Tickets sales up , Centre is working but the relationship between the city and the BPAC Board needs some work.

By Pepper Parr

BURLINGTON, ON  October 5, 2011  –  It was going to be all nicey, nicey; they were going to be friends and everyone would be happy and that is the way Burlington`s Budget and Corporate Services Committee started out earlier this week.  Acting General Manager, Development and Infrastructure Division, Steve Zorbas explained that this was his 73^rd and last  report to Council from the Project Management Team that oversaw the construction of the Burlington Performing Arts Centre.  Besides thanking everyone for their contribution, and that list was long, Zorbas informed Council that the phrase “on time and on budget“ had to be revised to “on time and under budget“  – the project team was able to say there was $75,000 left in the bank account.

True, but Zorbas didn`t mention that the Project had been given a contingency amount of $3.5 million to complete the project which Zorbas managed to neglect.  At a council meeting Zorbas asked if the Management Team could hang onto the funds that remained at the time,  rather than have to go back to Council to get each item approved.

Councillor Taylor had major misgivings about the way the capital levy for the Burlington Performing Arts Centre was going to be used and made it clear he didn't thunk the ticket surcharge was high enough and voted against the Relationship Agreement that was being discussed..

Council was listening to General Manager Budget and Corporate Services, Kim Phillips report on just where things were.  Phillips was quite chirpy and talked about what she saw as a good working relationship with both BPAC and the Theatre Board.  But beneath the pleasant demeanour one could sense the gimlet eye of an accountant who knew how to count the pennies.

Councillor Taylor was not as confident as Phillips and he asked why there was so much uncertainty around the capital maintenance charges.  Phillips said that no one had given that aspect all that much attention.  The BPAC people and the Theatre Board were focused on fund raising and getting the building completed and ready for the opening day.

The city thought the capital levy on each ticket sold, would flow into the city`s coffers and the Centre people thought it would flow into their bank account – not wanting to be difficult with each other the city and the Centre decided to make it a 50/50 split.  Councillor Lancaster wanted to know what criteria was used to arrive at the 50/50 arrangement and was told that there really wasn`t a criteria – it was just what was done.  You could almost feel the shiver go through council members over what Councillor Sharman called “”tin cup” accounting.

Staff had developed a chart that set out all the items that came under capital costs – and realized when they were in discussions with the Centre staff that there was significant difference between who was going to pay for what.  Staff had used the word “doing“ in the document to set out who would be doing what and Centre people took that to mean paying – and that certainly wasn`t the case.  Of such misunderstandings are interesting court cases made.

Concerns over capital expenditures and the cost of replacing and upgrading features over the projected 50 year life of the building is still an outstanding issue. The city has one view as to who was going to pay for what and the Theatre Board and the BPAC people had another view.  Much of the capital related costs are supposed to be covered by that capital surcharge that appears on every ticket purchased.  It was to be between $1.00 and a $1.50 – and there is already talk of increasing that amount.

Phillips made is clkear to council that absolute clarity was needed by both staff and the BPAC administration on what was meant by "sustainability".

To be fair – Phillips came onto this file in May of this year and there was a lot of catching up to do.  Vacations and a bunch of other issues plus the fact that she will serve as the Acting city manager for November and December is keeping Phillips very busy.

It`s all a bit arcane but come the day when the roof has to be repaired it`s better to know now just who is going to pay for that replacing.  Phillips had a document that set all the things that were capital related and indicated who would `do`the work involved and who would `pay`for the work that would have to be done.   Exactly who would do and who would pay was not clear during the early discussions between the BPAC people and the city, which is a major concern for the city.  They want to have a policy that applies to every joint ventures group in the city.  The Burlington Gymnastic Club has a roof repair problem and the city wants to make sure that the same policy applies to everyone and that the money to implement the policy is in the budget.

The city is currently short many millions on road replacement work – the money to pay for it doesn`t exist – and they don`t want to find themselves in the same situation with the performing arts centre.  This is the time to do the haggling.

Several council members were disturbed that this level of detail had not already been worked out – staff came back with their being focused on getting the construction of the building completed and they didn`t feel it was useful to get into details that were perhaps a phase 8 task when everyone was focused on tasks 1 and 2. Council made it clear that they wanted to be fully aware of just what the financial ramifications were to the decisions they were making.

