ARMORY SQUARE

p a r k r a p i d s ,

m n

THE ARMORY STUDY

DECEMEBER 2012

ACKNOWLEDGEMENTS
HUBBARD COUNTY REGIONAL ECONOMIC DEVELOPMENT COMMISSION CONSULTANT TEAM

Chairman Vice Chairman Secretary Treasurer Executive Director City of Park Rapids Appointees Hubbard County Appointees Industries for Park Rapids Appointees At-Large Members Ex-Officio

Michael Monsrud Jeff Bjorkman Nancy Carroll, City of Park Rapids David W. Collins Nancy Carroll & Paul Utke Kathy Grell & Gregory D. Larson Jeff Bjorkman Marty Peterson & Michael Monsrud William C. Smith | Park Rapids City Administrator Deb Thompson | Hubbard Co. Coordinator Katherine Magozzi | Chamber of Commerce ARMORY SQUARE MANAGEMENT CORP. Alan and Keiko Zemek This study was prepared for the Hubbard County Regional Economic Development Commission. Funding for this study was provided by the United States Department of Agriculture.
RDG Planning & Design 900 Farnam Street, Suite 100 Omaha, NE 68102 402-392-0133

ThE ARMORY

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TABLE OF CONTENTS
EXECUTIVE SUMMaRY ................................ 4

1 2 3 4

THE aRMORY . . ................................................ 7

SCOPE OF THE STUDY . . .............................. 15 PaRK RaPIDS & THE REGION . . ................. 39

STaTE OF THE aRTS . . .................................. 31

5 6 7 8

STaTE OF EVENTS ....................................... 41

BUILDING PROGRaM ................................. 53

COST aNaLYSIS ........................................... 75 aRTS/CULTURaL CORRIDOR . . .................. 95

THE ARMORY STUDY

EXECUTIVE SUMMARY
The Armory is a 24,000 square foot building located in downtown Park Rapids at the crossroads of Park Avenue and Second Street. The former National Guard Armory building was constructed in 1922, and an annex building was added on in 1941. The building was in use until 1992. In 2010, EchoPoint Development acquired the building and began a private/public partnership to rehabilitate the structure. As part of the effort to rehabilitate the structure, Hubbard County Regional Economic Development Commission retained RDG Planning & Design, in association with Gruen Gruen + Associates and Shuler Shook, in 2012 to prepare an independent feasibility study for the reuse of the Armory Building as a facility for the arts community. The study is separated into eight chapters. 1. The Armory. A review of the history of the facility, its physical description, and reinvestments. 2. Scope of the Study. A description of the scope of services at the launch of the project. 3. Park Rapids and the Region. A review of the market conditions in the region, and update of the market analysis that was prepared in the Downtown Plan. Since the completion of the 2008 Downtown Plan, the City has experienced significant change in development, including a new Super Wal-Mart, redesigned Main Avenue, a grocery store, and several openings of new retail and restaurants in the downtown. Retail spending has nearly doubled between 2007 and 2012. The importance of downtown, its health and amenities offered to the public continue to attract a growing population to the community. Revitalizing the Armory building presents an opportunity for the community to exhibit its history and commitment to preserving the historical relics that unite generations. The reuse of the armory continues the trend of reinvestment in downtown and eliminating a vacancy at the front door of this vibrant district. 4. State of the Arts. The Park Rapids area is home to a noteworthy community of artists and performers that is both broad and diverse. This community is supported by a range of organizations at the regional and state levels and linked together by Park Rapid Lakes Area Arts Council. Challenges facing the arts community for assuming responsibility for the success of the armory include: (1) mobilizing the fundraising by the Arts Community to support the Art Center and (2) establishing a leadership structure and cooperation for leading the arts community. 5. State of Events. Few, if any, of the meetings held by local civic groups will be revenue-generating events for the Armory. However, the events offer a number of secondary benefits. First and foremost, they enable the Armory to be a functional amenity that serves a wide range of the community groups. The increased number of visitors that frequent meetings can only help drive additional business through their doors. The market for special event rentals, for weddings, banquets, receptions, appears to generate potential annual revenue of $8,250-$11,000. The events themselves are not anticipated to be a significant source of revenue for the Armory. However, attendees of this type of event have great additional value to the Park Rapids business community, as they will likely be staying overnight, spending money in local hotels, stores, and restaurants. The auxiliary services that might support an event space, the lodging, restaurants, and transportation that enable visitors to have an enjoyable time are all present in Park Rapids. However in the case of lodging and transportation, additional work should be done to facilitate convenience for visitors. This can be accomplished through making shuttle services available for large events. Another possibility would be a marketing strategy around an arts event in which either the Chamber of Commerce or, potentially, PRLAAC partnered with local hotels and resorts to create promotional packages which bundle together lodging, dining, transportation, and entertainment. 6. Building Program. EchoPoint Development designed the reuse of space for the Armory and Annex buildings to be separated into five zones of occupancy, which can be independently operated and maintained. Basic rehabilitation of the building is complete for the five tenant spaces. This study considers the reuse of the Armory building to become a facility to serve as a regional community arts, education, and cultural center. Meanwhile, the Annex is at full occupancy with a restaurant and retail clothing. Each zone of the building is ready to be completed and occupied separately as tenants and users are identified. Layouts and renderings for individual tenant spaces were included with an assumption of costs for the interior improvements. 7. Cost Analysis. This chapter presents the financing for the Armory Square development and a feasible alternative for realizing the vision for the building. This discussion presents base proformas for the project, establishes initial as-

