Community Events and Cultural Center Market Study Highlands Ranch, Colorado

COMMUNITY EVENTS AND CULTURAL CENTER MARKET STUDY HIGHLANDS RANCH, COLORADO

SUBMITTED TO Highlands Ranch Community Association

SUBMITTED BY Johnson Consulting

DATE August 4, 2017

TABLE OF CONTENTS

SECTION 1 TRANSMITTAL LETTER

SECTION 2 INTRODUCTION AND EXECUTIVE SUMMARY ...... 1

SECTION 3 MARKET ANALYSIS ...... 5

SECTION 4 INDUSTRY TRENDS & COMPARABLE FACILITIES ANALYSIS ...... 23

SECTION 5 INTERVIEW SUMMARY, REGIONAL FACILITY ANALYSIS, SURVEY & PRELIMINARY RECOMMENDATIONS ...... 37

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected]

SECTION 1 TRANSMITTAL LETTER

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected]

August 4, 2017

Jamie H. Noebel Director of Community Relations & Events Highlands Ranch Community Association 9568 University Boulevard Highlands Ranch, Colorado 80126

Re: Feasibility Study – Proposed Highlands Ranch Community Events and Cultural Center

Dear Ms. Noebel:

C.H. Johnson Consulting, Inc. (Johnson Consulting) is pleased to submit this report to the Highlands Ranch Community Association regarding the feasibility study for a Community Events and Cultural Center in Highlands Ranch. Pursuant to our engagement, this report represents Phase I of the study, providing an analysis of the economic and demographic characteristics of the community of Highlands Ranch, Douglas County, as well as the broader region; an analysis of trends in events center and performing arts center facilities; identifies and analyzes key characteristics of comparable and competitive venues; provides a regional facility analysis and community survey; and preliminary recommendations.

Johnson Consulting has no responsibility to update this report for events and circumstances occurring after the date of this report. The findings presented herein reflect analyses of primary and secondary sources of information. Johnson Consulting used sources deemed to be reliable, but cannot guarantee their accuracy. Moreover, some of the estimates and analyses presented in this study are based on trends and assumptions, which can result in differences between the projected results and the actual results. Because events and circumstances frequently do not occur as expected, those differences may be material. This report is intended for the clients’ internal use and cannot be used for project underwriting purposes without Johnson Consulting’s written consent.

We have enjoyed serving you on this part of our assignment and look forward to proceeding into Phase II of our analysis.

Sincerely,

DRAFT C.H. Johnson Consulting, Inc.

SECTION 2 INTRODUCTION AND EXECUTIVE SUMMARY

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected] Section 2 Introduction and Executive Summary | August 2017 Community Events and Cultural Center Market Study – Highlands Ranch, Colorado

PAGE 1

INTRODUCTION Johnson Consulting was retained by the Highlands Ranch Community Association (HRCA) to evaluate the market and perform a financial feasibility study for a new Community Events and Cultural Center in Highlands Ranch, Colorado and to find a location suitable to serve its purpose. The study aims to empower the HRCA and its proposed partner in the project, St. Luke’s Performing Arts Academy (PAA), to confidently make the most informed decisions about the viability, as well as the sustainability of this potential new community event and performing arts center.

OBJECTIVES In order to assess the opportunity for a new Community Events and Cultural Center (CECC) in Highlands Ranch, Johnson Consulting has prepared a two-phased study that addresses the following questions:

1. Market and Industry Potential: What is the overall potential of the proposed facility? Which existing and proposed venues will the facility compete with, or complement? Who will utilize the facility and what are their needs, desires, and expectations?

2. Program Considerations: What size should the facility be? What physical attributes should the facility have? What is the facility’s optimal configuration to capitalize on market trends and ensure flexible use of space? How many parking spaces are required to support the recommended program of spaces? What are site options?

3. Operations: How will the facility operate from a demand and financial perspective, as well as from a management and business-planning standpoint?

4. Funding: What funding mechanisms are available to the proposed facility?

This report documents Phase I of the study, which includes an analysis of the economic and demographic characteristics of Highlands Ranch, Douglas County, as well as the broader region; an analysis of trends in events center and performing arts center facilities; identifies and analyzes key characteristics of comparable and competitive venues; provides a regional facility analysis and community survey; and preliminary recommendations.

METHODOLOGY In order to complete the analysis required for Phase I of this study, Johnson Consulting performed the following tasks:

1. Interviewed and surveyed various Client representatives, and event facility operators and managers, along with other relevant stakeholders and representatives, in order to gather information about expectations for the proposed project.

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2. Examined and projected regional economic and demographic trends that may influence demand for the proposed venue.

3. Examined industry trends relevant to events center and performing arts center development, such as industry growth sectors, including education programming, theater, music, and family events, promoter trends, venue selection criteria, overall industry health, and other factors that will influence the success of this project and influence demand for the proposed venue.

4. Identified and examined relevant regional and national comparable facilities, analyzing the historical utilization and compiling statistical data on the size, quality, location, and performance of these facilities, including demand and operating information, as well as the impact to the region.

5. Conducted a regional facility analysis analyzing the current and proposed inventory of arts, cultural, and event facilities. Developed and administered a community survey to gauge the desirability of the project and the program needs that would supplement existing cultural and event activity. Approximately 5,445 responses were received.

EXECUTIVE SUMMARY Highlands Ranch has many of the key characteristics and requirements necessary to support a new Community Events and Cultural Center. Among the most important characteristics observed is a significant surrounding area population of nearly 1.5 million within a 30-minute drive-time of Highlands Ranch; a highly- educated population, a median household income well above the national average and a lack of facilities that offer educational classes, training, and cultural and event programming. The Parker Arts, Culture and Events Center (PACE) in Parker is relatively far and The Lone Tree Arts Center in Lone Tree doesn’t offer the programming that is being contemplated for Highlands Ranch.

While these factors can’t guarantee the success of the proposed Community Events and Cultural Center, they are certainly necessary prerequisites. There is a strong correlation between education and the pursuit of arts and cultural activities. This is evident by the number of arts groups that exist in the community and the purposeful steps taken by community leaders to evaluate the merits of developing the proposed Community Events and Cultural Center. These types of venues thrive in areas with residents that have disposable income and ample free-time to participate in arts and cultural events.

Highlands Ranch is well positioned to serve a broad regional area with not only educational programming and classes, but also events and activities that will be an important part of the financial plan for the proposed Community Events and Cultural Center. Highlands Ranch’s strengths to support such a facility include:

§ High quality of life and a strong arts community, § Growing population in the region and continued growth and development,

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§ Highly educated population, § Substantial median household income, § Strong and growing corporate base, and § Psychographic tapestry segmentation that has a variety of different groups of which a majority are potential users and participants in the arts community.

Surveys and interviews reveal that Highlands Ranch, as a community, is very involved in the arts and that the Highlands Ranch community currently uses Lone Tree Arts Center, the Parker Arts, Culture and Events Center, and downtown Denver cultural venues for professional and presented performances. In Highlands Ranch currently, the Southridge Recreation Center is the primary HRCA arts venue for residents. It has seven rooms with range in capacity from 20 to 325 people in the Auditorium. These rooms are very heavily used and limited in the total number of rooms and capacities offered.

Both the Lone Tree Arts Center and the Parker Arts, Culture and Events Center are subsidized with support for debt service and annual operating support. This indicates to us that additional PAC venues with a focus on commercially produced live performances is not viable, as it currently exists in close proximity and is significantly subsidized in those neighboring markets. Arts education programming, and facilities to support it, appears to be the gap that exists in the market and what is desired from a community needs perspective. It should also be noted that there is significant competition for dates at both of these facilities as well as school and church facilities in the area, further emphasizing the need for the proposed Community Events and Cultural Center.

There are several arts organizations in Highlands Ranch that offer educational programming but are currently hindered by the lack of available public facilities for rent. They use Churches and High Schools, when available. The PAA has also indicated their interest in serving as an anchor tenant for the proposed venue. The PAA and other organizations have indicated that there is an opportunity to draw in users from a wide geographic area, not just Highlands Ranch, which is important for revenue generation and also brings in outside dollars to the community. From a facility perspective, Valor School has a 100,000-square foot arts center that is an excellent model for an educationally based arts venue, but it is consumed by its own school use. Significant capital costs and land needs are involved with development of a project of this scale.

Having a venue that the HRCA community events can use and provide programming for residents would help to further formalize their event activities and engagement with residents. Both the interviews with arts organizations and event planners and the regional facility analysis indicate that there is a shortage of facilities in the 500 to 1,500-seat range for a public assembly venue. This conclusion is also supported by the facility inventories of similar markets nationally that all support two to three times the inventory of facility space that are purpose built, public venues in the 500 to 1,500-seat range.

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From the survey that was conducted, a majority of respondents support the development of the proposed Community Events and Cultural Center and just over 20 percent of respondents were undecided. It is our experience that as the facility concept is further defined and its business model is developed, a strong majority of undecided respondents convert to supporters for these types of projects. It will be important for the HRCA and arts organizations participating in advancing this project to develop an outreach and communication plan that effectively communicates the scope of the project, who it will serve, and how it will be operated.

Based on the market analysis, we see a clear need for an events/performance/cultural arts center for Highlands Ranch, based on the following merits:

§ 750-seats is recommended (500-seats on main level and 250-seats on a balcony), with a multi-purpose space black box theater and event space, rehearsal and class room space, and appropriate amount of lobby and support spaces. § Both Lone Tree and Parker are subsidized with support for debt service and annual operating support. § This indicates to us that additional PAC venues with a focus on commercially produced live performances is not viable, as it currently exists in close proximity and is significantly subsidized in those neighboring markets. § Arts education programming, and facilities to support it, appears to be the gap that exists in the market (and region) and what is desired from a community needs perspective. Through the survey and additional market research, we have validated this assumption. § PAA’s education programming and plan to scale up their operations significantly sets a good foundation for an anchor tenant relationship with Highlands Ranch. § County most likely to support educational centered program to service senior population.

We recommend proceeding to Phase II of this study to develop additional understanding relating to a detailed program of spaces, potential sites, business and operating model, financial projections, and cost estimates.

SECTION 3 MARKET ANALYSIS

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected] Section 3 Market Analysis | August 2017 Community Events and Cultural Center Market Study – Highlands Ranch, Colorado

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MARKET ANALYSIS In order to analyze the feasibility of a Highlands Ranch Community Events and Cultural Center facility in Highlands Ranch, Colorado, Johnson Consulting assessed the market conditions in Highlands Ranch and Douglas County, relative to the broader Denver metropolitan area, as well as State and national averages. The key objectives of this analysis are to identify demographic and cultural trends, strengths and weaknesses that may affect the market’s ongoing competitive opportunities and liabilities, and to gauge the level of support that exists for a new events and arts facility.

While characteristics such as population, education, employment and income are not strict predictors of the performance of events and art centers, they provide insight into the capacity of a market to provide ongoing support for facilities and activities. In addition, the size and role of a marketplace, its civic leadership, proximity to other metropolitan areas, transportation concentrations, and the location of competing and/ or complementary attractions, directly influence the scale and quality of facilities that can be supported within that particular market.

MARKET OVERVIEW AND PROJECT DESCRIPTION Highlands Ranch is located 12 miles south of Denver, Colorado, the State’s largest city. A western portion of the Highlands Ranch community boundary limit is made up by Chatfield State Park. Highlands Ranch borders other Denver suburbs including Littleton and Centennial to the north and Acres Green and Lone Tree to the east.

Figure 3-1

A non-profit organization serving 34,500 homes, the Highlands Ranch Community Association (HRCA) and the St. Luke’s Performing Arts Academy (PAA), are looking into the feasibility and market opportunities for

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an arts, cultural, and events facility that would cater to residents, arts organizations, and businesses and provide significant arts education opportunities ranging from children to senior citizens, serve as a home for some of the more than 100 community events that the HRCA hosts every year, and provide an event space for corporate and social events. The project is envisioned to have a 750-seat main performance hall that will be the primary venue of a larger building with additional facilities, such as classrooms, dance studios, meeting and rehearsal space.

