How Do I Operate My Facility?
Artscape projects operate on a cost-recovery model. Our major source of revenue is the affordable rents paid to us by our individuals, organizations and residential tenants. Our projects do not receive ongoing operational subsidy.
With over 20 years of experience in facility management, we know that artists and arts organizations make great tenants – Artscape typically experiences a minimal default rate and no loss due to vacancy as we are always able to immediately replace departing tenants with new ones. In a number of our properties we are able to also generate revenue through providing event management services to external organizations, gallery rental and programming such as arts markets. Please click here to review an Operational Budget Template.
Signing a lease is only the beginning of your relationship with your tenants. Artscape’s tenant services staff work with new tenants to ensure a smooth transition to their new space and community, and continue to provide ongoing liaison and trouble-shooting services for all of Artscape’s 860-plus individual and 56-plus organizational work and live/work tenants across 10 properties (including those in development).
Tenants are also given a copy of the Tenant Handbook for their facility at the time of signing their lease; a thorough review of the details contained within the handbook is provided by tenant services staff at that time. It is also important to keep on top of the day-to-day and ongoing maintenance of your property. At Artscape’s the properties team directly provides maintenance services and coordinates contracts with external specialist consultants and service providers.
The governance model that you choose for your project will need to reflect the complexity and diversity of your operations and the broad range of communities of interest that your project aims to serve. The most common types of organizations leading cultural/creative hubs and cultural facilities are, like Artscape, not-for-profit organizations led by an effective board of directors. Creating meaningful opportunities for community stewardship during the development phase and once the project is operational by involving the local community and the wider creative community in the decision-making process of the facility increases a sense of transparency in the organization. Your project may offer opportunities for tenants to become involved in some level of ongoing project governance, perhaps contributing to a programming or tenant selection committee or even your board of directors. These opportunities ensure that projects continue to be strongly rooted in and serve the needs of the artist and arts organizations who call them home.
How Do I Lease My Facility?
You will now need to formalize arrangements with your selected tenants and prepare them for the transition to a new workspace or live/work space. When a project is still in development Artscape makes an offer to lease to selected tenants; this is a legally binding agreement under the Commercial Tenancies Act that sets out the terms and conditions of the lease that will eventually be signed. Finally, a Commercial Sublease is signed by Artscape and the new tenant, again a legally binding agreement under the Commercial Tenancies Act.
In certain situations Artscape will issue licences instead of a sublease. Legally, there are some fundamental differences between a sublease and a license. A sublease is a grant of a proprietary legal interest in the premises, whereas a license is a grant of a right to use the premises. In other words, the license would not grant exclusive possession of the premises but would only grant the right to exclusive use of it.
Because Artscape recognizes that the artistic life is often a fluid one, our leases provide termination clauses. Generally, a commercial tenant can vacate their studio and terminate their lease on the last day of a month upon giving 90 days prior notice in writing (60 days for residential tenants). The notice period can be longer depending on your needs (as the landlord). This should be identified in your lease.
Artscape’s residential tenants sign a residential tenancy lease , governed by the Residential Tenancies Act, and, in the case of rent geared to income (RGI) housing, governed by the Social Housing Reform Act. To read more about the different types of commercial (workspace) and live/work spaces developed and operated by Artscape please see Introducing Artscape’s Creative Spaces.
It may be the case that your tenants are making their first move to a permanent workspace or live/work space and the rights and obligations of tenancy will need to be carefully explained to them. Prospective tenants should be encouraged to take legal advice as necessary.
Whether or not your tenants are “first timers” they will still need to be introduced to the particular values and vision of your project and to the every-day practicalities of working in a multi-tenanted and perhaps publicly accessible facility. Artscape provides a Tenant Charter setting out the understanding between Artscape and the artists and organizations living and working in Artscape buildings. The charter explains how getting involved in an Artscape project is about more than just becoming a tenant; it is about joining Artscape and other tenants in their efforts to further Artscape’s work. It’s also about keeping each other safe and working to ensure a fair, open and supportive tenant community.