ThE ARMORY

CHApTER 1

sumptions, considers strategic options, and presents an overall program for realizing the concept presented in Chapter Six. It also addresses the nature of community benefits that may result from occupancy and operation of the project. The consultant team interviewed the developer about the project, operating and leasing activities to date, future plans, anticipated occupancy, and the existing equity and debt capital structure. Also, the consultant team spoke with local banking institutions, City and County assessors, and potential tenants. This research assembled information about operating costs, property taxes and financing alternatives and terms, market demand possibilities, and the types of tenancies that Armory Square could attract, the markets they would serve, and sustainable rent levels. The analysis includes a base case that defines basic assumptions and demonstrates many of the challenges faced by a financing program. It continues by presents a preferred scenario that demonstrates the funding needs of the project, its ability to support some level of debt, and its ability to sustain itself as it begins operations. The base case indicates an unsustainable, yet realistic rental rate at $2 a square foot, while the preferred scenario indicates an unattainable, but necessary rental rate to retire the debt at $12 square foot. The consultant team elected to investigate a Split Ownership scenario, which shrinks the gap between the base scenario and preferred scenario for the facility to become an arts center. Split Ownership divides ownership in the property, with the Annex continuing in existing private ownership and the Armory section of the building transferred to community or

nonprofit ownership. The Annex remains in private ownership, Armory in community or nonprofit ownership. Its characteristics include:

Main

Armory Space. Flexible multi-use auditorium, adaptable to theater seating and convertible for event setup, with an concentration on single-day events; NLOC as a probable anchor tenant. er, with purchase price based on existing proportionate and direct investment in the Armory space.

Armory space is purchased from existing owner-develop Lower Armory Space. Relocated Nemeth Art Museum
with appropriate curatorial standards, retail art-related sales, storage and museum support.

An analysis of the operational and financial performance of various options leads to the conclusion that the split ownership option leads to the most desirable final outcome: a productive private commercial development in the annex and a completely developed community arts center for the Nemeth collection, traveling shows, and the performing arts in the Armory area. Because a portion of the Armorys lower level has been developed for private commercial restaurant use, the ownership split should reflect this use. The analysis continues with the financial performance of this option, phasing, title transfer, and financing options are addressed in the chapter. Completing the Armory Square project will require close cooperation among the owner, the City, and user organizations and the overall arts community. However, the project will have substantial qualitative and quantitative rewards to the community, making this type of cooperative effort highly worthwhile. Community Benefits. A well-programmed and marketed arts center, complemented by an adjacent restaurant can be expected to generate greater particles of attraction than would each individual art organization on their own in isolated locations. The clustering of complementary activities may encourage more frequent local and regional visitation, which in turn generates spillover benefits to nearby commercial uses while helping to signal the Downtown as a location for cultural activities. A consolidation of existing artsrelated uses and activities would permit the linking and leveraging of arts and cultural resources through co-branding and joint marketing opportunities so that the type and scale of programming and activities offered can be increased over

Street Annex Level. Existing retail and restaurants. Upper Annex Level. Possible phased approach with base
finish level of public spaces as a first stage to a major fundraising effort to upgrade to higher standards. Financing Options for this scenario could include

Local option sales tax, with revenue bonds retired by tax

proceeds.

