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HomeMy WebLinkAbout12-15-2015 Item 4 Performing Arts Center Strategic Plan Final ReportSEPTEMBER 2015 Strategic Planning Subcommittee John Rolph, Board President, Foundation for the Performing Arts Center, CHAIR Michael Codron, Assistant City Manager, City of San Luis Obispo Victor Brancart, Assistant Vice President - Administration & Finance Division, Cal Poly Ron Regier, Managing Director, Performing Arts Center San Luis Obispo Don Maruska, Consultant "Tammy MacDonald, Stoff Contents PREFACE ................. 3 EXECUTIVESUMMARY ............................................................................................................................ ..............................4 INTRODUCTION 8 INTRODUCTION TO THE PERFORMING ARTS CENTER SAN LUIS OI31SP0 ............................................... ............ ................................ ..8 TEIE STR/vrF.cIC PLANNING REPORT ................................................ ........................ ............. ................................. .................................... 9 RESEARCH....................................................................................................... ...........................1... ..... 10 INSIGHTS AND LEARNING FROM ELSEWHERE .......................................................................................................... .............................10 FINANCIAL ANALYSIS PROVIDED BY CAL POLY BUDGET OFFICI. ............................................................................ .............................11 THE STRATEGIC PLAN .............................................................................. ............................... ............ 14 .............................. STRA'I'EiGIC PLANNING GOALS AND PURPOSE .......................... ........ ..................... .................... ....... ......... ........, ..............14 THREEHIGH -LEVEL STRATEGIES ............................................................................................................................ ............................... lei IMPLEMENTATION........................................................................................................................................................................,.............10 CONCLUSION.......................................................................................................................................... ............................... 21 APPENVIX ..... .............................„............................................................................................................ ............................... 22 A. PRESENTATION OF PAC BACKGROUND: HISTORY, MISSION & ORGANIZATIONAL STRUCTURE BY RON REGIER .............22 B. ARTIS'T'IC MISSION ....................:.......................................................................................................................... .............................22 C. VENUF COMPARISON SURVEY FINAL REPORT ................................................................................................ .............................22 D. OPERATING AGREEMENT FOR THE CHRISTOPHER COHAN CENTER ........................................................... .............................22 Page 2 Preface The Central Coast Performing Arts Center Commission appointed the Strategic Planning Subcommittee (SPS) in October 2014 to develop the first strategic plan for the Performing Arts Center (PAC). The four member SPS consists of one representative from each of the three PAC partners and the PAC Managing Director. Gathering relevant information about the PAC and other performing arts venues was the first step in our strategic planning process. We started by developing a "Level Set" for the PAC. This consisted of a summary of the finances, business model, and history of the PAC covering the past ten years,'rhe 2008 assessment of PAC and Cal Poly Arts by an external consultant, AMS, gave us a helpful perspective on the PAC's history. The second part of our information gathering effort aimed at understanding how other performing arts venues operate and comparing them to the PAC. To this end, we created, sent out and tabulated the results of a comprehensive survey of 9 other venues and made follow -up site visits to three of them. We gained additional understanding of other venue operations by attending the California State University Performing Arts Center Managers Conference at Sonoma State. A second activity was to consult with the Commission and PAC stakeholder groups to get their perspectives on whatthe strategic plan should cover. Early in the process, we engaged the Commission to get their ideas about what topics to cover in the strategic plan and theirhopes for what it would accomplish. We also met with the PAC stakeholders to get their input. From Cal Poly, these included Cal Poly Arts, the Dean of the College of Liberat Arts, the Theatre and Dance Department chair and the Chair of the Search Committee for the new Managing Director. We also consulted the PAC staff, community groups that use the PAC, the Foundation for the Performing Arts Board of Directors and representatives of the City of San Luis Obispo. The Commission approved the SPS' proposed framework for the strategic plan following their July 1, 201 i meeting. This draft report, based on that framework, will be submitted for the Commission's approval. The SPS would like to acknowledge the help we received from other performing arts center managers and staff including Craig Springer, Executive Director of the Santa Barbara Center for the Performing Arts, Celesta Billeci, Executive Director of UCSB Arts and Lectures, Barry McComb, Cultural Affairs Director of the 'thousand Oaks Civic Arts Plaza, and Larry Furukawa- Schlereth at the CSU Performing Arts Managers Conference. From Cal Poly, we thank Doug Epperson, Dean of the College of Liberal Arts and Sciences, Steve Lerian, Director of Cal Poly Arts, Lorlie Leetham, Executive Director of Cal Poly Corporation and Josh Machamer, Chair of the Theatre and Dance Department for their help. Community groups including Bettina Swigger, Festival Mozaic, Lisa Deyo, Deyo Dances, Sharon Dobson, Opera SLO and Wendy Eidson, San Luis Obispo International Film Festival met with us and gave us their perspectives as did the Board of Directors of the Foundation for the Performing Arts Center. Katie Liclrtig, City Manager of San Luis Obispo, provided helpful guidance. And members of the Central Coast Performing Arts Center Commission guided us throughoutthe process. Don Maruska ably facilitated our meetings with the Commission and stakeholders as welt as contributing his knowledge and expertise to this strategic plan. Tammy MacDonald was staff to the SPS and contributed in numerous important ways. Finally, I would like to thank my fellow members of the SPS, Victor Brancart Michael Codron, and Ron Regier for all their work and insights in carrying Out this strategic planning process and preparing this report. John Rolph Chair, PAC Stroteyic Planning Subcommittee Page 3 Executive Summary There were several reasons for embarking on a strategic planning process for the Performing Arts Center San Luis Obispo (PAC) at this time. First, during the two decades the PAC has been open, the area's entertainment market has become more competitive. Numerous new entertainment venues and alternative delivery systems for performance and information dissemination have come into existence, available for San Luis Obispo County arts and leisure consumers. Related to this factor, consumer expectations have evolved and continue to evolve and the PAC facility and its design are now nearly 20 years old. Second, Ron Regier, the PAC's founding Managing Director is retiring at the end of 2015. It is an appropriate time for an assessment of PAC operations, and his experience and advice inform this strategic planning process. Third, the new Managing Director will need a roadmap in order to move forward successfully. We hope that our recommendations provide helpful strategic direction for the new PAC Managing Director. The Central Coast Performing Arts Center Commission appointed the Strategic Planning Subcommittee (SPS) in October 2014 to develop the first strategic plan for the PAC. The SPS consists of an appointee from each of the three PAC partners, plus the PAC Managing Director. This strategic plan is aimed at the future. It is critical that the PAC continue to have sound financial and artistic footing in the next decade. To achieve this goal, we recommend several strategies for sustaining and strengthening the PAC. They address successfully managing the venue, ensuring a diverse and successful base of client programming. PAC Revenues The pie chart below summarizes, in rough terms, current PAC revenues. The three partners, California Polytechnic State University (Cal Poly), the City of San Luis Obispo (SLO), and the Foundation for the Performing Arts Center (h'PAC), as specified in the PAC operating agreement contribute about bl1'Yo of revenues required to operate the venue. The partners' contribution is agreed to be two thirds, one sixth, and one sixth between Cal Poly, SLO, and FPAC, respectively The remaining 40% of PAC revenue, "earned revenue," comes from facility rental, labor fees billed to PAC clients, and consumer fees paid when patrons purchase tickets. The largest client, Cal Poly Arts, generates about half of PAC earned revenue through its programming. The "Other Clients /Activities" pie piece consists of community performing groups, independent presenters, and other campus and community activities and special events. An important consideration in sustaining the PAC's future financial health is promoting robust and stable client programming. Attracting and keeping a financially successful and diverse client base going