HomeMy WebLinkAboutDSD-2024-065 - Creative Hub Rent Schedule, Skills Trades and Signing Authority
Development Services Department www.kitchener.ca
REPORT TO: Community and Infrastructure Services Committee
DATE OF MEETING: March 25, 2024
SUBMITTED BY: Cory Bluhm, Executive Director, Economic Development, 519-741-
2200 ext. 7065
PREPARED BY: Eric Rumble, Arts & Creative Industries Coordinator, 519-741-2200
ext. 7424
WARD(S) INVOLVED: All ward(s)
DATE OF REPORT: February 23, 2024
REPORT NO.: DSD-2024-065
SUBJECT: Creative Hub rent schedule, skills trades and signing authority
RECOMMENDATION:
That Council endorse the tenant rate schedule and skills trade protocols developed
-pilot operations and budget as outlined within
staff report DSD-2024-065; and,
That the Director of Culture & Entertainment, or delegate, be authorized to execute
licence agreements for a term of two years or less with tenants of the Creative Hub,
to the satisfaction of the City Solicitor.
REPORT HIGHLIGHTS:
The purpose of this report is to affirm the rental rate schedule and reduction options
available to tenants of the Creative Hub project.
The key finding of this report is alignment between the experiences of the pilot period
and opportunities to continue providing below-market-rate workspace to the arts sector.
The financial implications are accounted for by operational funds that were requested
and approved during the 2024 budget cycle.
This report supports the delivery of core services.
BACKGROUND:
During the 2019-2023 pilot period of the Creative Hub project at 44 Gaukel, City staff used
a rental rate schedule aimed at understanding the affordability thresholds of arts sector
workers and small cultural organizations. The rates also helped determine the cost recovery
stnd
potential and suitability of the and 2 floors.
A flexible rent schedule was developed, which considered other commercial rates and
-private space options
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at 44 Gaukel. Lockdowns and the gradual rebound from Covid-19 challenged
progress; but for a few months before March 2020 and since early 2022, staff have been
able to gauge the viability of those rates and an increasing interest and utility of the space.
As the project has evolved, multiple approaches to amenities such as internet services or
custodial support have been attempted. Moving into the post-pilot period, a mix of internal
and external services are coordinated to keep 44 Gaukel clean, connected and accessible.
Annual operating funding for the Creative Hub in the 2024 budget is aligned with expenses
and revenues analyzed during the pilot period (see DSD-2023-143).
Selected tenancy arrangements during the pilot also led to the development of a skills trade
program that staff will continue to facilitate. Skills trades are in-kind contributions from
tenants that can include, but are not limited to, photography, design, video and music
productions, art exhibits, facility features, broadcasts or free community events and
experiences. Services provided in exchange for rent reductions during the pilot resulted in
approximately $100,000 of in-kind value that has benefited the Creative Hub brand, its
tenants and many citizens who have engaged with it.
Report DSD-19-273 delegates authority to sign Creative Hub licences to the Executive
Director of Economic Development. As Arts & Creative Industries moves to the Culture &
Entertainment subdivision within Economic Development, staff advise transferring signing
REPORT:
Creative Hub tenancies provide below-market rate workspace to arts sector workers and
organizations. As the Creative Hub is no longer in its pilot phase and has been integrated
updated
rates and integrate them into the 2025 Fees and Charges schedule.
New tenancy rates are being updated in 2024 with a 4% increase. The base rental rate for
all spaces 180 sq. ft. or larger will increase from $24 per sq. ft. to $25 sq. ft., inclusive of
utility costs, property tax and internet, security and custodial services. Tenants must also
purchase insurance and pay HST on monthly rent.
Current CBRE data informs the $25 sq. ft. as below market rate. Office space, inclusive of
net rent, property taxes, maintenance, insurance and utilities, is estimated to cost $29.73
sq. ft. downtown and $24.96 sq. ft. in suburban areas of Kitchener. Retail space downtown
is estimated at $37.25 sq. ft. and industrial area space is estimated at $25.54 sq. ft.
Typically, spaces smaller than 800 sq. ft., such as those available to 44 Gaukel tenants,
may be priced higher by commercial landlords.
Established rates for existing tenants who have transitioned to a month-to-month phase of
their licence agreements will be maintained, with an annual inflationary increase applied.
During 2024, that will amount to a 3.9% increase, implemented on a case-by-case basis
following an in-person discussion of the tenancy rate changes contained in this report.
Reductions to the new base rate will be available in these circumstances and increments:
$2.50 sq. ft.rate reductionfor registered not-for-profit or charitable organizations.
$2.50 sq. ft. rate reduction for no windows in a tenant space.