Private and charitable foundation fund-raising campaign. USDA Community Facilities loan. Gap or wraparound loan, using USDA Business and Industry loan guarantee to take out the six existing loan obligations.

THE ARMORY STUDY

time. Such an expansion would enhance visitation to the Downtown as a whole. An aggregation of cultural activities can be expected to derive benefits from co-locating just like commercial uses benefit from clustering. For example, the more restaurants present in a concentrated area, the more different or specialized types of restaurants permit a better fit between divergent tastes of consumers and the kinds of restaurants available; and greater numbers of differing types of restaurants usually result in better restaurants because they can both specialize and respond to competition from other nearby restaurants. Park Rapids neighboring community of Dorset demonstrates this phenomenon in a rural setting. In addition, strong retail agglomerations or localized depth of restaurants provide consumers with insurance that if one restaurant is full, they can find others with openings. A clustering of cultural and arts activities often increases the feasibility of securing on-site vendors to provide beverage and/or food service during performances and events that currently is not available as a revenue source and service amenity to patrons. A location Downtown in the Armory could provide an opportunity for the simulcast of Metropolitan Opera or other performances to increase revenue-generating utilization of space not obtainable in other venues such as the Park Rapids High School at which the Northern Lights Opera Company currently performs. It would also be worthwhile to investigate whether Northwest Technical College, Itasca Community College, and/or Bemidji State University would be willing to establish distance learning or other shared classroom or studio space at the Armory.

Payback. Armory Square involves a relatively modest investment, in the range of a public obligation in the range of $2 million, readily financeable by techniques that will have limited impact on the individual taxpayer. Armory Squares visual and performing arts facilities would generate about $1.25 million in incremental direct spending annually. Using a 2.5 multiplier, this adds about $3.125 million to the local economy each year. Facility Management. The development concept for Armory Square assumes public or nonprofit ownership and management of the Armorys visual and performing arts space. Establishing a nonprofit arts consortium to manage the facility for the long-term avoids direct governmental ownership or responsibility for the space, and the various political problems that such ownership could entail, yet retains the ability to qualify for USDA Community Facilities loans. Also, it could use PRLAAC, with capacity expansion to include the ability to manage the Armory space. This in turn would solidify the relationships between the citys various arts groups, and maximize use of the facility. It can, and should, be the framework for a joint arts funding campaign. This can increase efficiency and provide access to larger funding sources, such as corporate foundations, increasing the overall pool of money available to the community. On the other hand, it does involve some challenges that must be addressed. Among these include developing an equitable distribution system; and maintaining the identity of smaller arts groups. However, because the building should be seen as a unified community facility, its support and management should also be unified.

A short-term, interim measure for management could be a ownership of a non-profit community development corporation that leases spaces. The Park Rapids Community Development Corporation could operate as an incubator to complete and manage the interim conversion of Armory Square. The CDC provides short-term building development and management expertise that could be transferred to the arts consortium with the final financing package is assembled. In addition, the PRCDC was both organized by Armory Squares owner-developer (EchoPoint Development ) and has been certified as eligible for application for a USDA Community Facilities grant. This could provide unified management of both sides of the Armory Square enterprise at a critical time in the projects history. Public ownership of the facility is a possible last resort while nonprofit capacity is developed, but is not a recommended option. A public agency would need to dedicate staff to building management, and could encounter a number of issues in helping to bring about a transition to nonprofit management or occupancy. 8. Arts/Culture Corridor. The conversion of Armory Square to a new Arts Center and events facility for Downtown Park Rapids will cluster activities and experiences, creating new opportunities and memories for visitors and residents alike. This study includes an update to the Downtown Plan, and shows how the redevelopment of the Armory Building becomes the fulcrum of downtown development to continue east, and becoming a catalyst for even more reinvestment near downtown.

chapter

THE ARMORY
The Armory building is a historic relic in Downtown Park Rapids. The facility has a prominent location near the crossroads of Highways 71 and 34.