How Do I Select Tenants?
How Do I Pay for My Project?
When planning a capital project, one of the major challenges is to secure the funds required to complete the project. Typically, there are four major sources of capital funding which you can explore: government funding, private fundraising, partnerships and other sources and project financing.
The broad financial parameters for both your capital development and operational budgets will be established through your feasibility study, site selection and the design/development process and tested through business planning.
By working closely with your local municipality you will be able to identify how they can help facilitate your development process and with their help establish what planning and fiscal incentives may be available to you.
Artscape has prepared a listing of capital funding sources which includes a selection of local, provincial and federal programs and foundations, including those designed to support cultural sector projects, such as the Cultural Spaces Canada program, as well as other sources of capital funding directed at achieving diverse policy objectives including, for example, economic development, rural development and green building and stewardship programs.
At Artscape our objective is to reduce or eliminate the need to carry financing (a mortgage, for example) into the operational budget of the project in order to keep operational costs as low as possible – thus enabling us to offer our tenants affordable rates. On average our rents are about 65% below comparable market values across all ten of our properties. To achieve this it is essential that we are able to attract capital funding from diverse partners, stakeholders and supporters through a shared, powerful and compelling project vision.
Click here to find out more about the range of property and tenancy types and spectrum of affordability of Artscape facilities.
Each of Artscape’s projects operate on a cost-recovery basis without any direct subsidy. The operating budget sets out the detailed, ongoing operational costs of the project, as well as the cost of any financing (i.e. mortgage payments) being carried in the project. In a multi tenanted facility the rent you receive from tenants will be the most important source of earned revenue. In addition your project may generate earned income from a number of other sources which may include services you provide (i.e. Space Rentals, On Site Parking, Laundry) revenues from sales (i.e. retails, catering) and even revenues from direct programming.
How Do I Determine My Capital Budget?
The Capital Budget Template provides you with a useful tool for developing the capital budget for your project. When using the Capital Budget Template please note that line items have comments which provide an explanation of the terms, additional guidance and, in some cases, links to our glossary.
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The scope of the project: is it a small renovation or adaptation of an existing property or a large scale adaptive – re-use or new build project?
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The size of the project
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The location of your project, which will affect land values and soft and hard development costs
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The complexity of the selected site and any requirements for land remediation
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The type of development – a new build project or an adaptive re-use
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The complexity of the design
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The quality and complexity of finishes
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The decision to build in high standards of environmental design
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The impact of Heritage designation or listing of an existing property
Click here to download template
The broad financial parameters for your proposed development will be established through your feasibility study, site selection and the design/development process and tested through business planning.
By working closely with your local municipality, you will identify how they can help facilitate your development process and with their help establish what planning and fiscal incentives may be available to you.
The specialist consultants that you hire through the design and development process will play a critical role in establishing a detailed capital budget. A cost consultant or quantity surveyor will estimate a price per square foot to renovate or build new based on the type of use, such as affordable housing, multi-unit dwelling, office, artist studios, galleries or performance space. These costs can be further refined with investigations into an existing structure or decisions about what parts of the infrastructure can be reused and what will be demolished.
By the time the design development team has achieved 50% of design development, the estimating process transitions from square foot averaging to hard estimates from sub-contractors or trades. These can be further refined along the way, but eventually will be determined by bids during the procurement process once the permit set of plans and specifications have been completed.
When using the Capital Budget Template please note that line items have comments which provide an explanation of the terms, additional guidance and, in some cases, links to our glossary. You will find How Do I Approach the Design Development Process? especially helpful when thinking about “Due Diligence” costs, “Construction” and “Soft” costs.
Please also refer to How Do I Pay for My Project? for information on sources of capital funding.
How Do I Approach the Design Development Process?
Turning a good idea for a project into reality can be a long and detailed process. Once you have established your project vision, there are multiple stages of planning, organizing, and preparing before a shovel can hit the ground. Thankfully, you will have an experienced team of professionals to help guide your project and ensure that the final product reflects your initial project goals.
