Report Template

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

17 May 2005 / le 17 mai 2005

Submitted by/Soumis par : Ned Lathrop, Deputy City Manager/Directeur municipal adjoint,

Planning and Growth Management / Urbanisme et Gestion de la croissance

Contact Person/Personne ressource : Rob Mackay, Manager/Gestionnaire,

Strategic Initiatives/Initiatives stratégiques

(613) 580-2424 x22632, Rob.Mackay@ottawa.ca

Ref N°: ACS2005-PGM-ECO-0012

SUBJECT:	Public-private partnership (p3) for THE proposed ORLÉANS ARTS CENTRE

OBJET:	PARTENARIAT PUBLIC-PRIVÉ (3 P) POUR LE CENTRE DES ARTS D’ORLÉANs proposÉ

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council approve the following:

1. Authorize staff to proceed with the proposed public-private partnership framework for the Orléans Arts Centre and the proposed building program contained in this report;

2. Authorize staff to initiate a Request for Qualifications process for the development of the Orléans Arts Centre and the vacant City lands in the Orléans Town Centre;

3. Authorize a budget increase for the Orléans Arts Centre project (account number 901025) in the amount of $280,000 for the acquisition of the Hydro One property and the completion of the required Phase 2 Environmental Site Assessment associated with the landfill site in accordance with this report.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver ce qui suit :

1. autoriser le personnel à procéder à la réalisation du cadre de partenariat public-privé proposé pour le Centre des arts d’Orléans et du projet de programme de construction exposés dans le présent rapport.

2. autoriser le personnel à procéder à une demande de qualification pour l’aménagement du Centre des arts d’Orléans et des terrains municipaux vacants situés au centre-ville d’Orléans

3. autoriser l’augmentation de 280 000 $ du budget consacré au Centre des arts d’Orléans (compte numéro 901025) en vue de l’acquisition du terrain appartenant à Hydro One et de l’évaluation environnementale de phase 2 liée au site d’enfouissement, conformément aux prescriptions du présent rapport.

EXECUTIVE SUMMARY

Assumptions and Analysis:

The need for an east-end arts centre has been identified in various studies for more than 20 years. On October 12, 2004 City Council supported staff's recommended strategy for advancing the development of the Orléans Arts Centre by way of a public-private partnership (P3) model. Council also supported the request that this strategy identify ways of advancing development in the Orléans Town Centre.

The seven steps in the strategy have now been implemented by staff from Community and Protective Services and Planning and Growth Management Departments. Document 1 prepared by Community and Protective Services identifies the program functions and space requirements for the Orléans Arts Centre.

A proposed partnership framework and P3 financial model for the delivery of the centre is summarized in this report. The partnership framework proposes the transfer of the existing Orléans Client Service Centre building and remaining vacant City land in the Orléans Town Centre to the P3 partner in return for construction credits. Interest that has been expressed in renting office space in this project will also be traded with the P3 partner in exchange for construction credits. In return, the P3 partner will be required to design, build and maintain the Arts Centre with any shortfall in the cost of the centre being covered under a monthly lease to own arrangement with the City.

Financial Implications:

This project was identified in the Long Range Financial Plan II. To date, $450,000 has been approved and this request (i.e. $280,000 to acquire Hydro One property and complete site investigation works) will increase the authority to $730,000. Once the project is completed, the Department has identified a future operating impact in the range of $2.5M to $2.8M per year, which translates into a tax increase of 0.31% to 0.34%.

Funds in the amount of $280,000 are available for transfer from the Cash in Lieu of Parkland Fund.

Public Consultation/Input:

Consultation with key arts groups, Mouvement d’implications francophone d’Orléans (MIFO), and Arts Ottawa East is ongoing. Further public consultation is planned in June 2006 when the preferred P3 partner is selected.

RÉSUMÉ

Hypothèses et analyse :

Diverses études réalisées depuis plus de 20 ans ont révélé la nécessité d’aménager un Centre des arts dans l’est de la ville. Le 12 octobre 2004, le Conseil municipal a donné son appui à la stratégie que le personnel lui avait recommandée, soit de réaliser le Centre des arts d’Orléans en vertu d’un partenariat public-privé (3 P). Le Conseil a également approuvé la demande voulant que l’on adopte également cette stratégie afin de trouver des façons de promouvoir l’aménagement du centre-ville d’Orléans.

Le personnel des Services communautaires et de protection et du Service de l’urbanisme et de la gestion de la croissance a accompli les sept étapes prévues que prévoyait la stratégie. Le document 1, produit par les Services communautaires et de protection, définit les fonctions programmées et les besoins en locaux du Centre des arts d’Orléans.

