THUNDER BAY – City council has voted to move forward with a new, arms-length relationship with the Thunder Bay Community Auditorium, with the municipality putting up well over $3 million to cover the facility’s accumulated deficit and provide capital funding.
City and Community Auditorium leaders said Monday the new arrangement would open up new funding possibilities for the 1,500-seat performing arts centre, allowing it to run lotteries and access grants like the Ontario Trillium Foundation.
“It does free up opportunities," said Trevor Hurtig, the TBCA's general manager, including plans to run lottery-based fundraising campaigns.
In an interview, Hurtig said the move also puts the auditorium in line with other local cultural institutions.
“We were a little bit like a city department, a little bit non-profit, a little bit charity, and it was creating some confusion all the way around," he said. "People really didn’t know [what] we were."
"This clears it up: We’re going to be like most arts organizations – like Magnus [Theatre], like the [Thunder Bay] Art Gallery… where we're a non-profit organization, we’re supported and funded… by the city, but having said that, we run like an independent business.”
The TBCA is already a separate entity with its own board and employees, but has relied on the municipal government for significant support in operating the city-owned facility.
In terms approved by city council on Monday, the city would provide the TBCA with over $3 million over the coming years to get the organization on its feet as it transitions to operate independently beginning in 2023.
That includes a one-time grant of up to $2 million to cover the facility’s accumulated deficit, a “base loan” of $500,000, another “short-term revolving loan” of $500,000 to support special events, and a yearly contribution of $150,000 for capital maintenance through 2027.
The TBCA would also continue to receive annual operating assistance through the city's Community, Youth & Cutlural Funding Program, which has subsidized operating losses at the facility, typically to the tune of about $750,000 a year.
That city support represented only around about 14 per cent of the TBCA’s operating budget in 2022, noted staff presenting to city council on Monday, calling that a marked improvement from the 1990s, when the city had underwritten as much as 36 per cent of operating costs.
Losses that have accumulated beyond that relate in part to the Blues Festival, large artist fees, and weather-related issues in some years, said Hurtig.
Coun. Rajni Agarwal questioned how the TBCA will fare as an independent entity, given that history.
“I think the auditorium is a beautiful spot and has a great impact in our community, but fiscal responsibility – Historically, we have not seen it fiscally responsible,” she said.
“How can we be assured things will change going forward, and that we don’t see a deficit line and we hopefully see surpluses?”
Hurtig expressed optimism the new fundraising tools unlocked by independence will help, and said the TBCA is working on a business plan with a consultant.
Agarwal welcomed that news, but questioned how long the city should continue supporting the facility.
“We have to subsidize now, but in future I don’t know if the subsidy should be there,” she said.
“We’re heading, possibly, into a recession” and “budgets will be tight,” she added.
The previous council voted earlier this year to move to an arms-length relationship with the TBCA effective Jan. 1, 2023.
Council voted unaimously Monday to authorize city administration to sign an updated municipal capital facility agreement with the TBCA board, along with loan and lease agreements.
Hurtig said negotiations to finalize terms of those agreements are "moving rather quickly," anticipating final deals could be in place by the new year.
Community Auditorium leadership announced last week they would not organize the popular Thunder Bay Blues Festival in 2023, in part because the venue is still recovering from the COVID-19 pandemic.
Hurtig said Monday he hoped the new deal would help the organization make the financial headway it needs to make in order to take risks on major events like the blues fest.
Monday’s vote leaves some remaining question marks, like how an estimated $1.7 million in rehabilitation work required on the TBCA’s parking lot will be handled.
The exact amount of the accumulated deficit the city will cover, pegged at up to $2 million, also remains to be negotiated, though Hurtig said he expects it to remain in that ballpark.