It was clear that there is a different financial accountability environment on the council side of the horseshoe they all gather around.  This council doesn`t want any surprises and they are not yet confident that the staff in place fully understands the new accountability regime. There have in the past year been a number of surprises that council feels could have been avoided if staff had been more forthcoming.  The city is in the process of hiring a new city manager.  You can be certain that the new CM will be someone who will be diligent and thorough when it comes to reporting to council.  One can also expect to see much shorter reporting financial reporting cycles in 2012.  The city uses some of the best accounting software available and council expect staff to use all the features – faster reporter being one of them.

Council wants to be sure they don`t get blind-sided again the way they did with the losses that were being experienced at the Paletta Mansion – the place was losing a ton of money and council didn`t know that.  That`s why the city is asking for expressions of interest from anyone who might have some ideas for that  place.

One of the concerns that got expressed was when the city would learn if things did go bad and they found they had to or wanted to exercise the 20 day option they have to ask the Theatre Board and BPAC to give the keys back.  At this point BPAC doesn`t really own the keys they use  – the building belongs to the city and once the lease is signed plans are in place to turn them over to BPAC on October 23^rd at a formal public ceremony.

It was emphasized throughout the meeting that while the city owned the property BPAC runs the show.  BPAC`s policy is to have commercial shows in that make money for the Centre.  There will be programs put on by not for profit groups and prices for the use of the building will be lower.  The Centre will also develop a program of its own that will over time develop an appreciation for different art forms: dance, music, drama – trust Executive Director Brenda Heatherington to do what she did so well in St. Albert, Alberta in developing a taste for art forms that the city has not experienced in the past.

Councillors Meed Ward and Sharman weren't in agreement on very much during the Performing Arts discussion. This photograph was taken at a Strategic Planning session - they didn't agree much there either.

While everyone else was consistent in saying that the Centre would never be self-sustaining; that it would always need some form of subsidy from the city.   Mead Ward however said that she believed that entertainment can be made to pay and one got the impression she felt that the place could be made self-sustaining.  Phillips was experiencing small conniptions when she heard that for she is very firm on the need for clarity when the city sets out the relationship and the expectations it has of both the Theatre Board and the hard working folks at BPAC.  As Phillips put it when she said: `We need absolute clarity on this`, she said.  You will not make any money from this facility.  That didn`t stop Meed Ward from saying she felt the city portion of the operating expense would lessen over time.  Meed Ward countered with the bar is very low for sustainability.

The number floating around was about $350,000 a year to cover operating losses that will be experienced.  What had Taylor losing his normal smile and adding to his level of heartburn was the sneaky feeling that the city might at some point in the future be looking at as much as $500,000 more to cover capital replacement costs.  And he wanted those numbers fleshed out now before the lease is signed and the keys turned over.  But the hard number crunching that is needed hasn`t been done.

Taylor estimates that the capital surcharge of $1.50 will provide less than half of what is going to be needed.  Problems is if the BPAC loads on too big a surcharge they will become uncompetitive.

Your council then went back to one of its old habits and moved into closed session to talk about the specifics of the Relationship Agreement with the Theatre Board.  There was nothing in those discussions that had to be kept from the eyes of the public – if anything council should have wanted the public to know everything they possibly could about the largest capital expenditure the city has ever made.  Council members can and should get their views on the public record so that if there is ever a day when the city has to pull the plug and take back the building, which it owns, then the views and concerns of the council members were publicly known.  Not a particularly great start in terms of relationship building.

Councillor Taylor has always had concerns about the financial side of facilities that are tied to entertainment and show business.  He will point time and again to the Hamilton problems with their HEC5 operation. It is not that Taylor has a bias against entertainment – this is a guy who bought tickets to the Jersey Boys production and they weren`t for his children.  His concern is the ability of the Centre to bring in enough revenue so that the city is not on the hook for expenses it has made no allowances for in its longer term budget.

After more than an hour of closed session discussion council then voted on the Relationship Agreement and the Lease that will be in place.  Taylor didn`t vote for the agreements but the rest of council seemed to be comfortable – however you will never know because you didn`t get a chance to hear what was said – the session was closed.

Several changes were made to the Relationship Agreement as well as a few changes to clauses in the lease.  Mention was made of a change to clause 1601 B – which would presume there is a clause 1601 and therefore also a clause 1 – that would amount to a mighty long, complex document.  The Project Management Team also advised council that there were no liens on the property.