Le présent rapport résume le cadre de partenariat ainsi que le modèle de financement en partenariat public-privé proposés pour la réalisation du Centre. Le cadre de partenariat prévoit la cession au partenaire 3 P de l’immeuble de l’actuel Centre du service à la clientèle d’Orléans et des terrains municipaux vacants situés au centre-ville d’Orléans, en échange de crédits de construction. Il en sera de même en ce qui concerne l’intérêt qui a été manifesté pour la location de locaux dans cet ensemble. En retour, le partenaire 3 P devra concevoir, construire et entretenir le Centre des arts, tout manque à gagner devant être couvert en vertu d’un contrat de location-acquisition prévoyant des loyers mensuels qui sera passé avec la Ville d’Ottawa.

Répercussions financières :

Ce projet est prévu dans le Plan financier à long terme II. Des crédits de 450 000 $ ont été approuvés jusqu’à maintenant et la présente demande (280 000 $ pour faire l’acquisition du terrain d’Hydro One et réaliser l’étude du site) aura pour effet de porter les crédits autorisés à 730 000 $. Selon le Service, le projet entraînera, une fois achevé, des dépenses d’exploitation annuelles de 2,5 à 2,8 millions de dollars, ce qui représente une augmentation de taxes de 0,31 à 0,34 p. 100.

Des crédits de 280 000 $ peuvent être transférés du fonds constitué à même les frais relatifs aux terrains à vocation de parc.

Consultation publique / commentaires :

Les consultations se poursuivent avec les principaux groupements artistiques, le Mouvement d’implication francophone d’Orléans (MIFO) et Arts Ottawa Est. D’autres consultations publiques doivent avoir lieu en juin 2006, une fois que le partenaire privilégié aura été choisi

BACKGROUND

On October 12, 2004 City Council supported staff’s recommended strategy for advancing the development of the Orléans Arts Centre. The key steps in the strategy were as follows:

1. Present the final draft Building Program to the general public and prepare a report to the Health Recreation and Social Services (HRSS) Committee and Council on the program functions and spaces and corresponding costs by January 2005;

2. Position the Orléans Town Centre as the location for the east end Ottawa Counters Project with the Ministry of Consumer and Business Services, including any back office space requirements;

3. Undertake a full scan of municipal and other government services to determine if there are office requirements that can be addressed in the Orléans Town Centre, and secure covenants for these requirements;

4. Continue to anchor the importance of developing the Orléans Town Centre and Orléans Arts Centre as a catalyst for triggering more economic development with the East Ottawa Development Initiative;

5. Assemble the vacant land including the Hydro One property for the RFP process;

6. Secure the necessary funding to initiate this strategy immediately;

7. Report back to CSEDC Committee and Council on the results of the covenants secured for this project and on the recommendations for the issuance of the RFP.

Over the last several months, each step in this strategy has been advanced and these activities are summarized in this report. The attached Document 1 addresses Step 1 in the implementation strategy and explains in detail the recommended programming and space requirements in the Orléans Arts Centre, the associated operating budget for the programming activities as well as the overall need for the centre.

With regard to executing Steps 2 to 7 in the implementation strategy, staff have completed the following:

secured expressions of interest in being part of the Orléans Project from the province and the Orléans-Cumberland Community Resource Centre;
prepared a detailed building program for the Orléans Arts Centre and undertook a full public sector comparator analysis that established the construction savings between a traditional versus a P3 delivery approach. This cost differential has been factored into the financial model contained in this report;
analyzed the project’s economic development potential;
scanned all available municipal leases and leases associated with community non-profit organizations in the area;
developed a concept plan for the vacant City lands in the Town Centre Community and commissioned an appraisal report;
commissioned a market research study which supports the Town Centre development concept for an arts centre in this area;
market tested the readiness of these conceptualized land uses for development;
completed a Phase 1 Environmental Site Assessment on the Hydro One property and established a process for acquiring the parcel which is strategically located in the Town Centre and surrounded by City land, and;
prepared a financial model and framework for a suitable P3 partnership for the Orléans Arts Centre for Council’s consideration.

DISCUSSION

Orléans Town Centre

The Orléans Town Centre is strategically located within the east urban community of Ottawa (Document 2). Positioned next to Highway 174 and the Place d’Orléans Shopping Centre, this area currently has a mix of low-rise apartments and condominiums, recreational and retail services and the City’s 70,000 sq. ft. Orléans Client Service Centre building. These lands are also very accessible to the growing Orléans community, which has a current population of 97,000 residents and is expected to reach a planned capacity of 111,000 residents within the next decade. The Town Centre is 73% developed and has a component of vacant land (7.73 hectares or 19 acres) that is owned by the City of Ottawa.

