HomeMy WebLinkAboutDSD-2025-207 - Arts & Entertainment ReserveStaff Report
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Development Services Department www.kitchener.ca
REPORT TO: Committee of the Whole
DATE OF MEETING: May 5, 2025
SUBMITTED BY: Cory Bluhm, Executive Director, Economic Development
PREPARED BY: Jeremy Dueck, Director, Arts & Entertainment
WARD(S) INVOLVED: All
DATE OF REPORT: April 21, 2025
REPORT NO.: DSD -2025-207
SUBJECT: Arts & Entertainment Reserve
RECOMMENDATION:
That an Arts & Entertainment Reserve be established to pursue talent for tourism -
driven programming and event opportunities, with attributes as described in the
"Reserve Information Sheet" attached as Appendix A to report DSD -2025-207; and,
That the Director of Arts & Entertainment and Executive Director of Economic
Development be authorized to allocate funds and authorize expenses from the Arts &
Entertainment Reserve as described in Appendix A of report DSD -2025-207; and
further,
That $300,000 be transferred from the Municipal Accommodation Tax Reserve to the
Arts & Entertainment Reserve to provide an initial funding base.
REPORT HIGHLIGHTS:
• The purpose of this report is to create a reserve and provide Arts & Entertainment
division staff delegated authority to pursue talent for tourism -driven programming and
event opportunities.
• The key finding of this report is that an Arts & Entertainment Reserve is required to create
sustainable funding for event recruitment — without increasing tax -based funding (i.e.,
without increasing transfers from operating/capital budgets).
• The financial implications are an initial transfer of $300,000 from the Municipal
Accommodation Tax (MAT) Reserve to the Arts & Entertainment Reserve.
• This report supports the 2023-26 strategic action plan by creating a financial structure
for events and festivals.
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BACKGROUND:
The City's Strategic Plan (2023-2026) aims to create an "Economically Thriving City" by
implementing an entertainment venue management structure. Make It Kitchener 2.0 aims
to create a vibrant and active city. As part of the 2024 and 2025 budget discussions, Council
has shared its desire to see the City's festival, event, and performance offerings grow.
In 2023, City Council endorsed the creation of a Centralized Services Provider model to
support the four arts and entertainment venues owned by the City of Kitchener. One of the
supports contemplated by this model is assistance in venue operators taking calculated risks
on new shows, concerts, etc.
Currently, the City's Special Events team is using Council -approved operating funds to
produce its entire portfolio of signature events (e.g., Canada Day, Wayback Festival, etc.).
As the cost to produce special events continues to rise, staff are being challenged to find
new ways to offset increased expenses — particularly the cost of talent — without going over
the approved budget amount. One opportunity includes the introduction of ticketed events;
however, such events require the City to take on risk in the event ticket sales do not reach
levels sufficient to cover costs. To do this, there needs to be a financial mechanism in place
to underwrite non -budgeted programming risks.
In addition, one major obstacle in pursuing this vision of special events is how quickly talent
deals must come together. Delegated authority (DSD -2024-259) is already in place to
enable staff to sign and authorize talent purchases, but there is not a financial mechanism
in place to support talent purchases that are not planned for in the operating budget, thus
constraining growth in the portfolio of events.
REPORT:
Through the City's Strategic Plan, Make It Kitchener 2.0 and recent budgets, Council has
been clear on their ambition to see an increase in special events — offering bigger, better
and more. Despite the additional operating funding provided by Council, due to the rising
costs of producing an event — in particular talent costs — staff will be challenged to deliver
an increased quantity and quality of events without introducing new methods of generating
revenue. One option is to expand existing events through the introduction of ticketed event
days. For example, the Wayback Festival currently offers a one -day event with a free
concert. Staff could consider programming a second day as a ticketed concert, whereby
the revenues generated offset the increasing costs of the free concert. This option, however,
introduces new risk as there is no guarantee every ticketed event will be financially
successful. In the event of financial loss (e.g., due to low ticket sales, weather impacts,
etc.), staff would require a funding base to underwrite such losses, so as not to create a
negative year-end variance. The creation of paid "VIP" experiences provides another
revenue opportunity.
Another potential application of the Arts & Entertainment Reserve could be to support risk-
taking for new, non -budgeted, ticketed events in the other City -owned arts and
entertainment venues such as the Conrad Centre for the Performing Arts.
