Item 9 - PCPA WorkshopDATE:
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Summary:
AGENDA REPORT CityofPoway
CITY COUNCIL
April 6, 2021
Honorable Mayor and Members of the City Council
Wendy Kaserman, Assistant City Manager/Acting Director of Community Services W ~
Belinda Romero, Community Services Manager/Acting PCPA Supervisor
(858) 668-4592 or bromero@poway.org
Poway Center for the Performing Arts (PCPA) Workshop
The City Council held a workshop on November 5, 2019 to discuss the Poway Center for the
Performing Arts (PCPA). During the workshop staff presented information about the evolution of the
current PCPA operating model, the primary user groups and existing use agreements, as well as the
budgetary challenges with maintaining the ongoing annual operating subsidy (approximately
$700k/annually) and funding upcoming capital projects (approximately $3.3m) including HVAC work,
roofing, and seat replacement. Staff presented several alternate operating models for City Council's
consideration and recommended the Council consider directing staff to meet with Poway Unified
School District (PUSD) to further explore their interest in potentially purchasing the PCPA. Council
directed staff to engage in discussions with PUSD. Within a few months of the workshop, the pandemic
hit and responding to the pandemic became the focal point for both the City as well as PUSD.
During and after the 2019 workshop, the City Council heard from multiple user groups, as well as
Poway residents that there is a strong interest in the City maintaining operational control of the PCPA.
At the July 21, 2020 City Council meeting, Mayor Vaus appointed Deputy Mayor Leonard and
Councilmember Grosch to a new City Council PCPA ad hoc committee intended to meet with user
groups and report back to the City Council on future operations and options for the PCPA. At the
December 1, 2020 City Council meeting the PCPA ad hoc committee provided a brief report out in
which they recommended the City pause negotiations with PUSD for their potential acquisition of the
PCPA and directed staff to work with the ad hoc committee and user groups to develop a more
financially sustainable operating model with the City maintaining ownership and operational control
of the PCPA. Both Deputy Mayor Leonard, as well as Councilmember Grosch indicated that all user
groups should expect changes if the City is going to retain ownership of the facility and reduce the
operating subsidy.
Since December, both the ad hoc committee members, as well as City staff have had multiple
meetings with user groups and stakeholders to discuss ideas and opportunities to transition to a more
fiscally sustainable operating model, as well as fund future capital improvements and improve
operational efficiency while also providing more equitable access to the facility. The focus of this
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workshop is for the City Council to provide direction on several critical decision points. Based on City
Council direction, staff anticipates returning to Council at a future date for action/adoption of the
items discussed.
Recommended Action:
It is recommended that the City Council provide staff with direction regarding the decision points
outlined in this staff report.
Discussion:
The PCPA is a unique performing arts venue in the City of Poway. As described in the previous
workshop, there are three primary user groups of the facility. These groups are Poway OnStage (POS),
the 501 (c)(3) non-profit responsible for the annual professional performance series at the PCPA. PUSD
utilizes the theater for some student instruction, student rehearsals, performances, and other PUSD
functions. Community user groups including theater groups, dance companies, and other performing
arts groups rent the facility for rehearsals and performances. Each of the three user groups has
different priority access to reserve the facility, as well as different fee structures.
The current operating model is the major contributing factor toward what the City Council, the Budget
Review Committee, and staff have identified as an unsustainable annual operating subsidy. Looking
at both projected revenues and expenditures (pre-pandemic), the current annual General Fund
operating subsidy is approximately $700k. The subsidy appeared lower for FY 20-21 due to the City
leaving two positions (notably the PCPA Supervisor) unfilled and unfunded as negotiations with PUSD
for their potential purchase of the facility were ongoing. As described by City staff in multiple budget
presentations, and most recently at the March 2, 2021 City Council meeting, General Fund expenditure
growth is outpacing revenue growth. The City is projecting General Fund deficits over the next several
years unless action is taken to either grow revenues or reduce expenditures or a combination of both.
In order to transition the PCPA to a more financially sustainable operating model, staff has identified
several core decision points outlined below. While the initial decision points are foundational in terms
of the use policy, user group access and cost recovery levels, the remaining decision points are
randomly ordered. They are not ordered based upon one decision point being more important than
another. Staff acknowledges that some of the decisions will be difficult and do have the potential to
impact the operations of some of the City's user groups. The core decision points, are followed by
ancillary decision points.