The Highlands Ranch Community Events and Cultural Center will provide a formalized place for a broad range of artistic performances, learning and social events activity to occur in the community, which is said by local arts groups and residents to be currently lacking. This venue will fit in very well with current events and programs held in the community and will be a very popular attraction for community members and children and seniors interested in the arts.

CURRENT POPULATION In 2016, Highlands Ranch had a resident population of 104,500, representing approximately one third of the population in Douglas County (323,400 people). Between 2000 and 2016, the City’s population grew by 47 percent, a significant increase, which was lower than the growth recorded in Douglas County as a whole (84 percent), but higher than the Denver-Lakewood-Aurora Metropolitan Statistical Area (MSA) (27 percent) and the State of Colorado (26 percent), and the United States (15 percent). Population and its growth rates in City, County, MSA, and selected areas can be observed in Table 3-1 below. Of particular note is the significant population base within a 60-miute drive time, with nearly 3.2 million people and the rate at which the metropolitan area of Denver has grown and continues to grow.

Table 3-1

Highlands Ranch, Colorado Historic and Current Population (2000-2016) % Growth CAGR* CAGR* 2000 2010 2016 2000-2016 2000-2010 2010-2016 United States 281,421,906 308,745,538 323,580,626 15% 0.9% 0.8% Colorado 4,301,261 5,029,196 5,425,481 26% 1.6% 1.3% Denver, CO MSA 2,179,469 2,543,482 2,778,258 27% 1.6% 1.5% Douglas County, CO 175,789 285,465 323,387 84% 5.0% 2.1% Highlands Ranch, CO 71,289 96,713 104,476 47% 3.1% 1.3% 30-Minute Drive Time 1,146,715 1,355,487 1,474,982 29% 1.7% 1.4% 60-Minute Drive Time 2,496,081 2,925,650 3,196,552 28% 1.6% 1.5% 90-Minute Drive Time 3,287,870 3,887,097 4,246,704 29% 1.7% 1.5%

*Compounded Annual Growth Rate Sources: Johnson Consulting, Esri ArcGIS BAO

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PROJECTED POPULATION GROWTH The population of Highlands Ranch is projected to grow to 110,145 by 2021, representing an annual growth rate of 1.1 percent. This is lower than rates of growth projected for the County (2.4 percent), MSA (1.7 percent), State (1.5 percent), but higher than national projections (0.8 percent).

Table 3-2

Highlands Ranch, Colorado Projected Population Growth (2016-2021) % Growth CAGR* 2016 2021 2016-2021 2016-2021 United States 323,580,626 337,326,118 4% 0.8% Colorado 5,425,481 5,831,123 7% 1.5% Denver, CO MSA 2,778,258 3,026,079 9% 1.7% Douglas County, CO 323,387 363,777 12% 2.4% Highlands Ranch, CO 104,476 110,145 5% 1.1% 30-Minute Drive Time 1,474,982 1,606,508 9% 1.7% 60-Minute Drive Time 3,196,552 3,481,940 9% 1.7% 90-Minute Drive Time 4,246,704 4,618,615 9% 1.7%

*Compounded Annual Growth Rate Sources: Johnson Consulting, Ersi ArcGIS BAO

Longer-term projections for Colorado show that the State’s population will increase at an annual rate of .9 percent between 2020 and 2030, which is slightly higher than the projected rate of growth throughout the U.S., 0.8 percent, during the same period.

Table 3-3

Colorado State Projected Population (2020-2030)

CAGR* 2020 2025 2030 2020-2030

United States 335,804,546 349,439,199 363,548,443 0.8% Colorado 5,278,867 5,522,803 5,792,357 0.9%

*Compounded Annual Growth Rate Sources: Johnson Consulting, U.S. Census Bureau

AGE CHARACTERISTICS The age characteristics of Highlands Ranch are similar to those of Douglas County, the Denver MSA, Colorado, and the U.S. Highlands Ranch is made up of a slightly higher proportion of residents 0-44 years of age (63.1 percent) in comparison to the County (62.5 percent), the MSA (61.7 percent), the State (60.7

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percent), and nation (58.8 percent). There is also a higher than average band of residents in Highlands Ranch and Douglas County in the 35 to 54 age categories.

Table 3-4

Highlands Ranch, Colorado Age Distribution (2016)

Highlands Douglas United Denver MSA Colorado Ranch, CO County, CO States

0-4 7.1% 7.0% 6.6% 6.4% 6.2% 5-9 8.8% 8.5% 6.8% 6.6% 6.3% 10-14 9.2% 9.0% 6.8% 6.6% 6.5% 15-24 11.6% 11.6% 12.6% 13.5% 13.6% 25-34 9.8% 10.4% 14.7% 14.2% 13.6% 35-44 16.6% 16.0% 14.2% 13.4% 12.6% 45-54 16.5% 16.0% 13.5% 13.3% 13.3% 55-64 11.5% 12.2% 12.4% 12.8% 12.8% 65-74 5.7% 6.5% 7.5% 8.0% 8.8% 75-84 2.3% 2.2% 3.3% 3.6% 4.3% 85+ 0.9% 0.7% 1.4% 1.5% 1.9% Total 104,475 323,387 2,543,482 5,425,481 323,580,626

Sources: Johnson Consulting, Ersi ArcGIS BAO

MEDIAN AGE In 2016 the median age of Highlands Ranch residents was 37.2 years, which is right around the middle of the surrounding areas of Douglas County (37.4 years), the MSA (36.6 years), State (36.9 years), and the U.S. (38.0 years). Between 2010 and 2016, the median age in Highlands Ranch increased a total of 1.1 years, which was higher than growth recorded in the County (1.0 years), State (.8 years), MSA and U.S. (both growing 0.9 years).

Going forward, the median age of residents of Highlands Ranch is expected to increase to 39.4 years by 2021. This represents a 1.2 total growth in years from 2016, which is much faster than growth forecasted in the County (0.6 years), MSA (0.5 years), the State (0.5 years), and the U.S. (0.7 years).

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Table 3-5

Highlands Ranch, Colorado Median Age (2010-2021) Growth Growth 2010 2016 2021 2010-2016 2016-2021 United States 37.1 38.0 38.7 0.9 0.7 Colorado 36.1 36.9 37.5 0.8 0.6 Denver, CO MSA 35.7 36.6 37.1 0.9 0.5 Douglas County, CO 36.4 37.4 38.0 1.0 0.6 Highlands Ranch, CO 36.1 37.2 38.4 1.1 1.2 30-Minute Drive Time 36.3 37.2 37.8 0.9 0.6 60-Minute Drive Time 35.5 36.4 37.0 0.9 0.6 90-Minute Drive Time 35.4 36.3 36.8 0.9 0.5

Sources: Johnson Consulting, Ersi ArcGIS BAO

EDUCATIONAL ATTAINMENT Residents of Highlands Ranch and Douglas County are well educated compared to the MSA, State, and the U.S. as a whole. Of the City’s population aged 25 years and older, over half (63.4 percent) hold a Bachelor’s degree or higher, compared to 57.3 percent of the County, 41.0 percent of the MSA, 38.7 percent of the State, and 30.4 percent of the U.S.

Education levels are one of the strongest predictors of participation in the arts and cultural events, as has been identified by the National Endowment of the Arts. This bodes very well for Highlands Ranch given that greater than 60 percent of its population base over 25 hold a bachelor’s degree or higher.

Table 3-6

Highlands Ranch, Colorado Educational Attainment 25+ (2016)

Highlands Douglas United Denver MSA Colorado Ranch, CO County, CO States

Less than High School 1.5% 2.5% 10.0% 9.4% 13.8% High School Graduate 11.5% 13.3% 20.7% 21.9% 27.6% Some College, No Degree 17.5% 19.1% 20.8% 21.8% 20.9% Associates Degree 6.1% 7.7% 7.5% 8.2% 8.2% Bachelor's Degree 41.2% 38.1% 26.0% 24.1% 18.8% Graduate Degree 22.2% 19.2% 15.0% 14.6% 11.6%

Sources: Johnson Consulting, Ersi ArcGIS BAO

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EMPLOYMENT In 2016, the predominant industry of employment in Highlands Ranch was the Services Industry (44.0 percent of those employed in Highlands Ranch), followed by Retail and Trade (27.5 percent) and Finance, Insurance & Real Estate (10.5 percent). Services also makes up the largest percentage of the 4,780 employers in Highlands Ranch (18.1 percent)

Table 3-7

Highlands Ranch, Colorado Labor Summary* (2016)

Sector Businesses Employees # % # % Other Services 695 25.8% 4,780 18.1% Education Institutions & Libraries 62 2.3% 2,741 10.4% Eating and Drinking Places 131 4.9% 2,608 9.9% Health Services 165 6.1% 2,083 7.9% Construction 228 8.5% 1,643 6.2% Food Stores 45 1.7% 1,386 5.2% Motion Pictures & Amusements 102 3.8% 1,275 4.8% Real Estate, Holding, Other investment offices 140 5.2% 1,271 4.8% Manufacturing 67 2.5% 1,210 4.6% Miscellaneous Store Retailers 131 4.9% 900 3.4% Home Improvement 48 1.8% 858 3.2% Banks, Savings and Lending Instituitions 133 4.9% 605 2.3% Securities Brokers 49 1.8% 540 2.0% Automotive Services 75 2.8% 531 2.0% Furniture and Home Furnishings 73 2.7% 501 1.9% Agriculture and Mining 64 2.4% 498 1.9% Transportation 58 2.2% 493 1.9% General Merchandise 10 0.4% 463 1.8% Auto Dealers, Gas Stations 40 1.5% 463 1.8% Wholesale Trade 57 2.1% 385 1.5% Insurance Carriers and Agents 69 2.6% 359 1.4% Government 14 0.5% 266 1.0% Communication 25 0.9% 190 0.7% Legal Services 23 0.9% 121 0.5% Hotels and Lodging 9 0.3% 113 0.4% Total** 2,689 100.0% 26,450 100.0% *Sectors w/ 100+ employees **Including sectors w/ less than 100 employees Sources: Ersi BAO and Johnson Consulting

Douglas County’s labor force make-up is similar to that of Highlands Ranch. The Services, Retail Trade, and Finance, Insurance and Real Estate industries are among the top employers and employees throughout the county.

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Table 3-8

Douglas County, Colorado Labor Summary* (2016)

Sector Businesses Employees # % # % Other Services 2,631 23.1% 19,691 16.0% Eating and Drinking Places 555 4.9% 10,665 8.7% Health Services 808 7.1% 9,004 7.3% Banks, Savings and Lending Instituitions 496 4.4% 8,465 6.9% Education Instituitions and Libraries 198 1.7% 7,768 6.3% Construction 1,052 9.2% 6,663 5.4% Government 171 1.5% 6,172 5.0% Motion Pictures and Amusements 411 3.6% 5,512 4.5% Miscellaneous Store Retailers 568 5.0% 5,135 4.2% Furniture & Home Furnishings 282 2.5% 4,794 3.9% Real Estate, Holding, Other Investment Offices 573 5.0% 4,404 3.6% Manufacturing 259 2.3% 4,260 3.5% General Merchandise Stores 60 0.5% 4,220 3.4% Food & Beverage Stores 167 1.5% 3,517 2.9% Wholesale Trade 287 2.5% 3,026 2.5% Agriculture & Mining 325 2.9% 2,730 2.2% Communication 110 1.0% 2,552 2.1% Home Improvement 142 1.2% 2,200 1.8% Apparel & Accesory stores 174 1.5% 2,080 1.7% Auto Dealers, Gas Stations 166 1.5% 1,892 1.5% Insurance Carriers and Agents 311 2.7% 1,718 1.4% Automotive Services 277 2.4% 1,638 1.3% Securities Brokers 208 1.8% 1,243 1.0% Transportation 204 1.8% 1,198 1.0% Total** 11,391 100.0% 123,244 100.0% *Sectors w/ 1,000+ employees **Including sectors w/ less than 1,000 employees Sources: Ersi BAO and Johnson Consulting

The following table shows the annual unemployment rates for Douglas County, Denver MSA, Colorado, and the U.S., for the period of 2000 through 2016, where data is available. City level data is not available for Highlands Ranch.

