Thunder Bay City Council has directed employees to enter into a 50-year lease with Thunder Bay Art Gallery for waterfront lots.
THUNDER BAY – Thunder Bay Art Gallery has received important city permits as it works to bring to life its vision for a new, larger waterfront gallery.
City council authorized staff to sign a 50-year lease with the gallery on Monday after a closed session discussion, though some terms have yet to be negotiated.
The council also designated the new gallery as a municipal capital investment, allowing it to be exempt from municipal taxes.
The move won’t leave the city hooked on construction or operating costs, employees assured councilors.
The gallery is also expected to seek an increase in its $270,000 annual operating grant from the city, but hasn’t been able to say by how much.
Expected to open in 2025, the 38,000-square-foot gallery is a key element of city plans to expand the waterfront south of Prince Arthur’s Landing, along with the Pool 6 cruise ship dock, a potential science center, and an extension of the waterfront walkway.
The new gallery will include more than double the exhibition space of the current location at Confederation College, a café, a performance hall and outdoor art exhibitions.
The city has invested heavily in this vision, approving a $5 million capital contribution in 2017 and spending millions expanding roads, city services and parking lots in the area.
Joel DePeuter, Director of Development Services, called the forthcoming signing of a lease an exciting milestone.
“There’s momentum, which is great,” he said. “Science North has shown interest, certainly something is happening and it would be very exciting to progress waterfront development to the Pool 6 site.”
At a meeting Monday, council members hailed the project as a significant investment in the city’s waterfront, noting that the provincial and federal governments have contributed over $41 million toward the estimated $50 million cost of construction.
The gallery will seek to raise an additional $2.5 million to $3 million from the community and other large donors.
“There are some special projects that we’d like to do — possibly an art commission in the lobby and … I’d like to see a playground on our premises, and that’s not in our budget,” Godwin said. “Will look for ways to really upgrade the building.”
count. Peng You called the project much-needed good news for the city, but joined other council members for reassurances about its financial viability and financial risk to the city.
He noted that the council has yet to see a business plan for the gallery, which Godwin said the organization is in the process of updating a version created in 2013.
They also asked about the project’s overall budget, with Godwin saying challenges in the construction industry could shake the answer.
“By that point it will be over $49 million,” she said. “We have so much money available, but the market is very volatile and we have other needs.”
The lease has a term of 50 years
The council directed staff to enter into a leasehold agreement with the gallery for up to 50 years, at which point it could be renewed. The property, including the building, would revert to the city after the lease expired.
The agreement provides for the gallery to pay a “nominal” rent, DePeuter said, citing this as typical of large community organizations like the Community Auditorium and Shelter House, which have also been designated as city capital facilities
The gallery has sole responsibility for maintaining the building and providing funds for the long-term renewal of the capital.
“Consideration is being made to fund the ongoing replacement and maintenance of the building and to ensure that the building remains in good condition at the end of the lease when it is returned to the city … and that funds are in place to continue with capital requirements.” ‘ DePeuter said.
The design does not include parking as the lease is intended to allow visitors and staff to use existing lots.
What remains to be negotiated isn’t clear, though DePeuter said key components have been settled.
Neither the city nor the gallery could give an exact answer as to when an agreement will be signed, although DePeuter said that should be before the end of the summer.
Godwin has expressed hope that work could begin by the fall.
Gallery to apply for increased funding
The gallery is expected to seek increased operating funding from the city, but has not been able to estimate just how much.
This support, provided through the city’s Community, Youth & Cultural Funding Program, has traditionally covered about 30 percent of its budget.
The gallery is focused on generating more revenue of its own after the move, Godwin said.
Admission and membership revenue is expected to increase as visits increase, although fees remain “very low” and the gallery can retain its current pay-what-you-can option.
Other potential revenue streams include leasing space to community groups, a larger gift shop, and a third-party coffee shop.
Godwin also reported on recent increases in working capital from the Canada Council for the Arts and the Ontario Arts Council.
“I’m glad you have a plan because this is a big problem,” Coun said. They say previous infrastructure projects have sometimes left the city in control. “Everyone is so excited, and then suddenly the taxpayer has to take on a huge burden.”
count. Rebecca Johnson said she heard concerns along those lines and asked what would happen if the gallery suffered operating losses.
“Let’s hope it doesn’t happen, but if it does, how will you manage it?” She asked.
The gallery has managed its budget judiciously for 48 years, Godwin replied, and is used to making the most of limited resources.
“We’re going to continue like this,” she said.
Designation as a municipal capital investment
Designation of the gallery as a municipal investment among Ontario residents municipal law will allow for exemption from municipal and education taxes, as well as development fees.
The gallery is already exempt from these taxes in its current location, an exemption offered to many galleries across the province.
“The designation is available for large tourism and cultural facilities — the types of facilities that the city could operate if that group didn’t exist,” DePeuter said. “So you see mutual benefit there.”
The lands in question were previously for community use and not intended to generate revenue, employees noted.
Questions about details of the agreement should not overshadow the clear benefits of the project, Mayor Bill Mauro said.
“While we all have our concerns about it, we see it as a phenomenal project,” he said. “And it’s not the only time the city has reached such an agreement.”
Motions to permit the completion of the lease and designation of the gallery as a city investment were unanimously approved Monday.
The city has yet to pass a bylaw to make the naming official after signing a lease.