 5 5 Prep Days 0 0 0 0 Use Days 2 3 5 5 Attendance 700 945 1,610 1,645 Ave Ticket Price $25 $26 $27 $28 Ticket Revenue $17,500 $24,334 $43,116 $45,815 Rent Paid $3,150 $4,867 $8,436 $8,773 TheaterTotals Theater OPENING YEAR 2012 2013 2014 2015 Perfonnances 149 154 164 170 Event Days 148 152 161 165 Prep Days 36 37 39 40 Use Days 184 189 200 205 Attendance 54,250 50,862 55,895 59,458 Ticket Revenue $1,357,230 $1,281,621 $1,471,748 $1,615,675 Rent Paid $120,050 $128,699 $141,720 $150,313 Multi-purpose Room Facility-presented Film Perfonnances 6 8 10 12 Event Days 3 4 5 6 Prep Days 0 0 0 0 Use Days 3 4 5 6 Webb Management Services, Inc. Page 2 7/14/09 Federal Way Performing Arts and Conference Center MUL11-YEAR ACTIVITY ESTIMATES Resident Company Rentals Nonprofit Rentals Private and Corporate Rentals Commercial Arts Event Rentals Attendance Ave Ticket Price Ticket Revenue Rent Paid Perfonnances Event Days Prep Days Use Days Attendance Ave Ticket Price Ticket Revenue Rent Paid Perfonnances Event Days Prep Days Use Days Attendance Ave Ticket Price Ticket Revenue Rent Paid Perfonnances Event Days Prep Days Use Days Attendance Ave Ticket Price Ticket Revenue Rent Paid Perfonnances Event Days Prep Days Use Days Attendance Ave Ticket Price Ticket Revenue Rent Paid OPENING YEAR 2012 420 $12 $5,040 o 6 5 60 65 300 $20 $6,000 $10,800 8 8 4 12 400 $20 $8,000 $800 3 3 o 3 150 $0 $0 $720 2 2 o 2 100 $20 $2,000 $480 2013 528 $12 $6,526 o 8 7 64 71 360 $21 $7,416 $9,641 10 8 4 12 450 $21 $9,270 $824 6 6 o 6 270 $0 $0 $1,483 3 3 o 3 135 $21 $2,781 $742 2014 670 $13 $8,612 o 10 9 66 75 460 $21 $9,855 $10,798 12 10 6 16 552 $21 $11,826 $1,114 7 7 o 7 322 $0 $0 $1,800 4 4 o 4 184 $21 $3,942 $1 028 2015 816 $13 $10,909 o 12 11 70 81 564 $22 $12,566 $12,299 14 12 8 20 658 $22 $14,661 $1,426 8 8 o 8 376 $0 $0 $2.139 5 5 o 5 235 $22 $5,236 $1 337 , Multi-purpose Room OPENING YEAR 2012 2013 2014 2015 Perfonnances 25 35 43 51 Event Days 21 28 35 42 Prep Days 64 68 72 78 Use Days 85 96 107 120 Attendance 1,370 1,743 2,188 2,649 Ticket Revenue $21,040 $25,993 $34,236 $43,372 Rent Paid $12,800 $12,690 $14,740 $17,201 Multf-purpose Room Totals Perfonnance Space Totals OPENING YEAR 2012 2013 2014 2015 Perfonnances 174 189 207 221 Event Days 169 180 196 207 Prep Days 100 105 111 118 Use Days 269 285 307 325 Attendance 55,620 52,605 58,083 62,107 Ticket Revenue $1,378,270 $1,307,614 $1,505,984 $1,659,047 Rent Paid $132,850 $141,388 $156,459 $167,514 Perfonnance Space Totals (Theater and Multi-purpose Room) Conference & Meeting Spaces Lobby Non-profit Rentals Commercial Rentals lobby Capacity Webb Management Services, Inc. 33 22 700 Page 3 40 25 700 50 30 700 7/14/09 60 40 700 Federal Way Performing Arts and Conference Center MULTl.YEAR AClMTY ESTIMATES OPENING YEAR 2012 2013 2014 2015 Average Capacity Used 33% 33% 33% 33% Projected Attendance 12,705 15,015 18,480 23,100 Rental Income $46,200 $55,878 $71,235 $93,580 Large Meeting Rooms (2) Non-profit Rentals 150 165 170 175 Commercial Rentals 150 165 170 175 Large Meeting Room Capacity 200 200 200 200 Average Capacity Used 33% 33% 33% 33% Projected Attendance 19,800 21,780 22,440 23,100 Rental Income $90,000 $101,970 $109,262 $116,975 Small Meeting Rooms (4) Non-profit Rentals 300 330 340 350 Commercial Rentals 300 330 340 350 Small Meeting