Use and Use Policy
The current use policy focuses on the PCPA being utilized primarily for arts and education. The
calendaring policy gives first priority access after the City to POS. After they secure performance dates
with artists, dates are then released for PUSD, and then once PUSD makes its selections, dates are
then made available to community user groups. This structure provides maximum flexibility to POS
to book professional performances and work within the artists' tour schedules, however it also
reduces how far in advance PUSD (9 months) and the community groups (6 months) can secure their
desired dates. Through meetings with PUSD and community groups, the ad hoc committee and staff
have heard these groups would like earlier access to secure dates. We have also heard concerns from
POS about how changes to calendaring may impact their ability to secure artists. The current
calendaring process is also extremely staff/time intensive and fees do not reflect this.
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Decision Points: Does the City Council want to maintain the current policy that the priority use
of the PCPA is arts and education programming?
Does the City Council want to revise the existing use policy to allow all three
user groups more equitable access and more advanced confirmation of
calendar dates?
Does the Council want to expand the use policy to allow for uses outside of
arts and education programming including private social functions, business,
and religious uses? Anticipating these uses would have last priority in terms of
calendar access, there are questions about how frequently they would rent
the PCPA for functions. As an example, would a church rent the facility for
services on Sunday mornings if they couldn't book the facility every Sunday for
an extended period of time?
While the PCPA has been closed since March 2020 due to the pandemic, in normal times the facility is
open for public use and rental roughly 220 days a year between late September and June. There are
periods of closure between September and June for annual maintenance and the facility closes during
the summer, additionally the box office is only open on certain days of the week. Many of the closure
dates were established by the City over time in an attempt to contain costs since generally speaking
fees have not been set to fully recover the cost of opening the theater for public use. To put that
another way, it often costs the City more to open the theater for use than the City collects in revenue.
The PCPA staffing model in last full year of operations pre-pandemic (FY 18-19) included the following
regular/benefitted full-time equivalent (FTE) staff members: PCPA Supervisor (currently vacant}, 2
Technical Theater Coordinators, ¾ FTE Front of House Coordinator, ¾ FTE Box Office Coordinator
(currently vacant) and a part-time Administrative Assistant Ill (currently vacant). The pandemic (and
corresponding closure of the PCPA) has allowed for extended vacancies, however when health orders
are lifted and we begin to prepare for re-opening of the PCPA, we will need to determine the
appropriate organizational structure and ensure we have the staff necessary to operate the facility
and provide services to user groups.
Decision Point:
Cost Recovery
Does the City Council want to expand the number of days the PCPA is available
for public use, including opening in the summer? It is still anticipated that there
would be some limited closures for annual maintenance and the major capital
projects that need to be completed in the coming years and have the potential
to require extended closures as well.
As both the City Council Ad Hoc Committee and staff have met with user groups, the number one
question has related to fees and cost recovery and impacts to user groups. While the City Council has
said a greater level of cost recovery is needed, it has not yet defined what an acceptable level of cost
recovery is. The current fee structures for all user groups are intended to recover some portion of
costs, however expenditures currently exceed revenues by approximately $700k annually. For some
perspective, the daily cost for the PCPA can fluctuate from $2,500 to $5,400 based on the formula
utilized for cost-recovery and the City Council decisions on subsidy parameters. If we utilize the FY
18-19 (the last full year of operations pre-pandemic) expense total of $1,191,487 and divide it by the
current 220 days available, the daily rate is $5,415, yet if you spread the costs equally over 365 days,
the result is $3,264 per day. Although it is feasible to expa~d use and utilize the theater more days
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per year, it is important to remember that a portion of these dates may not be rented out. In FY 18-
19, 86% of the 220 available dates were used.
Staff is intentionally seeking policy direction on the acceptable level of cost recovery versus presenting
fee schedules. Council's direction on the cost recovery will drive the fee structures staff brings back to
the City Council for consideration in the future. Based on the anticipated timing of bringing changes
back and allowing all groups time to plan and adjust to changes, staff would recommend most
changes take effect beginning with the 2022-23 performance season which starts in August 2022.