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Table 3-9

Douglas County, Denver, Colorado Unemployment Rate* (2000-2016)

United Denver Douglas Year Colorado States MSA County, CO

2000 4.0% 2.7% 2.6% 2.3% 2001 4.7% 3.8% 3.8% 3.8% 2002 5.8% 5.6% 5.8% 5.4% 2003 6.0% 6.0% 6.3% 5.3% 2004 5.5% 5.5% 5.7% 4.8% 2005 5.1% 4.9% 5.1% 4.3% 2006 4.6% 4.2% 4.4% 3.8% 2007 4.6% 3.8% 3.8% 3.7% 2008 5.8% 4.9% 4.9% 4.7% 2009 9.3% 7.6% 7.5% 6.4% 2010 9.6% 8.8% 8.7% 7.1% 2011 8.9% 8.3% 8.3% 6.8% 2012 8.1% 7.8% 7.7% 6.3% 2013 7.4% 6.7% 6.6% 5.5% 2014 6.2% 4.9% 4.8% 4.3% 2015 6.4% 3.8% 3.7% 3.1% 2016 4.8% 3.3% 3.1% 2.2% *Average Annual Rate (seasonally unadjusted). Sources: U.S. Bureau of Labor Statistics, Ersi BAO, Johnson Consulting

Between 2000 and 2016, unemployment rates in Douglas County were consistently lower than MSA, State and national averages. In 2016, Douglas County, reached its lowest unemployment rate over the 15-year period (2.2 percent) and this rate was still comparatively lower than Denver MSA’s (3.1 percent), the state (3.3 percent), or the national unemployment rate (4.8 percent). Since 2010, data for Douglas County, Denver MSA, Colorado, and the U.S. have displayed a downward trending unemployment rate and emphasizes the high competition for skilled and qualified labor.

HOUSEHOLD INCOME In 2016, the median household income in Highlands Ranch was $111,519 per annum. This local figure is larger than Douglas County ($105,985) and significantly larger than the Denver MSA ($65,777), the State of Colorado ($60,903), and the United States ($54,149). For a sense of overall wealth for the County, according to Forbes, in 2017 Douglas County is the 5th wealthiest county in the U.S. By 2021 the median household income in Highlands Ranch is expected to reach $118,229. This represents a rate of growth of 1.2 percent, which is below the rate projected for the County (1.4 percent), MSA (3.0 percent), State (2.7 percent), and the U.S. (1.9 percent).

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Like educational attainment, household income is also a key predictor of participation in the arts and cultural activities. Given Highlands Ranch’s significant household income of over $110,000, this indicates that there is disposable income available for non-essential items and activities, including arts and entertainment. The household income drops to about $66,000 in an hour drive time, which is still a very healthy income level.

Table 3-10

Highlands Ranch, Colorado Median Household Income (2016-2021) CAGR* 2016 2021 2016-2021 United States $54,149 $59,476 2% Colorado $60,903 $69,620 3% Denver, CO MSA $65,777 $76,246 3% Douglas County, CO $105,985 $113,384 1% Highlands Ranch, CO $111,519 $118,229 1% 30-Minute Drive Time $70,479 $79,941 3% 60-Minute Drive Time $66,841 $77,193 3% 90-Minute Drive Time $64,864 $75,575 3%

*Compounded Annual Growth Rate Sources: Esri ArcGIS BAO, Johnson Consulting

MARKET TAPESTRY The demographic analysis featured in the pages above provides an accurate overview of each geographic jurisdiction and its associated economic and demographic traits, but it fails to determine what type of consumer resides in these areas and their psychographic traits such as activities, interests, and opinions. By using Tapestry breakdowns, that classify certain consumers based on the demographic and socioeconomic factors, we are able to better understand what type of consumer would be engaging in economic activity at the proposed Highlands Ranch Community Events and Cultural Center (CECC). When examining the 10 and 20-mile-radii from Highlands Ranch there are several tapestry segments that are most prevalent, including:

YOUNG AND RESTLESS: Median Age 29.4, Median Household Income $36,000, Average Household Size 2.02. These consumers are well-educated young workers though not yet established.

PROFESSIONAL PRIDE: Median Age 40.5, Median Household Income $127,000 Average Household Size 3.11. These consumers are well-educated professionals that have prospered and maintain upscale suburban lifestyles.

SAVVY SUBURBANITES: Median Age 44.1, Median Household Income $104,000, Average Household Size 2.83. These consumers are well-educated, well read and well capitalized and either empty nesters or have adult children living at home.

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BOOMBURBS: Median Age 33.6, Median Household Income $105,000, Average Household Size 3.22. These consumers are young professionals with families that have opted to trade up to the newest housing in the suburbs.

EMERALD CITY: Median Age 36.6, Median Household Income $52,000, Average Household Size 2.05. These consumers are Young and mobile, traveling often and more likely to rent with income close to US median.

BRIGHT YOUNG PROFESSIONALS: Median Age 22.2, Median Household Income $50,000, Average Household Size 2.40. These consumers are young and diverse, have a low net-worth, and are considered fashionable and trendy.

Table 3-11

Highlands Ranch Tapestry Breakdown

Highlands Ranch 10-Mile Highlands Ranch 20-Mile United States Radius Radius Tapestry Population Population Population Tapestry Segmentation Index* Index* Category Percentage Percentage Percentage Young And Restless Midtown Singles 9.7% 565 6.8% 399 1.7% Professional Pride Affluent Estates 8.6% 534 4.9% 308 1.6% Savvy Suburbanites Affluent Estates 8.3% 280 4.7% 157 3.0% Boomburbs Affluent Estates 6.6% 425 6.5% 421 1.5% Emerald City Middle Ground 5.5% 390 5.1% 360 1.4% Bright Young Professionals Midtown Singles 5.1% 230 4.1% 183 2.2%

*Index is a comparison of the percent of households in the area, by Tapestry segment, to the percent of households or population in the United States, by segment. An index of 100 is the U.S. average. Sources: STDB

The highest concentrated tapestry segment in Highlands Ranch is the Young and Restless Classification with 9.7 percent of the population within a 10-mile radius of Highlands Ranch belonging to this consumer classification. The second largest segment is the Professional Pride tapestry, which makes up 8.6 percent of the population within a 10-mile radius of Highlands Ranch, followed by Savvy Suburbanites with 8.3 percent of the population.

The index for each of the six top ranked categories is also significantly higher than the U.S. average of 100 for each tapestry category providing a sense of overall robustness compared to the national average. One notable observation from this tapestry analysis is that three of the top six tapestry segmentations fall under the category of “Affluent Estates” and account for 23.5 percent of population in a 10-mile radius. People in this category are generally more inclined to use and support a performing arts center in their community. Based on the tapestry analysis in Table 3-11, the Affluent Estates tapestry segments are highly likely to use and

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support a proposed events and cultural facility in Highlands Ranch and have an index rating several times higher than the national average

CORPORATE PRESENCE A strong corporate and business presence can be an important factor in the success of Highlands Ranch CECC, particularly through potential sponsorship opportunities and support of programming and educational activities. The following table shows the largest employers in Douglas County. As shown, the largest employers are spread across a number of industries, with an emphasis on Financial Services and Healthcare. The largest employer in Douglas County is Charles Schwab, with over 3,000 people. The remaining top 10 employers in Douglas County come from industries such as, Financial Services, Healthcare, Satellite TV and Equipment, Engineering & Architectural Services, Debt Collection Services, Indexed Technical Data, Transaction Processing.

Table 3-13

Douglas County Top 10 Largest Employers

Number of Employer Industry Employees

Charles Schwab Financial Services 3,200 DISH Network Satelite TV and Equipment 2,320 CH2M Engineering & Architectural Services 1,610 Western Union Financial Services 1,600 Centura Health Healthcare 1,560 HealthONE:Sky Ridge Medical Center Healthcare 1,400 TriZetto Corporation Healthcare software 1,000 Specialized Loan Servicing LLC Debt Collection Services 950 IHS INC Indexed Technical Data 950 VISA Debit Processing Services Transaction Processing 910

Sources: Johnson Consulting, Economic Development Board for Metro Denver

ACCESSIBILITY Located approximately 30 minutes’ drive time from downtown Denver, Highlands Ranch is accessible by various modes of transportation and as such can draw visitors from a wide catchment area:

§ Airports: Denver International Airport (DIA) is located approximately 40 minutes’ drive time east of Denver. DIA is ranked as the largest airport in the U.S. in terms of total land area and 6th busiest in

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U.S. serving over 58 million passengers in 2016. DIA is the main hub for Frontier Airlines, Great Lakes Airlines and popular connection point for Southwest and United. It is served by all major airlines.

§ Transit: The Regional Transportation District provides, light rail, train, and bus services throughout the Denver Metropolitan area. Regular services connect Highlands Ranch, the airport, and downtown Denver. There is currently an ongoing campaign for expansion of the transit system.

§ Road: Highlands Ranch is served by State Highway 177, which runs in the North-South direction and State Highway 470 which runs West-East and connects Highlands Ranch east to Interstate 25 that many people would use to get to Denver.

HOTEL INVENTORY The following table summarizes the largest hotels in the Highlands Ranch area. As shown, the largest hotel is the 128 guest room Hilton Garden Inn. Overall, there are just over 433 hotel rooms in the area that would be available to visitors of Highlands Ranch.

Table 3-14

Highlands Ranch Area Hotel Inventory

Hotels* # of Rooms Hilton Garden Inn Denver/Highlands Ranch 128 Residence Inn by Marriot Highlands Ranch 117 Home2 Suites by Hilton/Highlands Ranch 115 Comfort Suites Highland Ranch 73 Total 433

*Hotels w/ 70 + rooms in Highlands Ranch Sources: Mpoint, Hotel Websites, and Johnson Consulting

EVENT AND CULTURAL SPACE INVENTORY

Highlands Ranch Mansion: The Highlands Ranch Mansion is the namesake of Highlands Ranch and is a mansion that sits on a 250-acre ranch. The Mansion is currently owned and operated by the Highlands Ranch Metro District and as of 2010 the facility underwent $6 million in renovations before being reopened in 2012. The Mansion hosts various community events year-round including weddings, conferences, fundraisers, and some HRCA events. The Mansion has a 5,000-square foot Great Hall as well as several other large conference rooms. The Great Hall has a capacity of approximately 220 people. Listed below is the Highlands Ranch Mansion rental rate schedule.

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Table 3-15

Highlands Ranch Mansion Rental Pricing 2017 M-Th Fri Sat Sun Peak Season: June-Sept, Dec $3,000 $5,000 $6,000 $4,500 Off Peak Season:Jan-May, Oct-Nov $2,000 $4,000 $5,000 $3,000 Rates are for a five-hour event.

Sources: Highlands Ranch Mansion, Johnson Consulting

Northridge Recreation Center: Currently undergoing renovation, the Northridge Recreation Center is located in Highlands Ranch and was the first of the four Highlands Ranch Recreation Centers and built in 1982. This facility has been expanded to 62,600 square feet and includes tennis courts, two outdoor pools, racquetball courts and multiple exercise rooms.

Table 3-16

Northridge Rec Center Rental Pricing Room Capacity Hourly Full Day Crestone Peak 40 $35 $175 Wetterhorn Peakk 60 $40 $200 Sources: HRCA, Johnson Consulting

Eastridge Recreation Center: The Eastridge Recreation Center is located in Highlands Ranch and was built in 1997, the second of the four Highlands Ranch Recreation Centers. This recreation center’s facilities include a sand volleyball court, dance studios, indoor and outdoor pools, running track, climbing wall and various fitness areas.

Table 3-17

Eastridge Rec Center Rental Pricing Room Capacity Hourly Full Day Monarch +Telluride 108 $70 $350 Monarch 52 $40 $200 Telluride 56 $40 $200 Cooper 34 $35 $175 Sand Volleyball Court - $75 $350 Sources: HRCA, Johnson Consulting

Westridge Recreation Center: The Westidge Recreation Center is located in Highlands Ranch and was the third of the four Highlands Ranch Recreation Centers and built in 2001. This rec center features a 160 x 90

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turf field that can be split into three rentable sections along with a variety of fitness rooms, tennis courts, indoor and outdoor pools and a running track.

