The fate of Gilroy’s future performing arts center may hinge on
art enthusiasts and city officials becoming virtuousos of
finance.
Gilroy – The fate of Gilroy’s future performing arts center may hinge on art enthusiasts and city officials becoming virtuousos of finance.
The center, envisioned as a linchpin of downtown renewal, faces spiraling construction costs and significant anticipated shortfalls in its operating budget, according to city officials and arts supporters behind the project.
The financial pressures have forced city leaders to rethink their approach to the project, calling for an update of a three-year-old business plan that could include revenue-generating additions such as offices and storefronts. Such new ideas could mean major changes to the original vision of a community playhouse and gardens at the corner of Seventh and Monterey streets.
“A community playhouse is not built for revenue generation,” said Community Services Director Susan Andrade-Wax. “You have to have big names for that. Some places like Petaluma have loft space for architects and graphic designers. Some have brought in Starbucks. A year and a half ago, the arts groups thought the plan was solid and they really didn’t want to taint the project (with businesses). Now they’re more open and think its complementary. I think this is great. It’s a way to save the arts center.”
Donna Pray, executive director of the Gilroy Foundation and fund-raiser for the project, agreed on the need for change.
“If you look at the design now, it is the size of a two-story building,” Pray said. “There are other arts centers that have been successful by having space, Monday through Friday for architects, graphic designers, a lawyer’s office – people that would utilize the building when the arts community isn’t using it, and it generates revenue.”
City council members sanctioned the project in the late ’90s on the condition the center would finance its own operations, or at least approach that goal. A 2003 business plan projected that three-quarters of the center’s estimated $503,000 annual operating cost would come from parking fees, ticket sales and monthly rent from local arts groups, among other things. Interest from a planned $3 million endowment would cover a projected annual shortfall in revenues of $69,000.
Pray and others have already raised $1.8 million for the endowment, but it appears the money may not be nearly enough to bridge the gap. A pair of surveys conducted in December 2006 and in early 2007 suggest that projections of nearly $150,000 in rental fees could be overly optimistic.
Interest in using the facility remains high among the nearly 40 nonprofit groups who recently formed the Gilroy Arts Alliance, but less than a quarter of those groups plan to lease space in the new facility, said Andrade-Wax, who conducted one of the surveys. Combined with reduced lease rates officials plan to offer arts groups, City Hall could end up subsidizing the center indefinitely.
The prospect has inspired Mayor Al Pinheiro, who has placed downtown renewal at the top of his agenda, to explore partnerships with developers. A developer willing to help construct the facility could share in revenues from a cafe or piano bar, for instance. Parking could be located on top of the buildings, Pinheiro suggested.
“If we can get a developer to leave the cultural center as what we want, but has a model of doing a combination of retail and parking, I still believe that’s a viable option,” he said, adding: “There are two things you need to defray – you need to defray the cost of construction, and you need to put in place something that will augment the operations side.”
The city has only budgeted about $10 million to build the project, of which $3.9 million has already been eaten up by land purchases (originally estimated to cost just $900,000). Figures released in January by city architects place construction costs at $14.75 million. That price tag would increase if the city adds storefront space to the project.
In coming months, officials plan to survey nearby cities that have developed business plans for successful arts centers. City officials also plan to hire a consultant to develop a new business strategy for Gilroy’s arts center. They expect to release the document by September.
“Even if we got the construction cost issue out of the way, being able to sustain the center without some sort of subsidy from the city has always been a concern,” said Councilman Russ Valiquette. “I am not opposed to exploring the possibility of subsidies, but let’s see what the plan would be.”