The creation of an Arts & Entertainment Reserve account is crucial for several reasons:
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• Ongoing, Renewable Funding — A dedicated reserve will provide a funding source for
talent costs and related expenses, allowing the Arts & Entertainment division to program
non -budgeted events without relying on increased funding from property taxes.
Strategic Investment — The reserve will enable staff to pursue strategic event and
programming opportunities that have the potential to create positive economic spin-off
and benefit tourism.
Financial Stability — By earmarking funds specifically for new non -budgeted events
and/or non -budgeted components of existing events, the division can better mitigate the
risk of operating budget shortfalls and variances.
The benefits of a reserve include:
Increased Event Recruitment Capability — The availability of funds for major event
bids will enhance the City's ability to attract high-profile events, boosting its profile.
• Economic Impact — High-quality arts and entertainment events attract visitors and
residents alike, driving economic activity in the local area through increased spending
on accommodation, dining, and other services.
• Vibrancy—Adding non -budgeted events and programs will contribute to a vibrant, active
community, fostering a sense of pride and belonging among residents.
As the scale of events being considered would attract visitors from beyond Waterloo Region,
leading to increased hotel stays, it is appropriate that the initial seed funding come from the
Municipal Accommodation Tax. Staff would ensure that any funding drawn from this
Reserve is attributed to costs associated with a multi -day event or an event that drew out-
of-town visitors.
Staff have engaged with the Director of Financial Planning & Asset Management regarding
the creation and use of the proposed reserve. Staff have previously engaged with the
Executive Director of Economic Development and the Director of Sport — key invested
groups of the City's MAT Reserve, overseeing allocation and fulfilment.
STRATEGIC PLAN ALIGNMENT:
This report supports Creating an Economically -Thriving City Together: Focuses on
growing an agile, diverse local economy powered by talented entrepreneurs, workers
& artists; creating opportunities for everyone and a resilient future that propels our
city forward.
FINANCIAL IMPLICATIONS:
The Arts & Entertainment Reserve would receive initial seed funding of $300,000 from the
Municipal Accommodation Tax (MAT) Reserve which is in place to enhance tourism
initiatives and attract major events. Specifically, staff recommends earmarking these initial
funds from the MAT to support non -budgeted programs and events. The MAT ended 2024
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with a balance of approximately $1 M, so there is sufficient funding available to transfer to
the Arts & Entertainment Reserve.
Ongoing funding for the Arts & Entertainment Reserve would come from:
Non -budgeted ticketing revenue — Any profits realized from new ticketed events that
were in addition to the City's current portfolio of special events will be allocated to the
reserve.
• Non -budgeted revenue generation opportunities — Any profits or commissions
generated from food and beverage sales, merchandise commissions, sponsorships, etc.,
over and above event expenses, would be allocated to the reserve.
This initial funding model will enable proof of concept, whereby the initial funding from the
MAT reserve will allow for some new ticketed events to be tried, but the ongoing success of
this model will be dependent on ticket sales and other revenue generated by the new events
on a recurring basis.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of
the council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter.
APPROVED BY: Justin Readman, General Manager — Development Services
ATTACHMENTS: Appendix A — Arts & Entertainment Reserve Information Sheet
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Appendix A — Arts & Entertainment Reserve Information Sheet
Name:
Arts & Entertainment Reserve
Type:
Discretionary
Category:
Program Specific
Cost Centre:
TBD
Ownership Lead:
Director, Arts & Entertainment
Purpose:
Provide an initial funding mechanism to support the Arts & Entertainment division as it
relates to non -budgeted, tourism -driven opportunities, such as ticketed events.
Funding Sources (other than interest income):
• Initial $300K funding investment from the MAT.
• Non -budgeted ticketing revenue.
• Other non -budgeted revenue generation opportunities (e.g., food & beverage,
sponsorship, etc.)
Funding Uses (other than interest expense):
• Underwriting talent costs for non -budgeted, ticketed opportunities that have a tourism
impact.
• Major event bids and other event recruitment initiatives.
• Underwriting operating costs for non -budgeted events such as production, security,
etc.
• Underwriting capital expenses for non -budgeted events such as venue repair (e.g.,
grass replacement in Victoria Park Commons).
Minimum Funding Target:
Closing balance should not be below $0.
Rationale: Projects should not proceed unless funding is available.
Maximum Funding Target:
Closing balance should not exceed $1 million.
Rationale: Staff should be planning for event recruitment and capital expense
opportunities.
Excess Funds:
Excess funding greater than the maximum transfers to the Economic Development
Reserve Fund.
Other:
NA
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