HomeMy WebLinkAbout10-18-2011 Council Economic Development CommitteeAGENDA
City of Iowa City
City Council Economic Development Committee
Tuesday, October 18, 2011
8:00 a.m.
Lobby Conference Room
City Hall
1. Call to Order
2. Consider approval of the September 20, 2011 Economic Development
Committee meeting minutes
3. Discuss formalization of economic development processes and policies.
4. Consider a recommendation for FT 13 funding from Riverside Theater.
5. Staff time
6. Committee time
7. Adjournment
EDC —September 20, 2011 1
MINUTES DRAFT
CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE
SEPTEMBER 20, 2011
LOBBY CONFERENCE ROOM, 8:00 A.M.
Members Present: Regenia Bailey, Matt Hayek, Susan Mims
Staff Present: Wendy Ford, Tracy Hightshoe, Jeff Davidson
Others Present: Ann Ashby,(Lorenz 2.0); Jeanette Pilak and Jon Winet (UNESCO
and City of Literature); Nancy Quellhorst (Chamber)
RECOMMENDATIONS TO COUNCIL:
Mims moved to recommend to the full City Council funding for the City of
Literature as discussed.
Hayek seconded the motion.
Motion carried 3-0.
CALL MEETING TO ORDER:
The meeting was called to order by Chairperson Bailey at 8:00 A.M.
CONSIDER APPROVAL OF THE MINUTES OF THE JUNE 21, 2011, ECONOMIC
DEVELOPMENT COMMITTEE MEETING:
Hayek moved to accept the June 21, 2011, meeting minutes as presented.
Mims seconded the motion.
Motion carried 3-0.
CONSIDER A REQUEST TO APPEAL A STAFF RECOMMENDATION AGAINST
PROVIDING A CDBG ECONOMIC DEVELOPMENT LOAN TO LORENZ 2.0:
Tracy Hightshoe summarized staff's initial review to deny CDBG loan funds noting
projected sales, a concern that the business would not be able to pay back a loan, and
concern about prior payment history. The business owner is appealing staff's
recommendation for funding and is at the meeting to discuss the situation. She spoke to
the Members, noting the problems they had had with getting enough inventory to meet
sales goals and that the request for funds is to buy inventory that would enable the
projected sales. She also noted that the foot traffic is expected to be as heavy as the
location she moved from this summer. In continuing her request for assistance, the
owner stated that she needs these funds in order to move forward.
Discussion ensued. Mims asked staff if having a co-signer would help in this situation.
Hightshoe noted that a co-signer would be liable for repayment should the applicant
default. Hightshoe noted that there was a bankruptcy in 2005 and the judgment from
January of 2011 to consider, indicating increased risk. The issue of the January 2011
judgment was discussed, with Members noting a lack of payment plan. Bailey asked
that the owner come up with such a plan, which would give the Committee a better idea
EDC — September 20, 2011 2
of the feasibility of the loan. The details of how this could be accomplished were
discussed, with the owner being directed to negotiate a payment plan for the judgment.
New projections would then be needed, to show that the owner can pay back the
judgment amount and increase her inventory in order to increase her sales while
ensuring a CDBG loan will not be used to pay off the judgment. Applicant stated that if
needed, she has a co-signer and can secure collateral. Applicant will agreed to work on
these issues and said she would re -apply for funding.
CONSIDER A RECOMMENDATION FOR CONTINUED FUNDING (FY13, 14 AND 15)
OF THE CITY OF LITERATURE:
Ford spoke to the Members funding for the City of Literature. She statied that UNESCO
has made big strides in its three years of existence and that staff is recommending
Council consider $50,000 for continued funding in the upcoming budget, and also
consider a placeholder for similar funding for two more fiscal years. She then asked
Jeanette Pilak from the City of Literature to address the Members. Pilak reviewed some
of the accomplishments of the organization. Through partnerships with the business
community, she stated that their hope is to continue to grow the City of Literature. Pilak
then shared some of the upcoming events, throughout the world, involving UNESCO and
City of Literature designations. The University of Iowa has also committed funding to the
City of Literature for the next three years, according to Pilak. Jon Winet also addressed
the Members. He spoke briefly about his recent experiences in some UNESCO cities.
He reiterated Pilak's comment that Iowa City is the only city in the Western Hemisphere
with the City of Literature designation. He added that his recent encounters with
Chinese authors who demonstrated the enormous admiration they have for Iowa City.
Winet also shared recent experiences in Edinburgh, the first City of Literature. He noted
that he is also now the director of a newly launched project called the 'digital study for
the public humanities.' Nancy Quellhorst with the Chamber added that the City of
Literature designation bring many benefits to Iowa City.
Members discussed the recommended funding amounts, stating that the economic
impact of these types of cultural offerings is worth the investment. All agreed that the
City of Literature has done quite well in such a short time.
Mims moved to recommend to the full City Council funding for the City of
Literature as discussed.
Hayek seconded the motion.
Motion carried 3-0.
DISCUSS FORM FINALIZING ECONOMIC DEVELOPMENT INCENTIVE
FRAMEWORK:
Davidson addressed the Members regarding the incentive framework form that he would
like to get finalized. He stated the Economic Development Division has seen a great
deal of interest in development within the community, and added that it has become the
norm for developers to ask for the City's help. He stated the desire to work from a
framework around what Council would consider for financial incentives, as it will help
staff become more efficient and effective in their work with developers. He gave
EDC — September 20, 2011 3
Members a brief history of what the councils in the past have done in this area, noting
that the difference now is the unrelenting nature of the requests for financial incentives.
Bailey asked how this links in to the City's overall strategic planning. Davidson noted
that this is something that definitely needs to remain fluid, as the City's priorities change
and a new Council takes the helm. After a brief discussion of the importance of strategic
planning with regards to a development framework, Davidson noted that staff will
present a recommendation to the full Council in October. Hayek added that they will
need to educate the public on these issues, as well, as they move forward with strategic
planning and types of incentives offered for development.