Table 3-18

Westridge Rec Center Rental Pricing Room Capacity Hourly Full Day Barn Owl 52 $40 $180 Cooper's Hawk +Red Tailed Hawk 78 $35 $175 Cooper's Hawk 45 $35 $175 Red Tailed Hawk 33 $35 $175 Falcon Room 100 $35 $175 Golden Eagle 24 $30 $150 Turf (Full; 2/3; 1/3) - $135/90/65 - Sources: HRCA, Johnson Consulting

Southridge Recreation Center: The Southridge Recreation Center is located in Highlands Ranch and is the newest of the four Highlands Ranch Recreation Centers having opened in 2005. This rec center features five outdoor tennis courts, a pottery studio, senior lounge, auditorium, multiple indoor pools, an outdoor pool, a dance studio and many fitness areas.

Table 3-19

Southridge Rec Center Rental Pricing Room Capacity Hourly Full Day Arapahoe Dry Craft Room 30 $35 $175 Arrowhead Conference Room 20 $30 $150 Backcountry 110 $125 $625 Butte 50 $50 $250 Cliffs 50 $50 $250 Wildcat Mountain Auditorium 325 $250 $1,250 Nurstery 20 $30 $150 Sources: HRCA, Johnson Consulting

Lone Tree Arts Center: The Lone Tree Arts Center (LTAC) is a cultural arts venue located in Lone Tree, Colorado, and an adjacent community to Highlands Ranch about ten minutes away. The LTAC is owned and operated by the City of Lone Tree and includes a Main Stage Theater (500 seats), the Event Hall and the Grand Entry Hall. In addition to the three indoor spaces there is also a 350-seat Terrace Theater outdoor space that has rollup doors and allows the outside stage to be serviced. Below is a table of their Rental Rates. The LTAC offers professional musicals as well as children’s performances and an informational speaker series.

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Table 3-20

Lone Tree Arts Center Rental Pricing For Profit Market Rate Main Stage (480) Event Hall (100-200) Grand Entry Hall (150) Mon-Thurs (4 hour rate) - $650 $600 Mon-Thurs (Daily rate) $975 $1,085 - Fri-Sun (Daily rate) $1,350 $1,300 - Set-up/Tech Rehearsals (Daily Rate) $680 - - Hourly Rate (3 hour max) - - $150

Weekly Rate $7,160 - - Non-Profit Market Rate Main Stage (480) Event Hall (100-200) Grand Entry Hall (150) Mon-Thurs (4 hour rate) - $485 $450 Mon-Thurs (Daily rate) $730 $815 - Fri-Sun (Daily rate) $1,000 $975 - Set-up/Tech Rehearsals (Daily Rate) $510 - - Hourly Rate (3 hour max) - - $150 Weekly Rate $5,300 - - *Daily rate is from 6am to Midnght. Sources: Lone Tree Arts Center, Johnson Consulting

Parker Arts, Culture and Events Center: The Parker Arts, Culture and Events Center (PACE) is located in Parker, Colorado about 20 minutes away from Highlands Ranch and hosts touring acts, local performances, exhibits, educational programs, weddings, fundraisers, meetings and more. It is host to a Mainstage theater (536 seats), 3,000 square foot event room, art gallery, dance studio, teaching culinary kitchen and four classrooms. Below are their performance theater rates.

Table 3-21

PACE Mainstage Theater Rental Pricing 2017 M-Th Fri-Sun 1 Non-ticketed, Non-Performance Event $550 $850 1 Performance Theater Performance $1,320 $1,870 3 Performance Theater Package $5,650 - 4 Performance Theater Package $6,580 - 5 Performance Theater Package $7,250 - *Theater package includes basic sounds and lighting, house manager, ushers, box office, concession staff, dressing rooms and green room.

Sources: Parker Performing Arts Center, Johnson Consulting

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Cherokee Ranch & Castle: Cherokee Ranch & Castle is a 1450-style Scottish Castle built in the 1920’s that sits on 3,400 acres of land about 13 miles away from Highlands Ranch in Sedalia, Colorado. The Castle hosts Conferences, meetings, corporate retreats, private celebrations and fundraisers. The Castle itself has a capacity of 80 people but there is also a Veranda Tent and a Pavilion Tent that hold 150 and 250 guests respectively. The tents are available May through September. Rental Rates are not currently available.

The Falls Event Center: The Falls Event Center is 5 miles away from Highlands Ranch in Littleton, Colorado. The event center features a 3,430 square foot Main Hall, a 1,705 square foot Large Conference Room, 930 square foot Small Conference Room along with a Game Room and Bridal Suite under its roof. Their outdoor space consists of a two Patios and two Courtyards. This Center is primarily used for weddings and other smaller social gatherings.

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Event and Cultural space Inventory - Highlands Ranch, CO

A Highlands Ranch Mansion B Northridge Recreation Center C Eastridge Recreation Center D Westridge Recreation Center E Southride Recreation Center F Lone Tree Arts Center G PACE Center H Cherokee Ranch and Castle I Falls Event Center

IMPLICATIONS Highlands Ranch has many of the key characteristics and requirements necessary to support the proposed CECC. Among the most important characteristics observed is a significant surrounding area population of nearly 1.5 million within a 30-minute drive-time of Highlands Ranch; a highly-educated population, a median household income well above the national average and a lack of facilities that offer educational classes, training, event and meeting spaces, and cultural programming (PACE is relatively far and Lone Tree doesn’t offer the programming being contemplated).

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While these factors can’t guarantee the success of the proposed Highlands Ranch CECC, they are certainly necessary prerequisites. There is a strong correlation between education and the pursuit of arts and cultural activities. This is evident by the number of arts groups that exist in the community and the purposeful steps taken by community leaders to evaluate the merits of developing the proposed CECC. These types of venues thrive in areas with residents that have disposable income and ample free-time to participate in arts and cultural events. As will be discussed in more detail in the next section, Highlands Ranch is well positioned to serve a broad regional area with not only educational programming and classes, but also events and activities that will be an important part of the financial plan for the proposed CECC.

SECTION 4 INDUSTRY TRENDS & COMPARABLE FACILITIES ANALYSIS

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected] Section 4 Industry Trend & Comparable Facilities Analysis | August 2017

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PERFORMING ARTS INDUSTRY TRENDS Smaller venues of 500 to 5,000 seats are an important component of the event and performing arts industry. As Live Nation has gained dominance in the thinner large-venue market, the regional or smaller event organizer has changed format. In order to adapt and survive, many of the local promoters and arts organizations are turning to smaller venues (500 to 5,000 seats) as baby boomers and other attendee categories are finding entertainment and cultural events and facilities more enjoyable in this size category. Many of these groups, both for profit and not for profit, are returning to subscription based pricing strategies such as, buy one get one free or one mega ticket, which may even include parking costs in the ticket price and access to a multi-day event for one price. This is how the Lone Tree Performing Arts Center and PACE Center in Parker are operated. As the following trend information will highlight, another significant component of earned revenue comes from educational programs.

The Theatre Communication Group (TCG) produces an annual report on the state of U.S. professional not- for-profit theatres across the nation. The information in their latest report provides meaningful insight on the financial, operational and attendance trends of the 1,750- non-profit theatres that were TCG members in 2015 and 125 Trend Theatres that responded to the TCG survey every year from 2011-2015. The latest report identified a robust upward trend in individual giving and support but a decline in government funding was simultaneously down by a significant amount from 2011-2015.

During that same time period income for trend theatres earned from “other” activities such as educational programs, rentals and concessions increased 24.6% while other income generators like investment income dropped by 62.3%. As seen in Figure 4-1, income from educational and outreach programs have grown consistently each year since 2011 while concession and rental income have also increased from 2011-2015. This figure also shows a slight drop off in these theatre’s income from show productions. Other trends highlighted by this report were that theatres’ increase in total income over time was spurred by more contributions than earned revenue and expenses grew significantly mostly due to an average payroll increase for administrators, production staff and artists.

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Figure 4-1

As the above figure indicates, both education programs and outright rental income are significantly larger revenue streams when compared to production income, which is also the source of the greatest share of the overall operating costs for facilities that focus on produced shows and presentations. While many shows at the larger venues can do well, the product is limited by the number of acts and artists available. The number of small venues is on the rise and the product diversification and the more intimate atmosphere in a smaller venue have helped this sector of the live entertainment business grow as the PACE and Lone Tree Theater are indicative of.

Given the presence of these two relatively close by facilities and the significant cultural facilities located in the Denver Metro Area, a facility in Highlands Ranch needs to focus on educational programming, rentals (corporate, area arts organizations, social, etc.), and community events for both HRCA and the County.

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COMPARABLE FACILITIES ANALYSIS In order to understand the potential operating characteristics for the proposed Community Events and Cultural Center in Highlands Ranch, Colorado, this section presents case study profiles of a set of national comparable facilities. The key operating characteristics of these facilities are provided in the following profiles, and include:

§ Size and character of facility program spaces.

§ Recent and/ or planned expansions.

§ A demand and financial profile, including the number and types of events, and operating revenues, expenses, and development history and funding strategy, where available.

Information about event demand and the financial performance of indicated facilities provides insight into the general parameters within which the proposed Community Events and Cultural Center could reasonably expect to operate.

These venues were selected for a variety of reasons that include program of spaces, operating/management style, market similarities, education programming, or rate and market information. The following table summarizes the key attributes of the facilities identified as part of this analysis that include (information in parentheses indicates logic for inclusion):

§ Flynn Center, Burlington, VT (host venue to a number of arts organizations)

§ Lawrence Arts Center, Lawrence, KS (mix of facility spaces and education programming)

§ The ZACH Theatre; Austin, Texas (mix of facility spaces and education programming)

§ Headlands Center for the Arts, Sausalito, CA (mix of facility spaces and education programming)

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Table 4-1

Key Characteristics of Comparable Facilities and Markets

Highlands Ranch Flynn Center for the Performing Headlands Center for Community Events & Lawrence Arts Center Zach Theatre Arts the Arts Cultural Center Location Location Highlands Ranch, CO Burlington, VT Lawrence, KS Austin, TX Sausalito, CA Demographics Characteristics (2017) Population 104,476 44,020 94,902 935,806 7,292 Median Age (Years) 37.2 27.8 28.3 32.6 53.8 Median Household Income $111,519 $43,989 $48,918 $57,625 $122,036 10 mile Radius Population 735,226 131,435 112,807 1,589,838 977,362 10 mile Radius Median Age 38.6 35.9 29.6 33.5 39.9 10 mile Radius Household Income $79,547 $63,441 $51,892 $66,300 $84,270 Facility Attributes Year Built (Renovated) TBD 1930 2002 1932 (2012) 1982 300 seat main theatre, 5 420-seat Performance Theatre; exhibition galleries, 2 1,411 main stage, 110-200 Flynn 130-seat in-the-round Theatre, 2,000 SF gymnasium, Facilities TBD dance studios, 7 visual arts Space, 2 dance studios, art gallery 230 seat performance venue, resident housing studios, 2 preschool art 3,200 SF reaheasal studio classrooms Vermont Symphony Orchestra, Lawrence Ballet Theatre, Broadway Performances and Anchor Tenant(s) TBD Vermont Youth Orchestra, Lyric various educational Resident Artists performing arts school Theatre, and UVM Lane Series programs Ownership/ Management Owner TBD Flynn Family Ctiy of Lawrence City of Austin National Parks Service Flynn Center for the Performing Headlands Center for the Manager TBD Lawrence Arts Center ZACH Theatre Company Arts Arts Revenue & Expenses (Most Recent Year) Total Revenues TBD $6,670,900 $3,369,335 $7,200,000 $2,835,962 Total Expenses TBD $6,487,900 $3,214,912 $6,900,000 $1,842,145 Net Operating Income (Deficit) TBD $183,000 $154,423 300,000 $993,817 Annual Subsidy Annual Public Subsidy TBD - $101,080 $321,000 $72,000 Private Contributions TBD $2,650,500 $1,785,748 $1,813,306 $1,544,320 Source: Relevant Facilities, Esri, Johnson Consulting

Of significant note is that communities smaller than Highlands Ranch are able to support substantial arts and cultural facilities. The following subsections present an individual case study for the comparable facilities listed in the table above.

