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Home My WebLink About06-1108 Performing Arts Feasibility Study oho- °aS Final Presentation ~"*:_:. .... ....,, Economic Feasibilitof a KA', Performing Arts Center ;:a. . - ,t.• r, r • ;iG ,tom ). :11111 1 .0 t .11101_10_11.-•,... Presented to: � �"'1 The City of Elgin Presented by: °, r-``: . ...... .............. . ics esearA ' Fisher Dachs Associates �..'� . - November 8, 2006 ..,` *i ' 4 r 4:14:::;;.*41P1,, v:11';'—,,,,...1,.. I.L.:5,4;*-.,...:IN--....-: A's . ifil ,.:....,,_ ,..„„,,, .., NM.. . . ..... 0 / Overview • How did we get here? • What did we discover? • What is yet to be discovered ? • Where do we go from here? Key Questions 1 . Population and income growth implications 2 . Does a 2nd or new performing arts venue make sense for Elgin? 3 . If so , what is the impact on the Hemmens? 4 . What is the impact on on-going downtown revitalization? Approach • Demographic and Economic Context • Hemmens Cultural Center Discussion — User / stakeholder interviews — Architectural and physical assessment — Attendance, utilization , revenue and expenses • Regional Competitive Environment • Performing Arts Industry Trends • Architectural Program Options — Baseline / Renovations to the Hemmens — New venue options: Music Hall / Multi-Purpose Hall • Financial Analysis Demographic & Economic Context • Current: 1 5-mile market of 1 .2 million people • Growth : 65, 000 new residents by 2030 — Near-term: Younger families • Beginning a Significant Transition : — Emergence of higher value home construction — Growth in educational attainment and income — Transition from traditional manufacturing • Downtown Implications : — Linkage to downtown housing — Downtown as a regional entertainment and lifestyle destination Existing Conditions - Physical • Current Programming • Recent Physical Analyses: — 1999 Masterplan — 2004 Talaskie Evaluation • Advisable Renovation Considerations: — Patron comfort / front-of-house — Back-of-House / loading dock improvements • Other Renovations Not Considered Feasible: — Acoustical improvements — Audience expansion Existing Conditions - Operations • User Interviews • Venue Utilization 2001 to 2005 : — Growth from 104 to 124 performance days — ESO: Increase from 27 to 34 performances • Dance Competitions Performances / Events , Popular Concerts Dance Groups PAW Local Performing Arts Government ESO Exhibit Space 0 10 20 30 40 50 60 70 80 90 Existing Conditions - Operations • Revenue Per Use Day: — Revenue from popular concerts produced by staff — PAYP remains a highly profitable element Government Revenue Per Use Day Exhibit qpace ESO Local Performing Arts Dance Groups Total Revenue Dance Competitions F�4YP Fbpular Concerts f 1 l $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Existing Conditions - Operations • Attendance : — Over 90,000 people drawn to downtown — Over 70% of visits are by non-residents Popular Concerts Attendance I PAW MEI 1 Local Performing Arts ill= E90 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Existing Conditions _ icket Sales • Red zipcodes : 50 % of ESO ticket sales Top Ten Zip Codes by Ticket Sales 05-06 - ESO k. \ Legend 1-? •• ,••• • Hemmens 5 ) 0 H -99 100_499 BOONE COUNT+ ;ICHEIY CO UNITY:; 1111 500-1 999 IM 2 000-4,800 T nip 10 ESO _ I Au A DEKALB CoUNTY r _ .L7- R A • • • ) PUPAGI COW/Y •I I 0,1 COLINTY V+4 courr E 7v) 0 3 5 7 IE5_4l L, I i 1,11.Mrles COOK r { Chical A • • Existing Conditions - Ticket Sales • Red zipcodes : 50 % of concert sales Top Ten Zip Codes by Ticket Sales 05-06 - Hemmens (Popular) , Legend• f— • Hemmens i .1 1-99 tt, Boone COUNT, MCHENRY COUNTY \ LAKEWOUNTY 100-499 ij q( �•' _500-1.999 2.000-2,173 fir,,-- rajS Top 10 Hemmens x'341 � VOW' r ;-. .._ [Ti • eAde ,1_,-„( corm COUNTY r re -sir, �4UPAGE COUNTY ,.-.ir • 6 1• I 11-y Araw ._ -- _ l - lMI r C a .i _ RENOFLL COGNTY� KALI CO7Y ..