Sunset Center Theater
"The Cultural Heart of Carmel-by-the-Sea"
E/s San Carlos St. between 8th Av. & 10th Av.
Carmel-by-the-Sea, CA.
Regular Meeting Agenda
Tuesday, February 6, 2007
4:30 p.m., Open Session
V. Announcements from Closed Session, from City Council Members and the City Administrator.
C. Announcements from City Administrator.
• Receive second quarter financial report for SCC, Inc.
Herewith is an excerpt from the “2nd Quarter 2006-2007 Financial Report,” written by Sunset Cultural Center, Inc.’s Executive Director Jack Globenfelt, dated February 6, 2007, which was included in the February 6, 2007 City Council Agenda packet.
Significance: The end of the “Term,” or the first three years of the agreement between Sunset Cultural Center, Inc. (SCC) and the City of Carmel-by-the-Sea ends June 30, 2007; “the SCC shall have the option to extend the Term for three (3) additional years (“the Renewal Term”). “During the one hundred fifty (150) day period prior to end of the Term…, Carmel and SCC shall negotiate in good faith to establish a new Enabling Grant, as defined in Section 4.4, for the Renewal Term.” (See Reference at end of post)
To: Mayor Sue McCloud and Members of the City Council
From: Jack Globenfelt
Executive Director
Sunset Cultural Center, Inc.
Date: February 6, 2007
Subject: 2nd Quarter 2006-2007 Financial Report
Summary of Operations
“We expect the remainder of the year to be close to our projections. While we have pushed to lower costs and raise income, it can not be anticipated that these results will be sustainable in the future. More resources will be required and we are diligently working on a three year budget to present to you to reflect this reality.”
QUESTION: Evidence for SCC reneging on SCC’s pledge to reduce the City’s subsidy over time?
NOTES: City Subsidy to SCC (Fiscal Year 2004/05 – Fiscal Year 2006/07)
Fiscal Year 2004/2005:
Enabling Grant: $762,000
Start-Up Grant: $105,000
Advance of Working Capital: $120,000
Fiscal Year 2005/06:
Enabling Grant: $772,000
Fiscal Year 2006/07:
Enabling Grant: $713,000
Total for Three Year Term: $2,472,000
REFERENCE:
AGREEMENT Between CITY OF CARMEL-BY-THE-SEA, A Municipal Corporation And SUNSET CULTURAL CENTER, A California Not-for-Profit Corporation
May 24, 2004
ARTICLE 1
DEFINITIONS; PREMISES; PARKING; TERM; OPTIONS; POSSESSION
1.5 Agreement Term. The term of this Agreement (“Term”) shall be for a period of three (3) years commencing on July 1, 2004 (“Commencement Date”) and terminating on June 30, 2007, unless terminated sooner in accordance with the provisions of this Agreement.
1.6 Option to Extend Term. At the end of the Term, provided that SCC is not then in default under the terms of this Agreement, SCC shall have the option to extend the Term for three (3) additional years (“the Renewal Term”), followed by an option to extend the Renewal Term for an additional three-year (3) period (“the Second Renewal Term”). SCC may exercise its option to extend the Term or the Renewal Term, by giving Carmel an updated Operating Budget, as defined in Section 4.4. for the Renewal Term or the Second Renewal Term, and written notice of its intention to extend the Term or the Renewal Term not less than one hundred and eighty (180) days prior to the end of the Term or the Renewal Term. During the one hundred fifty (150) day period prior to end of the Term or the Renewal Term, Carmel and SCC shall negotiate in good faith to establish a new Enabling Grant, as defined in Section 4.4, for the Renewal Term or the Second Renewal Term. If the parties agree upon a new Enabling Grant, and if Carmel approves an updated Operating Budget, the Term shall be extended and the Renewal Term or the Second Renewal Term shall be subject to the provisions of this Agreement, but not including additional options to extend the Second Renewal Term.
ARTICLE 4
EXPENSES
4.1 Carmel’s Duty to Reimburse SCC’s Operation. SCC agrees to assume the full and complete responsibility for all Direct and Indirect Costs of operation of the Sunset Center, except for those specific costs of repair, maintenance and capital expenditures which Carmel assumes under the terms of this Agreement as set forth in Section 6.1 below. In addition to those expenses which Carmel shall pay directly for repair, maintenance and capital expenditures, Carmel shall advance SCC an Enabling Grant as set forth in Section 4.4 below, which is the amount equal to the difference between revenues generated by SCC’s management of Sunset Center, and the costs incurred by SCC in connection therewith, as hereafter provided. Carmel acknowledges and understands that SCC’s initial operating budget is based on best effort estimates by SCC and that adjustments to the budget may be necessary during the Term of this Agreement.