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FLYNN CENTER FOR THE PERFORMING ARTS BURLINGTON, VERMONT

LOCATION: The Flynn Center for the Performing Arts is an art deco theater located in Burlington, VT, just east of Lake Champlain, a lake that divides Vermont and upstate New York. The center is also adjacent to Interstate-89 and just minutes away from the Burlington International Airport.

OWNERSHIP/ MANAGEMENT: The Flynn Center for the Performing Arts is self- managed and operated and was built by entrepreneur John J. Flynn in 1930 as a vaudeville house and later served as a movie theater before being transitioned to a performing arts center.

MISSION: The Flynn Center for the Performing Arts fosters the enjoyment, understanding, and development of the performing arts in Vermont through diverse and engaging artistic experiences.

VISION: The Flynn is Vermont's premier home for diverse performing arts programming and education, collaborating with artists, organizations, schools and the community to encourage the creation, appreciation, and understanding of the arts. We seek to nurture a vibrant arts community, foster artistic excellence, and bring people together for powerful shared experiences that inspire a creative exchange of ideas.

FACILITIES: The Center is comprised of one main stage theater, a Flynn Space, two dance studios and an Art Gallery. Features and Specifications of these facilities are:

§ Main Stage: The Flynn’s original theatre was fully restored in 2000, this full-service stage has 1,411 seats and a newly expanded and renovated lobby adjacent to it.

§ Flynn Space: This intimate and versatile space presents world-class performances with flexible configurations and a capacity of 110-200 people.

§ Hoehl and Chase Dance Studios: These two dance studios house Flynn Arts classes, camps and other events. They are equipped with bathrooms, pianos, sound systems and mirrored walls.

§ Amy E. Tarrant Gallery: This gallery is an extension of the Flynn Lobby and is open to the public on Saturdays from 11am-4pm.

RENTAL RATES: The following table provides details of the facility’s rental rates.

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Table 4-2

Flynn Rental Pricing 2017 Sun-Thurs Weekend/Holiday Commercial (For Profit) $3,300 $3,650 Non-commercial (Non-profit) $3,070 $3,480 Community (all volunteer cast & crew) $2,280 $2,865 Flynn Space $465-$750 $465-$750 Rehearsal rates available upon request Sources: Flynn Center for the Performing Arts, Johnson Consulting

ANCHOR TENANTS: The Flynn Center is home to the Vermont Symphony Orchestra, Vermont Youth Orchestra, Lyric Theatre and Vermont Stage Company and the UVM Lane Series.

DEMAND SCHEDULE: No demand information available.

REVENUE & EXPENSES: The facility relies heavily on private donations and contributions and they were attributed to 40% of their operating revenue in 2016. These donations allowed the Flynn to finish 2016 with a net operating surplus of $183,000.

Table 4-3

Flynn Center for the Performing Arts Revenue and Expense Statement

2016 Revenue & Support Contributions $2,650,500 Earned Revenue $4,020,400 Total Revenues $6,670,900 Operational Expenses Programs and Services $5,267,700 Fundraising & Admin $1,220,200 Total Operating Expenses $6,487,900 Net Operating Income $183,000 Sources: Flynn Center, Johnson Consulting

FUNDING: The Flynn Center relies heavily on grants, donations and private contributions for funding.

EDUCATIONAL PROGRAMMING: The Flynn is a leader in arts education and they consider it a vital part of their mission. The student matinee service they provide serves over 45,000 children from around Vermont. Their after school programs, camps, workshops and classes include dance, drama, choir, music class, play

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writing, theatre and jazz. Some of the donations and private contributions obtained by the Flynn is used for scholarships for students that may not be able to afford the tuition of their classes or summer camps. The Flynn Center education programming has been nationally recognized as models by the Kennedy Center’s Changing Education Through the Arts program, the Association of Performing Arts Presenters and in the Dana Foundation’s publication, Acts of Achievement: The Role of Performing Arts Centers in Education.

OBSERVATIONS: The Flynn is a full service non-profit theater that is supported greatly by its community and their donations and contributions which comprise about a third of its revenue. The Flynn’s 1,411 seat theater, 180-seat cabaret space, art gallery and educational studies makes the building a beloved facility not just in the town of Burlington but throughout Vermont and their programs draw people from across the entire state.

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LAWRENCE ARTS CENTER LAWRENCE, KANSAS

LOCATION: The Lawrence Arts Center is located in Lawrence, KS, on the south side of the Kansas River close to the campus of Kansas University.

OWNERSHIP/ MANAGEMENT: The Lawrence Arts Center building is owned by the City of Lawrence and is responsible for major exterior and structural maintenance to the Arts Center but not internal upkeep. The Lawrence Arts Center is a public and private partnership, a regional center for visual and performing arts, contemporary exhibitions, film, and lectures. These programs are complemented by fully developed curricula in ballet and modern dance, theater performance, and visual arts. The Arts Center employs over 120 teaching artists whose courses observe Kennedy Center standards for visual and performing arts. 10,000 students take courses annually, and the Arts Center greets over 200,000 visitors each year.

MISSION: Our mission is to enrich and invigorate the community by offering the best in contemporary exhibitions, performance, and visual and performing arts education.

FACILITIES: The Lawrence Arts Center is a 40,000-square foot facility that includes a 300-seat main theatre, 5 exhibition galleries, 2 dance studios, 2 art-based preschool classrooms and 7 visual arts studios.

RENTAL RATES: Rental Rates not provided.

ANCHOR TENANTS: The Lawrence Arts Center is home to the Lawrence Ballet Theatre and many educational programs for all ages.

DEMAND SCHEDULE: During 2015-2016 season the Lawrence Arts Center presented more than 79 performances of 27 separate productions, with participants totaling over 921.

REVENUE & EXPENSES: As seen in the table below, the Lawrence Center brought in double its income in 2016 than the year prior due to large increases in donations and memberships and also earned revenue.

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Table 4-4

Lawrence Arts Center for the Performing Arts Income and Expense Statement 2015 2016 Income & Support Donations and memberships $1,393,038 $1,785,748 Earned Income $1,336,179 $1,482,507 City of Lawrence $113,717 $101,080 Total Income $2,842,934 $3,369,335 Operational Expenses Arts Education $1,383,112 $1,736,052 Performing Arts $691,556 $707,281 Exhibitions $442,596 $514,386 Scholarships and Financial Aid $110,649 $128,596 Visiting and Resident Artist Program $138,311 $128,596 Total Operating Expenses $2,766,223 $3,214,912 Net Operating Income $76,711 $154,423 Sources: Lawrence Arts Center, Johnson Consulting

FUNDING: City-issued bonds funded 60% of the building cost of the $7 million building. The city also pays for the utilities incurred by the building and gives around $30,000 a year in scholarships to students for education at the center. The Center also relies on donations and contributions to meet its annual budget.

EDUCATIONAL PROGRAMMING: The Lawrence Arts Center’s main function is that of an educational facility for all ages. The venue has a ceramics studio, digital media lab, metals studio, printmaking studio, photography studio, painting and drawing studio, dance studios along with pre-K classroom all used to conduct classes and to create art. In 2015, the Center awarded 1,058 educational grants worth $111,759 and in the most recent year awarded $142,642 worth of financial aid to Lawrence and Douglas county residents. The Lawrence Center has educational opportunities for everyone from Preschool to seniors. The table below shows a breakdown of the number of students in each category of education.

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Table 4-5

Lawrence Arts Center Educational Enrollment Totals 2015-2016 Visual Arts Education Adults 1,137 K-12 1,749 Pre-K 598 Total 3,484 School of Dance Adults 204 K-12 1,256 Pre-K 293 Total 1,753 Performing Arts Theatre and Dance 1,066 Tech Theatre 32 Total 1,098 Community Outreach Pre-K 220 Elementary 380 Middle School 220 Total 820 Total Enrollments 7,155 Sources: Lawrence Arts Center, Johnson Consulting

OBSERVATIONS: The Lawrence Arts Center is a non-profit performing arts facility that is involved with many different kinds of visual and performing arts. With a 300 seat main theater and many different studios dedicated to different facets of art, the Lawrence Center strongly emphasizes education and hosts hundreds of classes, camps and workshops annually and even provides scholarships and financial aid to students without the means to pay for classes. Furthermore, the Lawrence Arts Center support the artists by holding yearlong residencies for visiting artists and hosting exhibitions for artists to show off and even sell their work.

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ZACH THEATER AUSTIN, TEXAS

LOCATION: The ZACH Theatre is located in downtown Austin, Texas, one block southwest of the Colorado River. The ZACH is the longest continuously running theatre company in Texas and is a staple in the vibrant and rapidly growing Austin Performing Arts Community. The facility is named in honor of Hollywood star, Zachary Scott.

OWNERSHIP/ MANAGEMENT: The ZACH is managed by the ZACH Theatre Company a 501(3)(c) non-for-profit organization.

FACILITIES: The ZACH has a bevy of venue space. These spaces include:

§ Topfer Theatre: 420-seat performance venue with a lobby and bar that was opened in 2012 § Serra Skyline Lounge & Terkel Terrace: 950 square foot lounge with bar, attached outdoor terrace and incredible, panoramic downtown views § People’s Plaza & Bobbi Pavilion: 6,400 square foot plaza with a five pole tent, with the capacity to seat 420 people § Whisenhunt Stage: 130-seat theatre-in-the-round performance venue § Whisenhunt Studio: 1,000 square foot event space § Kleberg Stage: 230-seat performance venue including lobby and patio access § Nowlin Rehearsal Studio: 3,200 square foot event space

ANCHOR TENANTS: The ZACH primarily hosts Broadway performances and serves as the home to its performing arts school.

DEMAND SCHEDULE: The ZACH attracts nearly 115,000 visitors each year. Of these visitors roughly 65,000 are attendees of the ZACH Theatre performances and 50,000 of the visitors are children participating in educational camps and classes.

REVENUE & EXPENSES: In 2014, the ZACH Theatre generated over $7.2 million in revenues and had roughly $6.9 million in expenses. The revenues and expenses for 2014 are provided below in Table 4-6.

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Table 4-6

Zachary Scott Theater Center Revenue and Expense Statement

2014 Revenue & Support Contributions $1,813,306 Government Grants 321,000 Program Services 4,188,086 Investments 141,184 Special Events 566,211 Sales 237,177 Other - Total Revenues $7,266,964 Program and Operational Expenses Program Serivces $5,023,100 Administratiokn 1,610,311 Other 343,235 Total Operating Expenses $6,976,646 Net Operating Income $290,318

Sources: Guidestar, Johnson Consulting

FUNDING: As seen in the previous table, the ZACH Theatre is funded by several sources including both public and private contributions and government grants.

OBSERVATIONS: The ZACH’s Theatre Company is the longest running theater company in the state of Texas. It provides the ever growing Austin market with a state-of the art venue, Broadway shows, and a series of high-quality educational camps and classes to cultivate the performing arts community.

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HEADLANDS CENTER FOR THE ARTS SAUSALITO, CALIFORNIA

LOCATION: The Headlands Center for the Arts is located 2 miles west of the north-end of the Golden Gate Bridge in Sausalito, California. The campus buildings were originally military facilities used at Fort Barry. In 1972, after the military withdrew from the facility the National Park Services took over the land. In 1982, local artists formed the Headlands Center for the Arts and resolved to rehabilitate the buildings for public use. The former military barracks on-site now serve as housing for the Headlands art-in-residence program.

OWNERSHIP/ MANAGEMENT: Since the military turned over the land in 1972, the National Parks Service has owned the land and buildings of the Headlands Center for the Arts. In 1982 the Headlands Center for the Arts organization formed and offered to manage and rehabilitate the facilities. In 1994, the NPS agreed to a long-term agreement to cooperatively use the land with the Headlands Center for the Arts.

FACILITIES: There are nine buildings in total that make-up the Headlands Center for the Arts’ campus. Each building serves a certain purpose for the Headlands Center by providing one of the spaces below:

§ Studios: There are studios buildings spread across four of the buildings at the Headlands. One of the buildings in particular, contains 20 smaller (100-400 square feet) spaces for individual artists and another is an expansive space that hosts dance and music performances. The one of the largest spaces resides in the Gymnasium building, which has 2,000 square feet of open space and can hold basketball games, bowling matches and as act a studio.