STAFF TIME:
Davidson spoke to Members briefly about the downtown retail recruitment process,
noting that things are progressing. The SSMID is at the Planning and Zoning
Commission for consideration. Davidson noted that there have been some slight
changes to the University's schedule for the School of Music project. Due to FEMA
issues, the project has been pushed out to 2013, with a three-year timeline. Davidson
also spoke about the Moss Urban Village project on the north side of 1-80. There will be
some slight changes to the plan, according to Davidson, but things look to be going well
there overall. Riverfront Crossings' planning is still ongoing, and Davidson added that
the expanded area now includes from Burlington to Gilbert, Highway 6, and the river. In
this area is the multi -use parking facility project, which is wrapping up the concept
planning phase, according to Davidson. Davidson then noted that at tonight's Council
meeting the issue of the kiosk lease for a Wells Fargo ATM will be on the agenda. He
noted with regards to relocation of the wastewater plant that they were able to come up
with some additional funding. He also mentioned the Towncrest TIF area, noting that
they have a couple of exciting projects in the area. Davidson also noted that Council will
be hearing soon about an upcoming project in the Northside Marketplace area. Also
noted was the possible sale of Roosevelt by the School District. In regards to the new
industrial park area, Davidson stated that things have slowed down with the economy,
but that plans are still underway.
COMMITTEE TIME:
None.
ADJOURNMENT:
Hayek moved to adjourn the meeting at 8:54 A.M.
Mims seconded the motion.
Motion carried 3-0.
EDC — September 20, 2011 4
Council Economic Development Committee
ATTENDANCE RECORD
2011
TERM
N
NAME
EXP.
ry
ry
cn
c0
o
Regenia
01/02/11
X
X
X
X
Bailey
Matt
01/02/11
O
X
X
x
Hayek
/
E
Susan
01/02/11
X
X
X
x
Mims
Key:
X = Present
O = Absent
O/E = Absent/Excused
It
�,1.®, CITY OF IOWA CITY
110
MEMORANDUM
Date: October 12, 2011
To: City Council Economic Development Committee
From: Jeff Davidson, Director of Planning and Community Development
Wendy Ford, Economic Development Coordinator
Re: Formalization of economic development process and policies
The economic downturn which began in 2007 has created an atmosphere where the City is now
called upon to assist with the funding of economic development projects on a regular basis.
Developers are not able to go to financial institutions to the degree that they once could and
obtain the financing they need for projects. We are now commonly asked to share in the risk of
an economic development project as one of the funding entities.
Because these requests have become routine, we wish to commence a discussion with the
Economic Development Committee on bringing greater structure and objectivity to the standard
operating procedures for evaluating economic development financial incentives. Establishing
standard procedures and a framework for incentives will allow developers to more clearly
understand the City's intentions in providing such incentives, and ensure that the City's financial
resources are used as efficiently and effectively as possible.
We believe that our economic development financial incentives policy should be tied directly to
community objectives. These include such measures as:
• Increasing taxable valuation of property, especially commercial and industrial
• Increasing the number of jobs which have wages and fringe benefits which exceed the
County median
• Redevelopment of blighted property
• Desirable projects which might not otherwise occur without financial incentives, such as
downtown hotels, workforce housing, downtown grocery stores, arts and entertainment
venues, etc.
Following is suggested standard operating procedure for requests for economic development
financial assistance.
Step 1 - Intake. This is the information gathering stage of a project which will provide the
foundation for subsequent decision making. Project information may be proprietary and need to
be kept confidential. Project information will typically be incomplete in early stages, but it is
necessary to collect as much information as possible in order to begin the evaluation of the
project. We have developed the attached information intake form. Additional Planning
Department staff will be trained so that several persons will be able to conduct initial intake
meetings with development prospects.
Step 2 - Evaluation. The purpose of the evaluation stage is to weigh the public costs and
benefits of the project. To date, this step has been largely qualitative and subjective. We attempt
to evaluate the public purpose involved, the strength of the opportunity, and the public costs
October 12, 2011
Page 2
involved. This information is then taken to the City Council Economic Development Committee
for discussion.
We are aware of communities that use highly quantitative fiscal economic impact models. Many
of these are complicated and data -intensive. We are evaluating a software license for a product
called WebLOCI. It is data -intensive, but we believe may be suitable for our purposes. The next
step in our evaluation of this process is to load data into the model and then test it on some
prospective projects.
The evaluation stage involves an in-depth financial analysis of the project. We are currently
utilizing the services of the National Development Council to aid in this aspect of review. This
provides us with a level of expertise that is not otherwise available from City staff.
The evaluation process does not ignore political factors which will influence the economic
analysis. For example, how does the proposed project fare in a sustainability evaluation? Will
the proposal enhance or harm the image of the City? These factors will be fully vetted by staff
before being brought to the City Council Economic Development Committee.
Step 3 - Due Diligence. Once we have determined that the project may merit public assistance,
we proceed to due diligence. Due diligence is the process of verifying information provided in
the intake phase. It involves verifying corporate names, character of the applicant, financial
ability, financial history, market analysis, and other factors. In the due diligence phase we
typically like to examine three past years of business performance and at least three future
years (pro forma) based on the business plan for the project. The due diligence phase will
require the assistance of the City's legal and financial staffs. This step may need to be
accelerated for a project which requires a letter of commitment with a quick turn -around.
Step 4 - Performance Measures. Performance measures will vary depending on the type of
project. Examples of performance measures in past projects include minimum assessment
agreements, or Plaza Towers' requirement to include a hotel, grocery store, and office space in
the project. Industrial projects have been required to retain or add a specific number of jobs as
well as create an increase in the property tax base. This step is a regular part of the monitoring
process conducted by the Economic Development Division prior to certification of debt for tax
increment revenues.
