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CC Spmtg Item1 022619.Pdf gLendaL~’~ california CITY OF GLENDALE, CALIFORNIA REPORT TO THE: Joint fl City Council ~ Housing Authority Li GEDC fl Oversight Board ~ February 26, 2019 AGENDA ITEM Report: Glendale Arts Fiscal Year 2017-2018 Year End Report (1) Council Motion to note and file the Glendale Arts Year End Report for the period of July 1, 2017 through June 30, 2018 COUNCIL ACTION Public Hearing LI Ordinance fl Consent Calendar fl Action Item ~ Report Only U Approved for zk*o ~9 calendar ADMINISTRATIVE ACTION /9 Signature Submitted by: Philip S. Lanzafame, Director of Community Development U~JL)JQ Prepared by: Tamar Sadd, Senior Administrative Officer • Approved by: p Yasmin K. Beers, City Manager 1~vY~’ Reviewed by: Michael J. Garcia, City Attorney Darlene Sanchez, Asst. Director of Community Development , RECOMMENDATION It is recommended that the City Council take the following action: Note and file the Glendale Arts Year End Report for the period of July 1, 2017 through June 30, 2018. BACKGROUND!ANALYSIS The 2015 Lease Agreement between the City of Glendale (“City”) and Glendale Arts (“GA”) for the Alex Theatre (‘Theatre”), and the 2015 Management Agreement for operation of the Theatre both require GA to submit reports to the City on the financial and operational status of the Theatre. Exhibit 1 (attached) are GA’s written and financial reports on total GA activity including the community arts programming fund and Alex Theatre performance for Fiscal Year (“FY”) 2017-201 8. This written report provides a summary of information provided in the year end reports, including an analysis. While the Management Agreement is specific to the Alex Theatre, Glendale Arts is the private non-profit organization charged with managing the Alex Theatre and coordinating resources. As such, the two organizations and their financial operations are examined in this report and in the financial reports. The five year Management Agreement, beginning in 2015 with a five year option to extend, is structured to incrementally move Glendale Arts towards increased self-sufficiency. It transfers the responsibility of funding all Theatre maintenance and improvements to Glendale Arts, while slowly reducing their reliance on City funding by decreasing the management fee from $415,000 to $150,000. This year was the first drop in the management fee from $415,000 to $200,000. While Glendale Arts shows an $85,416 loss, this deficit is caused not by an exceeded expenses budget, but unattained income budget. The main cause of this income deficit was an early adoption of the new reporting standards set forth by the Fair Accounting Standards Board (FASB) for not-for-profit accounting. This change defers restricted fundraising and grant money from the quarter it is received to the quarter in which the expenses are actually incurred, creating a greater “paper loss” than expected. As the change in accounting occurred this year, there is a gap in the efforts of generating new income by staff and what is reflected in the year end report. Major examples of this deferred income include Glendale Arts obtaining a $75,000 Digital Cinema Projector grant from the Ahmanson Foundation which arrived at the end of the fiscal year. This project is not slated until the 1st and 2nd Quarter of FY19, and in adherence to the reporting policies, Glendale Arts deferred the revenue to when the money will be spent rather than when it was received. This grant, combined with a $45,000 Parson’s Grant: re~resents $120,000 in Special Projects / Restricted Income for the proiector which was received this fiscal year, but does not appear as income on the Glendale Arts FY 17-18 books. Like the projector, sponsorship and contributed income received for the 2018 Open Arts & Music Festival & Open Grants Program in FY18 was deferred to the 1st Quarter of FY19 (when the festival actually took place). This represents an additional $75,000 in deferred revenue from FY17-18 to FY 18-19. Page 2 of 6 Glendale Arts & Alex Theatre Year End — FY 201 7-18 Actuals GLENDALE ARTS: FIVE YEAR SNAPSHOT FY2013-14 FY2014-15 FY2015-16 P12016-17 FY2017-18 Actual Actual Actual Actual Actual Income $1,447,073 S1,745,176 $2,227,589 $2,379,553 2,208,756 Expenses $1,702,838 $1,760,759 $2,027,938 $2,265,268 2,294,172 Net Surplus! -$255,765 -$15,583 $199,651 $114,285 -$85,416 Deficit During Fiscal Year 2017-18, Glendale Arts hosted more than 90,000 patrons at the Alex Theatre and 11,000 people at their free community arts events. The Theatre patrons helped generate an estimated $1.7 million in economic activity. This assumes that each patron spent $16.39 in local spending on top of the price of their admission, a formula based on research in the Americans for the Arts & Economic Prosperity Study IV. In addition to economic activity spurred by Glendale Arts patrons, the organization also provides a direct financial impact to the