§ Houses: There are five total houses on campus that are fully furnished and have between 4-5 bedrooms. These buildings are used to house resident artists, interns, and in unique scenarios staff.

§ Main Administrative Building: This building holds the Headlands Center for the Arts offices, the Mess Hall” for the Center and a project space, which is designed to display the Center’s current exhibit.

ANCHOR TENANTS: The Headlands Center for the Arts is home a wide array of artists, who agree to pay rent in exchange for access to professional quality facilities to create and exhibit their work.

DEMAND SCHEDULE: Not available.

REVENUE & EXPENSES: In 2014, the Headlands Center for the Arts reported over $2.8 million in revenues, with nearly $1.5 million coming private contributions to the Center. Aside from the generous contributions,

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another factor that contributes to the Centers positive balance sheet is the organizations ability to incentivize talent to perform and exhibit their works, by offering subsidized rental. Because of this, the Headlands Center for the Arts is able to generate revenue from the rentals by the artists and retain this consistent and top-level talent at a discounted cost.

Table 4-7

Headlands Center for the Arts Revenue and Expense Statement

2013 2014 Revenue and Support Grant Income Public $62,000 $72,000 Private 325,881 414,269 Contributions 594,645 1,544,320 In-kind Contributions 313,985 302,983 Special Events 198,181 172,850 Rental Income 214,605 247,888 Admissions, Sales, & Fee (net) 73,744 81,103 Interest Income 1,823 549 Net Assests Released from restriction - - Total Revenues $1,784,864 $2,835,962 Program and Operational Expenses Programs Artists in Residence $825,518 $840,906 Public Forums 343,714 352,334 Special Projects 142,512 89,487 Supporting Activities Fundraising 271,880 287,626 Facilities 57,488 66,516 General Administration 215,527 205,276 Total Operating Expenses $1,856,639 $1,842,145 Net Income (Deficit) ($71,775) $993,817 Assests Increase (decrease) in net assests ($71,775) $993,817 Net Assests, BOY $1,704,000 $1,632,225 Net Assests, EOY $1,632,225 $2,626,042

Sources: Guidestar, Johnson Consulting

FUNDING STRATEGIES: The Headlands Center of the Arts have the luxury of being funded by several public bodies, including the National Parks Service, as well as having a strong private donor base.

OBSERVATIONS: The Headlands Center for the Arts has an ideal location, residing in the Golden Gate recreational area; it is no wonder why artists have flocked to this serene venue for inspiration and to properly display their work. The Headlands Center for the Arts is prime example of the repositioning of existing outdated facilities into relevant and fulfilling spaces that can be enjoyed by the community. It also highlights the importance of pursuing grants and partnering with artists to make the project successful. The level of rental income should also be observed indicating that a good amount of revenue can be generated by artists using purpose built facilities for their particular craft.

SECTION 5 INTERVIEW SUMMARY, REGIONAL FACILITY ANALYSIS, SURVEY & PRELIMINARY RECOMMENDATIONS

6 East Monroe Street | Fifth Floor | Chicago, Illinois 60603 | Phone: 312.447.2010 | Fax: 312.444.1125

www.chjc.com | [email protected] Section 5 Interview Summary, Survey, and Findings | August 2017

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INTERVIEW AND OBSERVATION SUMMARY This section provides a summary of key findings from interviews conducted with a variety of potential users and organizations that have thoughts on the development of the proposed Highlands Ranch Community Events and Cultural Center (CECC). These interviews help us to identify market opportunities for the proposed CECC and to gauge an interest in programming event activity in the venue. This section also profiles the existing inventory of venues in the regional area and a competitive assessment of how the proposed venue will fit into the market place and compete for event activity and attendees.

Johnson Consulting conducted a variety of interviews in person and over the phone. Notable individuals, groups and organizations interviewed included:

§ Highlands Ranch Community Association § Littleton Ballet

§ Highlands Ranch Metro District § Highlands Ranch Mansion

§ PACE Center Assistant Programming § Douglas County Libraries Director (Parker, CO) § Douglas County Commissioner § Highlands Ranch Chamber of Commerce § Douglas County Cultural Council § Scientific and Cultural Facilities District § Rock Canyon High School § Mountain Vista High School § Lone Tree Arts Center § Valor Christian Performing Arts Center § Regional promoters/presenters § Potential conference and meeting users

The groups listed above represent a broad spectrum of potential users and arts organizations, as well as community leaders and the hospitality and tourism sectors that are intimately familiar with the market area and sources of demand that may support the Highlands Ranch CECC. The participation in the interview process was excellent and a wide range of potential users had the opportunity to share their organization’s thoughts on the Community Events and Cultural Center, which will be a key component of informing the balance of this analysis.

Some of the key observations identified by the interviewees are summarized as follows:

§ Highlands Ranch as a community is very involved in the arts.

§ The community uses Lone Tree PAC, Parker PAC and downtown Denver cultural venues for professional and presented performances.

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§ Both Lone Tree and Parker are subsidized with support for debt service and annual operating support.

§ Arts education programming is very popular with significant wait lists.

§ Southridge Rec Center seems to be primary HRCA arts venue. It has seven rooms with range capabilities from 20 to 325 (Auditorium).

§ PAA offers programming but is currently hindered by lack of its own space. They use Churches and High schools.

§ Valor School has 100,000 square foot arts center that is consumed by its own use.

§ Arts Education programming and facilities to support it seem to be the market opportunity.

§ Shea Developers has to be contacted for potential site options.

§ Key variables are land cost, site size vs program needs, identify program needs and development costs.

§ County most likely to support educational centered program to service senior population.

§ There is a vibrant arts community in Highlands Ranch and in the surrounding region.

§ Why Highlands Ranch?

− High quality of life and a strong arts community.

− Growing population and continued growth and development.

− “Silver Tsunami” is taking effect in Highlands Ranch with a boom of retirees many of which have a strong demand for the performing arts.

§ From the various schools and organizations that we spoke with, it was very clear to them that there is a shortage of space for them to use. The high schools do not have a single space where they can fit an entire student class and must hold their prom outside the county.

§ There are several organizations that expressed an interest in making a proposed Community Events and Cultural Center their permanent home/be a resident organization. However, cost is a concern.

§ The demographics, education levels, and high household income of Highlands Ranch make its resident base an ideal consumer of arts education and cultural programming.

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§ There is a great potential for arts education in the community. The PAA in Highlands Ranch is an organization that teaches kids and gives them a platform to perform and has grown rapidly in recent years and struggles to find a home venue that’s big enough.

§ The Lone Tree and Parker Arts centers have developed a relationship of cooperation and not competition among each other and do not view the proposed Community Events and Cultural Center and its education and cultural focus as competition.

§ Highlands Ranch has been pushing for some type of Community Events and Cultural Center for 15 years however the community is very conservative and will rarely raise assessments to fund such a project.

§ A key factor of the project will be leveraging social and conference business to help pay for what will be significant annual operating costs. Fundraising and grants will also be important and may likely serve as the differentiator between a building that loses money or one that breaks even or makes a small profit.

§ There are nine high schools in Douglas County and 10,000 school age kids in a 5-mile radius of Highlands Ranch. High Schools expressed interest for 600+ seats to have district wide events and professional development days while library said they have 6-8 events per year with 1,000+ attendees.

§ Several arts organizations utilize local high schools and churches, but are limited by the schedules and size of the host organizations. Often time’s venues are filled to capacity and can’t accommodate all interested attendees, in which case multiple runs of the performance are needed.

§ Concerns have been raised over the lack of available land in Highlands Ranch and potential sites are very limited.

§ Douglas County Council gets about $600k per year from Scientific and Cultural Facilities District which helped with soft costs for the PACE and Lone Tree Projects.

REGIONAL FACILITY SUPPLY ANALYSIS With the intention to analyze future prospect of the proposed Highlands Ranch Community Events and Cultural Center, it is critical to contemplate the supply and demand dynamics operating within Denver regional market area. Building on the demographic and economic analysis presented in Section 3 of this report, this Section provides an analysis of key supply indicators within Highlands Ranch and the greater Denver area’s PAC and event market, concluding with an assessment of the identified market opportunity for the proposed Highlands Ranch Community Events and Cultural Center and a subset of competitive venues.

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PAC AND EVENT FACILITIES Given the proximity of Highlands Ranch to a major metropolitan area (Denver), and the active arts community and strong economic base of the broader area, there are several established event facilities in the region. Each venue serves a subset of the market place with there being only a select few that serve the entire market area for the largest events. The information below establishes the supply of venues that directly serve residents in the Greater Denver area and those specifically in a relative size category that is being considered for the Highlands Ranch Community Events and Cultural Center.

REGIONAL PAC AND EVENT FACILITIES In order to analyze the inventory of facilities in the area Johnson Consulting first established some parameters for the analysis. Since what is being considered at the Highlands Ranch Community Events and Cultural Center is in the smaller to mid-size range of arts, cultural and event venues, facilities with less than 50 or more than 8,000 seats were excluded from the inventory analysis. Facilities that are more than 50 miles or approximately 1 hour drive-time from Highlands Ranch are also not included in the analysis. Facility types that are included are arenas, PAC’s, auditoriums, theatres, amphitheaters, fairgrounds, fieldhouses, convention centers, and school facilities. The following tables and maps indicate the significant number of event venues that are in the market area. The information in the table is organized by venue capacity from greatest capacity to smallest.

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Table 5-1

Facility Inventory in Denver-Highlands Ranch Region Distance to Facility Location Highlans Ranch Capacity (Miles) Magness Arena Denver 20 8,000 Levitt Pavillion Denver Denver 20 7,500 1stBank Center Broomfield 35 7,000 Bellco Theatre Denver 20 5,000 Balch Fieldhouse Boulder 46 4,200 Fillmore Auditorium Denver 20 3,700 Temple Hoyne Buell Theatre Denver 20 2,884 Boettcher Concert Hall Denver 20 2,679 Denver Botanic Gardens Denver 20 2,500 Ellie Caulkins Opera House Denver 20 2,225 Macky Auditorium Boulder 46 2,052 Chautauqua Auditorium Boulder 46 1,326 Paramount Theatre Denver 20 1,208 Glenn Miller Ballroom Boulder 46 1,000 Gates Concert Hall at the Newman Center Denver 20 971 Cherry Hills Community Church Highlands Ranch 0 800 Valor Christian Performing Arts Center Highlands Ranch 0 750 Parker Performing Arts Center Parker 17 534 Arvada Center Mainstage Theatre Arvada 34 526 Lone Tree Arts Center Lone Tree 5 500 St Lukes Methodist Church Highlands Ranch 0 425 Rock Canyon High School Highlands Ranch 0 400 Mountain Vista High School Highlands Ranch 0 387 Byran Theatre at the Newman Center Denver 20 350 Southridge Rec Center Highlands Ranch 0 325 Highlands Ranch Mansion Highlands Ranch 0 250 Cherokee Castle Sedalia 13 235 Arvada Center Black Box Theatre Arvada 34 226 Hamilton Recital Hall at the Newman Center Denver 20 225 St. Andrew United Methodist Church Highlands Ranch 0 200 Eastride Rec Center Highlands Ranch 0 108 Westridge Rec Center Highlands Ranch 0 100 Northridge Rec Center Highlands Ranch 0 60 Average 17 1,777 Source: Relevant Facilities, Pollstar, Johnson Consulting

What the above table tells us is that the average facility in the Denver metro area is 1,777-seats and 17-miles from Highlands Ranch. Compared to other similar market areas nationally, the Denver metro area has a

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higher proportion of event venues with 2,000 or more seats. This is due to the fact that for promoted events, venues with fewer than 2,000-seats present a challenge to make a profit and be viable since as a venue gets smaller but pays the same rate for talent, ticket prices increase significantly the smaller the venue gets. Distance is also an important factor when considering a facility that would primarily focus on educational programming and cultural events. The facilities listed above are a good distance from Highlands Ranch.