Framework for incentive qualification
Tax Increment Financing or property tax exemptions are the two principal methods of
financial assistance we have used in Iowa City. There are other smaller programs such as the
CDBG economic development fund, but we anticipate TIF and property tax exemption to
continue to be our principal sources of financial incentives. Until now, we have generally
considered each project on a case -by -case basis on its own merits. We have had
misunderstandings related to the expectation that a property within a TIF district is eligible for
TIF funds as a matter of right. We should prepare a more specific framework for qualifying for
City -provided financial incentives.
Once it has been determined that a project meets the public purpose requirements we have
established, the necessity for the financial assistance should be based on a gap analysis. A
gap analysis assures that the City's financial assistance are the last dollars in and that "but for"
the City's assistance the project would not have happened. If this analysis results in a project
which can proceed without public assistance, then it should proceed without public
assistance.
October 12, 2011
Page 3
TIF goals, objectives and strategies
A discussion is needed with the City Council Economic Development Committee on guidance to
establish the City's policies on TIF assistance. We have certain policies which are established
for us by state law. For example, TIF assistance can be used for two principal matters:
economic development and remediation of slum and blight. But there are a series of questions
which must be answered by us locally. They include:
1. Should establishment of an Urban Renewal Area and subsequent TIF district require the
creation of a TIF generator? For example, the City of Madison, WI requires a TIF
generator of at least $3 million to be created for the establishment of a TIF district.
Staff recommendation: Creation of a TIF generator of at least $2 million should
be a goal, but not a requirement for the establishment of a TIF district.
2. Should there be a percentage limitation on the amount of TIF made available for a
project? For example, Madison limits eligible TIF projects to not more than 50% of the
TIF increment generated.
Staff recommendation: It should be a goal, but not a requirement for TIF
funding to not exceed more than 50% of the TIF increment created. Further, TIF
funds made available to a private developer shall not exceed the rg oiect value
created. For City TIF projects, funds may be generated from an entire TIF district.
3. Should we require a minimum developer equity for eligible projects? Madison requires
developer equity to equal or exceed TIF loaned to the project.
Staff recommendation: Developer equity should be required to at least equal or
exceed the amount of TIF funds made available for a project. To clarify, bank
commitment of debt can be counted towards developer equity.
4. Does every project get TIF assistance? How do we distinguish between desirable and
undesirable projects? Based on the types of project requests we have had, policy
positions need to be established for the following potential projects:
1. Industrial uses
2. Office space
3. Retail space
4. Specific desired uses, such as hotels, grocery stores, arts and entertainment venues,
etc.
5. Historic revitalization for adaptive reuse
6. Housing which supports stated economic development goals
Staff recommendation: Historically, the Economic Development Committee has
not wanted to limit projects which can receive TIF assistance. Even student
housing may create a new taxable value which justifies TIF assistance if other
City goals and objectives are achieved for the project. These may include such
things as floors dedicated for commercial and office uses, adaptive reuse of an
historic building, or specified desired uses as stipulated above. We believe our
highest priority for TIF assisted projects should be job creation at wage and
benefit levels which exceed the County median.
October 12, 2011
Page 4
The discussion of these policy questions can get quite detailed. For example, should the
creation of new office development be conditioned on new tenants, or is the shifting of tenants
from one location to another acceptable?
An additional matter which must be resolved is how TIF funds will be distributed. Traditionally,
the City has used a rebate approach where all property taxes are paid and money distributed to
protected levies, and the remainder used for rebated project agreements. Based on the success
of the Plaza Towers project, we are now receiving requests for the City to sell bonds to produce
upfront cash and then the City pay itself back through a TIF arrangement. This increases the
risk to the City significantly.
Past TIF projects
To assist in the discussion of policies and procedures on how TIF funds should be used, we
should examine past TIF projects we have funded. Following is a table listing City of Iowa City
TIF projects funded since 2000. There have been nine projects, ranging from retail to office to
industrial development. There was one large mixed use project, Plaza Towers, which resulted in
a property with the highest taxable value per square foot in the city.
Development of a specific TIF process
Once the above policy questions are answered satisfactorily, staff can begin constructing a
specific TIF process to be followed. The steps will include:
1. Creation of Urban Renewal District
2. Application process for TIF funds
3. Gap analysis
4. Staff recommendation
5. Legislative process through the Planning and Zoning Commission and City Council
At your October 18 EDC meeting, we will step through these questions and attempt to develop
answers to the various issues.
Attachments:
Adopted Economic Development Policies
Intake Form
Past TIF Projects
Tax Increment Financing Districts and Property Tax Exemption Areas
ppdd i r/mem/ecodev-process090911. doc
lkFP
DC
Handout 1 / 13 work session
City Manager Markus
F
DRAFT
ECONOMIC DEVELOPMENT POLICIES
It shall be the policy of Iowa City to maintain an economic development plan. The
purpose of the plan is to attract new development including residential, commercial and
industrial uses. Further, the purpose of the plan is to retain the city's existing business
operations and to encourage them to expand and foster spin-off business operations. The
city's plan also supports organizations which help to incubate, grow, foster, and create
new business operations by providing non-traditional collaborative environments.
The expected results of the economic development plan are: increased economic activity,
more jobs, lower unemployment, higher wages, greater property values, more tax
revenues, more ownership and entrepreneurial opportunities and revitalization ''of
underutilized or blighted areas.
The city will consider incentive programs including city, state and federal economic
development funds, tax increment financing, public private partnerships and other tools
in order to achieve the expected results.
