Scottsdale Arts master services agreement takes form as new vision materializes

The Scottsdale center for the Performing Arts is at 7380 E. Second St. (photo by Sean Deckert)

A new management services agreement coupled with an ordinance designed to regulate the relationship between Scottsdale Arts and the local municipality appears to be moving forward, with some changes to how the two entities have historically collaborated.

The new management services agreement was presented to Scottsdale City Council in late March, by Assistant City Manager Brent Stockwell and Tourism and Events Director Karen Churchard.

For more than 30 years, Scottsdale Arts has provided advisory and management services for the arts and cultural programs and facilities of the City of Scottsdale through three separate 10-year agreements.

Last July, City Council agreed to extend the 2008 agreement for one additional year to provide adequate time to prepare a new master services agreement with the newly hired CEO of Scottsdale Arts, Gerd Wuestemann.

Gerd Wuestemann, president and CEO of Scottsdale Arts. (Independent Newsmedia/Josh Martinez)

Mr. Wuestemann joined Scottsdale Arts in March 2018.

The new agreement is proposed to be five years, versus the previous 10-year agreements.

The proposed amendment seeks to achieve alignment with current use and language, insurance requirements and to require use of the special events ordinance to the fullest extent possible. Additionally, the amendment proposes the name Scottsdale Mall be changed to “Scottsdale Civic Center.”

During the lengthy public conversation at City Hall, Councilman Guy Phillips suggested other names besides Scottsdale Civic Center — one suggestion offered was, “Old Town Plaza.”

The name change of the area is recommended by city staff to lessen confusion with the Old Town roadway named Civic Center Plaza.
Overall, the City Council had consensus to be an umbrella organization so arts entities, such as the Scottsdale Philharmonic and the Scottsdale International Film Festival, come to Scottsdale Arts for funding requests.

“We looked at our current agreements with Scottsdale Museum of the West, Experience Scottsdale, to really look at what types of things we should be adding to this MSA,” Ms. Churchard said.

“We took time to define our maintenance responsibilities; we have now four exhibits within the MSA that talk about what the city’s responsible for maintaining versus what Scottsdale Arts is responsible for. In terms of city funding, one recommendation that came out of the audit was for Scottsdale Arts to become more self-sufficient.”

A monumental sculpture in Old Town Scottsdale that’s a part of Scottsdale’s public art program. (photo by Melissa Fittro)

Arts funding

Scottsdale has provided funding annually to Scottsdale Arts through a variety of sources and methods, most notably through the yearly financial participation agreement. This agreement authorizes a management services fee to the Scottsdale Arts to provide the services outlined in the master agreement.

Funding for this agreement is drawn upon the General Fund and represents 43% of Scottsdale Arts’ operating budget, a report to City Council states.

The annual financial participation agreement for year one, under the new master agreement for fiscal year 2019-20, is scheduled to be heard by City Council in June.

The additional 57% of Scottsdale Arts’ funding comes through contributed revenues such as donations and memberships, and through earned revenues such as ticket sales and admissions.

“One goal on the funding side is for, in the actual MSA for Scottsdale Arts to have a goal of 67% of total revenue coming from other sources,” Ms. Churchard explained to the council. “So, other reliance would become less, about 10% over terms of five years if that were met. That does not include Canal Convergence currently.”

The 2018-19 fiscal year budget allocation for Scottsdale Arts is $4,788,148. This breaks down to be:

  • Management and Administration of the facilities: $3,988,148
  • Maintenance and Repair of Specialty Equipment: $20,000
  • Community Arts Grant Program: $60,000
  • Conservation and Restoration of City Artwork: $120,000
  • Management and Administration of Art in Public: $600,000.

Councilwoman Solange Whitehead requested to see more funding metrics.

“I see the 67%, I mean this with all of our contracts, I want to see metrics. When I look at these agreements there are no metrics,” she said. “In this case, there’s a goal of 67%, is there a way to tighten that up? To say that city funding is contingent on ‘X’ number of dollars, so we can actually tell taxpayers that you will not pay more than ‘X’ dollars?”

Mr. Phillips requested to see both the local film festival and philharmonic specifically addressed in the new agreement.

Scottsdale City Councilman Guy Phillips (File Photo)

“The two main things for me is the film festival and Scottsdale Philharmonic — I want to see them mentioned here in this contract — not some vague thing that we’ll work with someone here and there — I want to make sure these two are taken care of,” Mr. Phillips said.

