The Business Case for a Yes Vote

Prepared by the PARC board for the Plymouth Chamber of Commerce, whose board voted to endorse the PARC Millage

The PARC Board of Directors appreciates the interest of the Chamber of Commerce Board in the PARC Project. We are pleased that we will have an opportunity to share our vision with you and hopefully you will agree that PARC provides an opportunity to put Plymouth on the map when it comes to arts and recreation. It will have a significant positive impact on quality of life, education opportunities, recruiting efforts, retail traffic and property values. This truly is a “Once in a Lifetime Opportunity”! We will never have an opportunity to develop a similar site in a downtown Plymouth location ever again.

Of course projects of this magnitude always have legitimate questions that need to be addressed. PARC is no exception. The Chamber has submitted 10 questions that we will attempt to address.

1. What is the feasibility of the project without the theater?

This is probably the most frequently asked question. Of the $30 million for the project, approximately $15 million will be for the theater. There are four reasons why the theater is critical to this project.

a. There is an unmet need for performance space of this size to support local arts organizations. The Salem Auditorium at PCCS is not available to outside groups. It’s the only auditorium for the entire school district. Local theater, music and dance groups are driving 20-30 miles to find suitable facilities. One local dance school rents the Saline High School Auditorium for 14 days per year for recitals. It’s very inconvenient and a long way for parents to drive. The Michigan Philharmonic has to perform in churches and venues outside the region. The Village Theater is a suitable facility for smaller groups, but it’s not in an ideal location and it doesn’t have the capacity for the larger performances. There isn’t a properly sized performance space within 25 miles for local arts organizations.

b. The theater provides an opportunity to bring high quality regional and occasionally national entertainment to our community. The Detroit Symphony Orchestra, Michigan Opera Theater, Motor City Brass Band, Detroit Chamber Winds and Strings, and national touring acts have expressed strong interest in performing in this facility. The theater’s downtown location, easy freeway access, ample parking and favorable resident demographic make this an attractive venue for performances.

c. One needs to ask what will happen to Downtown Plymouth as Amazon and other on-line shopping takes over the retail business. How long before our local retail shops are seriously impacted by this sea-change in retail shopping? PARC, including the theater, will bring significant numbers of people to the downtown area. This is an opportunity for PARC to be the anchor in making Plymouth an arts and recreation destination that facilitates shopping, dining, etc. The DSO has indicated it would make PARC its Western Wayne County home and the DIA is taking considerable interest in Plymouth via PARC. The world-renowned College for Creative Studies has already opened their first ever satellite operation in PARC. Discussions are underway with CCS and the DIA to implement a Public Art campaign. If we do this right, with a proper theater, we can make Plymouth a year round arts and recreation destination that surpasses anything between Ann Arbor, Birmingham and Detroit.

d. Finally, there’s the matter of financial viability. The numbers just don’t work well without the theater. Outside consulting studies indicate that the theater is a necessary part of the project for it to be financially viable on an operating basis. Internal projections indicate that operating the facility without the theater would be a challenge and would most likely result in operating losses over the long term that would need to be covered by charitable contributions. Since the theater is on the same site, under the non-profit control of the same PARC senior management and staff, operating costs are substantially lower than they would be for a stand-alone theater managed by government. (We will provide more details during our meeting).

2. How many seats or rentals do you need a year to make the theater profitable?

Based on initial feedback from potential users we expect to be open for 150+ days per year. At about 100 days, the theater should be profitable. Most of the costs for the theater are variable. Only the insurance and utilities are truly fixed. If the theater isn’t open [for an event] we have very little cost. The Village Theater does about $400,000 per year in revenue with a 400-seat facility in a relatively remote location and limited parking. We are conservatively projecting $450,000 in annual revenue with a much larger facility in a perfect location and virtually unlimited parking.

3. What are the differences that make this theater project work financially better than the Village Theater.

a. The primary one is location. The VT is in the middle of nowhere. When people go to the theater it’s an evening out. Many times it includes dinner before, and drinks or dessert afterwards. Obviously that’s a huge advantage for PARC.

b. The VT is a beautiful facility at 400 seats, but it’s just too big for smaller groups and too small for larger groups. The ideal venue has two sizes i.e. 150 – 200 seats and 800 -1,000. PARC will have a renovated 175 seat facility in the existing school and the new 800 seat theater, both which can be operated at the same time. Again, consider the efficiencies of being able to operate two theatres on the same site while leveraging existing staff and costs.

c. PARC is a 501(c) 3 non-profit. This is a huge advantage in payroll costs and benefits versus a government run enterprise. A 501(c)3 pays less, can solicit donations, hold fundraisers, and build a volunteer staff, etc. No one will make a donation to a government run enterprise like the Village Theater, Livonia Rec, etc. The independent studies were very specific that PARC had to be run by a 501(c)3 or their projections were not valid.

d. Operating costs for a 400 seat theater are nearly the same as for an 800 seat facility. Staffing is nearly the same. The financial viability is much greater with a larger theatre given the same operating cost and having two theaters.

4. How much authority does PARA have?

PARA will own everything -- the property, existing facility and the theater. PARA will request the millage to fund the bonds to renovate the school and build the theater. PARA is a separate, unique entity like the library, and will enter into a 20-year contract with PARC to operate the complex. Following construction, PARC will be self-sufficient and receive no operating subsidy from PARA or the taxpayers.

5. Since the theater is key to the financial success of PARC, who hires and oversees the theater director?

The theater is part of the entire PARC complex. The PARC Board of Directors hires and provides oversight of the PARC Executive Director. The theater will have an Operations Manager who reports to the PARC Executive Director.

6. How will the recreation and cultural options at PARC be promoted to the community?

PARC already has a strong website, e-mail and Facebook presence. In addition, individual events are promoted with flyers, and listed on several promotion sites. A digital sign will be installed in front of the building in about 45 days to make the public more aware of events at PARC. Each of the tenants also do marketing through their individual websites, e-mail data bases and Facebook pages.

7. Given the volatility of arts organization’s funding, how will you deal with long term dips in the economy.

PARC intends to have a minimum of a $1.0 mil reserve going into this effort to address future potential downturns in the economy and other unforeseen circumstances.

8. When there is a large event, like a well-attended hockey game at the cultural center, and a sold-out concert at the Theater, what is the projection for needed parking spaces?

The Cultural Center currently has 250 parking spaces. With the theater, PARC will have about 525 for a total of 775+. The theater requires 267 parking spaces for 800 people. Assuming the theater and Cultural Center were both at maximum capacity it would require a total of 517 spaces. That would leave 258 spaces for other activities at PARC. 260 spaces is approximately what PARC has on the existing site so the theater with the additional parking should not add any additional parking load. In fact, PARC provides as-yet untapped parking capacity to help address Plymouth’s downtown parking shortage.

9. What is the revenue versus expenses of the current operations at PARC?

Form 990 Tax Returns and audited financial statements for 2015, 2016, and 2017 are available online.

10. What is plan “B” if the ballot initiative fails?

There is no clear “Plan B”. If the millage fails, the owner of the property will determine the ultimate outcome. Community Foundation Investments, LLC (an affiliate of the Community Foundation for Southeast Michigan, arguably the top philanthropic organization in the region) is the prospective owner via a charitable contribution to a donor-advised fund established by Plymouth residents, Patty and Mark Malcolm. If the millage fails and CFI determines that donation of the property to PARC or another organization is not prudent and therefore decides to sell the property, all proceeds would return to the donor-advised fund and have to be contributed entirely to charitable organizations i.e., there is no possibility of personal financial gain for the Malcolms.