Room Capacity 100 100 100 100 Average Capacity Used 33% 33% 33% 33% Projected Attendance 19,800 21,780 22,440 23,100 Rental Income $90,000 $101,970 $109,262 $116,975 Conference & Meeting Space Totals Conference & Meeting Space Totals OPENING YEAR 2012 2013 2014 2015 Non-profit Rentals 483 535 560 585 Commercial Rentals 472 520 540 565 Conference and Meeting Participation 52,305 58,575 63,360 69,300 Rental Income $226,200 $259,818 $289,760 $327,530 ESCALATION RATE Webb Management Services, Inc. Page 4 7/14/09 Federal Way Performing Arts and Conference Center MULTI-YEAR PRO-FORMA OPERATING BUDGEI' Facility Opens January 1, 2012 2011 " Change 2012 " Change 2013 " CI1ange 2014 " Change 2015 EARNED INCOME Live Presenting Tier A $49,000 $23,793 $50,239 $53,029 TierB $51,450 $33,310 $52,751 $55,680 TierC $49,000 $59,483 $75,359 $92,800 Rim Presenting Rim in Theater $35,280 $45,683 $60,287 $76,361 Rim in Multi-purpose Room $5,040 $6,526 $8,612 $10,909 Event Sponsorship Revenues Theater - Live $36,000 $32,960 $47,133 $53,474 Rentals Theater $120,050 $128,699 $141,720 $150,313 Multi-purpose Room $12,800 $12,690 $14,740 $17,201 Lobby $46,200 $55,878 $71,235 $93,580 Large Meeting Rooms $90,000 $101,970 $109,262 $116,975 Small Meeting Rooms $90,000 $101,970 $109,262 $116,975 User Fees Theater $80,434 $86,228 $94,952 $100,710 Multi-purpose Room $5,120 $5,076 $5,896 $6,880 Lobby $9,240 $11,176 $14,247 $18,716 Large Meeting Rooms $9,000 $10,197 $10,926 $11,698 Small Meeting Rooms $9,000 $10,197 $10,926 $11,698 Concessions Theater $27,125 $26,194 $29,937 $33,120 Multi-purpose Room $685 $898 $1,172 $1,476 Income from Catered Events Lobby Special Events $20,000 $22,660 $29,994 $37,878 Multi.purpose Room Events $8,000 $9,270 $11,783 $13,369 Other Income Ticket Handling Fee $105,678 $102,948 $118,215 $131,461 Facility Maintenance Fee $111,240 $108,366 $124,437 $138,380 Total Earned Income $0 $970,342 $996,169 $1,193,087 $1,342,681 CONTRIBlIlB> INCOME City of Federal Way $100,000 $200,000 0% $200,000 -5% $190,000 -5% $180,500 Other Government $15,000 $30,000 10% $33,000 10% $36,300 10% $39,930 Individual $15,000 $30,000 10% $33,000 10% $36,300 10% $39,930 Foundation $15,000 $30,000 10% $33,000 10% $36,300 10% $39,930 Corporate $15,000 $30,000 10% $33,000 10% $36,300 10% $39,930 Special Fundraising Events $25,000 $100,000 10% $110,000 10% $121,000 10% $133,100 Allocation from Capital Budget $160,000 $150,000 $75,000 Endowment Income $50,000 $100,000 $150,000 $150,000 $345,000 $620,000 $617,000 $606,200 $623,320 Total Income $345,000 $1,590,342 $1,613,169 $1,799,287 $1,968,001 OPERATING EXPENSES Full-time Personnel Executive Director $125,000 5% $131,250 3% $135,188 4% $140,595 4% $146,219 Development Director $37,500 $75,000 3% $77,250 4% $80,340 4% $83,554 Administrative Assistant $35,000 5% $36,750 3% $37,853 4% $39,367 4% $40,941 Technical Director $25,000 $50,000 3% $51,500 4% $53,560 4% $55,702 Operations Manager $20,000 $40,000 3% $41,200 4% $42,848 4% $44,562 Marketing Director $22,500 $45,000 3% $46,350 4% $48,204 4% $50,132 Sub-total $265,000 $378,000 $389,340 $404,914 $421,110 Benefits $79,500 $113,400 $116,802 $121,474 $126,333 Sub-total $344,500 $491,400 $506,142 $526,388 $547,443 Part-time Personnel House Manager $20,000 3% $20,600 4% $21,424 4% $22,281 Maintenance