Vario} s evaluative tools including financial pro forma's, written evaluation reports,
established benefit metrics, and other performance tools shall be used to monitor the use
of economic incentives from the early stages of project development thru the issuance of
an incentive and post incentive to make sure the objectives are met.
Developers' who receive incentives will be .expected to enter into development
agreements which delineate the terms, conditions, understandings and the expected
results of receiving an incentive.
It will be the policy of the City of Iowa City to endeavor to attract, recruit, retain, foster
and develop new development through the use of incentives which is new to our region
(Metropolitan statistical area MSA). The city will not actively recruit business from
other jurisdictions within our MSA. Should business from jurisdictions within: our MSA
wish to relocate to the City of Iowa City we will notify our neighboring jurisdiction of the
interest. It will be the general practice of the City of Iowa City to not provide economic
incentives to business wishing to relocate from another jurisdiction within our MSA.
When incentive programs are utilized they will be used to maximize the benefits to the
City of Iowa City. The dollar amount of the incentive and time duration of the incentive
shall be smallest amount necessary to achieve the maximum amount of city benefit as
determined by the City of Iowa City, City Council.
Despite the need for the program to be flexible and nimble in order to respond to the ever
changing economic conditions of the marketplace it will be the policy of the city to insure
that the process of using incentives is an open and transparent public process which
instills confidence in the publics understanding of how economic development incentives
are utilized.
s; r'IIIMtp ��
CITY OF IOWA CITY
Date:
Present at meeting:
Name of firm:
Contact information:
Name:
Phone:
e-mail:
Project description:
Nature of firm:
Location identified?
Size of parcel:
Economic Development Intake Form
Existing building or new?:
Size of building needed:
Meeting location:
❑ Local ❑ Regional ❑ National ❑ Global
TIF District or not?
# of Jobs:
Associated wagesibenefits:
Projected sales/year:
Estimated taxable value:
Parking requirements:
Industrial -Related
Transportation requirements? (Rail, interstate access, special roadway geometry, etc.)
Water capacity needs in gal/day (average and peak):
Waste water capacity needs in gal/day:
• High concentration waste?
EPA industrial category?
• Hours of operation?
Electricity requirements:
Notes:
w/ppddir/EconomicDevelopmentl ntakeForm.doc
2
TIF in Practice — Iowa City
Projects since 2000
1. ALPLA No. 1 (2003):
This project made improvements to an existing 56,000 square foot plastic bottling plant
through construction of additional manufacturing, warehousing, and distribution space
totaling approximately 86,000 square feet. The company was required to pay all property
taxes due and maintain a minimum of 35 FTEs. The project increased the assessed
value of the property by 90%. As of November 2009, ALPLA employs 251 FTEs at an
average hourly wage of $16.55. Their total Iowa City payroll exceeds $8.6 million per
year.
2. United Natural Foods, Inc. (2003):
This project made improvements to an existing 120,500 square foot natural foods
warehouse through construction of additional warehousing and distribution space
totaling 140,000 square feet. The project has resulted in a 2009 assessment which is
approximately $8.4 million higher than the 2003 assessment. In 2009 United Natural
Foods certified 306 Full Time Equivalent positions with an average wage of $17.36.
Their total Iowa City payroll exceeds $11 million per year.
3. Southgate Development — Pepperwood (2003):
This project provided for exterior improvements to buildings, parking lots, and
landscaping elements at Pepperwood Plaza Shopping Center. The project resulted in a
$3.2 million increase in new taxable value in 2009. Pepperwood Plaza has maintained a
97.5% occupancy rate since the project was completed.
4. Sycamore Mall (2004):
This project provided exterior building improvements, parking lot improvements, and
landscape improvements to Sycamore Mall. The 2008 tax assessment is approximately
$10.3 million, or a 222% increase over the 2000 tax assessment.
5. Plaza Towers (2004):
The Plaza Towers project provided a $6 million construction grant to the developer
which was repaid through TIF. The project constructed a multiuse downtown building
with a required minimum construction cost of $22,265,000. The space was required to
include a 10,000 square foot full -service grocery store and at least 18,000 square feet of
new conference space as well as a boutique hotel, high -end office space, and residential
units with a maximum of two bedrooms for sale and lease on the upper floors. A skywalk
connects Plaza Towers to a City parking ramp. The result of the project is creation of
new taxable valuation of approximately $35 million. The project generates approximately
$1 million in property taxes annually. The 20-year TIF bonds were paid off in eight years.
6. Northgate Corporate Park — Mercer (2005):
This project constructed a new office building of at least 46,000 square feet and required
the developer to maintain an average of at least 202 Full Time Equivalents and 25 Part
Time Equivalents at an hourly wage of no less than $15.70 per hour with competitive
benefits. The result of this project is an increase in taxable value of approximately $5.8
million from 2002 to 2009. Mercer has certified 275 full-time employees with an average
wage of $18.68 per hour, indicating Mercer's payroll is over $10.6 million annually.
7. Scott Six Industrial Park — Graham Packaging Company (2005):
This new construction project created $5.7 million in taxable value.
8. Plamor (2006):
The reconstruction and rehabilitation of the former Plamor Lanes Bowling Alley improved
the 23,000 square foot existing structure and constructed a new 4,600 square foot
building for commercial use. The result of the project is an increase in taxable value of
$1.06 million.
9. ALPLA No. 2 (2007):
This second ALPLA project provided improvements to an existing 100,255 square foot
building by construction of additional manufacturing, warehousing and distribution space
totaling approximately 82,200 square feet. The company was required to maintain a
minimum of 180 FTEs with an average wage of $14 per hour plus a competitive benefit
package. The project has resulted in 251 new employees averaging $16.55 per hour.