SUBSET OF PAC AND EVENT FACILITIES In the table below, we have removed any facility with a capacity of 2,000 or more because these venues will not be competing directly with the proposed Highlands Ranch Community Events and Cultural Center as they will have a vastly different orientation and all are 20-miles or more away. The facilities that remain are presented in Table 5-2.

Table 5-2

Facility Inventory in Denver-Highlands Ranch Region Distance to Facility Location Highlans Ranch Capacity "Go" or "No Go" Reason (Miles) Chautauqua Auditorium Boulder 46 1,326 Distance Paramount Theatre Denver 20 1,208 Orientation Glenn Miller Ballroom Boulder 46 1,000 Distance/Orientation Gates Concert Hall - Newman Center Denver 20 971 School (DU) Cherry Hills Community Church Highlands Ranch 0 800 Orientation Valor Christian Performing Arts Center Highlands Ranch 0 750 School Parker Performing Arts Center Parker 17 534 Go - Ticketed/Rental Arvada Center Mainstage Theatre Arvada 34 526 Distance Lone Tree Arts Center Lone Tree 5 500 Go - Ticketed/Rental St Lukes Methodist Church Highlands Ranch 0 425 Orientation Rock Canyon High School Highlands Ranch 0 400 School Mountain Vista High School Highlands Ranch 0 387 School Byran Theatre at the Newman Center Denver 20 350 School (DU) Southridge Rec Center Highlands Ranch 0 325 Go - Same market, but small Highlands Ranch Mansion Highlands Ranch 0 250 Size Cherokee Castle Sedalia 13 235 Size Arvada Center Black Box Theatre Arvada 34 226 Distance Hamilton Recital Hall at the Newman Center Denver 20 225 School (DU) St. Andrew United Methodist Church Highlands Ranch 0 200 Size Eastride Rec Center Highlands Ranch 0 108 Size Westridge Rec Center Highlands Ranch 0 100 Size Northridge Rec Center Highlands Ranch 0 60 Size Average 13 496 Source: Relevant Facilities, Pollstar, Johnson Consulting

Upon closer evaluation of the facilities in the above table, a majority of these facilities have an orientation that compromises their ability to provide a dedicated facility to non-affiliated arts groups and users. Schools typically have a priority on serving the teaching needs of its students and that consumes the majority of the

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schedule for those facilities. As a case in point, one of the closest venues to Highlands Ranch is the Valor Christian Performing Arts Center, which is the main facility of the Valor Christian high school, or other venues, such as the Bryan Theatre and Gates Concert Hall, which are facilities for the University of Denver. As such, the facilities in Table 4-2 have been categorized into “Go” or “No Go” categories with the reason listed for “No Go”. Facilities marked as “Go” are considered to be in the same size category of what is proposed, have similar orientation, and/or are in close geographic proximity (25-miles or less).

SHORTLIST OF FACILITIES Table 5-3 and the following section provide a summary of venues that have been identified as in the same size for the proposed Highlands Ranch Community Events and Cultural Center. Distance, size and orientation of the venue were the determining factors in selection.

Table 5-3

Facility Inventory in Denver-Highlands Ranch Region Distance to Highlans Facility Location Capacity Rental Rates "Go" or "No Go" Reason Ranch (Miles) Parker Performing Arts Center Parker 17 534 $1,870/ Day Go - Ticketed/Rental Lone Tree Arts Center Lone Tree 5 500 $1,350/ Day Go - Ticketed/Rental Southridge Rec Center Highlands Ranch 0 325 $1,250/ Day Go - Same market, but small Average 7 453 Source: Relevant Facilities, Pollstar, Johnson Consulting

Figure 5-1 displays the location of these venues identified as potential competitors for programming, tenants and audience share.

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Figure 5-1

For a metropolitan area the size of Denver, there is a shortage of facilities in the 500 to 1,500-seat range when compared to inventories of other market areas of a similar size and disposition. For example, in metropolitan Atlanta there are eight facilities in this size range with two more under development that would be included in the “Go” set, and in the St. Louis area there are 5 facilities, while in Denver there are two facilities, the PACE Center in Parker and the Lone Tree Arts Center in Lone Tree.

Of these two facilities, the PACE Center in Parker is the only facility that offers educational and cultural programming, in addition to presented and live entertainment events, but it is just under 20-miles away. This distance is effectively far enough away that the Highlands Ranch Community Events and Cultural Center would serve the population roughly half way to Parker and West and Parker would serve the population from the midpoint and to the East. The Lone Tree Arts Center offers subscription series theater productions, which is not being considered for the Highlands Ranch Community Events and Cultural Center as a primary demand and revenue source. The above factors, combined with community and arts organizations advocacy for additional venue space, indicates that the market can support additional facility space in Highlands Ranch.

The following profiles provide more information about these two facilities and other facilities in the regional area.

PARKER ARTS, CULTURE AND EVENT CENTER: The PACE Center is a state-of-the-art facility located in Parker, Colorado. The PACE center opened in 2011 and features a 536-seat Mainstage Theater, a 3,000- square foot event room, an art gallery, dance studio, culinary kitchen, four multi-use classrooms and an

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interactive outdoor musical playground. This venue hosts local performances, exhibits and educational programs and is also commonly rented for weddings, fundraisers and meetings. Shown below is a schedule of their for-profit rental rate schedule.

Table 5-4

Sources: Parker Performing Arts Center, Johnson Consulting

LONE TREE ARTS CENTER: The Lone Tree Arts Center (LTAC) is a cultural arts venue located in Lone Tree, Colorado, and an adjacent community to Highlands Ranch about ten minutes away. The LTAC is owned and operated by the City of Lone Tree and includes a Main Stage Theater (484 seats), the Event Hall and the Grand Entry Hall. In addition to the three indoor spaces there is also a 350-seat Terrace Theater outdoor space that has rollup doors and allows the outside stage to be serviced. Below is a table of their Rental Rates. The LTAC offers professional musicals as well as children performances and informational speakers.

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Table 5-5

SOUTHRIDGE REC CENTER: The Southridge Rec Center was built in 2005 and is the most recently built of the four Highlands Ranch Recreation Centers. Southridge Rec Center features the Wildcat Mountain Auditorium which has high-tech lighting and sound and a pottery studio. This rec center also features fitness equipment, locker rooms, spa, running track, outdoor pool, tennis courts, senior lounge, meeting rooms, and a dance studio.

Table 5-6

THE NEWMAN CENTER: The Newman Center for the Performing Arts is located in Denver, Colorado about 20 miles north of Highlands Ranch and the University of Denver (DU). It is used by the theatre program at DU and is located on campus. The Newman center has three main performance venues including the 971-

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seat Gates Concert Hall, the 225-seat Hamilton Recital Hall and the 350-seat Byron Black Box Theatre. Also housed here, are classrooms for students and various rehearsal halls. The Newman Center typically hosts around 500 performances each year featuring international touring artists, singers, musicians and many of DU’s own artists and performances.

VALOR CHRISTIAN HIGH SCHOOL THEATRE: The Valor Christian High School Theatre was opened in 2015 and is located in Highlands Ranch. The Theatre has 750-seats and is a state-of-the art facility that also includes many different classroom and equipment for all types of arts within the 100,000-square foot building. The theatre is typically not rented out to outside organizations.

ARVADA CENTER FOR THE ARTS AND HUMANITIES: The Arvada Center is located 34 miles from Highlands Ranch and was opened in 1976 and is supported partly by the city of Arvada, the Science and Cultural Facilities District and Colorado Creative Industries. The Center has an outdoor amphitheater, a 526-seat main stage theatre that hosts Broadway-style musicals and a 226-seat black box theatre as well as various classrooms, a ballroom, multiple art galleries and a history museum. The Center is currently undergoing phase 3 of an expansion that will be completed in 2018.

INTERVIEW SUMMARY & REGIONAL FACILITY ANALYSIS FINDINGS Both the interviews with arts organizations and event planners and the regional facility analysis indicate that there is a shortage of facilities in the 500 to 1,500-seat range for a public assembly venue. This conclusion is also supported by the facility inventories of similar markets nationally that all support two to three times the inventory of facility space that are purpose built, public venues in the 500 to 1,500-seat range.

It is understood that there is a perception that with Lone Tree Arts Center in Lone Tree and the PACE Center in Parker that there is a sufficient supply of public assembly venues for the submarket to the south of Metro Denver. The mission and purpose of the PACE Center is most similar to what is being contemplated for Highlands Ranch, but with even more emphasis on the educational and cultural event components. Lone Tree is a subscription based Broadway theater and is not similar to the operating model being contemplated for Highlands Ranch. The distance of PACE, the different operating focus of Lone Tree Arts Center, and arts group and event planner input indicate that there is in fact a need for additional events and cultural facilities to serve the market. It should also be noted that there is significant competition for dates at both of these facilities as well as school and church facilities in the area, further emphasizing the need for the proposed Highlands Ranch Community Events and Cultural Center.

HIGHLANDS RANCH COMMUNITY EVENTS AND CULTURAL CENTER – COMMUNITY USER NEEDS SURVEY Building off of the findings from the arts groups/user interviews and the regional facility analysis, it was determined that it was important for this analysis to understand the needs, orientation and desire of the Highlands Ranch community for the proposed Community Events and Cultural Center. This community

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survey was put together by Johnson Consulting and the HRCA and is designed to help the Highlands Ranch community determine the viability and structure for the proposed Community Events and Cultural Center. This survey was sent out to people in the home owners association that opted into receiving updates from the association and also different arts groups within the community. As a result, we were able to collect and analyze the results of 5,446 responses.

Figure 5-2

As shown, the cultural events that are most attended at least once a year are Museums, Music performances and Theater performances. Around 40 percent of respondents said they attend each of those three categories of cultural programming around two to four times a year. Among the least frequent were creating art as a profession or as a hobby, spoken performances and dance performances.

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CURRENT FACILITIES The following figure provides a breakdown of the facilities currently used by survey respondents within Highlands Ranch.

Figure 5-3

Q2: Where in Highlands Ranch have you participated in these activities (select all that apply)? If you have participated at a place that is not on the list, please note that space in the "Other" Field.

Parks and Outdoor Spaces 67.71%

Churches and other places of worship 48.37%

Southridge Rec Center 43.13%

Highlands Ranch Schools 41.78% (Public & Private)

Eastridge Rec Center 27.94%

The Highlands Ranch 27.80% Mansion

Westridge Rec Center 15.53%

Northridge Rec Center 13.55%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

As shown, the highest proportion of survey respondents (68 percent) participate in cultural activities and events at outdoor spaces and parks such as the Highlands Ranch Civic Green Park and Highlands Heritage Park. Other places that are commonly used for these events are churches and places of worship which nearly 50 percent of responders saying they had attended cultural events at. Also included is the text analysis below that is from the comments left in the “other” field of this question. The bigger the word the more times it was mentioned in the “other” comments of this question. Venues to note from this analysis are the Denver Museum, the HR Library, Buell Theatre, Red Rocks Amphitheatre and private homes.

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FACILITIES USED OUTSIDE HIGHLANDS RANCH The following figure provides a breakdown of the respondents that said they travel outside of Highlands Ranch for cultural events.

Figure 5-4

Q3: Do you attend cultural programming OUTSIDE of Highlands Ranch, including educational classes?

Yes 65.76%

No 34.24%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

As shown, nearly 66 percent of survey responders reported that they do travel outside of Highlands Ranch to attend cultural programming or educational classes.

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FREQUENCY OF TRAVEL FOR CULTURAL PROGRAMMING The following figure provides a breakdown of the frequency in which survey respondents reported they travel outside of Highlands Ranch for cultural programming or educational classes.

Figure 5-5

Q4: How frequently do you attend cultural programming OUTSIDE of the Highlands Ranch, including educational classes?

2 to 4 times a year 40.04%

Never 20.94%

Once a year 17.42%

Once a month 11.62%

2 or more times per month 9.97%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

As shown, the highest proportion of survey respondents (40 percent) said that they travel outside of Highlands Ranch for cultural programming two to four times per year. Also to note, 21.59 percent of respondents leave Highlands Ranch for cultural programming either once or twice or more per month meaning that over 60 percent of respondents are very active in cultural programming. This indicates that Highlands Ranch is leaking out potential users and visitors of the Community Events and Cultural Center.

