Wednesday, June 1, 2011
Sanchez Art Center Sub-lease
Every city should have arts and cultural programs, the arts add an additional view and reference, and may bridge our effort to become more civilized. But, will an art center making much of a profit? Maybe in some larger cities, not expected in Pacifica.
The Art Guild of Pacifica lease extension with the City of Pacifica, 10 years (1/1/11 through 12/31/20).
1. Lease terms: City Council meeting 3/9/09, Art Guild LEASE, Item 4, print pages 11-18. Approval: City Council meeting 12/14/09, Art Guild, Item 12, (print pages 37-38).
2. Apparently no significant changes in the lease occurred from 3/9/09 until 12/14/09 because no revision was presented to the public.
3. The sub-lease applies to management of Sanchez Art Center (artist studios) only, and not to Pacifica Performances" (The Mildred Owen Concert Hall), which is a separate sub-lease.
Questions about the Art Guild of Pacifica lease transaction.
1. The city has a policy of sub-leasing to non-profit organizations, whereas the Art Guild of Pacifica is an association, a Club, is this an exception, if so why?
2. Note: Both Sanchez Art Center (artist studios) and Pacifica Performances (The Mildred Owen Concert Hall) are non-profit 501(c)3 corporations.
3. Note: If the Art Guild of Pacifica is merely a pass-through organization, no third party beneficiaries or brokers are named, (lease. section 8).
4. Is the Art Guild significantly capitalized, and how does it provide business and liability transactions?
5. Is the real leasing organization Sanchez Art Center (artist studios), and if so why was the lease extended without clear disclosure?
The confusion at Sanchez Art Center never goes away.
1. The Sanchez Art Center includes both performing and fine arts and is located at 1220 Linda Mar Boulevard, unless the site has been renamed-- has it?
2. "Sanchez Art Center" (the tenant studio non-profit organization) is NOT the same as Sanchez Art Center, and is separate from the Art Guild of Pacifica, the accountable sub-leasee.
3 Note: CA non-profit organizations disclosure indicates "Sanchez Art Center" (tenant studio organization) income and revenue is $153,834 (fiscal tax year 2008/09), asset amount $31,787; foundation code: "1/3 support from investment and unrelated business income, and 1/3 from fees."
4. Note: According to their "Dirty Palette" news letter, edition March, 2011, the Art Guild of Pacifica (unincorporated organization) is currently applying for non-profit 501(c)3 status, and their mission does not specify artist studio management. Do they even collect studio tenant fees, cover site expenses, and pay the monthly bill to the City? As a sub-leasee they are accountable to do that.
The City glossed-over report and approval, City Council meeting 12/14/09 , item 12 (link above).
1, Art Guild of Pacifica reasons to renew its 10 year lease 1 year or more in advance: "Schedule exhibits, obtain future grants, plan long range improvements" (letter 3/08) . Some of these issues (grants in particular) seem less likely for an unincorporated organization (Club).
2. Renovation information (1997-2001). Clarification: much of the Sanchez Art Center renovation funding was from grants, citizen donations and citizen labor.
3. City tax and revenue gain or loss is not significant. Tax gain (DeJarnatt 1% calculation), less than $100 annually. Financial benefit to city vendors, less than $10,000.
4. Expense impact to the City, + or - is not significant. Example, annual rent collection $17,880 (2009) vs. "site utilities" $16,696, variation $1,184 (2008/09). Utilities provided (gas, electric, water, sewer) are not defined specific to the studio site, nor is there a 10 year expense projection, or other ground/parking lot maintenance or other considerations noted.
Studio tenant rent assumption
1.The Art Guild of Pacifica (sub-leasee) tax return information is not available, but "Sanchez Art Center" (SAC) studio tenants is. SAC non-profit information indicates 1/3 of their income is from fees, part of what is claimed as $153,834 (2008/09) income is likely their own studio fees.
2. New studio rental fees are disclosed at Sanchez Art Studio Information, the range is approximately $480 for a small shared studio, to an estimated $675 for a large studio with a sink (4 tenants). Older contracts would be lower cost.
3. Note: The Art Guild of Pacifica (sub-lease) stipulates an annual flat fee will be paid to the city on a monthly basis. The "base rent" from 2011 is $1,568 (item 3.1). Each year from January 1st, the rent shall be adjusted upward 2.5% (Item 3.2). :
4. There should be about 20 studios. Average occupancy, whether all studios are filled or functional, average tenant rent cost are all unknown assumptions. The "base rent" for 2011 in the amount of $1,568 is known. Although not defined in the lease, the type of lease (modified net), management provided by the artist center, the arrangement with the City is to some extent known. Among other revenue producers, the art center may gain a higher percentage of revenue by filling studio vacancies, and raising prices as needed.
High gross rent assumption (an approximate guess) based revenue paid to the city, trial 1
Studios: 20 studios x 2 average shared occupants = 40 tenant units.
Tenant rental fees: $200 average tenant cost, x 40 tenants = $8,000 art center monthly income.
Rent fees paid to the City: $1,568 monthly (19.60%)
Retained by the artist center to provide management and maintenance: $6,432 (80.40%)
Low gross rent assumption (an approximate guess) based revenue paid to the city, trial 2
Studios: 19 studios x 1.75 average share occupants = 33.25 tenant units.
Tenant rental fees: $180 average tenant cost x 33.25 tenants = $5,985 art center monthly income.
Rent fees paid to the City: $1,568 monthly (26.20%)
Retained by the artist center to provide management and maintenance: $4,417 (73.80%)
Disclaimer. Social issues and fair process within the artist center have not been considered. Posted information is based upon documents viewed, presented, and reasonable assumption from these.
Posted by Kathy Meeh