The city has approved a $1-million line of credit to the Nelson Civic Theatre Society to apply for grants necessary for the construction of a three-screen theatre in the city-owned building.
But if the society’s fundraising goal of $4.5 million is achieved, it may not need the loan at all.
The federal government’s Invest in Canada infrastructure program, to which the theatre will apply for $3 million, requires an applicant to prove they have the balance of the funding to complete the project.
“We are being the concrete pillar to support them,” said city finance manager Colin McClure at Monday’s council meeting where the loan was approved.
“Obviously their goal would be not to have a loan, and it is possible they won’t need a loan from us at all.”
The society will have to raise at least $3.3 million for the line of credit to take effect as a loan. Repayment will amount to a minimum of $120,000 per year and the loan will mature in 2031.
Once the loan has been repaid in full, an arrangement will be negotiated whereby the city will share profits with the society or the society will pay rent to the city.
The society will pay the city’s short-term interest rate plus one per cent per year, and will provide an operating and capital budget to the city annually. Until the loan is repaid in full, the society may not reduce fees, reduce operating hours or incur capital expenses more than $5,000 that are not included in its business plan.
“We have been talking with city staff for a long time about this,” said the society’s executive director, Eleanor Stacey. “We know that we have goodwill and they have goodwill towards our future, so these are great terms for us to work with.”
“They have a strong business plan,” said councillor Janice Morrison. “They have a good leadership team and a strong board. So I feel confident they will be able to meet the terms that have been set out.”
The city has provided loan funding to other organizations in the past that occupy and improve city facilities. The last such loan was part of a partnering agreement with the Nelson and Youth Soccer Association in the amount of $350,000.
The theatre construction project will divide the 306-seat auditorium into three separate theatre spaces. The facility would continue to be used for film screenings and a variety of community events.
A three-screen theatre has been the goal of the society from the beginning.
Stacey told the Star in December that its financial losses last year are tied to the theatre being restricted to one screen, and that three screens will ensure profitability.
“The issue is as a single screen, we remain not solvent,” said Stacey at the time. “We have a business model that isn’t set up to thrive given the requirements of our film distributors. So if we have a single film that doesn’t do well, it could knock us into a negative number by the end of the year.”
She cited the 2016 film Rogue One: A Star Wars Story as an example of a film that failed to stay profitable over the four weeks Disney required the theatre show it.
Stacey said she expects the three-screen theatre to be up and running sometime in 2021.
In its business plan summary presented to council, the theatre states that since opening in 2012 it has presented 2,000 screenings of 700 films, added $670,000 in capital improvements, created jobs for more than 20 local people, maintained a paid membership of close to 1,000 members, live-streamed diverse content from around the world, and facilitated 100 community rental events.
With files from Tyler Harper
Related:
• Civic Theatre suffers financial loss of nearly $14,000
• Civic Theatre plans for three screens
bill.metcalfe@nelsonstar.com Like us on Facebook and follow us on Twitter