THE ARMORY STUDY

Built in 1922

Built in 1941

LOCATION
203 Park Avenue South, Park Rapids, Minnesota 56470

LEGAL DESCRIPTIONS
Armory. Lots four (4) five (5) and six (6), Block 7, Original town site of Park Rapids in the County of Hubbard, Minnesota Annex. East 110 feet of Lots One (1), Two (2) and Three (3), Block Seven (7), Original Townsite of Park Rapids in the

County of Hubbard, Minnesota

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Map 1.1: 2008 Downtown Plan

BACKGROUND
The Armory is a 24,000 square foot building located in downtown Park Rapids at the crossroads of Park Avenue and Second Street. The former National Guard Armory building was constructed in 1922, and an annex building was added on in 1941. The building was in use until 1992, at which time the State closed several armory locations including the one in Park Rapids. The building was deeded to the City of Park Rapids. The ownership of the building shifted numerous times since the City acquired it in 1992, and yet remained vacant for nearly two decades. In 2000, the City sold the building to a private developer for $1 along with a development agreement. The developer made improvements to some of the basic systems of the building, but did not adequately satisfy the conditions for safety and access. The City foreclosed on the building. In 2005, the building was sold by the City at auction to a local resident. In 2008, the City adopted a Downtown Master Plan that indicated that the Armory building should be considered for adaptive reuse as a community theater. The plan indicated that off-street parking could be located to the east of Highway 71, and indicated that the 3rd and Park intersection should be signalized to calm traffic entering Downtown and improve the ability of pedestrians and local traffic to cross the highway corridor safely. In June of 2010, EchoPoint Development purchased the building from the local resident and began the rehabilitation and abatement process for the reuse of the Armory building.
Armory Building

Crossing

Main Ave Urban Grocery

Street

Project Completed or Under Development

THE ARMORY STUDY

Figure 1.1: Timeline of events

REhABILITATION
Since 2010, the Armory has been the target of several improvement efforts. Figure 1.1 shows the timeline of events since EchoPoints involvement with the Armory, and summarized below:

Architectural Plan Review & Building Code Analysis.

In December 2011 ASMC retained the services of BHH Partners, an architectural firm located in Perham Minnesota to prepare a building code compliance analysis for the overall design concept of the building. This report will be available by the end of January 2012, and should provide clarity for any remaining building code issues that may arise.

Hazardous Materials Abatement. The City of Park Rapids executed a Development Agreement with Armory Square Management Corporation (ASMC) to create the preconditions necessary to allow the project to proceed; and with help to offset the substantial sunk cost for redevelopment of the former armory building. This commitment was an absolutely component to attract the investment required to return this significant property to productive use. Without this demonstration of public support, renovation of this incurably obsolete facility would have had no viable hope for success.

Appraisal.

Annex Retail Space Opens. After completion of environmental abatement work and installation of new utilities services and public infrastructure on Park Avenue in October of 2010, Armory Square attracted a local retailer. Summerhill on 2nd opened on May 14th, 2011.

In September 2011 Armory Square was independently appraised by a commercial property appraiser as a multi-tenant commercial building. The appraised value of the bare minimum improvements planned by ASMC was $3.6 Million. A similar insurance appraisal in November valued the replacement cost of the building at $4.4 Million. This clearly demonstrates the significant legacy value of the project and its great potential as a commercial anchor for destination events in downtown Park Rapids. At the beginning of 2012, the focus of the project shifted from reconstruction to tenant recruitment and business development. Each area of the building is now a definable space with a preliminary program, which is furthered explored in this plan. A comprehensive signage plan was approved for the building. A large wall mounted monument sign on the corner of Park Avenue and Second Street identifies tenants. Banners attached to the corner of the building reinforce the buildings connection to the downtown theme, Positively Park Rapids.

Tenant Recruitment.

Infrastructure Improvements.

A new state of the art stormwater management system was installed following the clean up asbestos, lead paint, PCBs, an abandoned underground fuel storage tank. The improvements also included new curb, gutter, and sidewalks.

Tenant Signage.

Content prepared, in part, by EchoPoint Development.

10

chapter

SCOPE OF THE STUDY

This chapter of the document identifies the scope of services used for retaining the consultant for this study. Narrative from the original scope was modified to reflect actions that were completed or deferred.

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THE ARMORY STUDY

Hubbard County Regional Economic Development Commission retained RDG Planning & Design, in association with Gruen Gruen + Associates and Shuler Shook, in Spring 2012 to prepare an independent feasibility study for the reuse of the Armory Building. The purpose of the study was to provide architectural services, including three programming concepts. A preferred concept selected from the initial three concepts would be refined to include a floor plan, elevation drawings of interior and exterior, opinion of probable costs, and a market study. Final products will be available for fundraising. The results of the process considered a hybrid of all three concepts, rather than an exclusive use. The five major tasks in the project include: TASK 1: Building Analysis/Programming TASK 2: Site Analysis/Programming TASK 3: Alternatives Feasibility Analysis TASK 4: Market Analysis of Preferred Program

TASK 1: BUILDING ANALYSIS & PROGRAMMING

Objective: Develop a program for the future rehabilitation of the Armory Building.