Decision Point How much does the City Council want to reduce the approximately $700k
annually subsidy by and by what time frame?
For example, does the City Council want to reduce the subsidy by 50% in Fiscal
Year 2022-23 Uuly 1, 2022 through June 30, 2023)?
The current fee structure has different rates for private businesses and non-
profits. It does not distinguish between Poway and Non-Poway user groups.
Due to the fact the PCPA has a regional draw, whether the user group is
physically in or out of Poway, does not necessarily indicate where audiences
are coming from, nor does it indicate the residency of participant performers.
Does Council want to maintain the two existing categories? If there is direction
to expand the use policy to include other functions, does Council want to have
different rates for arts and education programming vs. religious uses and
private functions (i.e. a wedding or a corporate type event)?
Should new fees also include a capital component to help offset a portion of
major capital projects that are on the horizon?
Does the City Council want to engage a professional fee consultant to develop
fees consistent with the cost recovery and capital funding direction provided
to staff? If the City Council is interested in engaging a consultant, does the
Council want a consultant who focuses exclusively on fees or a consultant that
perhaps has expertise in the area of performing arts venues? This likely
depends on Council's goals with the fees, a financial consultant would likely
be more focused on cost recovery, whereas a consultant with performing arts
expertise may be more focused on the market and competing venues. In
either approach, staff does anticipate doing a market check, to ensure the
proposed fees are not so far out of market that we lose clients and rental
revenue.
Agreements wl User Groups
The City has agreements in place with POS, as well as PUSD.
POS is responsible for booking the professional performance series offered annually at the PCPA and
enjoyed by Poway residents, as well as individuals throughout the San Diego Region. The current
agreement between the City and POS expires in June 2021. The agreement is structured in such a way
that in return for booking and facilitating the professional performance series, the City provides POS
with multiple benefits, including a direct cash subsidy ($93,350 in the current fiscal year), free office
space at the PCPA, free use of the theater for performances, and free and reduced staff support
charges. Within the last two years POS did add a $3 fee to their tickets that is being transferred to the
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City to put toward capital projects but POS, like all other users, retains all other revenue, minus
handling fees, from their performances.
The City and PUSD entered into a Joint Use Agreement UUA) at the time the PCPA was built 30 years
ago. The facility is unique in that it is on PUSD property but the City owns the building. Generally, per
the terms of the agreement, PUSD has access to 35% of the available annual dates at the PCPA and in
turn pays 35% of specific operating costs. There are however notable exceptions to shared costs
including electricity and major capital projects. The JUA also provides for PUSD paying discounted
hourly rates for staff support of their events. In recent years City staff and PUSD staff have discussed
the need to update theJUA. It was in fact these discussions in 2019 that initially led to PUSD expressing
an interest in purchasing the facility.
Decision Points:
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Does the City Council want staff to negotiate a new agreement with POS?
Alternatively does the Council want to explore other options for booking
professional performance series at the PCPA beginning with the 2022-23
performance season (e.g. issuing an RFP for booking services)? POS would
have the opportunity to submit a proposal. If the City Council does want staff
to negotiate a new agreement with POS, should the new agreement include
any direct or indirect subsidies or should POS be subject to all of the same fees
and charges as all other user groups? Staff conservatively estimates the
combined value of the indirect and direct subsidy to POS as over
$300k/annually. This does not include a contribution to the major capital
projects mentioned in previous sections. In order to fully realize this additional
revenue, either the agreement with POS and/or the PCPA fee structure would
need to be revised to eliminate the cash subsidy, require POS to in some way
pay for their proportionate share of operations and maintenance and all staff
support before and during their season, and pay rental charges for their use
of the facility.
Given that the current agreement with POS expires in June 2021 and staff likely
will not return to Council for action on all fees, agreements, and other related
matters until after June 2021, does the City Council want staff to negotiate a
one-year temporary contract extension with POS? Should that agreement
include any direct cash subsidy? At this point no subsidy is included in the
proposed FY 2021-22 budget due to the fact the current agreement expires at
the end of this fiscal year.
Does the City Council want staff to negotiate a new agreement with PUSD? If
yes, should the agreement include any direct or indirect subsidies or should
PUSD be subject to all of the same fees and charges as all other user groups?
