Thunder Bay City Council has asked staff to enter into a 50-year lease with the Thunder Bay Art Gallery for the waterfront lands.
THUNDER BAY – The Thunder Bay Art Gallery has won key city approvals as it works to bring its vision for a new, larger waterfront gallery to life.
City council cleared staff to move forward with signing a 50-year lease with the gallery on Monday after a closed-door discussion, although some terms remain to be negotiated.
The council also designated the new gallery as a municipal capital asset, which enabled it to be exempt from municipal taxes.
The step won’t leave the city on the hook for construction or operating costs, city councilors reassured.
The gallery is also expected to seek an increase to its $270,000 annual operating grant from the city, but cannot yet say by how much.
Scheduled to open in 2025, the 38,000 square foot gallery is a key part of the city’s plans to extend waterfront development south of Prince Arthur’s Landing, as well as the Pool 6 cruise ship dock, a potential science center and an extension of the riverside trail.
The new gallery will include more than double the exhibition space of Confederation College’s current location, a café, an event hall and outdoor art exhibits.
The city has invested heavily in this vision, approving a capital contribution of $5 million in 2017 and spending millions to expand roads, city services and parking in the area.
Director of Development Services Joel DePeuter called the impending signing of a lease an exciting milestone.
“There is momentum, which is great,” he said. “There has been interest from Science North, there are definitely things happening, and it would be very exciting to move the waterfront development forward at the Pool 6 site.”
At a meeting on Monday, councilors hailed the project as a substantial investment in the city’s waterfront, noting that the provincial and federal governments have contributed more than $41 million of the estimated $50 million cost of building.
The gallery will seek to raise an additional $2.5-3 million from the community and other major donors.
“There are special projects we would like to do – potentially an art commission in the lobby, and…I would like to see a playground on our lot, and that’s not in our budget,” said said Godwin. “We’re looking at ways to really improve the building.”
Com. Peng You called the project much-needed good news for the city, but joined other councilors in asking for assurances on its financial viability and the financial risk to the city.
He noted that the board has yet to see a business plan for the gallery, which Godwin said the organization is updating from a version produced in 2013.
You also asked about the total budget for the project, with Godwin indicating that construction industry challenges could throw the answer into uncertainty.
“At this point, it will be north of $49 million,” she said. “We have so much money in place, but the market is very volatile and we have other needs.”
The lease has a term of 50 years
Council directed staff to enter into a ground lease with the gallery for up to 50 years, after which it could be renewed. Ownership, including the building, would revert to the city at the end of the lease.
The deal would see the gallery pay “nominal” rent, DePeuter said, calling it typical for large community organizations like the Community Auditorium and Shelter House, which have also been designated municipal capital assets.
The gallery will be solely responsible for maintaining the building and setting aside funds for long-term capital renewal.
“There are plans to fund ongoing replacements, maintenance of the building and to ensure that at the end of the lease, if the building is returned to the city, that it is kept in good condition…and that there is funding in place to continue with the capital requirements,” DePeuter said.
The design does not include parking, the lease should allow visitors and staff to use the existing land.
It’s unclear what remains to be negotiated, although DePeuter said major items have been settled.
Neither the city nor the gallery could give a firm answer on when a deal will be signed, though DePeuter said it should be before the end of the summer.
Godwin expressed hope that work could begin in the fall.
The gallery is looking to increase its funding
The gallery is expected to seek increased operating funding from the city, but has not yet been able to estimate the amount.
This support, provided through the city’s community, youth and cultural funding program, has traditionally covered around 30% of its budget.
The gallery is focused on generating more of its own revenue after the move, Godwin said.
Admission and membership revenue are expected to increase with increased visitation, although fees will remain “very low” and the gallery will be able to retain its current fee-for-service option.
Other potential revenue streams include space rental to community groups, a larger gift shop, and a third-party operated cafe.
Godwin also pointed to recent increases in operating funding for the Canada Council for the Arts and the Ontario Arts Council.
“I’m glad you have a plan because it’s a big deal,” the adviser said. You, saying past infrastructure projects have sometimes let the city hold the bag. “Everyone is so excited, and then all of a sudden there’s a big burden on the taxpayer.”
Com. Rebecca Johnson said she heard concerns along these lines, asking what would happen if the gallery suffered operating losses.
“Let’s hope that doesn’t happen, but if it does, how are you going to handle it?” she asked.
The gallery has managed its budget carefully for 48 years, Godwin replied, and is used to making the most of limited funds.
“This is how we will continue to operate,” she said.
Designation as municipal capital property
The designation of the gallery as a municipal capital asset under the Act respecting Municipal law will allow it to be exempt from municipal and school taxes and development charges.
The gallery is already exempt from these taxes at its current location, an exemption offered to many galleries across the province.
“The designation is available for major tourism and cultural facilities — the types of facilities the city could operate, if it weren’t for this group,” DePeuter said. “So that’s where you see mutual benefit.”
The land in question was previously intended for community use and not intended to generate revenue, staff noted.
Questions about the details of the arrangement should not overshadow the obvious benefits of the project, Mayor Bill Mauro said.
“While we all have our concerns about it, we consider it a phenomenal project,” he said. “And this isn’t the only time the city has made such an arrangement.”
Motions approving the completion of the lease agreement and designating the gallery as a municipal capital asset passed unanimously on Monday.
The city will still have to adopt a regulation to formalize the designation after the signing of a lease.