The improvements added $3.8 million in new taxable value.
ppddir/TIF in Practice.doc
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CITY OF IOWA CITY
MEMORANDUM
To: City Council Economic Development Committee
From: Wendy Ford, Economic Development Coordinator
Date: October 13, 2011
Re: Riverside Theater funding request
Riverside Theater has submitted a request for three years of funding in declining amounts of
$30,000, $25,000 and $20,000 respectively, for the next three fiscal years (FY 13, 14, and 15).
Riverside Theater permanently employs 11 people and hires nearly 100 additional actors
annually on a budget of a little more than a half million dollars. The area's only professional
theater presents more than 85 shows annually at its two locations — the Gilbert Street theater
and the Festival Stage in City Park, and is a key contributor to the creative culture of Iowa City.
Typical of similar sized theaters, Riverside's expenses are funded roughly half through earned
income and half through contributions. Through the economic downturn, contributions have
remained steady, but ticket sales and sponsorships have decreased. The impact of the
economy and the flood of 2008 have compromised working capital, and thus, the ability of the
theater to continue to operations at the level it has achieved and at which the community
expects.
Despite substantial cost cutting during the current fiscal year and plans for unusually
inexpensive productions at the Gilbert Street theater in the coming year, there is little room for
continued cuts and it is unlikely the expenses of future production years will be as spartan
without compromising the theater's viability.
Adding to the challenge for Riverside Theater is the new Coralville Center Performing Arts, a
community stage venue also competing for audience members. Competition requires that ticket
prices remain low; steady at best. The recent year's income shortfalls have again delayed
deferred maintenance and needed improvements which are becoming critical. In the not -too -
distant future, Riverside Theater will be seeking a new permanent home as the Gilbert Street
rental arrangement is not guaranteed. In order to be in a position for a capital campaign to fund
a permanent facility, the theater must improve its financial situation.
The Comprehensive Plan notes that Riverside Theater is one of the organizations that adds to
the vitality of the city and states that support for the arts and culture of the community enhances
our position in the region and adds significantly to the quality of life of the community and should
be continued and institutionalized as an economic development and community betterment tool
for the city.
Ensuring that Riverside Theater continue as a viable arts business in Iowa City is also
consistent with the Central District Plan (updated in 2008), which calls for preserving and
promoting the unique aspects of and supporting the economic vitality of the Northside
Marketplace.
For these reasons, staff is recommending the full funding request be considered by Council in
the FY13 economic development budget and that placeholders be inserted into the draft
budgets for FY14 and 15. Please feel free to contact me with any questions. Riverside Theater
representatives will attend your meeting, as well.
Riverside Theatre
Request for Support
October 2011
Executive Summary
Riverside Theatre is requesting support from the City of Iowa City to help improve its financial
situation and ensure that it may continue to exist as an anchor arts and entertainment
organization within our community. The theatre has finished its last two seasons with deficits
amounting to a total of over $55,000, largely due to the negative impact of the economic
downturn and the 2008 flood. Funding in the amount of $75,000 over three years (year one,
$30,000; year two, $25,000; year three, $20,000) will help alleviate this earned income
shortfall, strengthen the organization's financial status, and allow for extra marketing efforts.
This support will also help the city of Iowa City achieve its comprehensive plan to sustain and
expand Downtown arts and entertainment options.
Background on Riverside Theatre (RT)
• Non-profit professional theatre founded in 1981 by Ron Clark, Jody Hovland and Bruce
Wheaton (all still active leaders and artists in the RT organization)
• The Iowa City area's most prolific professional producing company. In a typical year, RT
provides the community with professionally produced, professionally acted
entertainment options 88 nights a year.
o September through April at its Gilbert St. theatre in Iowa City's historic
Northside neighborhood (mainly contemporary work)
o In June and July at the Festival Stage in lower City Park (the Shakespeare
Festival)
Provider of educational opportunities for the community, with programs including
o An outreach program that brings Shakespeare into 8th grade classrooms (Will
Power, sponsored by Rockwell Collins and MidWestOne)
o A professional apprentice training program tied to the summer Festival
o A summer training program for high school students (Young People's Intensive)
o Ongoing theatre classes (summer classes typically sponsored by Hills Bank)
o An educational partnership with Cornell College, which yields a co -production in
alternating years.
• Employer: 11 staff positions (including full-time, part-time and work-study).
Additionally, employs nearly 100 additional artists annually.
• City Partner: RT partnered with IC in the creation of the Festival Stage and later raised
$100K toward the installation of permanent seating. Since 2001, RT has paid over $48K
to Parks and Rec for Festival stage usage.
Riverside Theatre Page 1
An Anchor of Downtown Iowa City's Arts and Entertainment Community
For 31 years, RT has been an important part of Iowa City's arts community, creative culture and
the Northside neighborhood. RT's longevity as a producing company in a community of our
size is particularly remarkable. The average lifespan of a theatre company in NYC is 3 years; in
Chicago, the average is 4 years.
During the 2010-11 season, roughly 9,500 tickets to RT productions were sold. This number
tops 10,000 when non-RT-produced arts and entertainment events hosted at RT are counted.
Demand for Gilbert St. Riverdog season subscriptions is strong; for the past two years RT has
sold almost 500 passes. The first year a 2-play pass was offered for the Shakespeare Festival,
nearly 350 were sold.
Positive Impact on Business
RT's productions and patrons have a positive economic impact on Downtown businesses. The
events RT hosts (RT-produced and non-RT-produced) give people a reason to stay —or come —
downtown on more than 100 nights of the year.
Northside area restaurants typically see a significant increase in business on nights when the
theatre has a show or hosts an event. This year, five Northside restaurants/cafes have
enthusiastically partnered with the theatre on promotions related to the RT Riverdog season
pass because they value the additional business RT brings. Additionally, 27 area businesses/
individuals purchased ads in the Gilbert St. 2011-12 playbill.