Worker $20,000 3% $20,600 4% $21,424 4% $22,281 Ticket Office Manager $20,000 3% $20,600 4% $21,424 4% $22,281 Ticket Office Staff $15,000 3% $15,450 4% $16,068 4% $16,711 Sub-total $0 $75,000 $77,250 $80,340 $83,554 Benefits $0 $11,250 $11,588 $12,051 $12,533 Sub-total $0 $86,250 $68,838 $92,391 $96,087 Direct Costs of Presenting Tier A $82,000 $42,230 $87,838 $91,352 TierB $85,000 $58,367 $91,052 $94,694 TierC $56,667 $72,958 $91,052 $110,476 Film $54,112 $73,206 $95,528 $119,668 Sub-total $0 $277,779 $246,761 $365,471 $416,191 TIcket OffIce Network Maintenance $10,000 $20,000 4% $20,800 4% $21,632 Postage $5,562 $5,418 $6,222 $6,919 Ticket Printing $16,686 $16,255 $18,666 $20,757 Supplies $22,248 $21,673 $24,887 $27,676 Credit Card Fees $27,810 $27,092 $31,109 $34,595 Ticketing Service (net) $11,124 $10,837 $12,444 $13,838 Sub-total $0 $93,430 $101,275 $114,128 $125,417 Administration Institutional Promotion/Advertising $20,000 Webb Management Services, Inc. Page5 7/14/09 Federal Way Performing Arts and Conference Center MULn-YEAR PRO-FORMA OPERAnNG BUOGEr Facility Opens January 1, 2012 2011 'l(, Change 2012 % Change 2013 % Change 2014 'l(, Change 2015 Printing & Publications $10,000 Office Equipment/Systems $25,000 Office Supplies/Services $15,000 Legal! Accounting $15,000 Volunteer Management $7,500 Professional Development/Conferences $7,500 Travel and Entertainment $5,000 Telephone $10,000 Miscellaneous $5,000 Sub-total $0 $120,000 3% $123,600 4% $128,544 4% $133,686 Facility Operatlons Projectionist Theater $1,200 $1,648 $2,142 $2,674 Multi-purpose Room $1,200 $1,648 $2,142 $2,674 Stage Hands Theater $55,200 $58,401 $64,272 $68,514 Multi-purpose Room $20,400 $23,731 $27,508 $32,085 Event Security Theater $23,840 $25,379 $28,108 $30,302 Multi-purpose Room $2,000 $2,884 $3,685 $4,545 Event Cleaning Theater $59,600 $63,448 $70,271 $75,755 Multi-purpose Room $1,875 $2,704 $3,455 $4,261 House Staff Theater $53,640 $57,103 $63,244 $68,180 Multi-purpose Room $3,000 $4,326 $5,527 $6,818 Sub-total $0 $221,955 $241,272 $270,355 $295,608 Building Expenses Utilities $84,448 $86,981 $90,461 $94,079 for a 52, 780sffacility Repairs and Maintenance $31,668 $32,618 $33,923 $35,280 Service Contracts $13,195 $13,591 $14,134 $14,700 Building Supplies $26,390 $27,710 $29,095 $30,550 Cleaning Supplies $13,195 $13,855 $14,547 $15,275 Technology Services $25,000 3% $25,750 4% $26,780 4% $27,851 Perfonnanee Equipment R&M $10,000 3% $10,300 4% $10,712 4% $11,140 Trash Hauling $50,000 3% $51,500 4% $53,560 4% $55,702 Security System $25,000 3% $25,750 4% $26,780 4% $27,851 Sub-total $0 $278,896 $268,055 $299,992 $312,429 TOTAL OPERAnNG EXPENSES $344,500 $1,569,710 $1,595,943 $1,797,268 $1,927,060 SURPlUS/(DEFlCIlj $500 $20,632 $17,227 $2,018 $38,942 Earned Income as % of Op Expenses 0% 62% 62% 66% 70% MARGINS, RAnOS AND FORMUlAS Escalation Rate 2% 3% 4% 4% Gross Square Footage 52,780 52,780 52,780 52,780 Sponsorship Revenue/Event Theatre - For Uve Events $4,000 3% $4,120 4% $4,285 4% $4,456 Hospitality Net concession income per capita $0.50 3% $0.52 4% $0.54 4% $0.56 Number of Catered Even1s Lobby Special Event Rentals 10 11 14 17 MUlti-purpose Room Events 8 9 11 12 Fees from Catered Events Lobby Special Event Rentals $2,000 3% $2,060 4% $2,142 4% $2,228 Multi-purpose Room