forward is particularly important since the PAC gains half of its earned revenue from a single client. Our recommendations given below are largely focused on sustaining and promoting PAC clients' success both in attracting audience and in their own fundraising activities. i 'The PAC Operating Agreement between the partners does not allow the PAC itself to take oil a major presenting role. The inotiva Lion is to prevent the PAC and its partners Prom being solely responsible for the financial risk that comes with being apresenter. This limitation on presenting underlies our focus on promoting the success of PAC clients. Page 4 Sources of PAC Revenue by contributors that support PAC's operations City of SLO 10% We recommend three high -level strategies for the PAC; • Maintain the PAC as a State -of the -Art Facility • Strengthen the PAC's Long Term Financial Sustainability • Serve the Community and Campus Well Strategy 1: Maintain a State -of -the -Art Facility Other is /Activities 20% The fact that the PAC is heavily used makes a robust maintenance and capital improvement program critical. The Major Equipment Maintenance, Repair, and Replacement Program (MEMRRP) has been essential to maintaining the PAC in state of the art aesthetic and performance condition. The PAC's MEMRRP reserve fund has funded major improvements and long -term PAC financial planning has created numerous opportunities for FPAC to fund desirable capital improvements through private contributions. Examples include the Forbes Pipe Organ, the Barco Projector, and the Meyer Sound Constellation Acoustic System. Therefore, to maintain the PAC as a State -of- the -Art Facility, we recommend that the PAC: Continue too nd the MEMRRP at a sufficient level to achieve this strategy Maintain a prioritized short- and long -term facility maintenance plan to inform investments in the replacementund repair program Curate a comprehensive capital investment "wish list" fbr equipment and facility amenities to enable donor - supported acquisitions Page 5 Strategy 2: Strengthen the PAC's Long -Term Financial Sustainability Since 40 percent of PAC revenue comes from client programming, maintaining or even increasing earned revenue is essential to sustain the PAC business model. The PAC can contribute to client success in a variety of ways, The PAC can raise awareness levels on campus and in the community. Currently, the PAC has a modest program to promote performances in its venues, playing a decidedly secondary role to the client's marketing efforts. it is clear from examining how other facilities operate that the PAC has the potential to increase its visibility in the community by building the PAC brand to serve as an umbrella, strategically supporting all performances presented in the hall. We recommend that the PAC: Make a conscious effort and strategic investments to contribute to client success, by taking steps such as: Invest to a greater degree in modern, integrated, collaborative marketing Be a more visible participant in the local arts ecosystem, e.g. "Take it to the Streets" Providing more value -added services at the PAC would benefit both patrons and clients. Proactively making the PAC experience more enjoyable, through improved audience hospitality, will make it more likely that patrons will return more frequently. We recommend that the PAC: Enhance the patron experience, by taking steps such as: v Improve the concessions program Develop a patron 'concierge'service at performances Enabling on enhanced social media experience The SPS venue survey and visits also made clear that contributed income must be an important part of the _______ __: _�._. _ c_. _______.__r.. ____ • ._c ___ mi__ -I C ____i_i e__.__�_ _ 61 r�i�vuic ivy a�iy pi�i iii iiiiii� a� �� vi�aiiii.auvii. i iic -I AC wuiu illi�icx�c a Niv�iuiii vi auNpoi liiig iia clients' efforts to engage the communityto raise needed funds. We recommend thatthe PAC: • Support client organizational capacity- building, taking steps that may include: i Helping facilitate strategic planning1murket research efforts Growing the Venue Access Program, if the pilot effort is successful In addition, we recommend that the PAC: • Examine its business model to determine whether and how it may be possible to lessen the client and consumer financial burden, thereby making the PAC more affordable, Page 6 Strategy 3: Serve the Community and Campus Well Community access and high - duality programs are hallmarks of performing arts centers associated with universities such as Cal Poly. The PAC hosts a diverse set of performances and programs. PAC outreach activities, particularly to young audiences and performers, also contribute to the sense that the PAC provides a foundation supporting a vibrant local arts ecosystem. In order to serve the community and campus well, we recommend that the PAC: Continue to facilitate access through a variety of programs and outreach activities Increase efforts to support students inspired by Cal Poly's "learn by doing" model Promote and support efforts to diversify and grow programming and participation in order to build audiences In the two decades since its opening, the PAC has been remarkably successful, both artistically and financially. This success has been achieved through the close and unselfish cooperation of its three partners in the PAC's unique business model and governance structure, which is memorialized in the Operating Agreement for the Christopher Cohan Center entered into on March 31, 1993 and amended on April 15, 2002 (the "Operating Agreement "), a frilly executed copy of which is attached as Appendix D. Nothing in this Strategic Plan Final Report is intended to modify the partnership or change the rights or obligations of any of the partners as set forth in the Operating Agreement. As the PAC moves into its third decade, we expect that this partnership will continue to successfully guide the PAC to take on the challenges that will arise. Page 7 Introduction INTRODUCTION TO THE PERFORMING ARTS CENTER SAN LUIS OBISPO The Performing Arts Center San Luis Obispo (PAC SLO) would not have been created but for the partnership between Cal Poly, the City of San Luis Obispo and the Foundation for the Performing Arts Center (FPAC). It would not be the venue it is now without the partners' sustaining cooperative interest. It is important to understand that the PAC is not a presenter or producer of events. The PAC is a rental hall and the presenters and producers who bring or create performances are PAC "clients" mWW CAL POLY X14 SAN LUtS 088 S'4 L ARTS Connecting Artist with Audience The most important result of what the PAC does is to connect an artist with an audience. The PAC sells the tickets for all events that take place in the venues, but the sales revenue belongs to the client, PAC event marketing issupportive of but secondary to, publicity created and paid for bythe client, The PAC offers the venue: a state -of- the -art place where the artist and audience meet. Staff and Personnel PAC staff includes 15 frill -time people, 150 part -time and production over -hire crew, as well as 250 volunteers, mostly ushers. Events at the PAC require certain services contracted with Cal Poly, including fiscal services, concessions & catering, parking & security, and cleaning & maintenance, IT technical support plus utilities, which are all in the PAC budget. "There are Cat Poly offices that provide additional services and support, including Hnman Resources and Contracts & Procurement. Page 8 Governance The Managing Director manages the building and the services it provides and reports to the Cal Poly VP for Administration and Finance (Cindy Villa), who sits on the Commission. The VP reports to President Armstrong, The Central Coast Performing Arts Center Commission (CCPACC) is the 501 c 3 advisory body with 5 members appointed by Cal Poly, 2 appointed by the City of SLO and 2 appointed by FPAC. The Commission has specific areas of interest and influence, including budget, program, policy and facility condition and is advisory to both the Managing Director and the Cal Poly President. THE STRATEGIC PLANNING REPORT The PAC Strategic Planning Report that follows is presented in three sections. The first section incorporates the research thatwas conducted by the SPS to establish a "level -set° for the PAC itself, particuIarlyas abasis for comparison with other venue business models and a hnmdation for report findings. The second section presents three strategies and some suggested tactics to serve as a road map for the new manager that lie or she will develop further in consultation with the PAC Commission. Third, the last section is an acknowledgement that some of the strategies desired may very well require additional resources, leaving it again to the new Managing Director to develop and propose those details and tactics. Finally, this plan is considered to be a "living" document that will be referred to, measured against, clarified, elaborated upon or amended as time passes. Page 9 Research INSIGHTS AND LEARNING FROM ELSEWHERE Venue Comparison Surve • Confirmed that it's hard to find /compare with a like business model: The PAC's specific 3 -party partnership and governance structure does not exist elsewhere P, The PAC model, not incorporating presenting function and /or'fundraising, is rare. • Confirmed that the PAC's Major Equipment Maintenance, Repair & Replacement sinking fund is not common. • Confirmed that the PAC expends fewer resources on marketing than most, but this is clue to the fact that the PAC does not present performances of its own. • Discovered that the combined PAC /Cal Poly Arts (presenting) /FPAC (fundraising) budgets, including contribution to reserves, appear to be close to the survey's median of $5.85 million. Virtually all venues rim an annual operating deficit, to be covered primarily by their institution ondlor donations. • Discovered