Critical to Maintaining the Downtown Arts/Entertainment/Creative Culture
Having a resident, professional theatre company in our community is a source of pride for Iowa
City residents. RT is frequently highlighted in recruiting materials to convey a feel for Iowa City,
and to emphasize that our community affords many of the same high -quality arts experiences
as other, larger cities.
While student and community theatre shows are another way to experience live performance,
and they provide good opportunities for non-professionals to participate in theatre, it is usually
difficult for these shows to match the artistic excellence of a professionally produced and acted
production. With Hancher displaced and presenting programming in a variety of locations,
options for those seeking professional arts entertainment in Iowa City are significantly
reduced, and RT's productions stand out as even more critical to the goal of maintaining the
arts and entertainment culture of Iowa City.
Riverside Theatre Page 2
Strong Partnerships Benefiting Businesses and Students
Riverside Theatre collaborates with organizations and neighborhood businesses to develop
innovative programming, mutually beneficial promotions and foster new artistic development:
• During the 2010-11 season, RT collaborated with the Iowa City Foreign Relations
Council on programming related to RT's production of The Syringa Tree, which had at its
core the political issues and experiences of apartheid -era South Africa.
• RT solicited a contribution from River. Products Company that allowed 100 youths from
area schools/affiliated with area human services organizations to see Syringo Tree free.
• In both 2010-11 and 2011-12, RT has provided an artistic home for an emerging theatre
company, Working Group Theatre, through a residency that provides the company with
cost-free space for productions and artistic mentorship.
• In January 2011, RT hosted an event at the Bluebird Diner to celebrate RT's 30th
anniversary season and support the Bluebird's goal of expanding dinner service sales.
• In October 2011, RT provided free theatre education classes as part of the Northside
neighborhood's inaugural October fest and hosted readings for the Literary Walk
expansion.
Accessible Entertainment in Iowa City
RT provides affordable professional entertainment options for our community. Discount prices
are offered for senior citizens, youth, college students, and, in an effort to attract a younger
demographic, adults ages 30 or younger. Student rush tickets are available when unsold tickets
remain before shows. The Riverdog season pass offers five productions from the Gilbert St.
season forjust $115, and the Summer Nights pass introduced in 2011 offered both Shakespeare
Festival plays at a 25% discount.
Audience Profile (based on ticket type purchased)
2010-11 Gilbert St. 2011 Shakespeare Festival
Single Ticket Purchasers
Season Pass Purchasers
Single Ticket Purchasers
2-Play Pass Purchasers
Adult
36%
Adult
46%
Adult
45%
Adult
55%
Over 60
44%
Over 60
51%
Student/Senior
32%
Student/Senior
41%
Under 30
5%
Under 30
1%
Youth
12%
Youth
3%
Student Rush
8%
Comps
2%
Rush
8%
Comps
0%
Usher Comps
7%
Usher Comps
3%
0%
100%
100%
100%
1000
RT allows community members to see shows for free, in exchange for volunteer ushering
service. In the 2010-11 season, 350 volunteer ushers served and saw performances for free.
Riverside Theatre Page 3
Before the opening of major productions, RT hosts free Theatre talks and free/donation
suggested special events at the Gilbert St. theatre, Festival Stage and other Iowa City locations.
Economic Contribution to Iowa City
RT employs over 100 people annually. Staff is comprised of Iowa City area residents.
RT Employment: Positions & Wages
FY2010-11
FY2009-10
FY2008-09
Positions
Wages
Positions
Wages
Positions
Wages
Permanent staff Full-time
3
75,208
3
94,909
4
107,053
Part-time*
8
98,259
7
81,077
5
63,841
11
173,467
10
175,986
9
170,894
Seasonal staff Part-time
4
2,836
8
4,544
10
5,209
Seasonal artists Contract
84
74,830
101
90,321
85
89,148
Equity
8
28,648
10
30,635
8
29,289
92
103,478
111
120,956
93
118,437
TOTAL
107
279,781
129
301,486
112
294,540
*includes 3 work study students (50%of wages paid by RT, 50% paid by UI)
The majority of artists hired for productions are local residents, though some travel from other
cities in the region (e.g., Chicago, Minneapolis, Kansas City, Boston) to work at RT. The majority
of visiting artists come during Festival. Paid opportunities for artists in our area are rare and
appreciated. The artists that RT brings to the area add to the creative culture of Iowa City.
All artists who travel to participate in RT productions are housed in private Iowa City area
homes. As temporary Iowa City residents for several weeks (typically eight), they frequent Iowa
City businesses for coffee, meals, gym sessions, sundries and entertainment, and because
many do not have cars, they spend a high proportion of their earnings in the Iowa City area.
Also, visiting artists often invite family from outside of the area. This results in additional
spending on hotel rooms, restaurants and other local activities.
Riverside Theatre Page 4
Financial Situation —FISCAL YEAR 2010-11
RT's expenses are funded roughly 49% by earned income and 51% by contributed income,
which is common among regional theatres of RT's size. Earned income is primarily ticket sales;
contributions are funds donated by individuals, organizations (grants) and area businesses
(sponsorships, cash and in -kind donations).
While individual contributions have remained steady, the recent years' economic downturn
has made ticket sales and securing sponsorships from area businesses more challenging.
As of September, 2011, RT projects that it will close its 2010-11 fiscal year with a $20,200
deficit. (This figure is subject to audit.) The largest factor contributing to this deficit is ticket
sales coming in lower than budgeted. (See earned income line in statement below.)
