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Home My WebLink AboutItem A-Cultural Services UpdateEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Update on Cultural Services Division Meeting Date: May 12, 2004 Agenda Item Number: A Department: Library, Recreation and Cultural Services Staff Contact: Robb Hankins www. cl. eugene, or. us Contact Telephone Number: 682-5133 AGENDA ITEM SUMMARY This is an informational presentation regarding an update on the Cultural Services Division. Topics will include: 1) Cultural Services Subfund six year financial forecast; 2) highlights of improvements implemented to address revenue challenges; and, 3) discussion of a growth plan for revitalizing the Hult Center, Cuthbert Amphitheater and the arts in downtown Eugene. BACKGROUND Council Action History The Cultural Services Subfund was created by addendum to the FY99 Budget. Prior to FY99, the Cultural Services Division's budget was in the General Fund. Policy Issues Not applicable. Council Goals This informational presentation relates to the Council Goal of "Accessible and Thriving Culture and Recreation." Financial and/or Resource Considerations Attached is the Cultural Services Subfund six-year financial forecast; the assumptions used in this forecast are the same as those in the General Fund forecast presented to the council earlier this year. · About one-third of the subfund's resources come from Transient Room Taxes and approximately two-thirds from operating revenue (e.g., user fees). · The fund must cover any cost increases within fund resources. For the past several years, the Cultural Services forecast has been predicting future operating deficits. · As with the General Fund forecast, projected costs (especially personnel-related costs) are escalating more rapidly than available resources. · For the last few years, staff has used simple reductions and operating efficiencies to balance the budget. Such small incremental changes will not "fix" the underlying problem. L:\CMO\2004 Council Agendas\M040512\S040512A. doc Other Background Information Due to economic downturns, other types of financial challenges face the Cultural Services Division: · Patrons have fewer discretionary dollars to spend. This impacts not only the production revenue (e.g., rent and PUF), but also ancillary revenues such as parking and concessions, and Transient Room Taxes. · Resident companies are being challenged to balance their own budgets. · Promoters are asking venues to share more and more of the financial risk to get their business. · More patrons attend free outdoor concerts in surrounding communities and gambling casinos that can pay top dollar for acts, driving up costs and reducing artist availability. · Resident Companies can set their dates two years in advance while national touring events decide only two to six months in advance, causing greater potential for scheduling conflicts. The Future The Executive Director of Libraries, Recreation, and Cultural Services has challenged Hult Center staff to change the way it does business, so a 5-year growth plan for the Hult Center and for Cultural Services is being created. · While continuing to contain costs, staff must find ways to present more events; build new and larger audiences; and increase the sale of tickets, concessions, parking, and gift items. · Staff must explore new product possibilities. · Staff must start making cultural tourism a priority, and help host more and larger conventions. · Staff must generate the dollars needed to renovate the Hult and to deal with the structural challenges that prevent reaching new levels of profitability. · Staff must make sure that downtown continues to become an arts and entertainment center. · Staff must be more than just a landlord, and take calculated risks to dramatically increase levels of income. · Staff must function not only as a performing arts center, but as a community center available to all citizens. · Staff must use all its programs (events, grants, summer park concerts, etc.) to support arts education and diversity, and collaborate with all parts of the community to reach out to more audiences. · Finally, staff must work together to assure that the Hult, and all the arts in Eugene, will flourish over the next 25 years. Timing This item is scheduled to coincide with the Hult Center's 25th Anniversary. OPTIONS Not applicable. STAFF RECOMMENDATION Not applicable. SUGGESTED MOTION Not applicable. L:\CMO\2004 Council Agendas\M040512\S040512A. doc ATTACHMENTS A. Six-Year Financial Forecast Executive Summary FOR MORE INFORMATION Staff Contact: Robb Hankins, Cultural Services Division Director Telephone: 682-5133 Staff E-Mail: robb.j.hankins~ci.eugene.or.us L:\CMO\2004 Council Agendas\M040512\S040512A. doc Cultural Services Fund (031) - Six-Year Financial Forecast, FY05 - FY10 Executive Summary Major Issues for This Fund *Long range forecast continues to indicate operating deficits. Departmental Advisory Committee (DAC) has made recommendations; some recommendations are currently being analyzed by staff. For example, forecast includes impact of DAC recommendations on revisions to the rental rate implemented, structure and increases in some user fees and facility rental rates are scheduled for July 1,2004. *Health of the fund is dependent on the health of the economy and the entertainment industry overall, both on a national level and the local level. *Transient Room Tax receipts account for approximately one-third of the fund's revenue and are dependent on the health of the economy and hospitality industry. *This fund annually provides funds to the Lane Arts Council for disbursement to local arts groups. *This fund annually provides $65,000 for Hayward Field renovation debt; the last debt payment occurs in FY07. Actual Actual EstimatedProposed Forecast FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Resources Beginning Working Capital 1,080,973 1,164,2991,101,8291,037,884 998,404 850,876 659,550 479,266 269,653 Revenues 4,229,6083,797,9824,192,3504,335,0404,416,7214,511,0464,612,159 4,719,868 4,841,759 Total Resources 5,310,5814,962,2815,294,1795,372,9245,415,1255,361,9215,271,709 5,199,133 5,111,412 Requirements (1) Operating - Cultural Services 3,560,5243,860,4524,176,2954,300,7704,494,2494,636,1224,792,443 4,929,480 5,083,701 (2) Loan to Youth Levy Fund 235,758 - - - (1) Cap Transfers - Silva Acoustic Proj 350,000 - - - (1) Repay Acoustic Project Loan 80,000 73,750 70,000 66,250 Total Expenditures 4,146,2823,860,4524,256,2954,374,5204,564,2494,702,3724,792,443 4,929,480 5,083,701 (3) Reserves Reserves - General 1,147,5351,084,9931,020,181 981,740 833,795 641,957 461,057 250,716 8,016 Reserves - Dedicated Donations 16,764 16,836 17,703 16,664 17,081 17,593 18,209 18,937 19,695 Total Reserves 1,164,2991,101,8291,037,884 998,404 850,876 659,550 479,266 269,653 27,711 Total Requirements 5,310,5814,962,2815,294,1795,372,9245,415,1255,361,9215,271,709 5,199,133 5,111,412 (4) Target General Reserve 1,382,0941,286,8171,418,7651,458,1731,521,4161,567,4571,597,481 1,643,160 1,694,567 (1) $675,100 of this fund's resources have been used for the Silva Acoustic project. In FY02, a $250,000 loan from the General Capital Projects fund was taken; loan repayment is FY04-FY07. The resources for the acoustic project transfers/loan is 25% of Patron User Fees dedicated to facility upgrades/equipment (operating M&S has been reduced to provide the transfers/loan payback monies). (2) Loan to Youth Levy Fund: Both the loan to the Youth Fund and the loan payback were completed during FY02. (3) Operating Surplus/(Deficit) = "Revenues" minus "Total Expenditures." (4) Due to cyclical nature of the entertainment industry, General Reserve Target is four months of Total Expenditures. Note: "Reserves-General" is equivalent to Balance Available (Total Resources - (total expenditures + dedicated reserves))