that the PAC generally conforms to the norms in programming offered for classical music, dance and theatre /opera; however: The PAC appears to host half as many speakers and conversely twice as many comedy shows. The PAC hosts significantly more pop music than the norm. As a percentage, this genre is off set by a sianificantly lower "Other" number for the PAC, • Discovered that the majority of venues operate their own concessions and catering operation, but that these operations rarely contribute in a significant way to the venue's positive bottom line. Venue FieId Trip • Discovered that it's likely advantageous to be more visible in the local arts ecosystem; creating more, robust umbrella publi city /promotion for all events & "lifting all boats." • Discovered that it's possible to play a more supportive role in marketing and organizational development to help clients become more successful in fundraising and selling tickets. • Confirmed that venue and program fundraising efforts can be distinct, compatible, supportive and mutually successful. Music - Classical 22% 25% Music - Pop 15% 25 % Dance - Ballet 6% 5% Dance - Modern 7% 5% Theatre 5% 2% Broadway 7 % 10% Opera 2 % 5% Speakers 9% 5 % Comedy 50/4 10 % Other 22% 80/0 • Observed, at a facility with a presenting program, that an imbalance in revenue sources from the lack of robust, successful fundraising and sponsorship was reported to cause fiscally conservative, 'popular' performance choices, lacking the quality and diversity of genre and impact that PAC SLO aspires to host and has known for nearly 20 years. Page 10 FINANCIAL ANALYSIS PROVIDED BY CAL POLY BUDGET OFFICE Organization The PAC operates under a unique partnership model as prescribed in the Operating Agreement. At the inception of the PAC, it was the intent that the Center operate for the mutual benefit of the University and the people of San Luis Obispo County on an on -going basis. To that end the CCPACC adopted a financing model whereby 2/3 of the PAC's annual operating budget would be funded by the University with 1/6 each funded by the City of SLO and FPAC. The assessments are calculated as the net of budgeted revenues less expenditures and reserves. Included in this calculation is all annual contribution to a sinking reserve fund established for the purpose of financing major repair and replacement projects as the building ages. The Major Equipment Maintenance, Repair and Replacement Program (MEMRRP) is also a unique feature of the partnership and demonstrates a commitment to maintain the PAC as a state -of-the -art venue. This model has worked well since its adoption and has proven workable both in good economic times as well as in clown turns. The official financial records of the PAC are maintained on both the University's and Cal Poly Corporation's accounting systems. A consolidated statement of financial operations including operational and long -term reserves is prepared annually and distributed to all partners. Summary of Financial Operations Figure 1. Ten Year Summary of Operations with the major budgetary categories. 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Financial Opelratio s `Fen Year Summary 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Operating Revenues Total Operating Expenditures rota] Partner Assessments Net Operating surplus /(deficit) Operating Reserve While revenues and expenditures fluctuate depending on economic times, the Partner assessments remain steady and predictable, the PAC operates at a surplus, and the Operating Reserve continues to increase all indicators of a solid financial model. Page 11 Expenditures by Category Figure 2. Expenditures by Category for fiscal year 2013 -2014 Maintenance 4% Parking 3% Utilities 6% Other 2% Fiscal services 5% Supplies and services 8% Long Term Maintenance 13% As expected, salary and benefits comprise the largest expenditure category. All full -time employees are State P1.,yc'-,S .,1.,.,-. 2 n tc rT , .;th ai an, —' , .,I-„n t cc ,.,.,rL., 'T'4.,, T ., - T.,, -.r, represents the annual contribution to the MEMRRP: Utilities, Parking, Maintenance, and Fiscal Services are supplied by the University and charged back to the PAC. Page 12 Revenues by Category Figure 3. Sources of PAC Revenue by contributors that support PAC's operations. City of SLO 10% Other is /Activities 20% On the right hand side of the chart - or what could be classified as non -tax support - are FPAC with 10% donor - funded contributions, while Cal Poly Arts and Other Client Groups each contribute 20 %. On the left - hand side - essentially tax support - are the City of SLO and the University for a combined total of 50O /o. In total, PAC's sources of revenue are a fairly balanced model with 50% of tax support and an equal 50% of non -tax support. In other words, the PAC is not hugely reliant on a single source of revenue to support operations. Page 13 The Strategic Plan STRATEGIC PLANNING GOALS AND PURPOSE The Commission recognizes that the PAC has been extremely successful over its first twenty years. Even though its operating model is unique, it has served the partnership well and enabled staff to focus on accomplishing the PAC's artistic mission. This Strategic Plan is aimed at the future. It is critical that the PAC continue to have sound financial and artistic footing in the next decade. To achieve this goal, we recommend several strategies for sustaining and strengthening the PAC. They address successfully managing the venue, ensuring a diverse and successful base of client programming. We hope that our recommendations will provide helpful strategic direction for the new PAC Managing Director. THREE HIGH -LEVEL STRATEGIES The SPS has identified three high -level strategies. Each of these strategies is supported by findings and actions needed for implementation. The actions are not prescriptive, but are illustrative of the types of activities the new Managing Director may wish to recommend pursuing to achieve the objective. These strategies are: 1. Maintain a State -of -the -Art Facility 2. Strengthen the PAC's Long -Term Financial Sustainability 3. Serve the Community and Campus Well Strategy 1: Maintain a State of the Art Facility Our key findings: ❖ The PAC is heavily used, so the Major Equipment Maintenance, Repair and Replacement Program (MEMRRP) focus is a critical success factor. The PAC is ahead of the curve by maintaining a capital reserve fund, which is has made major improvements possible. + PAC financial planning creates more opportunities for the Foundation for the Performing Arts Center to fund desirable capital improvements through private contributions. One of the greatest successes of the PAC has been its ability to stay true to its early commitments to maintain the building in "as -new" condition. This has translated into a great appreciation of the facility by performers and patrons alike, and contributes immeasurably to the "sense of place" a person feels when in the building or plaza. This result has not been achieved by accident; it is the result of careful finance planning and thoughtful financial management by the existing staff. The SPS found that the M EMRRP is an important tool for achieving the objective. Page 14 Figure 4. Total PAC uses during the past season. 442 total uses during the 2014 -2015 season 130 ! 110 Performances ULO i 16-- ._ Rehearsals Outreach Activities Community Activities The PAC is p heavily used and carelld attention to keeping the 159 facility in like - new condition has been a critical success -_ factor. Cal Poly Activities in addition, the PAC has maintained a capital reserve, making major improvements possible. One strategy that has been employed with great success is using the PAC's reserves to plan for and fund important projects, and seeking to leverage this funding with contributions made through the Foundation for the Performing Art Center (FPAC) to accomplish multiple objectives. Examples of MEMRRP projects funded by the reserve include new seats in the hall (2012), stage floor refinishing (2012), and the Colleen Moore Green Room re- design (2014). Important FPAC projects made possible through contributions include the Forbes pipe organ (2007), the Constellation audio system (2012), and the Spheres public art project in the plaza (2014). As a result, we recommend the following actions; 1) Continue to fund the MEMRRP at levels necessary to maintain the facility in state -of- the -art condition. 2) Maintain a prioritized short- and long -term facility maintenance plan to guide investments in the replacement and repair program. 