Vacant City lands on the west side of the Town Centre are zoned to permit retail and service commercial uses, offices, institutional and upper storey residential uses. As an Institutional use, the proposed 84,000 sq. ft. Orléans Arts Centre is a permitted land use in this area. A description of this centre and the proposed uses within the centre can be found in Document 1.

The City lands within the east half of the Town Centre are zoned to permit medium-density and high-density residential development, which can take the form of townhomes and apartment buildings. Privately owned lands in this area already contain several multi-storey residential condominium developments, with underground parking.

Development of the vacant City lands in the Town Centre will be governed by the City’s Official Plan and design control measures that are in place to ensure a high level of design standard is implemented.

Concept Plan

To better understand the servicing issues and potential for extracting value from the City’s lands in this area, staff commissioned a detailed concept plan that conforms with the current Official Plan policies and zoning for the Town Centre community (Document 3). The plan depicts a “highest and best use” scenario and places the Orléans Arts Centre next to the existing Client Service Centre building and a proposed hotel. A separate office component is illustrated in this area that could be used to accommodate those who have expressed an interest to staff in renting office space in this area. An additional office building is depicted as well as a seniors’ residential building and a small parkette.

On the east side of the Town Centre next to the 10^th Line Road, mid to high-rise residential buildings are illustrated as well as stacked townhomes.

Staff have met with and presented the concept plan to real estate agents, hoteliers, high density residential and condominium developers, and a proponent who would like to construct a seniors’ residence in this area. The concept plan was supported and these individuals expressed an interest in investing in this area particularly if the Orléans Arts Centre was to proceed. The Orléans Arts Centre, coupled with additional office space requirements, is viewed as a strong anchor use and a catalyst for more development in this area. Together with the existing and proposed mixed-use development that has been planned for the Town Centre and its accessibility to Highway 174 and transit services, these representatives were confident that a reasonable return on investment could be achieved in this area. Office developers were more hesitant and argued that the City and the Province needed to make a long term lease commitment before they would be successful in attracting office clients to this area.

In addition to the concept work completed for the Orléans Town Centre lands, a detailed servicing, transportation and soils stability study, approved through the 2005 Capital Budget is now underway for this area. This work will analyze the feasibility of servicing these land uses and provide options and accurate cost estimates for bringing municipal piped services and roads to the vacant Town Centre lands. As some of the City’s vacant lands are within 500 metres of a former landfill site, the Official Plan requires monitoring to determine if remedial measures will be required prior to the issuance of building permits in this area. Recommendation No. 3 requests the funds to allow the monitoring to be undertaken.

For purposes of this report, staff have established a reasonable cost estimate for servicing the City’s lands and have worked this into the financial model. It should be noted that while the concept work addressed many of the site development issues in this area, the P3 partner would not be bound by this design. Through the subsequent procurement steps with the City, the P3 respondents will be able to propose alternative concept plans for the City’s real estate. As well different locations on the site for the Orléans Arts Centre and office requirements will be considered provided they are in compliance with the Official Plan. As a major public centre and anchor use for the development, the Orléans Arts Centre must be highly visible from Centrum Blvd and close to public transit and parking.

The City’s due diligence on this land will however expedite the P3 respondent’s conceptual work and shorten the delivery date for the centre.

Appraisal Report for the City’s Vacant Lands, Client Service Centre Building and Hydro Property

With the concept plan completed and a preliminary servicing estimate prepared, staff commissioned an appraisal report to assess the highest and best use value of the City’s 7.73 hectares (19 acres) of vacant land, the existing Client Service Centre building and the hydro property. Where land uses were clustered together on the conceptual plan, values were assigned to each of these blocks so as to provide flexibility when negotiating with the P3 partner. These land values were included in the financial model.

The Client Service Centre building was assigned a value taking into consideration the transfer of this centre to the P3 partner in exchange for equivalent value in the form of a construction credit that would reduce the cost of the Orléans Arts Centre. This scenario is further explained in the partnership framework section of the report and is considered the highest and best use scenario for the centre. Staff support this transfer as it will send a positive signal to the market place that long term leases are being secured in the east end of the City. The transfer will also simplify expansion requirements of this building should this be necessary.

At this stage staff are recommending that the transfer of the Orléans Client Service Centre be included in the RFQ and RFP as an option so that Council has the benefit of the private sector’s input and the value they may assign to the transfer/lease option.