RIVERSIDE THEATRE
DRAFT INCOME STATEMENT - SUBJECT TO AUDIT
FISCAL YEAR 2010-11
INCOME Actual Budget
Earned Income 236,392 271,593
Contributed Income 300,620 296,700
TOTAL INCOME 537,012 568,293
EXPENSES
Artistic
159,689
164,382
Production
66,152
67,531
Education
13,260
15,222
Marketing
72,806
78,746
Patron Services
52,501
54,970
Administration
51,883
56,088
Development
55,666
55,233
Facility
85,264
87,363
TOTAL EXPENSE
557,221
579,535
NET INCOME
-20,209
-11,242
Allocations to restricted funds
-1,600
-4,200
NET AFTER ALLOCATIONS
-21,809
-15,442
Riverside Theatre Page 5
Financial Situation —FISCAL YEAR 2011-12
RT's operating budget for fiscal year 2011-12 projects that this season will finish with a small
net profit (+$10,851 before allocations; see net income line in chart below.) This is largely the
result of aggressive expense cutting and the fact that this year's Gilbert St. shows are
extraordinarily cost-effective. Several shows have minimal sets; the co -production with Cornell
College places some production costs on Cornell rather than RT. It is not the case that 2012
reflects what will be possible in future years. In fact, it's almost certain that expenses in
upcoming years will be higher.
RIVERSIDE THEATRE
11-12 Budget DRAFT #2
2011112
BUDGET
INCOME
Earned Income 272,529
Contributed Income 279,800
TOTAL INCOME 552,329
EXPENSES
Artistic
143,209
Production
61,183
Education
14,527
Marketing
78,035
Patron Services
54,798
Administration
52,565
Development
51,527
Facility
85,634
TOTAL EXPENSE
541,478
NET INCOME 10,851
Allocations to Restricted Funds -2,305
NET AFTER ALLOCATIONS 8,546
(Contributed income is budgeted to be $16,900 under 2010-11's budget because 2010-11 included an
exceptionally successful "$10K matching gift" campaign and other tactics that won't be repeated in
2011-12. This figure also reflects the trend of grants and corporate sponsorships being increasingly
difficult to secure, as well as fundraising events generating less than budgeted in recent years.)
Riverside Theatre Page 6
Moreover, while a "good year" is expected to be immediately ahead in FY2012, the theatre has
significant losses to make up from the previous two seasons. This is the first season since 2008-
09 that the theatre expects to finish without a net deficit.
Income and Expenses Last 5 Fiscal Years
FY
Earned
Income
Contributed
Income
Total
Income
Expenses
NET
2011-12*
272,529
279,800
552,329
541,478
10,851
2010-11**
236,392
300,620
537,012
557,221
(20,209)
2009-10
267,258
290,045
557,303
592,472
(35,169)
2008-09
282,818
298,926
581,744
570,939
10,805
2007-08
1 237,750
1 309,241
1 546,991
1 543,642
1 3,349
*2011-12 figures are budgeted; **2010-11 figures are pre -audit
The most significant factors contributing to the deficits of 2010-11 and 2009-10 were lower -
than -expected ticket sales, particularly for the Shakespeare Festival.
Looking at key elements of RT's most recent audited figures (2009-10), relatively low
percentages of its expenses go toward administration/operations and fundraising —almost
65% goes toward programs.
Key Elements of RT Income and Expenses
Percentage of
RT Income supported by public donations (not including government grants)
42.30%
RT Expenses allocated to administration/operating
25.17%
RT Expenses allocated to fundraising
9.909/0
RT Expenses allocated to programs/direct services
64.90%
(Based on RT fiscal year 2009-10--the most recent audited figures.
The above percentages do not include in -kind contributions or expenses)
Anticipated Challenges
In addition to recovering from past income deficits, Riverside Theatre anticipates the following
trends and challenges in the next three years (2011-2014).
• Increased competition from a new venue: While the new Coralville Center for
Performing Arts is not a producing organization, and although it is primarily associated
with community (non-professional) theatre, it provides a new option for those seeking
theatre experiences. With the city of Coralville strongly behind this venue, it will be a
strong competitor for the community's attention, and may lure people away from Iowa
Riverside Theatre Page 7
City. RT anticipates needing to spend more to market productions and the company
itself in the upcoming years.
• The continuing economic challenges and a resulting need to offer discounts/maintain
low ticket prices: Feedback suggests that patrons continue to be cautious about
spending money in our economic climate. The popularity of Festival Family Night tickets,
Festival Summer Nights Passes, and the Gilbert St. Riverdog season pass attest to this.
Discounts help RT sell tickets, but this cuts into earned income. RT raised ticket prices
slightly for both the 2011 Festival and the 2011-12 Gilbert St. season without seeing a
negative impact, but it is not anticipated that further increases will be possible soon.
While RT is vigilant about not cutting too deeply into average ticket price, it is
anticipated that relatively generous ticket discounts will continue to be offered.
• The need for facilities and equipment maintenance/improvements. Because of recent
years' income shortfalls, RT has deferred making physical improvements to the Gilbert
St. theatre facility and equipment. Over the next 3 years, RT estimates that
approximately $30,000 will have to be spent on new lighting instruments, augmenting
the sound system and replacing the nearly 20-year old HVAC system.
• The need to improve RT's financial situation prior to raising funds for a permanent
(non -rental) indoor facility. The current Gilbert St. rental arrangement is not
guaranteed for the long-term future. However, RT cannot embark on the capital
campaign required to identify/establish a permanent facility, given its current financial
situation. After thirty years as part of the Iowa City community, RT places a priority on
establishing a permanent facility in Iowa City; this will be the be the first -choice path
when the financial situation is solid enough to begin exploring options.
Riverside Theatre Funding Request
Riverside Theatre respectfully requests that the City of Iowa City consider a three-year award
of economic development funds: year one, $30,000; year two, $25,000; year three, $20,000.
The decreasing amounts are intended to reflect the theatre's progression toward greater
financial strength.
The theatre will use these funds to:
• Alleviate previous seasons' earned income shortfalls
• Ramp up marketing efforts, and help offset ticket discounts in the next 1-3 years
• Complete anticipated critical physical improvements
Riverside Theatre Page 8
All of these efforts will help strengthen the organization and ensure that RT can continue to
produce the high -quality, professionally produced and acted productions for which it is known.