3) Curate a comprehensive capital investment "wish list" for equipment and facility amenities to enable donor - supported acquisitions. Strategy 2: Long -Term Financial Sustainabill Since 40% of PAC revenue currently comes from client programming, maintaining or even increasing earned revenue is essential to sustain the PAC business model. The PAC can contribute to its client's success in a number of ways. During the outreach process, the SPS met with a variety of stakeholders, including clients, patrons, performers, staff, and representatives of the partners. In addition, our research took us out into the real world to see and better understand other venues and their financial models. The largest take -away from this effort is that client success is essential to sustain the PAC model. Furthermore, the PAC has a role to play in contributing to client success by providing value added services and supporting client organizational Page 15 development. We have translated our findings into implementation recommendations. The new Managing Director will play a major role in determining how and when each strategy might be implemented. Key Findings: Client success is essential to sustain the PAC model ❖ The PAC can contribute to client success by; Raising awareness levels on campus and in the community Providing value -added services i> Supporting client organizational development Keeping costs reasonable ❖ PAC revenue comes from a variety of sources, but can be split approximately 60 % -40% between contributed and earned revenue, respectively. City of SLO 10% 1hq, Other Clients /Activities 20% Our first recommendation to insure the PAC's long -term sustainability is building the PAC brand to serve as an umbrella that covers all of the performances produced in the hall. By enhancing the brand and engaging in an integrated marketing and PR effort, the PAC can reach new audiences and offer a unique and enjoyable experience. Currently, the PAC treads lightly in this area and the SPS believes there is capacity to increase marketing activities and build audiences in a way that contributes to client success. A second area where the PAC can add value for its patrons and clients is by improving audience hospitality. The more enjoyable and responsive the PAC is to audience needs and expectations, the more likely patrons will be to return frequently. A third opportunity that we identified to add to the PAC experience is by enabling patrons to engage with the artist and the art form. This might be through bonus content available on -line, social media features, in- person meet -and- greets with the artist, or even additional performances outside the four walls of the PAC. This last concept to "take it to the streets" is an idea that came up during a brainstorming session of the SPS. Page 16 The concept is to support organizations that want to reach out to new audiences by providing performances in public spaces throughout the County, e,g., in the Mission Plaza. The goal would be to increase the reach of PAC marketing efforts by using the performances as another way to invite the public to experience the artist at the PAC. Fourth, supporting client organizational development is a new area to which the PAC can potentially contribute. An important lesson the SPS learned on our field trip visiting other venues is that contributed income must be an important part of the revenue picture for any performing arts organization, In other words, over- reliance on ticket sales carries with it risl<s that could otherwise he mitigated through a robust development regime. The PAC should support its clients' efforts to engage the community to raise needed funds. In addition, the PAC's new Venue Access Program may provide an effective alternative model that can help smaller organizations offset some of the financial risk of performing at the PAC. To the extent that the PAC can help organizations grow through this or similar programs, it would be in the best interests of the PAC to do so. In summary, the key recommendations associated with this strategy are: 1) Make a conscious effort and strategic investments to contribute to client success, such as a) Invest to a greater degree in modern, integrated, collaborative marketing. b) Be a more visible participant in the local arts ecosystem, e.g., "Take It to the Streets" 2) Enhance the patron experience, such as: a) Improve the concessions program b) Develop a patro n 'concierge' service at performances c) Enable an enhanced social media experience 31 Support client organizational capacity - building, such as: a) Help facilitate strategic planning, and market research efforts h) Grow the Venue Access Program, if the pilot effort is successful 4) Examine the PAC business model to determine whether and how it may be possible to lessen the client and consumer financial burden, thereby making the PAC more affordable. Page 17 Strategy 3: Serve the Community Well Community access and high - quality programming are hallmarks of performing arts centers associated with universities such as Cal Poly. The PAC provides substantial community benefits by hosting a diverse set of performances and programs from a wide variety of organizations. PAC outreach activities, particularly to young audiences and performers, also contribute to the sense that the PAC provides a foundation supporting a vibrant local arts ecosystem (the trunk on the tree that supports the growth of all the leaves). The PAC Commission supports the notion that the doors of the PAC should be open to the community, and this third strategy identifies ways that this can continue to be the case. The key finding Associated with this strategy is: ❖ The PAC can serve as a resource for campus and community arts organizations, ensembles and artists. In the case of youth as performers and audience, the SPS noted that for many youth, their first experience with the PAC is actually on stage performing. This also has the benefit of bringing parents and families into the hall, creates positives associations for them, and increases the likelihood of subsequent attendance of other performances and events at the PAC. Additionally, the Commission recognizes the substantial learning opportunities available at the PAC - which might even be thought of as a "performing arts laboratory." For example, using the Pavilion, make -up rooms, or other facilities as a classroom to educate about both backstage and front -of- the -house production components is desirable - though presents logistical challenges. Internships, summer camp stipends, and scholarships are other ideas that have been discussed and presented to the SPS, While these are items for possible implementation by the new Managing Director, the Commission sees the value of making these efforts to ensure that Cal Poly students have multiple opportunities to experience the PAC during their time on campus. As alumni, when they will look back at their college days, they will associate the PAC with what makes Cal Poly (and San Luis Obispo in general) such a special place. Page 18 The following key recommendations are highlighted for future implementation: 1) Continue to facilitate access to the PAC through a variety of programs and outreach activities. 2) Increase efforts to support students in the "learn by doing" model. 3) Promote and support efforts to diversify and grow programming and participation in order- to build audiences. Page 19 IMPLEMENTATION Timeline & Cost The SPS does not offer specific recommendations on how to implement the strategic plan recommendations presented in this report. Deciding on how and on what schedule to implement-these recommendations will be on the agenda of the new Managing Director in consultation with the Commission. A number of our recommendations are likely to incur additional costs. The audience- building strategy may include: ❖ Ensuring that the PAC serves as a resource for campus and community arts organizations, ensembles and artists. ❖ Investing in modern, integrated, collaborative marketing ❖ Creating a "PAC presents" opportunity fund for new presenters ❖ Funding internship and summer camp stipends and grants to support a "learn by doing" initiative Audience - building efforts can be expected to ultimately offset their costs through higher attendance, generating additional ticket fee revenue, However, initial additional funding will be needed for these initiatives. Accurately costing these out requires details about implementation that remain to be specified. A rough idea of cost may be gleaned by a looking at the current PAC budget for marketing. Including staff and paid advertising, it is $117,000 or 3.85% of the PAC budget. If this were roughly doubled in order to support these audience - building initiatives, an additional $100,000 to $150,000 would need to be found in the PAC budget. Page 20 Conclusion In the two decades since its opening, the PAC has been remarkably successful, both artistically and financially. This success has been achieved through the close and unselfish cooperation of its three partners in the PAC's unique business model and governance Structure. The aim of this strategic plan is to provide the incoming Managing Director and the Commission, consistent with the obligations and rights set forth in the Operating Agreement, with strategic direction to assist them in the managing of the PAC going forward. As the PAC moves into its third decade, we expect that this unique partnership will continue to successfully direct the PAC as it takes on the challenges that will inevitably arise. Page 21 Appendix A. PRESENTATION OF PAC BACKGROUND: HISTORY, MISSION, & ORGANIZATIONAL STRUCTURE BY RON REGIER B. ARTISTIC MISSION C. VENUE COMPARISON SURVEY FINAL REPORT D. FULLY EXECUTED OPERATING AGREEMENT FOR THE CHRISTOPHER COHAN CENTER ENTERED INTO ON MARCH 31, 1993 AND AMENDED ON APRIL 15, 2002 Page 22 Presentation of PAC Background INTRODUCTION TO THE PERFORMING ARTS CENTER SAN LUIS OBISPO The Performing Arts Center San Luis Obispo (PAC SLO) would not have been created but for the partnership between Cal Poly, the City of San Luis Obispo and the Foundation for the Performing Arts Center (FPAC), It would not be the venue it is now without the partners' sustaining cooperative interest. It is important to understand that the PAC SLO business model and structure is more complex than any other with which we are familiar. This is due, in part, to three factors: 1. The partnership and the operating agreement among the partners, which stipulates that the PAC not be a presenter or producer of events. The PAC does not contract with artists. The PAC is a rental hall and the presenters and producers who bring or create performances are PAC "clients" 2. The Central Coast Performing Arts Center Commission (a 501 c 3 not- for - profit corporation) is a constituent entity with members appointed by the partners, which serves as a formal advisory body with specific areas of interest and influence, including budget. programming, and policy. 