Hydro One

Recommendation No. 3 requests a budget to cover the anticipated costs associated with acquiring the Hydro One parcel. These costs include purchasing the parcel at its appraised fair market value, fees, taxes and a Phase 2 Environmental Site Assessment that is needed due to the historical use of the site as an electrical substation. The recommended source is a transfer from the Cash in Lieu of Parkland Fund.

Following the approval of this report, staff will enter into a Purchase and Sale Agreement with Hydro One and complete the Phase 2 Environmental Site Assessment. If no contamination is discovered, the City will close on the land and incorporate it into the Request for Proposals documentation for the Arts Centre. If the site needs remediation, the City will have the option of opting out of the agreement or if the remediation costs are reasonable, the City can renegotiate and lower its offer to purchase the parcel in order to offset the cost of the clean up.

Expression of Interest For Office Space Secured by Staff

To strengthen the employment component of the Orléans Town Centre and secure for the P3 partnership a long-term lease revenue stream, staff spent a considerable amount of time attempting to aggregate interest in renting office space from municipal tenants, community non-profit organizations in the area and the Provincial Government.

Expression of Interest from the Provincial Government

To promote the benefits of the project to the Province, meetings were organized with senior officials in Toronto and Ottawa. Two Assistant Deputy Ministers were briefed on the Orléans Arts Centre. The project was positioned as the location for a second provincial common counter and broader government services (such as a district labour office). The P3 delivery model, coupled with the economies of concurrently delivering the Orléans Arts Centre as well as provincial and municipal office space requirements, were presented as a cost saving measure to these officials. Staff also discussed the option of this project accommodating a centralized government call centre function for Ottawa. This would have value given the strong bilingual work force in Orléans and lower lease rates than what the Province is currently paying in downtown Ottawa.

In response, the Assistant Deputy Minister for Consumer and Business Services issued a letter in March of this year indicating their interest in pursuing a location for a second Common Counter in suburban Ottawa. The consultant that has been hired by the Province to evaluate where this counter may go is recommending the Orléans Town Centre as the most suitable location for the next counter. Based on discussions with Provincial staff, the counter will also require additional back office space to support its function. The Ministry of Consumer and Business Services have requested funding for this second Common Counter from the Provincial Treasury.

Community Services and Municipal Leases

Leases held by community non-profit organizations in the area were scanned to determine if these services and their space requirements could be potentially transferred to the Orléans Town Centre. A short list of potential leases was generated and interviews were held with the community non-profit representatives and staff from Real Property and Asset Management.

Unfortunately, many restrictions to relocating these leases to Orléans were discovered including committing to a 2½-year delivery date for the new space, as well as various site location restrictions. Most of these agencies are located in proximity to the client groups they are serving and did not support being moved away from their client.

This search will continue, however staff have been able to secure an expression of interest from the Orléans-Cumberland Community Resource Centre. This agency is currently situated in 3 different locations in the Orléans area and is interested in consolidating their operations in the Orléans Town Centre.

Proposed P3 Partnership Framework

The Orléans Arts Centre is a civic complex, which will be operated by the municipality in partnership with the community art organizations. Under this operating model, the preferred approach for the various components of this P3 partnership is as follows:

A. Design, build, finance, own/transfer and maintain the Orléans Arts Centre. (84,000 sq. ft.)

Under this requirement, all building maintenance (i.e. heat, lighting, cleaning, snow removal, etc.) and life cycle functions, will be performed by the P3 partner. These costs will be charged back to the City either as a flow through expense or as a long-term lease.

The P3 partner will use their expertise to design and build the Orléans Arts Centre for a fixed price and maintain the centre over the life of the agreement. After 25 years, the centre will be returned to the City with all life cycle requirements addressed. Reversion of ownership is necessary, as the proposed financial model requires a Municipal Capital Facilities Agreement (MCFA) be entered into in order to exempt the P3 partner from paying development charges and property taxes over the life of the agreement. A MCFA for a centre of this nature requires a reversion of the ownership to the City at the end of the agreement.

B. Design, build, finance, own, operate and maintain the new office space requirements (e.g. provincial and Orléans-Cumberland Community Resource Centre – currently totalling 30,000- 33,000 sq. ft.) aggregated together.

Like the Client Service Centre building, staff are proposing this office space be constructed by the private sector partner in a location that takes into consideration the needs of these future tenants and the City’s Official Plan and zoning. Some of these space requirements may need to be addressed in the existing Client Service Centre building, which may require renovations causing some municipal tenants to be displaced. An example would be the Provincial common counter, which may need to be aligned with the existing municipal service counter on the ground floor. Common ownership of all the new aggregated office space requirements with this building will allow the P3 partner to achieve better efficiencies in accommodating client requirements.

C. Own, operate and maintain the existing Orléans Client Service Centre building and provide a long-term lease to the City.

