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HomeMy WebLinkAboutFCS-17-128 - P17-024 Lease of 44 Gaukel St - Creative Hub REPORT TO:Committee of the Whole DATE OF MEETING:2017-06-26 SUBMITTED BY:Michelle Palmer, Director of Supply Services 519-741-2200 ext. 7214 P REPARED BY:Emily Robson, Coordinator Arts and Creative Industries 519-741-2200 ext. 7084 WARD(S) INVOLVED:ALL DATE OF REPORT:2017-06-19 REPORT NO.:FCS-17-128 SUBJECT:P17-024 Lease of 44 Gaukel Street & the Creative Hub ___________________________________________________________________________ RECOMMENDATION: That staff be directed to conclude the procurement process for P17-024 Lease of 44 Gaukel Street & the Creative Hub; That staff be directed to work with key creative industry partners to explore and develop alternative creative hub concepts and operating models and return to Council before the end of 2017 with a recommendation on the future of the Creative Hub and 44 Gaukel; and further, That the Mayor and Clerk be authorized to execute short-term (month-to-month) lease agreements for the first floor of 44 Gaukel Street with any of the existing tenants and sub-tenants of 44 Gaukel Street, including the University of Waterloo and/or the accelerator Centre,with other terms and conditions consistent with the current lease agreements, with said agreements to be satisfactory to the City Solicitor. BACKGROUND: Community consultation, locational analysis of various sites and research into best practices of a creative hub was undertaken in 2016. In December 2016, Council directed that 44 Gaukel Street be established as the location of the Creative Hub. This location provides an opportunity for the City to leverage a municipal asset to strengthen the creative industries as an economic sector, build urban vitality, and to spark *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 1.vii. - 1 innovation across sectors. Staff proceeded by issuing a request for proposal for the st lease of 44 Gaukel Street(1 Floor) to identify an operator of the Creative Hub. REPORT: Request for Proposals were advertised publicly on the City of Kitchener website and the Internet through the Ontario Public Buyers Electronic Tendering Information System. Documents were downloaded by two (2) interested parties and by the closing date of Monday March 20, 2017,two (2)proposalshad been received. The following proposalswere received: ArtsBuildOntarioKitchener ON J.M. Drama AlumniKitchener ON The proposals were rated on the following criteria: Demonstrated Understanding and Approach Proposed Activities and Uses Operational Capability Revenue to the City The proposals were reviewed by the evaluation committee consisting of staff from Arts and Creative Industries, Business Development, Facilities Management, Financial Planning, Supply Services as well as Avvey Peters from Communitech and Rob Zielder from the Cotton Factory, who concur with the recommendation. Bothproposalsreceived in response to the Request for Proposal (RFP) were compelling and well-researched and supported.Eachproposal was responsive to the needs articulated by creative industry stakeholders during the Creative Hubconsultation process and builds on the proponent’s significant and relevant experience. However, neither submission included a financial model that recovered CAMs and property tax at a minimum, which was a key evaluation criterion requested by Council. Asboth submissions failed to meet this criterion, neither proposal can be moved into the second phase of the RFP process. From feedback received, there are a number of contributing factors that hindered proponent’s ability to develop financial models thatadhere to the requested financial criterion.Without a lease term specified in the RFP, proponent’s eligibility for capital grants is uncertain. For example, a five-year lease is a required condition for an Ontario Trillium Foundation capital grant, anda 10-year lease is required to be eligible for the Canada Cultural Spaces Fund. In addition, the amount and specific use of 50 per cent of the proceeds from the sale of 48 Ontario Street North(which has been notionally allocated to the Creative Hub)is unclear. Furthermore, there may be opportunities to improve on the process of acompetitive RFP, which works well for issues such as the procurement of goods and services, leasing of property, and disposition of surplus land, but may not be the most effective to establish such a facility. 1.vii. - 2 Moving Toward a Creative Hub: The response and feedback of proponents suggest that it is still possible to develop an operating model for a Creative Hub. The objectives of the Creative Hub do not fall within the current mandate of any particular local organization. Therefore, a collaborative approach, bringing the strengths of various organizations to the initiative, is required. Given thesignificant community interest, demand forcreative industry support, and the willingness of proponents to establish and operate at 44 Gaukel, staff recommends workingwith key partners to explore and develop alternative Creative Hub concepts and operating models.Staff plan to facilitatediscussions to explore how multiple partners might work together to operate the Creative Hub, how existing programming could be offered at 44 Gaukel, and how the limitations of the RFP financial criterion can be addressed. It also allows for the sale of 48 Ontario Street North to be resolved, adding clarity and transparency on the resources available for the development of the Creative Hub. Short-Term Use of 1st Floor: Currently, 44 Gaukel houses numerous tenants and sub-tenants, including Conestoga College, University of Waterloo, the AccleratorCentre, ArtsBuild Ontario, and a selection of creative industry businesses and organizations. Some of these tenants and sub-tenants have expressed an interest in using the space on the first floor on a short- term basis. The initial timeline for the procurement process targeted the fall of 2017 for an operator to take occupancy of the first floor of 44 Gaukel. With no successful proponent to advance to the second phase of the RFP process staff recommends entering into short- term leases with potential tenants for the first floor. This approach will ensure that the space is well-used and secure some revenue to City while the Creative Hub concept is further explored. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The Kitchener Economic Development Strategy (Make it Kitchener) adopted in 2015 recognizes arts, cultural workers and content creators (including music, media, film, design, and performance) as an important economic cluster. Strengthening arts and culture activities helps to develop Kitchener’s distinct identity as a desirable place to live and to visit. The City of Kitchener Strategic Plan notes that arts, culture and the creative industries make important contributions to “Quality of Life” through creativity, heritage and diversity. Development goals are also served through arts and culture, and adding to urban vitality. 1.vii. - 3 FINANCIAL IMPLICATIONS: Not applicable at this time.Should the City execute short-term lease agreements with the existing tenants, additional revenue would be received. Current lease agreements were previously approved by Council at rates that are below fair market value and could be extendedon a month-to-month basis. COMMUNITY ENGAGEMENT: INFORM – This report has been posted to the City’s website with the agenda in advance of the council / committee meeting. Should the recommended direction be supported by Council, staff will work with key partners to explore and develop alternative Creative Hub concepts and operating models. This topic will be tabled at the Arts and Culture Advisory Committee in August 2017. PREVIOUS CONSIDERATION OF THIS MATTER: CAO-15-037 Kitchener’s new economic development strategy, Make it Kitchener CAO-16-015 Community Engagement on potential arts hub and potential of 48 Ontario Street North CAO -16-025 Community Engagement for Creative Hub—Status Update CAO-16-034 Options for a Creative Industry Hub ACKNOWLEDGED BY: Dan Chapman, Deputy CAO & City Treasurer, Finance and Corporate Services 1.vii. - 4