3, All fundraising for the venue is done by FPAC, a conumumity -based 501 c 3 not- For - profit corporation. CAL POLY }AN Y.VIS OaISrd 1 Y PAC Clients Who are the PAC clients? Below is a list of the presenters who brought performances to the PAC during the 2014 -15 season. Presenters do not create work; they, present the i-vork of others. There are national and A -1 international service organizations that provide networking, professional development and advocate for presenters' interests. CAL POLY PRESENTING ORGANIZ, • Cal Poly Arts • GALA • Otter Productions • SBL Entertainment • Artbeai, Inc. • Monarca • SLO International Film Festival • Rotary Club of San Luis Obispo cle Tolosa ARMS Producing Organizations The producing organizations that are clients of the PAC are typically local not - for - profit organizations or school groups. These organizations alt create work that is performed on the stage. Below is the list of producing organizations who were clients of the PAC in 2014 -15. CAL R)LY PRODUCING ORGANIZATIONS • FestivalMozoic • ClYlc Ballet of SLO • Vocal Arts Ensemble Academy of Dance • Cuesta Master Chorale CORE Dance Company • Son Luis Obispo Symphony • Ryon's AmerIcanDonce • SLO Youth Symphony Detios Performing Arts Center • ON Poly Music Department SLO High School & Laguna Middle (] performing encerrtaresl School • Cal PDIy Theatre b Dance Morro Bay High School E Los Osos Deparirnenl Middle School • Cat Poly %Gemila►bqulIy Center Atoscadero High School ( "Voglm Monologr►es "I • KetrlkProducflans • Central Coast Ctt;fd<en'sChoir • Baflef Theatre of SLO SLO County Mack Rock • Opwa SLO ARTS CaNtexNa Theatre Center • County Honor Band Altogether, there are more than 30 arts presenters arid producers who are regular clients of the PAC, 10110 Event Producers Another category is labeled event producers. Most of these events involved the presentation of a speaker- or presentation, rather than a performance. This is a list of other kinds of events that tookplace at the PAC in 2014 -15. The PAC staff deals with a client for every performance or event that takes place, in the Cohan Center or Spanos Theatre - that's nearly 200 per year at the present time. L POLY - - - OTHER EVENTS Cal Poly Motor Evenls: SOAR Community Special Evenfs: • rola conlofence C.Wly AcouL:ny Clrn[fu +liioi� • WOW SYC> C. nfJf7117ei l.FjpUt7r5�try) f'1'Ceg'.1n9 • (�r•7fiUC]l H ?YlS • SlC> wren Servi 5}ic;wz}a.Se • of: rrH�auS+~ �.�IvchrySlG Evster servicce • F' rc35idetd '4/{q"jviSUIYG:AtrUG €I conferences ARtlS Connecting Artist with Audience The most important result of what the CAL POLY PAC does is connect an artist with an Le itdience. Marketing and ticket sales comprise approxunately 10% of the: PAC's annualexpenditUres- Twenty percent of that, or about 2 %, is spent on advertising. Overall, the PAC allocates just ender 4M) of its bodgeton marketingstaffand advertising. _ 1 t. . , s ►. The PAC sells the tickets for all events that take place in the venues, but the sales wars revenue belongs to the client, A -3 Financial Support For a presenting or producing organization, ticket -sale revenue generally covers 50 % -70% of its total expenses. The remainder typically comes from avariety of coil tribtirLed income sources. The presenter or producer must bring on donors who support the organization, sponsors who support the performance, or investment hackers for commercial promoters, who could share in any profits that might be generated. CAL POLY Staff and Personnel The PAC offers the venue: a state -of -the -art place where the artist and audience meet. Who is involved From the PAC itself? PAC staff and volunteers: ] 5 full -time people 30 regular part- timers 125 over hire part -time, intermittent production crew 250 volunteers Events at the PAC require certain services contracted with Cal Poly, including: Parking and security Custodians and maintenance Concessions and catering A -4 The PAC is not directly charged for Concessions (patron pays) and catering (client pays), but the cost of parking, security, cleaning, and utilities are in the PAC budget. All of the personnel associated with these services are directly involved in connecting artist with audience, but we do not directly supervise any of them. Cal Poly Support Services The green ring represents other Cal Poly offices that we lean on for services and support. This process is on- going, all the time. There are more too, but these are the primary ones: Cal Poly Corporation for fiscal services. The PAC has a contract with CPC and pays a fixed amount annually for these services. Campus Dining, tinder CPC, also oversees concessions and catering operations campus - wide, They hold aliquor license for the PAC. State Facilities provides a huge variety of services for the venue, including custodial, maintenance & repair, and utilities. We are billed for those services as well as for project management. However, they routinely provide oversight and consultative services for which they do not bill us directly. State Human Resources assists the PAC with all of its personnel needs - hiring, evaluation, discipline, as well as strategy and training related to staffing and supervision. There is no charge for the services they provide. State Contracts and Procurement help the PAC with all of its contractual obligations with clients and vendors, as well as purchases of a certain magnitude, There are no charges for these services. A -5 State ITS provides technical support for computing and interaet connectivity. The PAC has a service Level agreement (SLA) and plays a fixcd amount annually. Advisory Body The final ring; is the 501 c 3 advisory body, the Central Coast Performing Arts Center Commission (CCPACC). There are nine members; 5 appointed by Cal Poly, 2 appointed by the City of SLQ and 2 appointed by FPAC. It typically meets quailerly and has specific areas of interest and influence, including; budget, programming, and policy. CCPACC is also deeply interested and involvcd in facility condition and care. Managing Director The Managing Director manages the building and the services it provides; keeps things running smoothly. A rough estimate of the MD's division of labor would indicate: 40% on facility management 40( /0 on managing the PAC's various relationships, internal and external 20% on programming, scheduling, and marketing The MD reports to the Cal Poly VP for Administration and Finance (Cindy Villa), who sits on the Commission, The VP reports to Cal Poly President Jeffrey Armstrong. The CCPACC is set up to be advisory to both the M D and the university president. A -7 Artistic Mission THE ARTISTIC MISSION OF THE PERFORMING ARTS CENTER IS TO: 1. To actively encourage full, broad -based facility use, featuring a schedule of varied, high quality arts events designed to serve diverse audience interests. 2. To actively support local arts groups, providing a range of quality services which encourage and enable them to reach their maximum potential. 3. To promote use of the Center and its services to potential clients from outside the community, in a manner which supports and enhances local arts groups. 4. To provide a consistent, high quality-experience for the Center's patrons and clients. March 7, 1996 B -1 PERFORMING ARTS CENTER San Luis Obispo Appendix C: Venue Comparison Survey Report Table of Contents I. Introduction ............................ ............................... 1 II. Methodology ............................ ..............................1 III. Demographics ........................ ............................... 1 IV. Survey Results ......................... ............................... 2 V. The Survey .............................. ............................... 6 Introduction The Strategic Planning Subcommittee conducted a survey in the spring of 2015 of ten similar performing arts venues on the west coast. The purpose of the survey was to gather data and compare operating models to that of the Performing Arts Center San Luis Obispo (PACSLO). The survey included questions about the venue's operating budget, patron experience, marketing, and programming. Items on the survey included the following topics: • Whether or not the venue was a presenter + annual operating budget • Concessions, ticketing, and parking • Competition and marketing practices Note: The complete survey questionnaire is included later in this document for reference. Methodology The survey was developed with guidance from the PAC Managing Director Ron Regier together with input from the other subcommittee members. The survey respondents were selected to encompass related models of ownership and management in venues of similar sire throughout the west coast. The survey was conducted oriline with initial contact made via telephone for introduction purposes. The respondents were instructed to provide financial data according to their most recently completed fiscal year. Twelve venues were selected, ten completed responses were received. Three of the .responding venues were also visited in person by the Subcommittee after the survey was completed. The responses were imported into Microsoft Excel and a matrix was prepared and distributed to Subcommittee members for review and discussion. Demographics t'enues surveyed represented three distinct categories of ownership /management model combinations: • School /University - 4 • Not- for -profit - 2 • Nfunicipahty (city /county) - 4 VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -1 Survey Results Organizational/ Operating Model Is your organization /venue a presenter? No 0 Comments We host approximately 350 events each year and present approximately 30 performances in- house. Only occasionally - we have eight resident companies who put on the majority of the work that appears on our stage. In addition to a presenting organization, we work with Student groups, University administrative organizations and the .Nlusic and Theatre and Dance departments. U ,'e have just retutm a! tr, presenting after a 5 year hiatus. \X c hope to present 12_ 15 shows in our 15 -16 season. Budget/ Financial What is your annual operating budget? 