By transferring the existing Client Service Centre building to the P3 partner, staff will require the value of the building to form an offset savings to the construction cost of the Orléans Arts Centre. In return, it is proposed that the City become a long term tenant in this building and pay a market rent to the P3 partner. The financial model takes into consideration this new operating pressure for the rent expense, which is subsequently offset by a requirement for an initial credit that is to be applied to the capital cost of the Orléans Arts Centre. This requirement of the P3 partner to provide this up front credit is reasonable given the long-term (25 years) lease revenue stream the City will be establishing for the partner under this option. The financial model also considers the scenario where the value of the Client Service Centre building is left out of the P3 relationship however staff are recommending that both scenarios be tested with the private sector.

D. Own, service and develop, based on performance requirements, the City’s vacant lands in the Orléans Town Centre.

The City anticipates that over a seven-year period from the execution of the P3 agreement, the remaining vacant City land in the Town Centre will be developed. This development will likely take the form of land uses that will be similar to what has been illustrated on the attached concept plan (Document 3). Given that the City will kick start investment on these lands with the construction of the Orléans Arts Centre (and office space), staff believe it is reasonable to extract up front as a construction credit for the Orléans Arts Centre project, the appraised value of these lands as well as an efficiency savings. These savings relate to the P3 partner’s ability to service and develop these lands comprehensively thus lowering their costs to prepare the real estate for the market place. To ensure the land is developed in a comprehensive, efficient manner, staff will require a high level concept plan at the RFQ stage followed by a detailed concept and phasing plan at the RFP stage. Land speculation will be avoided by applying performance measures to the City’s real estate which could be enforced through repurchase options should development not occur as proposed in the phasing plan.

P3 Financial Model

A full analysis comparing the costs of a traditional design/bid/build tender for the Orléans Arts Centre to that which would be delivered through a P3 approach was undertaken for this project. This analysis concluded that the Orléans Arts Centre could be constructed in the range of $25M to $27M. Applying the offsetting credits mentioned in the last section of this report including a community fundraising goal of $500K, results in the capital cost of the Orléans Arts Centre being reduced by approximately 50- 60%. This resulted in the Arts Centre having a net cost in the range of $10M to $13.5M.

Through the P3 model, Council will have the flexibility to either cover the net cost of the Orléans Arts Centre through its capital budget or through a lease to own approach with regular payments over an extended period of time. Staff are recommending the lease to own approach.

Converting the net capital cost of $10M to $13.5M into annual payments over 25 years after applying a reasonable interest rate, results in a base operating budget requirement in the range of $725,000 to $1M/yr.

Operating costs in addition to the loan payments for the Orléans Arts Centre are as follows:

Loan repayment on Net Capital Cost ($10-$13.5M)		$725K to $1M/yr
Plus Net operating costs for programming Building maintenance, life cycle costs, and incremental rent on existing Client Service Centre building	$450K/yr $1.3M/yr	$1.8M

Total		$2.5M to $2.8M/yr

In summary, the anticipated operating budget requirement to deliver the Orléans Arts Centre and trigger additional economic development activity in the Orléans Town Centre is in the range of $2.5 to $2.8M/yr.

Applying New Tax Revenue Streams to the Cost of the Orléans Arts Centre

The concept plan for the Orléans Town Centre includes a mix of residential units, office buildings, a hotel and an 84,000 sq ft Orléans Arts Centre on the City’s lands. The total anticipated assessment for all of these land uses is expected to be in the order of $110M. By applying a modest construction multiplier of $2 spent in the economy for every $1 of construction value realized on the City’s lands, the proposed land uses when built out will result in approximately $220M of new economic activity. As well, additional dollars will be realized when the privately owned lands in the Town Centre are developed.

The anticipated build out period for the conceptualized land uses is estimated to be within 7 years, with total City property taxes at that point reaching $1.5M per year. Provincial taxes at this threshold are estimated at $850K per year. This does not take into consideration reassessment increases or inflationary increases over this period of time in city or provincial taxes.

Given the outcome of the market testing and the strong link between the anticipated new economic development activity in the Town Centre and the construction of the Orléans Arts Centre and office space requirements, staff are of the opinion that the new tax revenue streams generated from this new development activity could be notionally applied to off-set some of the operating budget requirement previously identified for the Orléans Arts Centre. This offset would be in the order of $285K initially growing to $1.5M/yr at build out.

By applying these anticipated tax revenue streams to the net capital cost of the Orléans Arts Centre, the annual loan payment on the net capital cost of the centre would be removed resulting in a remaining operating budget requirement of $1.8M/yr.

