Facility Planning Advice For Performing Arts Centers

In April, ground was broken for the Buddy Holly Hall of Performing Arts and Sciences in Lubbock, Texas. Slated to open in early 2020, it will include a 2,200-seat main theater; smaller studio theatre with 425 seats; multipurpose room, bistro and dance center. We plan to cover different aspects of this interesting project in upcoming articles. But before ground is ever broken for any performing arts center (PAC) project, extensive planning takes place. What factors contribute to successful projects – those that meet deadlines, budgets and objectives? Over the next two weeks, we’ll consider the general topic of PAC planning from the perspective of the developer involved in Buddy Holly Hall; we spoke with Greg Garfield, President of Garfield Public/Private LLC in Dallas. First we’ll learn about the work of his firm and its partners, including development services, market studies, community engagement and conceptual design. Then Garfield discusses budgeting, ownership options and other financial considerations.

Creative Alternatives. "Our firm has focused exclusively on public or public/private projects for the past 20 years,” says Garfield. These projects include courthouses, government office buildings, schools, parking garages, hotels, arenas and performing arts centers, among other facility types. Customers are typically municipalities, educational institutions, other nonprofits or some combination of these.

Garfield’s firm provides complete development services: initial business planning; selection of architect, engineers, consultants and contractors; negotiating contracts, including operating agreements; financing/fundraising; and oversight of design and construction. A guaranteed maximum price and completion date are provided using turnkey contract methods. Garfield states they’ve always met deadlines and budgets. “We offer a creative alternative to the old design-bid-build-occupy method,” he explains.

Before an architect is hired to create conceptual plans for any PAC, Garfield recommends pre-development strategic analysis, which typically includes a market study and business plan, as well as programming, conceptual design, conceptual estimate and financing and fundraising plan. For PAC market studies and business plans, Garfield engages an outside consultant specializing in this industry.

For Buddy Holly Hall, that consultant was Webb Management Services in New York. “We developed the market study that confirmed the need and opportunity to develop this facility,” explains Duncan Webb, President. His firm also wrote the preliminary business plan that confirmed how the recommended facilities at Buddy Holly Hall should be programmed, operated and financially sustained.

Extensive Research. The market study considers existing facilities and routing patterns for touring national shows that might visit. It recommends seating capacity, capabilities and other programmatic elements. The community’s user groups are surveyed; outreach also includes promoters and other entities that may want to use the building.

“In the initial interviews, we don’t put on any limits or boundaries,” says Garfield. “We ask for the stakeholders’ dreams and aspirations, along with their wants and needs.” The resulting information is distilled and refined into concrete recommendations.

Garfield considers community engagement vital on many levels. “We only want to plan new facilities that will help existing arts groups and established venues in that market,” he remarks. “Successful facilities help everyone. We really believe that old adage: A rising tide raises all ships.”

The market study also includes an activity profile outlining expected programming and average attendance. This information helps create a financial model for the first 5-10 years, showing expected operating revenue, expenses and net income/loss. If a loss is projected, earned revenue will need to be supplemented with fundraising separate from the capital fundraising for the building’s construction.

“A theater consultant and architect are engaged to develop a spatial program and conceptual design, which may also include site identification and analysis, considering maximum economic impact, access and visibility,” explains Garfield. The conceptual design typically includes a building program, site plan, floor plans, elevations, building system narratives and perhaps some renderings. These visual elements can be helpful in generating excitement for the project and jump-starting the fundraising process.

Soup-to-Nuts Budgeting. Armed with the PAC building program and conceptual design, Garfield partners with an active, blue-chip contractor familiar with the local community. “We’re looking for a firm with relevant experience, capable of providing guaranteed maximum price and completion dates with payment performance bonds, if needed,” he says. Either that contractor or a cost consultant that specializes in PACs helps create an early development budget.

This budget includes all of the hard and soft costs, direct and indirect construction costs, professional fees, pre-opening costs, etc. “It’s everything we can think of – from soup to nuts – that it will cost to complete and open the building,” comments Garfield. He says the budget includes various contingencies appropriate for an early phase project.

If the project moves ahead, Garfield’s firm works to further develop and refine the design with the architect and engineer, reducing contingencies along the way. “We want to ensure there’s a realistic budget so we can meet the guaranteed maximum price set by the contractor,” he notes.

Ownership, Financing, and Funding. Garfield says the last piece of pre-development strategic analysis is perhaps the most important: the ownership, financing and funding. Who will own the facility? The city? A nonprofit? “There are many different options for ownership, governance and operations,” he notes. Performing arts centers and other cultural, sports and entertainment venues developed or planned by Garfield have variously been owned by cities or counties, municipally controlled special purpose vehicles, intergovernmental entities or 501(c)(3) nonprofits.

Financing and funding may come from a variety of sources, including philanthropic grants or contributions, naming rights, box seat/suite sales, personal seat licenses, facility net operating income, facility fees, parking revenue and/or financing from one or more municipal agencies/sponsors.

Sources of repayment for municipal bond financing may include increments of sales tax, hotel occupancy tax, TIF income and many other revenue streams.  “Every community is different in the municipal financing tools available,” says Garfield. He says that financings for his company’s developments have never required recourse to a municipality’s general fund or its commitment to raise residential property taxes if needed.  Garfield works with each client to determine the best possible financing structure consistent with the client’s financial and legal goals and constraints.

Foundation for Success. PACs and other public assembly facilities planned and developed by Garfield have had a variety of different operating models.  Whether the operator is a municipality, a private nonprofit, or a commercial operator, Garfield recommends including the operator early in the design process to help ensure the facility is properly planned and equipped. Having the operator’s early involvement along with an experienced theater consultant helps to ensure that all programmatic elements and equipment are included; that spaces are designed for maximum operational efficiency; and that artists, guests, and building staff are secure and comfortable.

Many communities get the “cart before the horse” in approaching performing arts centers and other facilities, says Garfield.  Announcing ambitions before a comprehensive strategic business plan is conducted, or designing a building without appropriate planning and assessment of financing and funding capacity are common mistakes.  According to Garfield, this can be counterproductive and delay the realization of desired facilities for years. Much more than just a market study, Garfield says good strategic business planning by an experienced developer is the necessary first phase to ensure a successful development. 

Garfield says, “We apply a level of professional rigor in early planning that produces results that are diligently researched, realistic and reliable so that community ‘buy-in’ is achieved and there is a solid foundation for success.”

[This article originally appeared in the Your Performance Partners blog, published by Wenger Corporation.]