Building a $70-million performing arts centre in downtown Kamloops may not cost taxpayers an extra dime, according to a new business case commissioned by the Kamloops Centre for the Arts Society.
In a 50-page report released to city council on Tuesday, the business case — independently conducted by KPMG — outlines ways to pay for the facility and how the facility should operate.
The business case was the main sticking point for a group that opposed the arts centre during the failed 2015 referendum, when the proposal was expected to increase property taxes for more than two decades.
Depending on fundraising and provincial and federal government subsidies, the business case notes the city would be on the hook for between $30 to $45 million in capital costs and states that: “If the city’s borrowing does not exceed $45 million, there is no anticipated impact to municipal tax rates as a result of the project.”
That is due to the Tournament Capital Centre being nearly paid off.
Additional costs to the city for the arts centre bid at Seymour Street and Fourth Avenue include $3 million in site servicing for underground utility movements and earthwork to meet structural requirements and $703,000 in operating costs in the first year, decreasing to $383,000 by the fifth year.
The report notes that annual operating contributions from the city are expected to decrease over time, with “initial contributions lower than those provided to other municipal recreation facilities.”
Comparatively, the city’s operational contributions last year to the Tournament Capital Centre was $1.3 million and to the Sandman Centre was $752,000.
City CAO David Trawin said site servicing would be council decision, but he believes there is money in reserves that could cover the costs, noting that is, ultimately, a council decision.
“The operating costs above revenues would probably come from taxation,” he said. “It might be worth noting that after five years, the subsidy would be about what the tax subsidy is for Westsyde Pool. “
Trawin expects council to ask staff to prepare a report addressing how the $45-million can be funded.
“I think it can be funded without a tax increase if we use the debt that is coming off for TCC and other projects,” he said.
The business case also makes recommendations on how the facility should operate.
The city should retain ownership, but establish a city-owned subsidiary to independently operate and maintain the facility, with surpluses reinvested into the facility. Western Canada Theatre and Kamloops Symphony Orchestra would be primary users. Also recommended is an external board, including user groups, businesses and community leaders provides oversight.
“As the sole owner of the Centre, the city will retain financial risks associated with the facility and therefore maintain appropriate oversight of operations,” the business case states.
“City retained responsibility and authority is anticipated to include approval of material policy changes, approval of annual budget, receipt of reporting related to risk management and approval of long-term liabilities.”
The proposed $70-million facility would include two theatres and a blackbox theatre. Costs include $50 million for direct construction costs and $20 million for construction and other fees.
Construction costs include: $47.7 million for the main building including 70 stalls of underground parking, equipment at $1.7 million and grounds enhancements at $600,000. Architectural and consultant fees are pegged at $5.9 million, with construction oversight at $2.5 million, theatre equipment at $3.4 million and furniture, fixtures and equipment at $3.2 million. Five-million dollars is also included as contingency funds.
The business case notes a performing arts centre was identified as the highest priority investment in the Kamloops Recreation Master Plan.
It would fill a need in the city amidst aging and inadequate infrastructure, revitalize downtown and support nearly 4,000 youth in arts programming and education, while fostering a vibrant arts and culture scene and ultimately improving the quality of life for Kamloops residents as the city’s population continues to rise at a stable pace.
Outlining challenges and limitations of current facilities, the business case appears to demonstrate a Goldilocks situation in Kamloops — Sandman Centre is too big and better suited for sports, Pavilion Theatre is too small with limited functionality as a blackbox theatre and Sagebrush Theatre appears to be just right, at 706 seats— but it’s booked most of the year (300 days in 2018-2019,) with limited opportunity for groups to expand runs or book new shows.
The school district and Western Canada Theatre are given booking priority, based on a joint-use agreement with the city, limiting opportunity for use by others. The report notes Sagebrush is aging and has experienced failures, such as the recent eight-month closure due to structural issues in its roof. The closure left arts groups scrambling to fit in smaller venues.
The proposed downtown location for the arts centre — on the former Kamloops Daily News property, which was purchased by the city in 2014 for $4.8 million and which is now a parking lot — was chosen for its availability, size, city ownership and potential for economic revitalization.
The operating-revenue costs are expected to break even, assuming 150 days of use of the large theatre and 275 days of use of the medium theatre and 275 days of use of the blackbox space, notes that the ongoing building related operating costs at $2.6 million annually in the first year and $3 million in the fifth year would operate at break-even, with rental rates reflective of operation costs.
A facility fee would add an average of $3 for each ticket sold in the first year and four per cent of all box office sales would go to the centre. Naming rights would be sold as part of fundraising and 14 full-time staff members would be hired, plus another dozen to support box office, parking and ushers.
Construction of the performing-arts centre is expected to generate a one-time economic impact of $70.7 million to 565 full-time jobs and government revenues estimated at $9.2 million during planning, design and construction. Once it is up and running, the project is estimated to have an annual economic impact of $2.9 million, 31 full-time jobs and generate $330,000 in government revenues.
The proposed project timeline is to have project approvals in place by spring 2020, with design work to follow and construction beginning in the summer of 2021. The arts centre would be completed by spring of 2023 for a fall 2023 opening.
“Timing is subject to decision making and funding availability,” the report notes. “Efforts could be made to accelerate timelines where possible.”