Using this conceptual approach, the debt required to cover the net capital cost ($10M - $13.5M) of the centre would be retired in approximately 13 to 15 years without impact to the operating budget.

Staff have currently not factored this approach into the financial model contained in this report.

Request for Qualifications (RFQ)

To advance this project to a procurement stage, staff are proposing that a RFQ be released so that the City can short-list and pre-qualify respondents for the more detailed Request for Proposals (RFP) stage to be undertaken later this year.

The RFQ will have mandatory criteria requiring proof of the respondent’s ability to secure financing, performance security and insurance coverage. To be considered for the short-list, the mandatory criteria must be met. Submissions not fully complying with any of the mandatory requirements will be deemed to be non-responsive and will be given no further consideration. The criteria subject to point rating will request information on experience and qualifications of the respondent as it relates to this project, how well they understand and can meet the City’s objectives and their financial capacity to design, construct and operate in the long term. A high-level concept plan, which illustrates how they could arrange their proposed land uses on the City’s property will also be a requirement.

This stage pre-qualifies respondents who are then eligible to enter the next stage of Request for Proposal. Those short-listed are invited in the RFP stage to provide specific details on their business plan, approach and design.

As a best practice, an independent Fairness Commissioner will be appointed in the early stages to assist in both the RFQ and RFP to ensure that the process is open, fair and transparent.

Timing and Next Steps

A draft RFQ has been prepared for this project and subject to Council’s approval of this report, the document will be released on MERX. This is anticipated to take place in late June .

The results of the RFQ and the recommended short-list of respondents will be presented to Council in September of this year. At this meeting staff will also request the RFP be released to the short list of respondents. RFP proposals are to be submitted to the City by December 15^th, 2005 and the preferred partner will be recommended to Council in Spring 2006. Once a P3 agreement has been negotiated and finalized, construction is anticipated to start in November 2006 and be completed in the summer of 2008. As the procurement process on this project advances, a more accurate assessment of these timelines will be possible.

ENVIRONMENTAL IMPLICATIONS

A two-acre wood lot directly west of the Client Service Centre building was investigated by the City’s Forester who found that it had no substantial ecological significance and was in decline. Replanting was not supported due to the high percentage of rock in this area and it was the opinion of the forester that the tree stand should not constrain the development.

Further to the east, a study will be required to investigate any potential environmental concerns due to the prior existence of a municipal landfill site in proximity to the Orléans Town Centre lands. In accordance with the City’s Official Plan, this study requires site investigation and monitoring within a 500-metre radius of the former landfill site for methane gas. A budget has therefore been requested to cover these up front costs. This study will be completed prior to the release of the RFP in September 2005. The cost of any required clean up would be deducted from the appraised value of the land.

RURAL IMPLICATIONS

The Orléans Art Centre is considered a district centre that will serve all of eastern Ottawa including the rural area on this side of the City.

CONSULTATION

An Open House was held on November 8, 2004 and included 50 east end residents. The comments expressed at the meeting and in subsequent e-mails and letters from residents are reflected in Document 1. Most respondents felt that it had been 20 years since the very first study in 1985 and urged the City to move ahead with the P3 proposal for the entire arts center as soon as possible. A presentation was also made at the November 2004 meeting of the City’s Arts, Heritage and Culture Advisory Committee.

Further public consultation is planned in June 2006 when the preferred P3 partner is selected.

FINANCIAL IMPLICATIONS

This project was identified in the Long Range Financial Plan II. To date, $450,000 has been approved and this request (i.e. $280,000 to acquire Hydro One property and complete site investigation work) will increase the authority to $730,000. Once the project is completed, the Department has identified a future operating impact in the range of $2.5M to $2.8M per year, which translates into a tax increase of 0.31% to 0.34%.

Funds in the amount of $280,000 are available for transfer from the Cash in Lieu of Parkland Fund.

SUPPORTING DOCUMENTATION

Document 1 Proposed Orléans Arts Centre – Need Justification, Building Program and Operating Plan

Document 2 Location Map

Document 3 Concept Plan

DISPOSITION

Staff will initiate the RFQ process and report back to Council in September with the results of the RFQ before recommending the City proceed to the RFP stage.

Document 1

PROPOSED ORLÉANS ARTS CENTRE – NEED JUSTIFICATION,

BUILDING PROGRAM AND OPERATING PLAN

A City-Shaping Development Strategy

In 2002, 58 community organizations, representing community associations, the Orléans Chamber of Commerce, sports groups and cultural organizations, signed the Equality East Citizens' Coalition Declaration of Support for the establishment of a permanent cultural centre in Ottawa's East District. The City’s Ottawa 20/20 Arts and Heritage Plan, approved by City Council in 2003, listed this centre as one of 5 immediate cultural priorities in the City, and the only one identified in a suburban area.