City of Glendale by way of rent, utilities, parking by staff and patrons, event related expenses, and sponsorship of City programs, totaling over $180,000. Glendale Arts remains committed to its mission to integrate arts into the identity, growth and economic vitality of the City of Glendale by presenting programming and creating partnerships that benefit youth, patrons, artists, organizations and businesses into the community and the Alex Theatre. When the Council created the Alex Regional Theatre (ART) Board in 1994, one of their mandates was to provide discounts and subsides to assist local non-profit and community groups to rent the Alex Theatre and bring quality and affordable programs to the public. Glendale Arts retained that aspect of the Council’s charge and over the last decade has given over a million dollars in subsides. As the marketplace continues to become more competitive and more non-profit organizations look to host events, Glendale Arts finds itself extending even more discounts to attract and retain rental users. These subsidies and programs include: • Alex Theatre Rental Subsidy Program: Glendale Arts provided a record amount of rental assistance to resident companies, non-profits and rental users of the Alex Theatre, totaling over $186,000. This is a $45,000 increase over last year. • Open Arts & Music Festival: This event continues to grow in popularity. With the first year attracting nearly 3,500, and the second year nearly 7,500, the third year (which took place in the first quarter of FY 2018-19) brought in 10,000. • GAEdu: This is a technical internship program for high school and college students and offers arts education programs in partnership with local non-profits. • Taste Walk Glendale: Started in 2001 by Glendale Healthy Kids, The Taste of Downtown Glendale highlights the growing and evolving culinary scene in Glendale. This year, Glendale Arts took over as sole producer of the event, rebranding to Taste Walk Glendale. More than 900 people attended and enjoyed food, wine, and beer stations, Page 3 of 6 live music, and family-friendly activities along the route. Glendale Arts used a portion of the raised funds to benefit YWCA’s Camp Y Program to bring arts to youth. Alex Theatre — Year End Programming Highlights The Alex Theatre’s season concluded with a total of 208 bookings. In previous years, the Alex booked 218 in 2016-17, 225 in 2015-16, and 177 in 2014-15. The booking goal for2017-18 as detailed in the Management Agreement is 235. Since the booking goals were set, the Alex Theatre has focused on attracting larger productions such as television shows and multi-day events. Larger shows are desired because they increase reimbursable labor, concessions, and box office fees. But larger productions are also much more demanding on the staff and the building, and as such, require a reduced number of days the facility is in use to ensure proper maintenance. While the Alex Theatre did not meet its booking goal, it exceeded its revenue goal for rental income by $42,631. The Alex Theatre also continued to increase its global draw by hosting appearances and performances by high-profile figures, boosting the Theatre’s status as an attractive and highly sought-after venue in the crowded Los Angeles marketplace. Events included a sold-out Evening with Senator Al Franken in Conversation with Chelsea Handler, 50~ Anniversary film screening of Cool Hand Luke, the Miss Philippines USA Pageant, 2-day sold-out event Evolving Out Loud with Kyle Cease, Glendale Youth Orchestra’s ~ Season, The Nutcracker and other holiday classics, 20°~ Annual Three Stooges Big Screen event, Chic Media’s 2-day Rise Conference, 5th Annual Location Managers Guild International Awards, Michael Yo Comedy TV Special, and in collaboration with the City of Glendale and LA County Supervisor Kathryn Barger, a free screening of documentary film Crows of the Desert — A Hero’s Journey through the Armenian Genocide with a panel discussion with the filmmakers. Year End Numbers of Note: Actual vs. Budgeted • Actual income came in less than what was budgeted by $182,576. Major factors of note: o Individual donations, seat naming, and donor wall contributions fell lower than budgeted by $131,254. While seat naming was included in the budget and kicked off in FY 17-18, the concerted campaign for this fundraising endeavor will begin in FY 18-19 o Glendale Arts A1ex92 Annual Birthday celebration coincided with the La Tuna Canyon Fires. Forgoing fundraising activities to provide uplifting space for community members resulted in an unrealized fundraising potential of $20,000 • Concession sales exceeded budgeted revenues by $30,283 • Production income exceeded budgeted revenues by $20,730 • Labor income exceeded budgeted revenues by $18,759 • Actual expenses came in less than what was budgeted by $84,073 Year over Year Highlights • Concessions up by $32,537.
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