0 y 'f. -1 5 i -6 6 i -y 8 -9 9-10 Annual operating budgets for the ten venues ranged from 3.8 to 9.8 mullion dollars with a median of 5.85 million dollars. Does your operating budget include facilities /equipment repairs and maintenance? Response Count Yes 8 No 2 VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 i Does your organization /venue have a reserve fund specifically for facility /equipment maintenance and repairs? This reiponse 2 as of particular interest to the Subcommittee in comparing the existence of the Pei. fonrring fAYts Center San Luis Obispo 's Major Equipment Repair and 13eplacement Program, avhich is a fixed component of ils annual operafing budgef. Does your earned revenue typically cover your operating and facility costs? Response Count Yes 1 No 9 How is that deficit covered? Foundation /Endowment 2511-'0 2 City /County 25° 0 2 School /University 50°x0 4 Donations 62.5% 5 Percentages add to over 100"r) because some venues had more than one source. VENUE COMPARISON SURVEY REPORT AUGUST 1, 2015 C -3 Yes 4 No 6 This reiponse 2 as of particular interest to the Subcommittee in comparing the existence of the Pei. fonrring fAYts Center San Luis Obispo 's Major Equipment Repair and 13eplacement Program, avhich is a fixed component of ils annual operafing budgef. Does your earned revenue typically cover your operating and facility costs? Response Count Yes 1 No 9 How is that deficit covered? Foundation /Endowment 2511-'0 2 City /County 25° 0 2 School /University 50°x0 4 Donations 62.5% 5 Percentages add to over 100"r) because some venues had more than one source. VENUE COMPARISON SURVEY REPORT AUGUST 1, 2015 C -3 Patron Experience Does your venue manage its own concessions /catering? Ya Yes 7 No 3 Comments We handle our own concessions. We do NOT have catering in- house. Concession operated by Campus food service organization. They also manage the bar operation as they hold the alcohol licenses. We get a very small percentage that does not cover the cost of Maintenance. Concessions is a service provided for our patrons. The liquor license is held by a nonprofit that serves as our in -house presenting arm Is the concessions and catering operation a significant source of net revenue for your organization /venue? Yes 1 No 7 Other 2 Comments Approximately 4% We are currently increasing the program to become a significant revenue stream VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -4 Marketing/Programming Do you have corporate sponsors? For the venue itself For specific performarw-e,slse slevents 8 What percentage of your programming do you offer by the following genres? C( me& J�, o S1,cakers <) I hcnrrr l ?uicc - Modern lC 0 Percentages shown are the average across the ten venues. \ttl,i( - f ")p 1 5°�0 VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -5 The Survey 1) Please tell us who you are: Venue /Organization Name: Location: Contact First Name: Contact Last Name: Title: Email Address: Phone Number: 2) Is your organization /venue a presenter? () Yes () No Comments: 3) What kind of entity OWNS the building? () city O not - for -profit entity O school /university () Other: 4) What organization(s) do the venue's employees work tor? (i.e. administrative statt /technical staff /custodial staff) 5) Please list employee type if more than one employer 6) Are any employee groups unionized? ()Yes () No Comments: 7) Please list any employee groups that are unionized 8) Do you employ union stage hands? ()Yes () No VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -6 Budget/ Financial 9) What is your organization /venue's annual operating budget? 10) Does that budget include the cost of presenting - e.g. artist fees and ticket revenue? () Yes () No 1 1) Does that budget include facilities /equipment repairs & maintenance? () Yes () No 12) Does your organization /venue have a reserve fund specifically for facility /equipment maintenance and repairs? () Yes () No 13) What is the size of that reserve fund? 14) Does that include custodial services? () Yes () No 15) As a percentage of your operating budget, how much is derived from ticket sales? 16) As a percentage of your operating budget, how much is derived from rentals? 17) Does your earned revenue typically cover your operating and facility costs? () Yes () No 18) How is the deficit covered? [ ] Foundation /Endowment [ ] City /County [ ] School /University [ ] Debt Service [ ] Reserves [ ] Donations VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -7 19) What is the size of your endowment? 20) What is the size of your operating reserve fund? Patron Experience 21) Does your organization /venue manage its own concessions and catering? () Yes () No Comments: 22) Do you contract for those services? () Yes () No 23) Is the concessions and catering operation a significant source of net revenue for your organization /venue? () Yes () No () Other 24) How much net revenue has been earned on average over the most recent 3 seasons? 25) Do you hold an alcohol permit? () Yes () No 26) What type? 27) Who holds the permit? 28) Do your patrons pay for parking? () Yes () No 29) Does your organization /venue manage the parking operation? () Yes () No () Other: VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 30) Are patron parking fees a significant source of net revenue for your organization /venue? () Yes () No 31) How much net parking revenue has been earned on average over the most recent 3 seasons? 32) Does your organization /venue () Operate its own ticketing system O Contract out for ticketing services Comments: 33) Does your organization /venue add on fees to the advertised price of admission? () Yes () No Comments: Marketing & Programming 34) What percentage of their time and resources does your marketing staff /department spend on the following? ❖ Marketing performances that your venue presents ❖ Helping venue renters to market their performances ❖ Promoting rental of the venue to presenters/ event planners ❖ Other 35) Do you have corporate sponsors? Yes No For the venue itself () ( ) For specific () ( ) performances/ series/ events VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2.015 C -9 36) Who are the main competitors for your venue? To book for artists: To book for venue renters: For patrons: 37) What percentage of your programming do you offer by the following genres? Music - Classical Music - Pop Dance - Ballet Dance - Modern Theatre Broadway Opera Speakers Comedy Other 38) What, if any, other types of programming do you offer? Thank You! VENUE COMPARISON SURVEY REPORT- AUGUST 1, 2015 C -10 APPENDIX D CHRISTOPHER COHAN CENTER Operating Agreement FULLY EXECUTED OPERATING AGREEMENT ENTERED INTO ON MARCH 31,19-93 AND AMENDED ON APRIL 15, 2002 A- 51 -93 -CC OPERATING AGREEMENT for the Christopher Cohan Center This agreement is made and entered into this 316t day of March, 1993, and amended on April 15, 2002, by and among the Foundation for the Performing Arts Center, a California non - profit public benefit corporation ( "FPAC "), the City of San Luis Obispo, California (the "City") and the State of California acting through the Trustees of the California State University (the "Trustees ") on behalf of California Polytechnic State University, San Luis Obispo (the "University") to provide for the operation and governance of the Performing Arts Center (the "Center") which the Trustees, the University, the City and FPAC (collectively, the "Parties ") have built. Statement of Facts and Pur poses On December 5, 1989, the Parties entered into a Development Agreement, rerrormmg Arts center (the "Development Agreement "). The Development Agreement called for the Parties to enter into an Agreement for the operation of the Center, consistent with the Development Agreement. The Parties intend that this Operating Agreement be in satisfaction of the agreement called for in the Development Agreement. It is the intent of the Parties that the Center be operated cooperatively for the mutual benefit of the University and the people of San Luis Obispo County, on a permanent basis. Y Section 1 — Center Mission and Policies 1.01. The Mission. The Parties agree to operate the Center as a host facility where a broad mix of community and University nonprofit organizations and commercial producers will present a diverse array of events. The Parties intend to accomplish this through a Manager (as hereafter defined) and a professional staff, and through the Central Coast Performing Arts Center Commission, all as more specifically provided in Section 2. The Parties agree that neither the Commission nor the Manager of the Center will produce, sponsor or otherwise take financial responsibility for any event or, performance in the Center or elsewhere without the unanimous agreement of the University, the City and FPAC. 1.02. Policies on Use and Access. Center policies shall be developed and implemented by the Commission for use of and access to both interior spaces and exterior, spaces of the Center. As used in this Agreement, exterior spaces means plazas and courtyards constructed as part of the Center. Such policies shall be consistent with the Parties' intent that the Center be available to a diverse group of users. The Manager, the Commission and the Parties shall respect the artistic and the other rights of expression of users of the Center. Section 2 — Center Governance and Management 2.01. The Central Coast Performing .Arts Center Commission. In consideration for the non -state funding provided by the City and FPAC for the Center, the Parties agree that the -City, FPAC and the University shall create ,a nonprofit public benefit corporation. The purpose of the corporation shall be to advise the University and the manager on operating policies, scheduling, and maintenance policies. The 2 Commission, with concurrence of the University President shall adopt the operating budget and budget amendments. 