Stage One
The first stage of design development begins with the project vision, assessment of project feasibility, business planning and community and stakeholder engagement. Some of this work is steered by the lead consultant, your architect, and they will assist in selecting the sub-consultant team with your approval. While all this is happening there is the work of site selection, site analysis, environmental review, rezoning where required, and property leasing or purchasing. Of course, this process can progress in a somewhat different order; for example, you may be offered an existing building to replicate a model that you have developed elsewhere and begin the process there. And naturally, these activities don’t all necessarily progress in a linear fashion. It’s more likely that several may proceed simultaneously.
Stage Two
The second stage of design development is detailed design and begins with initial meetings with the consultants through to the beginning of permitted construction. (Note that certain construction activities in the case of a substantial renovation project may be considered as maintenance by the local building authority and may not require a permit, e.g. replacing the roof, below-grade waterproofing, limited interior demolition, remediation, etc).
Detailed design is often charted by the architect in percentages of completion leading up to the permit drawings (50%, 75%, etc). This relates both to a level of detail in the plans and specifications, as well as established benchmarks in a costing process inherent in construction management or a cost consultant approach to estimating. Initially, a cost consultant or quantity surveyor will estimate a price per square foot to renovate or build new based on the type of use, such as affordable housing, multi-unit dwelling, office, artist studios, galleries or performance space. Initial iterations can further refine these numbers with investigations into an existing structure or decisions about what parts of the infrastructure can be reused and what will be demolished.
In addition to special base building requirements of particular types of programming, estimating must take into account sustainability goals. By the time the team has achieved 50% design development, estimating transitions from square foot averaging to hard estimates from sub-contractors or trades. These can be further refined along the way, but eventually will be determined by bids during the procurement process once the permit set of plans and specifications have been completed.
Integrated Design Development
Regardless of the scale of a project, it is a generally accepted practice of design development today, whether your project is financially well endowed or you are working on a shoestring, to achieve an economically efficient operation, reduce greenhouse gases, provide tenant comfort and achieve a model that works well for the uses for which it was designed. You will want to get as many of the consultants, builders and future operators around the table as early in the design process as you can. They will make up your design development team. It goes without saying that not everyone will be able to make every meeting – often you may have substitute consultants whose contribution is highly specific – but the more people you have representing the most pieces of the puzzle attending design meetings will mean more savings, fewer jobs that have to be redone (at greater cost) and more success on every level. This is integrated design development.
Who Are My Stakeholders and How Do I Engage Them?
Artscape views itself as an intermediary, connecting the needs and interests of the community and our tenants with a broader group of stakeholders, investors and partners. We help to organize their ideas and energy into a coherent and sustainable vision.
We broker deals and foster relationship between individuals, companies, governments and community members. We align interests between private individuals, private developers, community and economic development officials, financial institutions, cultural policymakers, members of the creative community and politicians.
Artscape’s projects secure their financial sustainability and public support by ensuring that an ever-widening circle of partners, stakeholders and supporters are engaged in the project from the outset and can contribute to the development of a shared project vision. Building a network of partners, stakeholders and supporters is an ongoing process but the major focus is during the pre-project development phase.
Stakeholders will vary from project to project but may include:
- Your city
- Audience members
- Local residents
- Business improvement areas
- Neighbourhood associations
- Area schools
- Funders, donors, and sponsors
- Development partners
- Tenants
There are many reasons for investing time in developing and nurturing your stakeholder base and ensuring their ongoing engagement with the project. Here are some examples:
- You are building the project with other people’s money.
- Diverse stakeholders contribute to a shared vision.
- Diverse stakeholders add dimension and dynamism to your project.
- Stakeholder engagement builds support and momentum for your project.
- Stakeholders can help you find solutions to challenges.
- Stakeholder engagement can set the stage for broader and deeper engagement.