As an alternative to PUSD directly paying the same fees and charges as other
user groups, is the City Council open to alternatives that could include direct
cost sharing of positions or other expenditures. Examples could include PUSD
hiring staff to directly support PCPA operations, and/or collaboration related
to other operating expenses. Staff estimates that if the PUSD agreement was
amended to require them to pay the full 35% cost share (excluding major
capital projects) plus full loaded staff rates, they would be paying the City
approximately $122k more annually between operating and staff expenses.
Major capital projects were excluded from this number due to the fact that
ideally funding for major capital projects would be collected in smaller
April 6, 2021, Item #9
Fund raising
increments over a number of years. Based on the projected $3.3m in major
capital projects, PUSD's 35% cost share would be $1.1 Sm.
PUSD has expressed an interest in more access to the PCPA during both school
days and for evenings. Is the City Council open to providing more access and
under what conditions?
During both ad hoc committee and staff meetings with user groups the concept of fundraising to help
offset both capital and operating expenses, as well as potentially help fund new City programming,
has been raised multiple times. The fundraising discussions can be characterized into two distinct
ideas.
Establishment of an Endowment and/or Capital Campaign
In order for an endowment to generate significant enough interest to meaningfully offset either
operating and/or capital expenses at the PCPA, staff estimates $8-1 Om would need to be raised.
Through one of POS's long-time donors (who also contributed funding toward the construction of the
PCPA), there is the potential of $1 min seed money to the City to establish a new endowment, however
to grow that to $8-1 Om will require a serious commitment by all stakeholders, including City Council
members. Should there be an interest in pursuing this, the first logical step from staff's perspective
would be to engage a professional fundraiser to conduct a feasibility study to see if it is plausible and
if there's commitment to carry out this effort. It is anticipated City staff would serve in a lead role in
coordinating the feasibility study. The POS donor who has indicated the willingness to provide the
endowment seed money is willing to allow some of those funds to be used toward funding the
feasibility study. While it is a POS donor, it would be made abundantly clear that the feasibility study
is being conducted for the City of Poway, it is not in any way a potential fundraising opportunity for
POS.
An alternative to the endowment that theoretically would generate annual interest payments to offset
operation costs, would be a capital campaign solely focused on generating funds toward the $3.3m in
projects that will be needed over the next 3-5 years. The City has identified approximately $1 m in
previously set-aside funds for capital projects that is available for these projects, so a capital campaign
would require significantly less one-time funding (approximately $2.3m) than forming a new
endowment to help with ongoing operating costs.
Decision Point Does the City Council want City Staff to engage the services of a professional
fundraiser to conduct a feasibility study to explore the feasibility of either a
capital campaign and/or fundraising for a new endowment, including the
formation of a stakeholder committee? The feasibility study is anticipated to
cost approximately $30k.
Arts Advisory Committee Concept
Separate from the discussion about an endowment and/or a capital campaign, the ad hoc committee
and staff have also heard from a number of stakeholders that there's an interest in potentially forming
an Arts Advisory Committee. This committee could serve in an advisory capacity to the PCPA similar
to the existing Parks and Recreation Advisory Committee (PRAC). Staff would envision the committee
potentially meeting quarterly or as needed to provide input on best practices and PCPA operations,
as well as potentially plan and support a limited number of special events to promote the arts in
Poway and generate revenue for marketing the arts and potentially funding new family oriented
programming geared toward younger audiences than a professional performance series.
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Decision Point:
Best Practices Research
Does the City Council want staff to pursue the formation of an advisory arts
committee? The PRAC is comprised of 5 residents, as is the Budget Review
Committee. Should the Council want to form an Arts Advisory Committee, staff
would recommend that it too be limited to a relatively small number of
members with performing arts knowledge and experience that are either
residents or representatives from PCPA user groups. Staff does not intend to
propose the addition of any new staff positions as part of this report or future
action, so it is important as direction is provided on follow up actions and roles
and responsibilities associated with this workshop, to consider the impact of
new and expanded duties that may be assigned to existing staff.