2.01.1 Name. The nonprofit -public benefit corporation formed by the Parties shall be known as the Central Coast Performing Arts Center Commission (the "Commission ") 2.012 Board of Directors. The Commission shall be governed by a board of directors consisting of nine persons (the "Board "). 2.01.3 Membership. The Commission shall have no members, as provided in California Corporations Code Section 5310. 2.01.4 Powers and Responsibilities of the Commission. The Commission shall be advisory to the University and the Manager of the - Center as to operating policies, scheduling, and maintenance policies. The commission, with concurrence of the University President, shall adopt the operating budget and budget amendments of the Center all as set forth herein, 2.01.5 Selection of Directors. The President of the University shall appoint five directors and five alternates. The City shall appoint two directors and two alternates. FPAC shall appoint two directors and two alternates. 2.01.6 Compensation of Directors. No director shall be compensated for services as such, except that directors may be reimbursed for actual expenses incurred as permitted by California Corporations Code Section 5231.5, and approved by the Board. 2.01.7- Terms of Office. Directors shall b�_,'appointed for a three -year term. Initial directors shall be appointed before the organizational meeting of directors. At the organizational meeting, directors shall decide by lot which three among them 3 shall serve initial three -year terms, and which three shall serve initial one -year terms. A Director may be removed at any time without cause by the agency which appointed him or her. 2.01.8 Quorum. A quorum shall consist of five members of the Board, including at least one representative from each of the three Parties. 2.01.9 Officers. The Board shall select one of its members as Chair and one as Secretary to serve at the pleasure of the Board. 2.01.10 Voting. All actions of the Board other than adoption of a budget or changes to a budget require the approval of five (5) members, with. at least one vote from each of the Parties. Adoption of a budget or changes to a budget require, the approval of seven (7) members with at least one vote from each of the Parties. 2.01.11 Regular Meetings. The Board shall hold regular meetings, on a schedule to be agreed upon by the members; but, in any event, not less often than every three months. 2.01.12 Special Meetings. Special meetings may be called by the Chair or by any two members. 2.01.13 Public Meetings. If the Commission seeks and is granted status as a recognized auxiliary organization pursuant to Education Code Section 89900 et M., its meetings shall be conducted in accordance with California Education Code Section 89920 et seg. All meetings shall be held in the Center unless. some other meeting place providing convenient public accessibility is specified in the notice of meeting. 2.01.14 Bylaws. The Board shall, from time to time, adopt such bylaws, rules and policies not inconsistent with this Operating Agreement and the Development 4 Agreement as it determines to be best suited to the internal operation of the Commission and its advisory role to the Manager of the Center and the President of the University. Proposed bylaws and proposed bylaw amendments shall be submitted to each of the three Parties for review and comment, all in a timely manner. 2.02. Management. All aspects of the management and operation of the Center (including both interior and exterior spaces, furnishings and equipment) shall be the responsibility of a Manager. The Manager shall be a person qualified to perform the duties required to fulfill the Mission of the Center. Qualifications of the Manager shall include, but not be limited to professional training, experience and the personal traits necessary to work together effectively with a diverse group of University and community groups and individuals. The Parties intend that the Manager not be a presenter of events or an impresario, whether individually, on behalf of the Commission or otherwise. The Manager shall not otherwise be employed as a presenter of events, whether by the University or, any other entity. Father, the Manager shall see to the wise use of the Center for the ultimate benefit of both the University community and the people of the City of San Luis Obispo and San Luis Obispo County. Prior to hiring a Manager, the Commission and the President of the University shall adopt a detailed job description for the Manager. The Manager shall be an employee of the University or a University auxiliary organization, as the President of the University shall determine. Early each year, following guidelines established by the President of the University in consultation with the Commission, the Commission will review the past year's operations, including an assessment of the Managel performance. The employer of the Manager (University or the University Auxiliary) shall be responsible for insuring that the Manager operates within this Agreement and budgets W1 and policies of the Center adopted by the Parties or the Commission, as provided in this agreement. The Commission shall advise the President in the selection of the Manager. The Manager shall be responsible to and serve at the pleasure of the University President, and shall serve as liaison to the Commission on broad policy matters. The Manager shall be responsible for all administrative and operating matters. The President shall consult with the Commission in the review of the Manager and prior to terminating the Manager. 2.03. Other Center Staff. The balance of the operating staff of the Center will be employees of the University or a University auxiliary. The Commission shall reimburse the University and the University auxiliary as appropriate each year, in the amount, set forth in the final approved Center budget, for compensation and benefits for the Manager and operating staff of the Center; consistent with Section 3 of this Agreement and the Development Agreement. The Parties contemplate that the Commission will contract for its support services., with the California Polytechnic State University Foundation, or some other entity suitable to the Commission and the University President, for its administrative and support services. The Manager shall be responsible for the appropriate use and operation of the Center, and for the hiring, training, retention, control and, as needed, the discipline and termination of Center employees reporting to the Manager. The Manager will report to the University President and inform the Commission on these matters. Ir Section 3 — Center Fiscal Matters 3.01. Financing of Center Operations. The assessments to cover the budget requirements of the Center shall be shared by the Parties as follows: two-thirds (2/3) assessed to the University, one -sixth (1/6) to the Foundation for the Performing Arts Center and one -sixth (116) to the City of San Luis Obispo. The assessment requirement is calculated as the sum of the Center budget for operations and reserves less revenue derived from operations. The operating costs shall include, but not be limited to, management and staff compensation, insurance, contracts for services, supplies and equipment, interest expense, routine maintenance and utilities. Reserves shall include, but not be limited to, operations, major maintenance, and repair and replacement. Center operation revenue shall include rent, concession commissions, endorsement income, royalties, endowment income, interest income and other revenue items as agreed by the Parties. 3.02. University Su rt, and Maintenance. The University will provide the Center with utilities, building maintenance, grounds maintenance and custodial services consistent with state criteria. The University's maintenance staff will consult and cooperate with the Manager as to maintenance and service needs and scheduling occasioned by the Center's schedule and uses. Costs associated with these items will be included in the operating costs of the Center and shared by the Parties per section 3.01 above. 3.03. Operating Budget and Reserves. The Center will be budgeted to operate on a balanced, fiscally viable basis. The Manager will be ;responsible for preparing an annual balanced operating budget, and setting reserve needs in consultation with the Commission. The Manager shall not exceed the authorized budget limit without the 7 prior consent of all three Parties represented on the Commission. The Commission and the Manager shall conduct no less than quarterly reviews of actual results compared with the budget. If appropriate in light of those results, the Commission shall adopt, with concurrence of the University President, and the manager shall implement- revisions to the budget and to Center operations in order to avoid a deficit. The budget will be effective when approved by the Commission and the University President. 3.04. Endowment Income /Other Fundraising. The three parties may agree to pursue the establishment of a Commission endowment when the spendable earnings of the FPAC's endowment are sufficient to cover the FPAC's obligations under this agreement. When established, this Commission Operating Endowment Fund shah be held by a trustee approved by the Parties with the spendable earnings transferred for inclusion in the Center's operating budget. Other funds held by the FPAC are not subject ,to this agreement. FPAC will continue to be the primary fundraising entity for the Center, and the Commission- and the Manager shall coordinate with the FPAC to insure that fundraising is as efficient as possible. 