$2.50 sq. ft. rate reduction for mutually beneficial skills trades.
Skills Trade Opportunities
Incoming tenants may be considered for a skills trade rent reduction of $2.50 sq. ft. by
negotiating an in-kind arrangement based on the size of space they plan to licence. For
example, a $2.50 sq. ft. rate reduction for 400 sq. ft. would equal a $1,000 reduction, so
skills trade services valued at $1,000 may be proposed and fulfilled during a one-year
term.
Acceptable skills trades are determined at the sole discretion of City staff. General criteria
include:
Skills trades are available to artists and arts organizations from Waterloo Region.
This means artists who are current residents of Kitchener, Waterloo, Cambridge or
townships in the region, or arts organizations registered to an address in the region.
Any skill trade contribution should have clear benefit to the Creative Hub, not just
and open to the public could be an option, but not one that charges an entry fee or
solely focuses on vendor sales).
Skills trades services are formulated around a contribution that is likely to improve
the facility experience for all tenants (and their audiences), such as creating artwork
for a shared area or providing specialized production support or capacity to achieve
an established programming goal of the Creative Hub project.
Where appropriate, City staff may consider other locations for skills trade delivery.
Skills trades at the Creative Hub are accessed as follows:
Incoming tenants seeking a 12-month licence agreement can propose to reduce
their rent by $2.50 sq. ft. if the quoted cost of available space is a barrier to entry.
Skills trade options are negotiated in person with the Coordinator of Arts & Creative
Industries, endorsed for inclusion in a tenancy licence offer by the Manager of Arts
&
All skills trades for space arrangements are articulated as a customized schedule
attached to Creative Hub licence agreements.
After successful completion of one licence term, tenants or City staff can propose a
deeper rate reduction based on higher-value skills trades to achieve additional
project programming or promotional goals. Deeper skills trades are defined as more
than one $2.50 sq. ft. rate reduction, combined to create a larger reduction in
exchange for a more valuable in-kind contribution.
Deeper skills trade reductions are negotiated on a case-by-case basis that
considers the proposed alignment with Creative Hub, local community
and/or arts sector development priorities, as described in the bulleted list below.
Deeper skills trades following against the criteria below.
For each criteria met by the proposed in-kind services that is accepted by the director
overseeing Creative Hub activities, a $2.50 sq. ft. rate reduction may be applied:
Provision of arts-based social services provided to racialized, marginalized and/or
other underserved or equity-deserving communities.
Specialized production capacity (high-value equipment, technical skills or aesthetic
innovation) to support staff-directed programming objectives.
Operational and/or organizational support of 10or moreregional arts workers
and/or organizations.
Provision of arts sector development or support capabilities that can directly help to
fulfill goals stated in City strategic plansCreating an economically thriving
city together the
platforms and enable opportunities throughout the city for difference makers to
bring our city to life. Work with key stakeholders, business areas and cultural
producers to build and promote
Forecasted Rates & Reductions
The maximum rate reduction available to any tenancy is $10 per sq. ft. Reductions can be
achieved through any combination of conditions noted above a tenant providing proof of
its not-for-profit or charitable status; a tenant space without windows; a new tenancy skills
trade or a deeper skills trade that meets multiple criteria following a successful first term.
Annual inflationary increases of 1 to 5% (determined by consumer price index data) are
anticipated to be applied during subsequent years of the Creative Hub project. This table
forecasts inflationary increases at 2% for various rate reduction scenarios:
2024 2025* 2026* 2027* 2028*
Below-market rate (BMR) $25.00 $25.50 $26.01 $26.53 $27.06
BMR -1 reduction criteria $22.50 $23.00 $23.51 $24.03 $24.56
BMR -2 reduction criteria $20.00 $20.50 $21.01 $21.53 $22.06
BMR -3 reduction criteria $17.50 $18.00 $18.51 $19.03 $19.56
BMR -4 reduction criteria $15.00 $15.50 $16.01 $16.53 $17.06
*actual rate will be subject to Council approval on an annual basis.
One area of the 44 Gaukel facility contains tenant spaces smaller than 180 sq. ft. These
units are subject to a rate above $25 sq. ft., determined at the discretion of the Director
responsible for approving licence agreements at 44 Gaukel.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
The recommendations have no impact on the Capital or Operating Budget, as the noted
rates were contemplated as part of the financial projections associated with the 2024
Budget.
COMMUNITY ENGAGEMENT:
INFORM e with the agenda in advance of
the council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
DSD-2023-143 Creative Hub at 44 Gaukel Pilot Report
DSD-19-273 Delegated Signing Authority for 44 Gaukel Licence Agreements
APPROVED BY: Dan Chapman, CAO