Events $1,000 3% $1,030 4% $1,071 4% $1,114 User Fees as a % of Rent Theater 67% 67% 67% 67% Multi-purpose Room 40% 40% 40% 40% Lobby 20% 20% 20% 20% Large Meeting Rooms 10% 10% 10% 10% Small Meeting Rooms 10% 10% 10% 10% ncket Handling Fee % of tickets sold online 50% 50% 50% 50% Charge per ticket sold online $3.00 3% $3.09 4% $3.21 4% $3.34 % of tickets sold by telephone 20% 20% 20% 20% Charge per ticket sold by phone $2.00 3% $2.06 4% $2.14 4% $2.23 % of tickets sold at box office 30% 30% 30% 30% Charge per ticket sold at box offiee $0.00 3% $0.00 4% $0.00 4% $0.00 Fadllty Malnlel1ance Fee Charge per Ticket Sold $2.00 3% $2.06 4% $2,14 4% $2.23 Endowment Income Endowment Size $1,000,000 $2,000,000 $3,000,000 $3,000,000 Rate of Return 5% 5% 5% 5% Benefits Level Full-time Staff 30% 30% 30% 30% 30% Webb Managemenl Services, Inc. Page6 7/14/09 Federal Way Performing Arts and Conlerence Center MULn-YEAR PRO-FORMA OPERAllNG BUDGET Facility Opens January 1, 2012 2011 " Change 2012 % Change 2013 " Change 2014 " Change 2015 Part-time Staff 15% 15% 15% 15% 15% PTesentlng Expenses per event Uve Presenting - ller A Average Artist Fees $30,000 3% $30,900 4% $32,136 4% $33,421 Marketing Costs $6,000 3% $6,180 4% $6,427 4% $6,684 Other Direct Presenting Costs $5,000 3% $5,lS0 4% $5,356 4% $5,570 Uve Presenting - ller B Average Artist Fees $20,000 3% $20,600 4% $21,424 4% $22,281 Marketing Costs $5,000 3% $S,150 4% $5,356 4% $5,570 Other Direct Presenting Costs $3,333 3% $3,433 4% $3,571 4% $3,713 Uve Presenting - ller C Average Artist Fees $10,000 3% $10,300 4% $10,712 4% $11,140 Marketing Costs $2,500 3% $2,575 4% $2,678 4% $2,785 Other Direct Presenting Costs $1,667 3% $1,717 4% $1,785 4% $1,857 Rim PresenUng % 01 Revenues to Distributor 40% 40% 40% 40% Marketing Costs $2,500 3% $2,575 4% $2,678 4% $2,785 Other Direct Presenting Costs $833 3% $858 4% $893 4% $928 Cost/ Attender Cost/ Attender Cost/ Attender Cost/ Attender llckeUng Sen/fces Postage $0.10 3% $0.10 4% $0.11 4% $0.11 Ticket Printing $0.30 3% $0.31 4% $0.32 4% $0.33 Supplies $0.40 3% $0.41 4% $0.43 4% $0.45 Credit Card Fees $0.50 3% $0.52 4% $0.54 4% $0.56 Ticketing Service (net) $0.20 3% $0.21 4% $0.21 4% $0.22 Contract OperaUons Labor Projectionist Cost/Screenin~ Theater $20D 3% $206 4% $214 4% $223 Multi-purpose Room $200 3% $206 4% $214 4% $223 Stage Hands Charge Cost/Use Day Theater $300 3% $309 4% $321 4% $334 Multi-purpose Room $240 3% $247 4% $257 4% $267 Event Security Cost/ Perf Theater $160 3% $165 4% $171 4% $178 Multi-purpose Room $80 3% $82 4% $86 4% $89 Event Cleaning Cost/ Perl Theater $400 3% $412 4% $428 4% $446 Multi-purpose Room $75 3% $77 4% $80 4% $84 House Staff Cost/Perf. Theater $360 3% $371 4% $386 4% $401 Multi-purpose Room $120 3% $124 4% $129 4% $134 Building Sen/fces Utilities $1.60 3% $1.65 4% $1.71 4% $1.78 per square foot Repairs and Maintenance $0.60 3% $0.62 4% $0.64 4% $0.67 Service Contracts $0.25 3% $0.26 4% $0.27 4% $0.28 8uilding Supplies $0.50 3% $0.52 4% $0.54 4% $0.56 Cleaning Supplies $0.25 3% $0.26 4% $0.27 4% $0.28 OperaUng BudgetSummary " Change OPENING YEAR % Change " Change " Change 2011 2012 2013 2014 2015 Total Perlonnances 174 189 207 221 Total Attendance 55,620 52,605 58,083 62,107 Earned Income $0 $970,342 3" $996,169 20" $1,193,087 13% $1,342,681 