3.05. , Hold Harmless for Trustees. The Commission will release and hold harmless the Trustees of the California State University from any debts the Commission may incur. Failure to finance a deficit or to agree to a budget may be grounds to terminate this Agreement. Section 4 — Center Use and Access Scheduling 4.01. Use and _Access Scheduling. The Manager; in consultation with the Commission's board, will prepare at least one year in advance for Commission review a use schedule for the following year. The Manager's scheduling decisions will recognize the city's and community's entitlement to fair and equitable access to and use of the Center appropriately reflecting their combined approximate one -third share of the capital costs of the Center. Two- thirds of the events at the Center shall be activities that enhance the University's educational mission. In addition, the University shall have priority scheduling for certain official University functions (such as faculty convocations and graduations). The University shall present a list of official University functions and their dates to the Manager annually not later than January 31, of each year for events in the subsequent fiscal year (July 1 — June 30). The three parties are entitled to rent -free use of the facility for official functions. In the event of a scheduling conflict, the Manager,\the University and the Commission agree to use their best efforts to resolve the conflict. The Center will not be the exclusive home for any user group. The Manager will make every effort to accommodate the needs and schedules of local performing groups (campus based and community, based) including organizations which present touring pertormers. The Parties recognize that certain users may best be served by scheduling more than one year in - advance. The Manager and the Commission shall develop means to adjust to that need while maintaining opportunities for flexibility in scheduling. All use of the Center shall be subject to the Manager's scheduling decisions after consultation with the Commission, and subject to the dispute resolution procedures in Section 4.02. It is the Parties' intent that community and campus nonprofit groups be charged at a lower rate for use of the Center than other groups. The Manager shall develop and maintain a schedule of charges for use of thy, Center in consultation with .0 the Commission. 7 4.02. Resolution of Usage Conflict. 4.02.1 Issues Covered. The only matter subject to conflict resolution shall be the fairness in the allocation of Center usage for city or community sponsored events. 4.02.2 Complaint Procedure. In the event the City or FPAC takes exception to the fairness of Center usage allocated to city or community sponsored events in the proposed annual calendar developed by the Manager and after review by the Commission, either the City or the FPAC may write the University President, specifying the perceived unfairness. The writing must be submitted to the. President within one week of receipt of the Manager's final schedule. The President shall use his "good offices" to mediate between the complaining party or parties and the Manager. If the entity cannot accept the President's decision in mediation, it or they may appeal the matter to a dispute resolution committee. 4.02.3 Dispute Resolution Committee. The dispute resolution committee shall be composed of three members: one member shall be appointed by the University President; one member shall be appointed by the complaining party or parties bringing the dispute; and one neutral member selected by the presiding Judge of the Superior Court of San Luis Obispo County upon application of any one party. 4.02.4 Appeals. The dispute resolution committee shall decide the matter. In the normal course of events, all parties shall accept the committee's decision as final. In an unusual circumstance, the party bringing the dispute may have a recourse to the Chancellor of The California State University by submitting a letter explaining why the committee's decision is unacceptable. The Chancellor shall affirm, modify or reject the dispute resolution committee's decision based on the written 10 submissions. The Chancellor's decision shall be appealable to the chair of The California State University Board of Trustees whose decision shall be final. 4.02.5 Time Limit. It is expected that the dispute process shall be completed within thirty (30) days of the time it is begun. Section 5 — Concessions 5.01 Concessions. The sale or other distribution of food and beverages will be an integral part of events which occur in the, Center. Therefore, it is important that the Center's users and patrons have available a first- class, diverse, food and beverage offering. The Parties agree that the California Polytechnic State University Foundation will be the primary food service provider for the Center. Under special circumstances the Commission may recommend exceptions to this provision subject to approval of the University President. The Manager in consultation with the Commission shall develop concessions and catering policy guidelines. All concessions at the Center will be operated within these policy guidelines. An equitable and agreed upon percentage of the gross proceeds from concessions and catered activities will accrue to the Center and be used to cover Center operations through the Operating Budget. Section 6 — Acquisition and Display of Art 6.01. Acquisition and Display of Art. The display of art at the Center is an important function of the Center. The Commission ,shall develop policies and .N, procedures for acquiring and displaying art at the Center. -Such policies shall honor and protect the free expression of ideas. Such policies shall govern, among other things, 11 which works if any will be acquired by the Commission and which works will be accepted if donated to the Commission. The Commission shall, in dealing with art, always consider its ability to preserve, protect and display pieces it may acquire consistent with available resources. In general, the Commission should not attempt to acquire a permanent collection. Section 7 — Parking 7.01. Parkins Management Program. University , shall develop a parking management program providing public access to campus parking facilities for events scheduled at the Center. The University agrees that providing adequate, though nonexclusive parking is a part of its responsibility. Section 8 — Miscellaneous Matters 8.01. No Borrowing. The., Commission shall not pledge as collateral the Center building, fixtures, or land they are situated upon for any loan, debt or contract. 8.02. Insurance. The Commission shall maintain the following types and amounts of insurance, subject to periodic adjustments to recognize inflation and changes in industry standards: 8.02.1 Liability ,insurance. The Commission shall obtain and keep in force a policy or policies of public liability and property damage insurance with a single combined liability limit of not less than $5,000,000, and property damage limits of not less than $500,000 insuring against all liability of the Com (nission arising out of and in connection with use of occupancy of the Center. The Trustees, the City and FPAC, and 12 any supporting auxiliary shall be named as additional insureds. The Commission shall maintain such other policies of liability as the Board determines prudent. 8.02.2 Property Insurance — Premises. The Commission shall obtain and keep in force a policy or policies of insurance covering loss or damage to the Center, including fixtures, equipment, and improvements to the extent of at Least one hundred percent (100 %) of full replacement value, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils ( "all risk ", as such term issued in the insurance industry). These shall include demolition, increased costs of construction, and change in building law endorsements. 8.02.3 Policy Farm, Content, Insurer. All insurance required under this Agreement shall be issued by responsible insurance companies qualified to do business in California and reasonably acceptable to the Parties. All such insurance shall be issued as primary, not blanket, policies. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to the Parties. 8.03. Termination. This Agreement shall terminate, and the relationship among the Parties shall be dissolved upon the happening of any of the following: Agreement of all three Parties. Failure of the commission to adopt in a timely manner an Operating Budget with appropriate provision for reserves, as established' by Commission policy, for a period of one year.,after expiration of the most "w recent budget. 13 Failure of any of the parties to deliver on the obligations outlined in this Operating Agreement after having been given a reasonable period to remedy any deficiencies. Failure of the University to provide acceptable parking. 8.04. Amendment. This agreement may be amended in whole or in part, once or more often, by written agreement executed by the Trustees of The California State University, the University, the City of San Luis Obispo, and the Foundation for, the Performing Arts. In the event of dissolution, Trustees will give recognition to the City's and FPAC's contributions to the Center by guaranteeing community access to the facility at a rental rate and on a schedule no less favorable than what is available to University affiliated groups, consistent with the community's expectation of fair and equitable access to and use of the Center as set forth in Section 4.01 above. Section 9 — Execution 9.01. Due Authorization. Each of the Parties represents by executing this Agreement that he or she has been fully and completely authorized to do so and that he of she is empowered to bind the entity on whose behalf the Agreement is signed. Date: THE CALIFORNIA STATE UNIVERSITY SIGNATURES CONTINUED ON PAGE 15 14 WOW .. , RE: A- 51 -93 -CC Operating Agreement for the Christopher Cohan Center Date: _ S.11tfl'e ?" Date: s"- 20--02 Date: 5-2-0-02- 0 rc - CALIFORNIA POLYTECHNIC STATE UNIVERSITY By: CITY OF SAN LUIS OBISPO By: FOUNDATION FOR THE PERFORMING ARTS CENTER 1'VLt�.f.tAl:�iV�XI ll City Clerk 15 JI LUIS VDISPO