“The reason for that is every year they come to us, and every year I say, ‘why are you coming to us?’ It shouldn’t be that way. I want to see Scottsdale Arts be that umbrella instead of coming to us every time they have a funding request.”

Through the services agreement, city funds are ensured to be used for the program of work as presented annually through an operation plan and report. The agreement is monitored on an ongoing basis by the city’s contract administrator and through annual performance measures, programming updates and financial reports, according to a city staff report.

The terms of the contract call for an annual audit and year-end financial report.

The City Council must annually approve the allocation for the city’s financial participation for Scottsdale Arts, subject to the terms of the management services agreement.

Scottsdale City Councilwoman Linda Milhaven (Independent Newsmedia/Arianna Grainey)

“I know in previous contracts, although it was an annual appropriation, there was a statement of intent to say that we would increase funding by 2% percent a year, but I don’t see this anywhere in here. Is that now gone?” Councilwoman Linda Milhaven asked.

Mr. Stockwell confirms there is not a fixed amount to have in the budget process.

“I know it wasn’t the city’s intent to decrease to meet that goal, but rather the earned and contributed revenue would increase to meet that goal,” Mr. Stockwell said.

“There are 10 objectives here, they’re supposed to let us know what it will cost to meet those objectives. That may vary from year to year because in the year they do the community needs assessment it may be higher or lower — tell us how much it costs for you to meet the objectives in here — if you want to reduce or increase the amount that goes to Scottsdale Arts, you need to eliminate or add objectives to get there.”

Mr. Stockwell says Scottsdale Arts needs will be run through the budget process just like anything else.

“There isn’t that language anymore that puts that default of 3% in each year,” he said.

Scottsdale Museum of Contemporary Art is at 7374 E. Second St. (submitted photo)

Agreement details

Changes in responsibilities within the new agreement focus on the repair and replacement of specialty equipment and fixtures, as well as ongoing maintenance. Staff also suggested Scottsdale Arts plan for future improvements for the managed facilities, a staff report states.
In the 2008 agreement the city was entirely responsible for capital infrastructure.

“This starts to move in the direction of a shared responsibility,” Mr. Stockwell said.

The two city staff members used an analogy first proposed by Mr. Wuestemann: If you take a building and turned it upside down, whatever would fall out would be the responsibility of Scottsdale Arts; whatever was attached would be the city’s responsibility.

“They’re willing to take on some increased responsibility for some capital improvements because they know both with operational requests and capital requests, they have to come in here and compete with everything else the city has to do,” Mr. Stockwell said.

“Still, ultimately the city is responsible for the building, but we’re saying, ‘hey there might be a time where Scottsdale Arts finds an outside source for funding of facility.’”

Items such as projectors, house lights, catwalks, stages and audio systems are what the city will be responsible for, with Scottsdale Arts having responsibility for items like audio cables, microphones, ticketing systems and sewing machines, according to the proposed agreement.

Key objectives outlined in the MSA include:

  • Provide advisory services to the city for current and future arts and cultural affairs and facilities;
  • Actively work to engage the community to create within the city a climate in which the arts may flourish;
  • Develop an arts and cultural community needs assessment and recommend to the city an action plan for the support of arts and cultural;
  • Increase partnerships with local arts organizations for use of the city-owned facilities and increase the amount of grant funding available for Scottsdale-based and Scottsdale-focused arts organizations;
  • Cooperate in the development and ensure the ongoing operation of a city-wide arts and cultural events calendar;
  • Ensure that arts education and outreach programs are provided to the community;
  • Manage city artwork and the Public Art Program and events, and curate displays of city artwork and other displays of community interest at Civic Center and Appaloosa libraries;
  • Operate and manage programming, facility rentals and events at the city-owned facilities;
  • Increase funding over time from earned and contributed revenue with the goal of increasing reliance on outside funding to 67 percent of total revenue; and
  • Increase private revenues and secure new funding sources for use to supplement city expenditures on capital improvements necessary for current and future facilities.

The four operating branches of Scottsdale Arts are: Scottsdale Center for the Performing Arts, Scottsdale Museum of Contemporary Art, Scottsdale Public Art, and Scottsdale Arts Education & Outreach.

According to an annual report by Scottsdale Arts, the 2017-18 total attendance across Scottsdale Arts was 310,935, with an industry impact of $20,178,417.

A follow-up meeting to discuss and potentially approve the management services agreement and ordinance has not been scheduled at this time, but city Spokesperson Kelly Corsette says staff is looking at returning at a June City Council meeting.

Northeast Valley News Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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