Building on this community support is the “City-shaping” value of the Orléans Arts as the much-needed "anchor" for a town centre campus on Centrum Blvd in the east end of the City.

The development of new cultural facilities has a direct influence on property values (and therefore tax revenue), as well as on employment and other economic activities. A major research project by Ryerson University's Centre for the Study of Commercial Activity, entitled "Beyond Anecdotal Evidence" (2003) found a pattern of growth in new businesses, retail sales and property values complimented by positive trends in social indicators and attitudes around new and renovated cultural facilities. In Vancouver, for example, the restoration of the Stanley Theatre had several positive effects on the adjacent area: the number of new condo units rose to 144 in 2000 from 15 in 1999; the number of construction and renovation permits increased to 21 in 2003 from two in 1992; retail sales rose to $216.4 million from $104.2 million between 1998 and 2000; all 134 business owners surveyed said their business volume was up since 1998.

The Need

The goal of the project is to establish a hub that will allow east end residents to access cultural programs without having to leave their community. The Arts Centre would be a community focal point that offers programs in English and French, in collaboration with non-profit community arts partners such as the Mouvement d’implication francophone d’Orléans, the Orléans Young Players, the Visual Arts Centre Orléans, the Gloucester Pottery School and Arts Ottawa East. The Arts Centre will also reflect the growing cultural diversity of the city's eastern district, as seen by the dozen or so ethno-cultural groups who now use the existing theatre space for cultural presentations.

The building program for the proposed Orléans Arts Centre responds to three separate needs assessment studies undertaken between 1991 and 2003 in the east area of the City. All have supported a single arts centre that incorporates hands-on instruction and presentation of activities in the visual and performing arts. It is more cost-effective to construct and combine all needed spaces within one building envelope at the same time in order to better serve current and emerging needs in this community of almost 100,000 residents.

The Arts Needs Assessment - East District Report (Lussier, 2003) commissioned by the City of Ottawa, confirmed that the east end "is in dire need of adequate cultural facilities". The report findings cited the loss of cultural spaces in the former Gloucester City Hall; difficulties in finding suitable space for rehearsals; substandard and cramped instruction and storage space; presentation space that is too small; poor lighting, poor stage configuration, etc.

Building Program

Based on the needs assessment studies and input from the community, the recommended building program is an 84,000 gross sq. ft. centre. Arts instruction programs are cornerstones in child and youth development, and the overall building program integrates the needs for active participation, with the need to present performance and exhibitions.

The instruction studios would be operated by east end non-profit arts groups who would bring a large clientele base into the building during the day and in the evenings for classes. These organizations have provided design input and are enthusiastic about relocating from inadequate facilities located across the district together to a new centre. In this way, the entire site could be optimized to establish a well-rounded, community-based, and financially viable arts centre that serves the public from one central location in the east end.

The core set of program functions and spaces identified for the proposed Orléans Arts Centre include:

1. 500-seat Performing Arts Hall

The 500-seat Performing Arts Hall includes related production support spaces, dressing rooms, green room, community box office and bar/servery. The theatre, box office and black box studio would be operated by the City in collaboration with the Mouvement d'implication francophone d'Orléans (MIFO) who will have usage for up to 25% of the available schedule to deliver francophone programming to residents.

There is no medium capacity theatre available to arts groups in the City of Ottawa. A medium capacity venue has been identified as a priority need in the east end of the City since 1985. The current 220-seat venue at 255 Centrum was originally designed as the Cumberland Council Chambers and has limited technical capabilities. According to the Lussier Report, the theatre has many weaknesses. The Lussier Report noted that seating is limited to 220; the stage floor is not suitable for dance; it lacks a fly tower, wings, a ceiling grid and adequate stage depth; it has insufficient and inadequate dressing rooms and storage facilities.

A 500-seat model is viable for the following reasons:

§ it provides local performing arts groups with an appropriately designed and equipped venue;

§ it provides enough seats to generate sufficient box office revenue to support quality, marketable events;

§ it would be a suitable size to be operated in part by community volunteers;

§ it would be manageable for community groups as well as professional performers;

§ it provides community groups with a quality centre in which they could grow artistically, improving the quality of events and enlarging their audiences;

§ it provides a home base for local east end performing artists and give this vibrant arts community a tangible focus and visibility.

§ it provides the 92,000 residents from this community with its first purpose built venue to celebrate and enjoy the arts, music, dance and theatre.