4.2 Operating Budget. EXHIBIT B, attached hereto and incorporated herein, is an operating budget for the three (3) fiscal years of the Term, ending on June 30th of each year. By signing this Agreement, Carmel hereby approves EXHIBIT B.
4.3 Fiscal Year. The fiscal year for SCC shall start July 1 and end June 30 of each year to coincide with Carmel’s fiscal year.
4.4 Enabling Grant. Carmel acknowledges that SCC’s expenses incurred in the management and operation of Sunset Center will exceed revenue SCC generates from the Sunset Center. Therefore, Carmel agrees to provide SCC with an annual Enabling Grant, in amounts set forth in EXHIBIT B, to be paid to SCC in quarterly installments in advance, commencing on July 1, 2004. The annual Enabling Grant is intended to cover SCC’s budgeted financial shortfall as set forth in EXHIBIT B for each fiscal year of the Agreement.
4.5 Advance of Working Capital. Carmel shall advance to SCC five (5) days after the approval of this Agreement by Carmel, or on July 1, 2004, whichever is the first to occur, the lump sum payment of One Hundred Twenty Thousand Dollars ($120,000) as working capital. Any working capital remaining at the end of the Term shall be credited back to Carmel.
4.6 Start-Up Grant. Carmel shall further provide SCC with a one-time non-refundable start-up grant five days after the approval of this Agreement by Carmel, or on July 1, 2004 whichever is the first to occur, to cover expenses incurred by SCC during the start-up period (“Start-Up Grant”). The Start-Up Grant shall be in the amount set forth in EXHIBIT B.
(Source: http://www.ci.carmel.ca.us/, SCCagreement.pdf)
5 comments:
It is no wonder the City Council crys poor. What a white elephant! The city pours good money after bad but won't spend the minimal monies necessary to maintain our infrastructure or to hire the minimal amount of staff needed to keep the city running properly even though ample funds exist to do so. When are we going to have competent people running Carmel - people who have the city's welfare in mind rather than there own private agendas?
White elephant indeed! This pending train wreck brings to mind the genesis of the nonprofit to manage Sunset Center. That is, the interim director was quoted in his first and only interview with The Carmel Pine Cone that his most pressing and important task was first and foremost the determination of whether there was or was not public support for a nonprofit group to manage Sunset Center after decades of city management. It was rumored at the time that Sue shut this process down immediately.
Then we were treated to that meeting at the American Legion where the audience by and large was not pro-non-profit, and the city council members, refusing to sit up front and answer questions from the public, clearly showed they had their minds made up and therefore did not take the objections of the audience members seriously. It bears mentioning that the audience members who spoke had a deeper and more profound understanding of the arts in the U.S. today and non-profit management than all the city council members collectively and the SCC board members.
So fast forward to today, and after the city and SCC promised to run the Sunset Center with less and less of a city subsidy (read Carmel taxpayers money), SCC now seems ready to ask for a greater subsidy.
Good money after bad, indeed! And it isn't really a community center anymore. Just ask all the historic users who have left for more hospitable venues.
Whoa! Cost effectiveness dictates the city fix up Flanders, Scout House & Forest Theatre and sell Sunset Center. Before Sunset leads the city into financial ruin.
During the Suset Center financial analysis phase of the project, Mike Cunningham and his financial committee predicted that Sunset Center operations would not require nearly the subsideies it eventually required and would only need city subsidies for the first few years. They also said that once the Sunset Center started operations it would bring in $5.00 in revenue for every $1.00 spent by the city. So where is all that new revenue they promised?
The McCloud council,in its infinite wisdom, should invest $15,000 more of our tax money and have Ralph Andersen, do an analysis of just how much additional revenue the "new, privately managed, Sunset Center" is generating for city coffers.
During the Suset Center financial analysis phase of the project, Mike Cunningham and his financial committee predicted that Sunset Center operations would not require nearly the subsideies it eventually required and would only need city subsidies for the first few years. They also said that once the Sunset Center started operations it would bring in $5.00 in revenue for every $1.00 spent by the city. So where is all that new revenue they promised?
The McCloud council,in its infinite wisdom, should invest $15,000 more of our tax money and have Ralph Andersen, do an analysis of just how much additional revenue the "new, privately managed, Sunset Center" is generating for city coffers.
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