Contributed Income $345,000 $620,000 $617,000 $606,200 $623,320 Total Income $345,000 $1,590,342 $1,613,169 $1,799,287 $1,966.001 Operating Expenses $344,500 $1,569,710 2% $1,595,943 13" $1,797,268 7" $1,927,060 Surplus/(Delicit) $500 $20,632 $17,227 $2,018 $38,942 Earned Income as % 010 Ex 0% 62% 62% 66% 70% Contributed Income Summary " Change OPENING YEAR % Change " Change " Change 2011 2012 2013 2014 2015 City 01 Federal Way $100,000 $200,000 $200,000 $190,000 $180,500 Other Government $15,000 $30,000 $33,000 $36,300 $39,930 Individual $15,000 $30,000 $33,000 $36,300 $39,930 Foundation $15,000 $30,000 $33,000 $36,300 $39,930 Corporate $15,000 $30,000 $33,000 $36,300 $39,930 Special Fundraising Events $25,000 $100,000 $110,000 $121,000 $133,100 Allocation Irom Capital Budget $160,000 $150,000 Endowment Income $0 $50,000 $100,000 $150,000 $150,000 Total Contributed Income $345 000 80% $620 000 -13% $542 000 12% $606 200 3% $623 320 Webb Management Services, Inc. Page7 7/14/09 Reference Points Federal Way Performing Arts and Conference Center -Edm~~- Lynnwood MeydenbauerCenter the Arts Convention Center Bellevue, WA 410 Venue Location Theater Capacity Lobby Capacity Rehearsal Hall/Multipurpose Facility Capacity Meeting Facility 1 (sf) Meeting Facility 2 (sf) Meeting Facility 3 (sf) Meeting Facility 4 (sf) Meeting Facility 5 (sf) Theater Rental Rates Commercial Non-profit Overtime Rehearsal/Prep Additional Performance - Same Day Da rk Day Business Meeting Theater Rental Notes Lobby Rental Rates Commercial Overtime Cleaning Fee for Catered Event Lobby Rental Notes RehealS8l Hall/Multi-purpose Room Commercial Non-profit Performance Rate Overtime Cleaning Fee for Catered Event RehealS8l Hall/Multi-purpose Room Rental Notes Meeting Room Rental Rates (High) Meeting Facility 1 Meeting Facility 2 Meeting FaCility 3 Meeting FaCility 4 Meeting Facility 5 Meeting Room Rental Rates (low) Meeting Room 1 Meeting Room 2 Meeting Room 3 Meeting FaCility 4 Meeting Facility 5 Meeting Room Rental Rates Notes Ticketing Fees Ticket Set-up Service Charger per Ticket Online Ticket Set-up Patron Service Charge Box Office licensee Service Charge per Staff Fees Per Hour Front of House Staff Stage Technicians Audio/Visual Engineer Sound Engineer Lighting Engineer/Electrician Technical Director Security Police Webb Management Services, Inc. L___ Edmonds, WA 700 200 1,302 910 744 $1,250/5 hr block $200/hr $600/ 4 hr block 5-hour block with House Manager, Concessions Staff and Ushers $600/5 hr blOCk $l00/hr $75 5-hour block With one staff member Weekends/Evenings $45/hr $30/hr $30/hr Weekdays $35/hr $20/hr $20/hr $50 $0.10 $100 $2.00 $1.00 $ 18/hr $22/hr $25/hr $25/hr $25/hr $25/hr Lynnwood, WA 6,472 6,123 3,960 1,980 550 Commercial $1,941jday $1,836/day $1,195/day $600/day $178/day Gov'VNon-profit $1,812/day $1,714/day $1, 115/day $560/day $167/day Rates are for a full day, defi ned as 6AM to 11 PM $25/hr $50-$60/hr $50-$60/hr $50-$60/hr $50-$60/hr $50-$60/hr 18,000 6,000 4,000 3,000 1,000 $ 725 (Resident) or $775 (Otherl/day $325/ day $1.50 - $2.50/tix $1.00 - $4.00 $18 - $23/hr $25/hr $25/hr $25/hr $25 - $ 130/hr $30/hr $30/hr $60/hr Page8 Broadway Center for the Performing Arts - Rlalto Theater & RehealS8l Hall Tacoma, WA 742 125 - 300 $1,019/10 hr block $651/10 hr block $126 - $194/hr $378-$604/ 10 hr block $257 - $410/performance $231- $368/day 10-hour block $236-$331 $142 - $200 $305 - $515 $53 - $194/hr Packages range from 4 to 10 hours; Event staff expenses are $300 Everett Performing Arts Center MCintyre Hall Everett, WA 514 $375 - $450/5 hr block N/A $ 70 - $80/hr $200 - $250/5 hr block $375 - $450/performance $200 - $300/5 hr block 5-hour block (per performance); resident companies qualify to use per performance fees on a per-day basiS $125/5 hr blOCk $20/hr 5-hour block $125 - $150/5 hr block $35 - $40/hr 5-hr block $1.50 Ticketmaster Ticketmaster $22/hr $20/hr $24/hr $24/hr $20 - $24/hr $30/hr Mount Vernon, WA 651 300 - 700 125 variable configurations $1,015 - $1,225/6 hr block N/A $115 - $125/hr $615 - 750/6 hr block $200 - $260/performance $615 - 750/day $615 - 750/6 hr block 6-hour block, includes technical liaison, house manager, ushers and staging; additional 5% faCility tax on gross sales $1,000/6 hr block $ 110/hr 6-hour block, includes staff; waived when catering charges exceed $2,500 $550 - $1,000/6 hr block 7/14/09 Reference Points Venue Equipment Fees Sound & Lighting System Wireless Mic Orchestra Shell Risers Stage Platforms Piano Table Covers & Skirts Tables & Chairs Podium Projector Audio Accessories Dance Floor InterneVTelephone Hook up Other Fees TIcket Prices (Low to High) Presented Tier One Presented Tier Two Presented Tier Three Local Region Arts Users Webb Management Services, Inc. Federal Way Performing Arts and Conference Center Ed-;;;;;;;d; Ce~';----L;;"nwood Meydenbauer Center the Arts Convention Center Included in pricing $25/day $loo/event $10/day $lO/day $200 $5/table Included in pricing $15 $45 - $55 $31-$40 $19 - $27 $40 - $85 $125 Included in pricing $160 - $300 $5-$80 $54 - $2,500 $30 - $35 Cost of set-up labor $15 - $25 Included in pricing $80 $ 16/ta ble $2.50 - $7 Included in pricing $350 - $1.400 $200 - $300 $185 - $1,200 Hauling, Office Services. Parking, Exhibit Booth Packages, Freight receiving $25 - $65 Page9 ._J Mcintyre Hall -.--.----..-.- Broadway Center for the Everett Performing Arts Performing Arts - Rlalto Center Theater & Rehearsal Hall $125 $30 - $45 $19 - $36 $5 - $62 $39-54 $25 - $35 $12 - $25 7/14/09 Federal Way Perfonning Arts and Conference Center Edmonds Center for I,ynnwood Meydenbeuer Center Broedway Center for the Everett PerformIng Arts McI~ Hell the Arts Corwentlon Center Perfonnlng Arts - RlBIlo CenlBr Venue Theater & Reheel8lll Hell Equipment "- Sound & Lighting System Included in pricing $40 - $85 $54 - $2.500 Wireless Mic $25/day $125 $30 - $35 Orchestra Shell $1oo/event Cost of set-up labor Risers $10/day $15 - $25 Stage Platforms $10/day Included in pricing Piano $200 $80 $125 Table Covers & Skirts $5/table $ 16/table Tables & Chairs Included in pricing Included in pricing $2.50 - $7 Podium $15 Included in pricing Projector $160 - $300 $350 - $1,400 Audio Accessories $5-$80 Dance Floor $200 - $300 Internet/Telephone Hook up $185 - $1.200 Other Fees Hauling, Office Services, Parking. Exhibit Booth Packages, Freight receiving TIcket Prices (lDwtD High) Presented Tier One $45-$55 Presented Tier Two $31-$40 $30 - $45 Presented Tier Three $19 - $27 $19 - $36 $25 - $35 Local Region Arts Users $25 - $65 $5-$62 $39 - 54 $12 - $25 Webb Management Services, Inc. Page9 7/14/09