Item 23 CITY COUNCIl REPORT Meeting Date: June 27, 2017 General Plan Element: Economic Vitality General Plan Goal: Sustain Scottsdale as a tourist destination ACTION Adopt Resolution No. 10821 authorizing a FY 2017/18 Tourism Development Fund operating contingency transfer in the amount of $650,000 to the Tourism and Events Department operating budget for use in supporting the 2018 Canal Convergence events. BACKGROUND It started as an idea, a conversation, a meeting and grew into a partnership between the City of Scottsdale, Scottsdale Public Art and Salt River Project. Many others have since joined, all of whom share in the belief that Public Space conceived upon the nature of what supports us, what keeps us here, what inspires our creativity and enables our growth is the reflection of all that is important for sustaining life in this desert city. Canal Convergence is this idea. Since 2012 it has been a place of engagement, a place where international and local artists come together to celebrate a one of a kind community environment and immersive art experience for all, and a new point of pride for Scottsdale residents and businesses. As Canal Convergence began taking shape, the Tourism Strategic Plan adopted by City Council in 2013 outlined the importance of creating a destination event during the tourism industry's shoulder season (May through December). Through the Council appointed Tourism Advisory Task Force (TATF) and Request for Proposal (RFP) process, the city contracted with Webb Management Services to complete a three-phased destination event study. The goal of the study (Webb Report) was to identify events that would: 1. Activate Downtown Scottsdale with increased foot traffic and activities; 2. Raise Scottsdale's international profile and reputation as a destination; 3. Expand tourism into the shoulder season; and 4. Reinvigorate the city's positioning within the overall tourism industry. The Webb Report, developed in December 2015 and January 2016, defined that the market strategy for a destination event must attract out-of-state visitors, must fit with and be authentic to the community, and will require initiative and significant resources. Action Taken City Council Report | Canal Convergence Furthermore, it defined five approaches in creating a destination event: 1. Create an event that encompasses a large, new element but also embraces location, pre­ existing themes, happenings; 2. Relocate, or create a satellite location, for an already branded event; 3. Package a set of Scottsdale's pre-existing festivals and events into a larger, long-term festival; 4. Select an existing Scottsdale event that can be grown and developed to the level of a destination event; or 5. Create a brand new event - noting that the answer might be a combination of these approaches. The report called for a large-scale production that would hold 6-12 events spanning 10-12 days with budgets ranging up to $4 million. Several bike events, food and music festivals, events with a focus on climate change and other green subjects were proposed in that report. The TATF determined not to move forward on any of the proposed event concepts although remained interested in pursuing a destination event concept. During the past 12 months, the Tourism & Events Director and Assistant City Manager met with Scottsdale Arts and specifically with Public Art about Canal Convergence having the potential to be Scottsdale's shoulder season destination event. November was the month discussed based on Experience Scottsdale's knowledge of hotel room night needs. Concepts of what types of events and activities could be expanded or added have initially been discussed between the Public Art Director and Tourism & Events Director. Knowing there was a shared interest, staff began discussing with TATF, the Tourism Development Commission and Experience Scottsdale. Formally, staff and Public Art presented the proposed concept and request for funding to the Tourism Development Commission at its April 18, 2017 meeting, which was unanimously approved by the quorum present (7-0) and to the Tourism Advisory Task Force at its April 26, 2017 also unanimously approved by the quorum present (9-0). ANALYSIS & ASSESSMENT Scottsdale Public Art recently completed a spectacular fifth annual water + art + light Canal Convergence in February 2017. More than 80,000 attendees enjoyed stunning visual attractions featuring artists from around the world - four days of nine large-scale, temporary public art installations positioned in the Arizona Canal, along its banks and in the skies. Similar to other light festivals held in the US and internationally, the event proved to be another exciting way in how Scottsdale celebrates the arts. The Webb Report concluded there is a case to develop destination events based on: 1. Scottsdale is established as a tourism destination and is currently home to a number of festivals and events; 2. While there are a number of festivals and events in Scottsdale already, there are gaps within the major events that take place, particularly in the areas of art, food and culture; 3. A destination