The power and capacity of small non-profits and local community members to lead developments and drive change in their neighbourhoods is often underestimated. Individually, for example, the artists, non-profit organizations and community members that were the key drivers of the Artscape Wychwood Barns project did not have a lot of capacity or resources, but collectively, they became a powerful force in generating momentum and attracting the interest and investment necessary to realize the project. In the Queen West Triangle, an apparently irresolvable dispute between the developer, municipality and local community was transformed into a win-win-win deal brokered by Artscape and resulting in the innovative Artscape Triangle Lofts project. At Parkdale Arts and Cultural Centre, Artscape helped to broker a deal between a number of local interest groups, ensuring that this landmark local building was retained as a community asset serving their needs, the needs of the local community and the need for safe, secure and affordable live/work housing for artists in the neighbourhood.
In all our projects, the goal is to create partnerships where all parties win and a quadruple bottom line – cultural, economic, social and environmental – is generated.
How Do I Select and Contract Specialists and Services
Procurement is the process by which a good or service is acquired for a project, and is useful to select and contract specialists and services. This process usually involves a bidding stage for the selection of the best candidate to provide the good or service. The procurement process can range from a single-step process for straightforward procurement opportunities to a multi-stage process for more complex opportunities.
For certain projects with few requirements, a simple Request for Qualifications (RFQ) can be issued, calling for short, simple responses. As requirements increase in complexity and cost, the procurement process becomes more complex and may demand either a detailed Request for Proposals (RFP) or a multi-stage procurement process.
Stages of the Procurement Process:
A multi-stage procurement process usually consists of:
2) Pre-Qualification
3) Bidding
1) Information Gathering
Information gathering activities are processes used to obtain information on the availability of goods or services and the level of interest in the opportunity. These activities are not competitive processes as they are not requesting quotes or proposals. A Request for Expression of Interest (REOI) or a Request for Ideas (RFI) is a commonly used information-gathering tool. A response to an REOI or an RFI does not pre-qualify a potential contractor and does not influence their chances of being the successful bidder/proponent on any subsequent opportunity. Rather, the information gathered will help organizations plan a fair and cost-effective solicitation process, define the requirements for the solicitation documents or identify whether there are interested suppliers.
At Artscape an REOI is typically used in the pre-project development phase to stimulate and assess interest in a project.
2) Pre-Qualification
Pre-qualification activities use a Request for Qualifications (RFQ) process to pre-qualify proponents for an opportunity. Only those proponents who successfully respond to the RFQ and meet the qualification criteria will be included in the subsequent RFP solicitation process. This stage streamlines the solicitation process by screening potential suppliers based on qualification criteria.
3) Bidding
The Request for Proposals (RFP) solicitation method is the most commonly used when an organization wants to select the best candidate for a business opportunity. This might include hiring an architect or engineer, contractor or specialist business consultant to play a major role in your project’s development. The RFP document provides proponents with an overview of the perceived or expected requirements. It does not give a detailed project plan, as it is expected that this is what the proponent will develop and explain in their response to the RFP. The proposal is then evaluated to determine if the proponent has the necessary understanding of the organization’s needs so as to deliver a completed project in accordance with such needs. The evaluation is based on several criteria, including price. Other criteria are used to evaluate additional aspects of the proposal, such as the quality of the proposed solution and the qualifications of the proposed team.
Following this procurement process allows an organization to select the appropriate candidate to drive the project forward.
NOTE: The term “proponent” is used to describe an individual, company, or society that submits, or intends to submit, a proposal.
How Do I Assess the Feasibility of My Project?
Assessing if the project is both feasible and a good fit with your organization’s vision, mission, mandate and strategic priorities are essential components of pre-project development.
How Do I Manage My Project?
At Artscape we have learned that effective project management is essential to the success of any project. This includes a project management team built around a small number of dedicated individuals who bring a range of leadership, skills and experience to the project.
The project manager, responsible for the overall coordination of a development project, plays a key role in project delivery. The most important task for the project manager is to deliver the project on time and on budget. This requires the ability to coordinate a large team of people toward a common goal, work toward deadlines and pay attention to the small things while maintaining sight of the big picture.