Furthermore, fortifying RT's financial situation will help the city of Iowa City
• Achieve its comprehensive plan to expand Downtown arts and entertainment options
• Support the development of the Northside neighborhood and its resident businesses
• Remain the premiere destination for professional arts and entertainment
RT will recognize the contribution in a way that is appealing to the City. For instance, language
such as "The 2011-12 season is supported in part by the City of Iowa City" could be included in
upcoming publications and signage. All suggestions on recognition methods are welcome.
Riverside Theatre appreciates the consideration of the committee and the ongoing support of
the City of Iowa City.
Riverside Theatre Page 9
RIVERSIDE THEATRE
SUPPORTING MATERIALS
Letters of Support from area businesses
Follow on pages 11-14
Testimonials from audience members and artists
Follow on pages 15-16
Riverside Theatre Supporting Materials Page 10
DeL)oT(qN
117 North Linn Street 319.354.1001
Iowa City, Iowa www.Devotay.net
52245-7973
October, 2011
To whom it may concern:
It is with great pleasure that I write in support of Riverside Theatre.
The theatre was among the first to open its arms to us when we opened our
restaurant 15 years ago. Before that and since it has been a pillar of the
Iowa City community, and a great contributor to the economic vitality of
our neighborhood.
We can always count on a ten -to -thirty percent increase in dinner traffic on
show nights, and even more during their annual Shakespeare Festival in the
park. In addition, we have always appreciated their support for children in
the performing arts, which helped not only my own children but countless
others throughout Iowa City.
They do spectacular work.
Warm Regards,
Chef Kurt Michael Friese,
President/ CEO/ CIO
Devotay, Inc.
Real. Good. Food.
October 4, 2011
Dear Commissioners,
The Bluebird Diner strongly supports the Riverside Theatre funding proposal. We here at
Bluebird have directly benefited from Riverside's presence in the Northside
neighborhood in two main ways:
1. Advertising in the playbill and participation in fund raising activities has helped
us gain exposure to a valuable demographic group.
2. On nights when the theatre has an event our sales increase 25-30%.
Riverside Theatre figured greatly into our business plan when we were starting Bluebird
Diner and has undoubtedly added thousands of dollars to our annual gross revenues.
We here at Bluebird hope you will look favorably upon The Riverside Theatre's proposal.
Please feel free to contact me if you need additional information.
Sincerel ,
� t
Jonathan Wilson
Co-owner, Bluebird Diner
12—
To the City Of Iowa City
Riverside Theatre has been a pillar of our Northside Neighborhood and is a very important reason for
the growth of our area. Riverside Theatre is beneficial not only to the multiple dining venues in the
neighborhood, but it also has an effect on our bed and breakfasts, nick -knack shops and our business at
John's here as well. We have seen a great energy surrounding their productions, and with the patrons
that attend their shows, all of the businesses in the Northside have benefited from the Riverside
Theatre. They truly are an integral part of our neighborhood.
Thank you for your consideration.
Doug Alberhasky
Store Manager
John's Grocery
f �
Community Testimonials
General feedback received about experiencing professional theatre at RT:
"Riverside Theatre exposes me to new plays performed by actors who have the training
and experience to capture nuance and complexity in modern themes while also offering
me new productions of great classics... Riverside productions do what all great theatre is
supposed to do: elevate us as individuals and as a community and help us to appreciate
the beauty in all human experience."
—Victoria Brown, patron and educator
"We've enjoyed University and Community theaters throughout the years, but Riverside
Theatre's professional of productions is the crown jewel of the Iowa City cultural
environment. As the rest of the world is moving to glitzy musical productions to attract
patrons, RT keeps the tradition of live theater alive and gives us a real theater
alternative. The availability of quality, professional, thought provoking plays at RT saves
us the expense of traveling to a big city (Chicago, New York, London) to see theater."
—Julie and Carl Schweser, patrons
Written/emailed feedback received from audience members in response to RT's production of
All My Sons in 2011:
"It makes me proud to live in Iowa City where a theatre experience like All My Sons
is possible.
—Susan Boyd, patron
"...we were most impressed with all aspects of the production... the strong design and
technical support; excellent casting; a cohesive ensemble of unselfish actors... working
off one another "in the moment" and revealing character nuances along the way. And,
above all, there was an exemplary sense of fidelity to text ...the play itself came through
with great clarity. In short, a very satisfying evening of theatre. Kudos to all!"
—Steven Weiss, patron and educator
Riverside Theatre Supporting Materials Page 15
From artists employed by RT:
"...as the only professional theatre in Iowa City, Riverside Theatre is able to compensate
artists. Given the high cost of living in a university town, that money can mean the
difference between making a living and just getting by. After 21 years and 35
productions, I've found an artistic home with Riverside Theatre —a claim many of the
actors I've worked with from Chicago and New York cannot make. Like Dorothy Gayle,
I've found artistic 'happiness in my own back yard', without having to travel all the way
to Oz."
—Tim Budd, actor
"... I was afraid that in order to benefit from Iowa's clean skies and good schools, I would
have to sacrifice my professional and artistic growth as a theatre artist. I was surprised
to discover that wasn't the case. Riverside Theatre has nurtured me artistically and
professionally; their support has been integral to my success. They enrich this
community and make it possible for people like me to live and work here."
—Megan Gogerty, playwright and performer
"I love working in Iowa City. Not only is the work great, but I always feel truly embraced
by the community while I'm there.... I don't feel like an outsider when I'm there, I feel
like I'm part of a community, and I'm proud to contribute my work to this home away
from home.
—Cristina Panfilio, actor
Riverside Theatre supporting Materials Page 16