event in Scottsdale will need to take place across multiple, well-connected Page 2 of 5 City Council Report | Canal Convergence venues due to the limited number of facilities for large-scale events but noting hotels and resorts \A/ith large-capacity ballrooms and events spaces; and 4. As a recognized leader in the tourism industry, a new event or festival could help Scottsdale maintain this positioning while defining its role in the market in the future. Staff recently requested that its retained qualified marketing research consultant, Bruce Skinner and Associates, review, analyze, and assess the concept of eventually moving Canal Convergence from an in-season 4-day event in February to a non-season 10-day event in November. The report, attached, concluded: 1. Canal Convergence has the potential to be a differentiator for Scottsdale; 2. If the event is going to expand, organizers are going to have to secure significant additional funding from sponsorship and grants; 3. There is a lot of evidence that an expanded event could contribute to city branding efforts and serve as a significant tourism driver during a month that has hotel room availability; and 4. There is tremendous capacity for a multi-faceted, 10-day event, which could celebrate visual and performing arts, and other activities that are comprised of a high demographic audience. Staff and Public Art also researched and reviewed similar event budgets and found that the popular Toronto Nuit Blanche budget for its one-day event is $2.6 million ($1.2 million of this amount from the City of Toronto) and Santa Monica's GLOW one-day event is $650,000 ($300,000 coming from the City of Santa Monica). This collaborative effort will involve both the city and Public Art in the planning and organizing of Canal Convergence for two consecutive weekends in February and March 2018 and more importantly its transition to a 10-day event proposed to be held November 9-18, 2018. The proposed $650,000 would remain in the city's Tourism & Events budget, which will reimburse Scottsdale Arts for expenses made by its Public Art division. Below is a breakout of how the funds would be expended (Table 1) noting that with the exception of $150,000 to seed International artists, no other funding for the November 2018 Canal Convergence is being proposed at this time. Table 1. Expenditures for Temporary Art Installations and Canal Convergence Item Event Date FY 2017/18 Temporary Art Installation - Canal Nov 2017-Mar 2018 $100,000 Temporary Art Installation - Holiday Nov-Dec 2017 $60,000 Canal Convergence - 4 days Two weekends Feb/Mar 2018 $340,000 Contract w/ International Artists for $150,000 November 2018 Canal Convergence $650,000 The transition of Canal Convergence and length of the proposed November 2018 event will require much collaboration not only with the city and Public Art but also other key arts organizations and partners. A list of 25 organizations thus far has been drafted including partners from Scottsdale's Museum of the West to Scottsdale Gallery Association to Taliesin West to ASU SkySong. It will also Page 3 of 5 City Council Report | Canal Convergence require business and marketing plans and the execution of a series of 6-12 events and activities to be created around Canal Convergence that span 10-12 days. Capitalizing on the events current success these additional 6-12 umbrella events to be developed will celebrate other aspects of the arts and be authentic and unique. Community Involvement The proposed Canal Convergence concept was discussed at the April 18, 2017 Tourism Development Commission meeting. As a public meeting, there was opportunity for public comment, one citizen spoke in favor of the proposed funding and the importance of the Canal Convergence. RESOURCE IMPACTS The City's Treasurer's Office has estimated FY 2017/18 bed tax revenue at $19.4 million. Fifty percent of the total bed tax revenue derived from the bed tax, per voter approval, is used for destination marketing to promote tourism (estimated at $9.7 million), and the remaining fifty percent is allocated among tourism research, support for tourism-driven events, tourism-related capital projects, and other eligible uses. The estimated FY 2017/18 undesignated, unreserved ending Tourism Development Fund balance, including Council approved ongoing debt/expenses, is $12.1 million. Staffing, Workload Impact Tourism and Events staff will oversee and collaborate with Public Art on this proposed event. OPTIONS & STAFF RECOMMENDATION Adopt Resolution No. 10821 authorizing a FY 2017/18 Tourism Development Fund operating contingency transfer in the amount of $650,000 to the Tourism and Events Department operating budget for use in supporting the 2018 Canal Convergence events. RESPONSIBLE DEPARTMENTS Tourism and Events STAFF CONTACT(S) Karen Churchard, Tourism & Events Director, kchurchard(a)scottsdaleaz.gov Page 4 of 5 City Council Report | Canal Convergence APPROVED BY Judy^o^e/Bud§ et Direcfor' Date 480-312^2603, ]qoyle@^scotts)i|aleaz.gov Ju^t f7j 2ory Brent StockweTl, ^s^is^rant City Manager Date 480-312-7288, bstockwell(5)scottsdale.gov U).