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REASON FOR TRAVELING The following figure provides a breakdown of the most common reasons for traveling outside of Highlands Ranch for cultural programming or educational classes.

Figure 5-6

As shown, the highest proportion of survey respondents (48 percent) report that the reason they travel for cultural programming is because the programming they attend is not offered in Highlands Ranch. The reason cited the least was that programming in Highlands Ranch was either sold out or had a waitlist (1 percent), which is in conflict with the information obtained from arts groups and organizations that indicated that there is significant demand for their programming and that there are in fact waitlists and more facility options would allow them to expand their programming.

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PARTICIPATION BARRIERS The figure below provides a breakdown of barriers survey respondents cited for not participating in arts and cultural programming in Highlands Ranch.

Figure 5-7

As shown, the factors that were most cited by survey respondents of at least being somewhat of a barrier were Content, Marketing and the Time of events. The factor most frequently reported as “Not a barrier” was Access followed by Perception and Distance.

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PERCEIVED BENEFIT OF ADDITIONAL ARTS AND CULTURAL PROGRAMMING IN HIGHLANDS RANCH The figure on the following page provides a breakdown of the survey respondent’s average rating on a one to five scale if Highlands Ranch would benefit from the introduction of additional arts and cultural programming.

Figure 5-8

Q7: On a scale of 1 to 5, do you agree or disagree with the following statement: Highlands Ranch would benefit from additional arts and cultural programming.

Strongly Disagree 2 3 4 Strongly Agree

1 to 5 17.61% 12.68% 18.36% 17.85% 33.50%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Johnson Consulting

As shown, slightly over half of survey respondents agree or strongly agree more arts and cultural programming is needed, with the largest pool of respondents (33.5 percent) indicating that they strongly agree with the need for more arts and culture programming. Just under 18 percent strongly disagree with the statement that Highlands Ranch would benefit from additional arts and cultural programming.

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TYPES OF CULTURAL PROGRAMMING NEEDED The following figure provides a breakdown of the survey responders perceived cultural programming needs in Highlands Ranch with the darkest shade of green indicating the highest volume of responses.

Figure 5-9

Q8: What types of cultural offerings and activities, or arts education programs, or event and meeting rental space are needed in Highlands Ranch? Facility Not Needed - - - Definitely Needed Art in public spaces 22.51% 12.49% 28.45% 19.74% 16.81% Broadway on tour 25.65% 8.40% 19.45% 21.73% 24.77% Community-wide festivals and events 10.62% 6.66% 22.21% 29.48% 31.03% Dance 23.05% 17.98% 29.71% 16.64% 12.63% Dance workshops, classes and lessons 24.65% 19.97% 28.70% 14.39% 12.29% Digital and multi-media art 23.50% 18.22% 31.86% 16.74% 9.68% Digital and multi-media workshops, classes and lessons 21.81% 17.81% 30.41% 18.85% 11.12% Events that celebrate cultural diversity and heritage 22.43% 13.36% 25.31% 19.32% 19.58% Family events 11.16% 7.93% 23.31% 25.24% 32.36% Film 17.52% 9.74% 26.29% 27.34% 19.11% Film workshops, classes and lessons 24.62% 19.03% 30.67% 15.60% 10.08% Lectures 21.85% 17.63% 30.50% 18.14% 11.88% Literary and poetry events 26.31% 21.89% 30.12% 12.98% 8.70% Local and/or regional theatre companies 18.98% 8.44% 21.15% 24.84% 26.59% Museums-Design 28.40% 17.27% 28.02% 16.07% 10.25% Museums-History 24.62% 14.49% 25.79% 20.52% 14.58% Museums-Science or nature 23.44% 12.21% 23.84% 21.68% 18.83% Music/Concerts 11.05% 6.07% 17.20% 28.35% 37.33% Music workshops, classes and lessons 20.32% 15.55% 27.18% 19.25% 17.71% Musical Theatre 18.33% 9.42% 19.92% 23.83% 28.50% Open artist studios 26.15% 17.88% 28.29% 15.50% 12.17% Plays 16.82% 8.08% 19.68% 25.67% 29.75% Performing arts/Theatre workshops, classes and lessons 21.87% 14.68% 25.59% 18.26% 19.60% Visual arts exhibitions 21.06% 13.22% 28.87% 21.72% 15.13% Visual arts workshops, classes and lessons 23.91% 16.88% 29.89% 17.29% 12.03% Work by emerging artists 22.08% 15.38% 28.45% 19.41% 14.67% Work by local artists 18.78% 12.21% 25.42% 23.93% 19.66% Source: Johnson Consulting

As shown, the cultural offerings and activities and arts education programs that were reported most frequently as “Definitely needed” were Music/Concerts, Family Events, Community wide festivals along with Plays and Musical theatre. As for most frequently cited as “Not needed” the top responses were Design Museums, Library and poetry events, Open artist studios and Broadway on tour.

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ARTS & CULTURAL DEMAND BY AGE GROUP The following figure provides a breakdown of the survey respondent’s perceived benefit of cultural programming broken down by age group.

Figure 5-10

Q10: Do you feel there is a need for additional arts and cultural programming to serve the following community segments in Highlands Ranch?

Yes Maybe No

Under 18 45.10% 24.83% 28.77%

18 to 24 31.53% 36.28% 30.91%

25-34 37.31% 31.71% 28.99%

35-44 44.49% 27.12% 26.86%

45-54 46.56% 25.01% 27.29%

55-64 49.72% 24.50% 24.70%

65-74 45.98% 27.59% 25.13%

75 or older 37.02% 32.47% 29.30%

Prefer not to say 25.00% 20.30% 45.30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Johnson Consulting

As shown, the age groups survey responders said need the most additional arts and cultural programming were segments 55-64 (50 percent), 45-54 (47 percent) and 65-74 (46 percent). This shows that many responders think that the senior citizens of Highlands Ranch would benefit greatly from an arts and cultural facility. The under 18 segment also registered high on the need for additional arts and cultural programming.

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HIGHLANDS RANCH COMMUNITY EVENTS AND CULTURAL CENTER SUPPORT The following figure provides a breakdown of the survey responder’s support for the development of the proposed Community Events and Cultural Center in Highlands Ranch.

Figure 5-11

Q12: Do you support the development of a new Community Events and Cultural Center in Highlands Ranch?

Yes 52.28%

No 25.86%

Undecided 21.86%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

As shown, a majority of responders (52 percent) said that they would support such a development while another 22 percent said they are undecided. Only a quarter of responders reported that they would not support the development of the Community Events and Cultural Center in Highlands Ranch.

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COMMUNITY FINANCIAL SUPPORT The following figure provides a breakdown of survey takers willingness to contribute financially to the development of the Community Events and Cultural Center in Highlands Ranch.

Figure 5-12

Q13: If the development of a new Community Events and Cultural Center in Highlands Ranch is found to be feasible, how likely would you be to contribute financially to their development/ construction and/or ongoing operation?

Unlikely 45.42%

Somewhat Likely 32.90%

Very Likely 14.10%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

As shown, the highest proportion of responders (45 percent) stated that they were “unlikely” to contribute financially to either the development or the ongoing operations of a Community Events and Cultural Center in Highlands Ranch. 14 percent of responders said that it was very likely that they would contribute funds. This might seem like a low amount of financial support, but in other markets this number is often in the 5 to 10 percent range indicating that there is higher than average willingness to financially contribute to the proposed Highlands Ranch Community Events and Cultural Center. This unlikelihood of people wanting to donate to the cause is not uncommon.

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CREATIVE FACILITIES The following figure provides a breakdown of the support for facilities and services that support the creative process of artists and arts organizations such as studio space, artist work/live lofts, rehearsal spaces etc.

Figure 5-13

Q14: Are you in support of developing facilities and services that support the creative process of artists and arts organizations? These might include studio space, artist live/ work lofts, rehearsal spaces, co-working spaces, etc.

Yes 41.09%

No 32.99%

Undecided 25.92%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

As shown, the highest proportion of survey respondents (41 percent) said they would support the development of facilities that support the creative process. A quarter of responders said they were undecided while 33 percent said they would not support such developments.

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MULTIMEDIA/TECHNOLOGY FACILITIES The following figure provides a breakdown of the survey responder’s support of developing a facility that has a primary focus on multi-media arts and technology space such as teaching labs, rental spaces/equipment and studios. This programming may include digital photography, film making, sound mixing, animation and graphic designs.

Figure 5-14

Q15: Are you in support of developing facilities and programs that focus on multi-media arts and technology? This type of facility might include a combination of studios, teaching labs, rental spaces and equipment.

43.00% Yes

No 30.30%

Undecided 26.70%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

As shown, the responses are very comparable to the previous table with 43 percent saying they would support the development of these facilities and 30 percent reporting they would not.

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NEED FOR EVENT/ MEETING SPACE The following figure provides a breakdown of survey responder’s opinion on the need for additional event and meeting space in Highlands Ranch.

Figure 5-15

Q16: Do you feel there is a need for additional event/meeting space in Highlands Ranch?

No 36.85%

Yes 36.32%

Undecided 26.82%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

As shown, the survey responders were nearly evenly split on this question with 37 percent saying Highlands Ranch does not need more event/meeting space and 36 percent saying it does while around a quarter of responders are still undecided.

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HOUSEHOLD AGE DEMOGRAPHICS The following figure provides a breakdown of individuals in each survey responder’s household broken down by age segments. Figure 5-16

Q18: How many individuals in your household are under the age of 18?

0 50.57%

2 24.31%

1 14.85%

3 6.93%

4 2.36%

5 0.70%

6 or more 0.28%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

As shown, half of the survey responders have no children under 18 living in their household while the other half of responders have at least one individual under that age residing in their household. The figure below provides a breakdown of individuals over the age of 55 in each survey responder’s household broken down by age segments.

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Figure 5-17

Q20: How many individuals in your household are over the age of 55?

0 52.32%

2 31.05%

1 15.53%

3 0.71%

4 0.19%

6 or more 0.17%

5 0.02%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

As shown, almost half of the survey responders have no individuals over living in their household while the other half of responders have at least one individual over that age residing in their household.

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HOUSEHOLD INCOME The following figure provides a breakdown of the household income for those that participated in the survey.

Figure 5-18

Q19: What is your annual household income?

$75,000-$150,000 42.85%

$150,000-$250,000 31.50%

$250,000+ 12.90%

$50,000-$75,000 12.76%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

As shown, the largest proportion of responders have a household income of $75,000-$150,000 (43 percent). Another 45 percent have a household income of at least $150,000, which is significantly above the national average.

SURVEY OBSERVATIONS Overall Highlands Ranch residents are very active in the arts, events, and cultural activities. Being located in the Denver Metro area, the residents of Highlands Ranch have access to world class arts and entertainment offerings, from a patron perspective, but are less served in the number of ways they can be an active participant in the arts through education, events, and cultural programming in their own community. A majority of respondents support the development of the proposed Highlands Ranch Community Events and Cultural Center and just over 20 percent of respondents were undecided. It is our experience that as the facility concept is further defined and its business model is developed, a strong majority of undecided respondents convert to supporters for these types of projects. It will be important for the HRCA and arts organizations participating in advancing this project to develop an outreach and communication plan that effectively communicates the scope of the project, who it will serve, and how it will be operated.

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PRELIMINARY RECOMMENDATIONS AND NEXT STEPS Based on the market analysis, we see a clear need for an events/performance/cultural arts center for Highlands Ranch, based on the following merits:

§ Both Lone Tree and Parker are subsidized with support for debt service and annual operating support.

§ This indicates to us that additional PAC venues with a focus on commercially produced live performances is not viable, as it currently exists in close proximity and is significantly subsidized in those neighboring markets.

§ Arts education programming, and facilities to support it, appears to be the gap that exists in the market (and region) and what is desired from a community needs perspective. Through the survey and additional market research, we have validated this assumption.

§ PAA’s education programming and plan to scale up their operations significantly sets a good foundation for an anchor tenant relationship with Highlands Ranch.

§ County most likely to support educational centered program to service senior population.

We recommend proceeding to Phase 2 to develop additional understanding relating to a detailed program of spaces, potential sites, business and operating model, financial projections, and cost estimates.