2. 100 seat Black Box Studio

This venue is needed to facilitate children and youth events, rehearsals, and recitals that require a more intimate setting. The space will offer opportunities for youth to be mentored in all aspects of the performing arts. The black box is unique in that it can be configured in a variety of ways (i.e. retractable seating, cabaret style, theatre in the round for children's performances). Further, the black box studio is needed to take the rehearsal booking pressure off the 500-seat theatre thereby allowing it to be used almost exclusively for audience events. Freeing up the theatre for audience events is an important revenue generator as it leaves more prime dates available for community bookings.

3. Municipal Art Gallery

This enclosed municipal gallery space will replace the current Gloucester Gallery and Cumberland Exhibition space which each produced 12 exhibitions per year. There has been a heavy demand for exhibition opportunities at both of these venues and this will continue as the two spaces are combined into one gallery, with additional exhibition spaces constructed in the lobbies.

4. Theatre Studio

Orléans Young Players (OYP), an east end non-profit arts organization that will relocate from its existing venue on Tompkins Avenue, would operate theatre instruction spaces. The OYP offers classes, workshops and productions. During the 2003-2004 season, OYP produced 32 plays, with 68 public productions including summer shows, school touring and its spring, holiday and public festivals, to an estimated 10,000 people.

5. Pottery Studio

These studios would be operated by the Gloucester Pottery School (GPS), an east end non-profit arts organization which will relocate its operation from the Cyrville Community Centre basement. The Pottery School offers courses taught by professional partners (37 courses per year). The GPS offers exhibitions, workshops, a March Break program for children and offers studio time on a membership basis. The Gloucester Pottery School has 400+ registrations.

6. Visual Arts Studio

Visual Arts Centre Orléans (VACO), an east end non-profit arts organization that will relocate from its existing space at the Orléans Recreation Complex, would operate the visual arts studio spaces. VACO offers courses at all levels and abilities. It has 1,000 registrations per year with 7,000 visits to its gallery and 200 artists involved in group or solo shows. The VACO art gallery presents 14 exhibitions per year. VACO operates a gift shop and art supplies shop. VACO also houses the Orléans Photo Club and rents space to the National Woodworking School. Arts East holds two exhibitions, monthly meetings and workshops at VACO.

7. New Media Arts Studio

These spaces would be operated by Arts Ottawa East and arts partners. The studios will be oriented to new media (video production, graphics, etc.) with a focus on youth programs and outreach.

8. Dance Studio

The Dance Studio will have a sprung floor, mirrors, barres, etc. and would be rented out by the City to independent choreographers, dance groups, dancers, and culturally diverse folklore ensembles, for dance rehearsals and programming.

The centre will include necessary administrative and community meeting space adjacent to the studios, gallery and theatre for City staff and arts service providers, VACO, Gloucester Pottery School, Arts Ottawa East, MIFO and Orléans Young Players.

Operating Plan

The proposed Orléans Arts Centre would be viable from the outset with a City net operating budget investment of approximately $450,000 per year. This amount is based on the following assumptions:

1. Theatre rentals would account for the majority (60%) of revenues for the centre, while rehearsal studio rentals, theatre and box office services would account for the rest (40%). In year 1, the business plan assumes a full 42 weeks of activity with a total of 231 events. This works out to about 5 events per week (1-2 on each of Thursday, Friday, Saturday and Sunday).

2. The issue of projecting future uses is difficult. The Lussier Report concluded that current organizations will likely do more if there are adequate facilities and new organizations will sprout because there will be space for them to develop and present their efforts. The Report survey indicated that users would pay more for improved and larger facilities with proper sound and lighting equipment.

3. The business plan assumed 3 theatre rental classes for the 500-seat theatre and black box studio. Rental fees will be on a sliding scale, with the least expensive rate reserved for arts organizations. Arts organizations based in the east end of the City would have priority use as follows:

Class 1: Not-For-Profit Arts Organization (theatre, music, dance, literary, variety)

Class 2: Not-For-Profit Organization (general, non-arts organization)

Class 3: For-Profit Commercial

Governance Model

A number of governance options were reviewed and the model retained is that of the Orléans Arts Centre Centre being a City of Ottawa owned (or under a lease to own) public facility. The manager, as well as technical staff for the theatre and art gallery will be employees of the City, with artistic programming primarily delivered by autonomous arts organizations who will rent or lease the facilities. A minimum 25% of the theatre schedules will be allocated to MIFO to ensure French language programming needs are met. An advisory committee of community representatives will be established to advise City staff and guide the direction of the Centre. Arts Ottawa East and MIFO, as well as program partner organizations, will play a leadership role on this Committee.

Document 2

LOCATION MAP

Document 3

CONCEPT PLAN