In addition to the valuable input both the ad hoc committee and staff have received from user groups
and stakeholders, staff also sees benefit is reaching out to similar venues to learn more about their
organizational structure, fee structure, and overall operations. This research may help inform
decisions related to multiple topics including but not limited to, calendaring/scheduling processes,
staffing, and ticketing and fee structures. It is worth noting that with the pandemic and many arts
facilities being temporarily shutdown with limited staffing, this research may take longer than it would
have pre-pandemic.
Decision Point:
Next Steps
Does the City Council want staff to research similar performing arts venues to
research best practices in place at other facilities that may help improve the
efficiency of PCPA operations, reducing the operating subsidy, and generate
funding for major capital projects? Should the City Council provide direction to
form an Arts Advisory Committee, staff would envision discussing their
findings with the Arts Advisory Committee, to get feedback from committee
members, prior to bringing forward recommendations to the City Council.
This workshop represents an important milestone for future PCPA operations, as the direction
provided by the City Council recognizes the value of the arts in Poway and the value of keeping the
PCPA under City control while charting a course for more financially sustainable operations in the
future.
Based on the direction provided by the City Council on the decision points, staff will begin the work
necessary to bring back items for future City Council consideration. With the exception of specific
items denoted in the report, the intent would be for most changes to be implemented prior to the
2022-23 performance season beginning in July 2022.
Environmental Review:
This report is not subject to review under the California Environmental Quality Act (CEQA).
Fiscal Impact:
There is no direct fiscal impact associated with this report. However, based on City Council direction
on the decision points, follow up items staff will bring back to the City Council for future consideration
have the potential for significant positive fiscal impact to the General Fund.
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Public Notification:
None.
Attachments:
A. Summary PCPA Decision Points
Reviewed/ Approved By:
Wendy Kaserman
Assistant City Manager
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Reviewed By:
Alan Fenstermacher
City Attorney
Approved By:
Ch~
City Manager
April 6, 2021, Item #9
Summary of PCPA Decision Points
Use and Use Policy
1. Does the City Council want to maintain the current policy that the priority use of the PCPA is
arts and education programming?
2. Does the City Council want to revise the existing use policy to allow all three user groups
more equitable access and more advanced confirmation of calendar dates?
3. Does the Council want to expand the use policy to allow for uses outside of arts and education
programming including private social functions, business, and religious uses?
4. Does the City Council want to expand the number of days the PCPA is available for public use,
including opening in the summer?
Cost Recovery
1. How much does the City Council want to reduce the approximately $700k annually subsidy
by and by what time frame?
2. Does Council want to maintain the two existing fee categories (private business and non-
profit)?
3. Does Council want to have different rates for arts and education programming vs. religious
uses and private functions (i.e a wedding or a corporate type event)?
4. Does the City Council want to engage a professional fee consultant to develop fees consistent
with the cost recovery and capital funding direction provided to staff? If yes, the City Council
does the Council want a consultant who focuses exclusively on fees or a consultant that has
expertise in the area of performing arts venues?
Agreements w/ User Groups
1. Does the City Council want staff to negotiate a new agreement with POS? Alternatively does
the Council want to explore other options for booking professional performance series at the
PCPA beginning with the 2022-23 performance season (e.g. issuing an RFP for booking
services)?
2. If the City Council does want staff to negotiate a new agreement with POS, should the new
agreement include any direct or indirect subsidies or should POS be subject to all of the same
fees and charges as all other user groups?
3. Does the City Council want staff to negotiate a one-year temporary contract extension with
POS? Should that agreement include any direct cash subsidy?
4. Does the City Council want staff to negotiate a new agreement with PUSD? If yes, should the
agreement include any direct or indirect subsidies or should PUSD be subject to all of the
same fees and charges as all other user groups?
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5. Is the City Council open to allowing PUSD more access to the PCPA, if yes, under what
conditions?
Fund raising
1. Does the City Council want City Staff to engage the services of a professional fundraiser to
conduct a feasibility study to explore the feasibility of either a capital campaign and/or
fundraising for a new endowment, including the formation of a stakeholder committee?
2. Does the City Council want staff to pursue the formation of an advisory arts committee?
Best Practices Research
1. Does the City Council want staff to research similar performing arts venues to research best
practices in place at other facilities that may help improve the efficiency of PCPA operations,
reducing the operating subsidy, and generate funding for major capital projects?
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