- 40 40 ERA e 0, 3.5 t 14 Miles Existing Conditions - Implications • Key Revenue Drivers : — Ticket sales: Growth of 7.5% per year — Concessions: Growth of 19% per year — Overall annual revenue growth of 5% • Key Cost Drivers : — Labor: 48% of operating expenses — Labor Cost growth : 3.5% per year — Utilities: Growth of 20% per year — Special Event expenses: 7% per year — Overall expense growth of 8% per year • Annual operating subsidy:$685, 000 • Regional Competitive Environment • New / expanded attractions since 1990: — Children's museums, town centers, casinos, museums, baseball stadiums, arenas, etc. • New Venues : Region — Renovated LaSalle Bank Theater downtown — New Soccer Stadium for the Chicago Fire • New Venues : Hoffman Estates — Sears Center Arena — 11 ,000 seats — New summer amphitheater — 20,000 seats • New Venues : Schaumburg — A 2,400-seat multipurpose theater planned — If built, a key competitor Core Competitive Venues • Approach compares Hemmens to other venues — Paramount ( 1 ,888 seats) — Rialto Square ( 1 ,900 seats) — Pfeiffer ( 1 ,057 seats), Governors St.( 1 , 171 seats) • Implications : — Market: 10-mile core market of 500,000 people — Hemmens is highly utilized (80% of capacity) — Market penetration is low: Attendance at 13% of market size, pointing to opportunity. x — Seat Count is a clear limitation Symphony Benchmarking • Understand ESO Market Share Potential — Compare ESO to 13 other symphonies — Variables include: Seat count, utilization, market size, market share, total performances, • Implications : — ESO — smallest seat count — Trade area for ESO is the largest — 1 .2 million — ESO is maximizing Hemmens; seat utilization :75% — Market penetration (5%) reflects limited seat count • Comparable market penetration rates: 12% to 18% — Revenue per occupied seat is appropriate ($28) — ESO revenue per concert is the lowest surveyed Symphony Benchmarking Symphony Market Penetration 30% 26% 25% - 20% - 15% - 10% - 5% 0 . 1% % - 5% Ell — 03 c au c c13 u c c L E �LE Z cn 03 ) 'Ln Industry Trends • Report includes relevant background on : — Performing arts — Live music / popular concerts — Attendance trends (NEA) Architectural Program Options • Bid cost / Construction Cost / Project Cost • Music Halls versus multi-purpose performing arts centers — Seat count variation for popular concerts — Cost increment for a trophy architect • Industry trends • Approach Architectural Program Options Renovations to the Hemmens • Front of House — Expanded Lobby — Improved Restrooms — Materials Upgrade • Back of House — Improved Dressing Rooms — Expanded Loading Dock — Increase Stage House Height • Stage Equipment — New Stage Rigging — Modest Upgrade to Stage Lighting • Deferred maintenance and capital upgrades Architectural Program Options A New Music Hall • Front of House — Large Lobbies for Receptions — Catering / Warming Kitchen — Multipurpose Rehearsal Room — Patron's Lounge / Event Room • Back of House — Expanded Off-stage Areas — Dedicated Musical Instrument Storage — Musician Support for Resident and Touring Performers • Stage — 150-seat Choral Terrace — Removable Orchestra Platform System — Over-stage Motorized Rigging — Motorized Stage Lighting System Architectural Program Options A New Multi-purpose Performing Arts Center • Front of House — Large Lobbies for Receptions — Catering / Warming Kitchen — Multipurpose Rehearsal Room — Patron's Lounge / Event Room • Back of House — Dressing Rooms for 60 performers + Orchestra Musicians — Touring Show Support — Large Loading Dock / Assembly Area — Dedicated Musical Instrument Storage • Stage — Orchestra Pit — Full Stage and Fly Tower — Complete Stage Rigging & Lighting Systems — Automated Acoustical Enclosure System Architectural Program Options • Hemmens Renovations : — $25 Million • Music Hall Cost Factors : — Bid Cost: $97 Million — Project Cost: $ 125 Million • Performing Arts Center Cost Factors — Bid Cost: $99 .8 Million — Project Cost: $ 125 Million Financial Analysis - Case Studies • Ownership : municipal to private non-profit • No standards exist for precise comparisons — Architecturally unique buildings — O&M Impact — Revenue from non-theater sources • Full-time staffing : 20 to 46 people • Base rental rates : $ 1 , 000 to $5 , 000 per day • Subsidy: $600,000 to over $ 1 million annually • Business Models : — A volume business — Popular concerts offset enhanced financial support for local performing arts / symphony — Endowment to offset operating deficits Financial Analysis — Options • Option 1 — The Baseline - Existing conditions extended to the year 2010 • Option 2 — A Renovated Hemmens • Option 3 — A renovated Hemmens plus a new 2,000-seat Music Hall . • Option 4 - A renovated Hemmens plus construction of a new 2,000-seat multi-purpose performing arts center. • Option 5 — New Music Hall — This option includes the closure and removal of the Hemmens • Option 6 — New Multi-Purpose Performing Arts Center — This option includes the closure and removal of the Hemmens Financial Analysis - Options 1 & 2 • Current trends are extended to 2010 — Continued growth in utility costs ( 15% per year) — Labor cost growth (4.5%/year), w/current staffing — The venue remains at capacity — 336 events — No change in seat count or improved acoustics • 2010 Implications : — Renovation cost:$25 million — Will not help the ESO grow — Operating deficit growth from $640K to $811 K — Hemmens will require reinvestment if it stays open — Impact on downtown Financial Analysis — Option 3 • New Music Hall Plus Hemmens — ESO & popular concerts shift to new venue — Local events and rentals stay at Hemmens — ESO adds events (36 to 41 performances) — Staffing increases ( 15 to 23 FTE's) — Building size increase to about 169,000 GSF: • Drives O&M / contracted services / Insurance cost growth — Building runs food and beverage service • 2010 Implications : — Event growth to 349 events — Operating deficit increases to $1 ,450,000 — Capital Investment: $150 million Financial Analysis — Option 4 • New Performing Arts Center Plus Hemmens — Assumptions for Option 3 continue, except for: — Seat count increases for popular concerts • 1 ,850 seats to 2,000 seats — Addition of a Broadway Series — Building size increase to about 173,000 GSF: • Drives O&M / contracted services / Insurance cost growth • 2010 Implications : — Growth to 367 events — Operating deficit increases to $ 1 ,265,000 — Capital Cost: $ 150 Million Financial Analysis — Option 5 • Anew Music Hall — Hemmens is no longer used — ESO & popular concerts shift to new venue — A significant number of local events / rentals might no longer be supported — ESO adds events (36 to 41 performances) — Staffing increases ( 15 to 19 FTE's) — Building size increase to about 169,000 GSF: • Drives O&M / contracted services / Insurance cost growth • 2010 Implications : — Growth to 204 events — Operating deficit increases to $ 1 ,200,000 — 2,000-Seat Hall Bid Cost:$ 125 million Financial Analysis — Option 6 • Anew Multi-purpose Performing Arts Center — Hemmens is no longer used — ESO & popular concerts shift to new venue — A significant number of local events / rentals can no longer be supported — A Broadway Series is added — Staffing increases ( 15 to 19 FTE's) — Building size increase to about 173,000 GSF: • Drives O&M / contracted services / Insurance cost growth • 2010 Implications : — Growth to 232 events — Operating deficit increases to $985,000 — 2,000-Seat Hall Cost:$ 125 million Economic and Social Impact • Cities use cultural / performing arts buildings to anchor downtown districts • Hemmens supports downtown restaurants • Anew venue : increase downtown attendance — 50,000 to 60,000 potential downtown visits • Other Benefits : — Continued support for downtown revitalization — Support for the arts & music education — Enhanced quality of life — Enhances Elgin as a residential destination — Linkage with the ESO Core Questions • Will Schaumburg build ? • ESO : Grow programming / market share? • Parking , Parking , and more Parking • Negotiations between City and ESO — New rent structure / financial support — Role in fundraising / development / endowment — Decisions regarding ticketing / box office • Future of Hemmens • Policy Questions : — Funding support for the arts Project Implications • Hemmens has been maximized financially • Hemmens operating deficits will increase, unless significant changes to programming are made to reduce operating expenses • If Hemmens programming is reduced , the value of the venue to downtown will also decrease • It is unclear if the city can financially sustain operation of two performing arts centers • Capital costs to renovate Hemmens and build a new venue would appear prohibitive • A new performing arts center is one of multiple steps that should be taken to strengthen downtown as a unique urban destination • Opportunity cost Questions ?