On-site meetings were critical and numerous conference calls between the consultant. Project meeting dates are subject to change depending on client recommendation. Meetings include: Project Initiation Meeting. Primary project participants, including the building owner and a representative from Hubbard County Regional Economic Development Commission and consultant, toured the building. The objective was to identify project challenges, verify project scope, and review results of past planning efforts. Walking Tour. Participants involved in the Project Initiation verified existing conditions of the armory building and site. The scope of the walking tour included the building and surrounding property. Stakeholder Interviews. Working with HCREDC, RDG identified stakeholders and conducted stakeholder group discussions to address the facility, its dynamics, potential, and future directions. Stakeholders included government representatives, property owners, chamber of commerce, and artisan organizations. These meetings were supplemented with individual interviews by phone. Debrief with key stakeholders. RDG met with HCREDC board and selected representatives to share the results and initial impressions for future improvements.

Building Program Development. Based on input from stakeholders and owners, RDG prepared alternative development programs. Specific tasks included: 1. Develop Building Program. Multiple building programs were prepared for the reuse of the Armory. Task includes floor plans, narrative, and spreadsheets. 2. Evaluate Alternative Programs. Cost scenarios for each of the three alternatives were developed and used to determine the mix of private and public involvement. RDG to reviewed the condition, adequacy, and suitable. This task includes establishing criteria to assist in evaluating the preferred program. 3. Presentation. A brief presentation of the alternative programs prepared by the consultant followed by an informal session for participants to share their thoughts on individual scenarios. 4. Schematic Design for Building. RDG revised and advanced the program for the preferred program. Task included preparing renderings that could be used for fundraising and promotional use.

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SCOPE OF ThE STUDY

CHApTER 2

TASK 3: ALTERNATIVE FEASIBILITY ANALYSIS

Major tasks of the feasibility study includes:

Stakeholder Groups. Focus group participants will

be asked their perceptions about the feasibility

Individual Interviews. Interview business owners

and organizations in the Park Rapids area about their possible use of an event facility. hotels and motels.

Data Collection.

RDG will research and identify potential vendors for the space of the program. Results are dependent on the participation of individuals being solicited and responding to surveys and interviews. RDG will provide an opinion of probable costs for rehabilitating spaces for various alternatives. Projections are calculated using cost per square foot. RDG will conduct a targeted, online survey for each alternative scenario. ferred program.

Lodging for Events. Inventory available rooms in Assess Regional Facilities. Evaluate the condition,
services, and utilization of existing facilities in the region.

Projected Costs. Survey.

TASK 2: SITE ANALYSIS/PROGRAMMING
Objective: Improve access, circulation, and parking to the Armory and surrounding properties.

TASK 4: MARKET ANALYSIS OF PREFERRED PROGRAM

This task was prepared by Gruen Gruen + Associates, in association with RDG to analyze the economics of the preferred program. The preferred program is a hybrid of the arts programs.

Tour. RDG toured one (1) facility that matches the pre Assumed income and expenditures.
Examples of a specialized analysis may include:

Plan Perspective: Schematic Design. RDG conducted an internal design workshop for improving the site and access to the Armory and surrounding uses. The area includes the space between 2nd and 3rd Street from Washington Avenue to the alley behind the Armory. Considerations include:

Arts Center Feasibility.

Parking Design and Orientation. Landscaping enhancements Pedestrian access and circulation Preservation Strategies
Program Refinement. Following the design workshop, the consultants will meet with stakeholders to review the initial concepts.

This study includes a feasibility analysis for the Armory to include an artisan gallery/ workspace/cooperative. RDG investigated existing programs in the region that may be a model for the Armory building.

Update Retail Market Data. Obtain Reuse Cost Estimates

Annual Debt Service Costs

and Estimate Associated

Interview Property Owner, Economic Development Director, and Representatives of Comparable facility to Obtain Market Information and Perspective

Survey. Code and Space needs. Tenant Recruitment.

Summarize Interviews and Research to Develop Model of

Operating Revenues and Expenses

Compare Projected Net Operating Income to Debt Service and Return Requirements

Event Facility Feasibility. Project will determine the feasibility of the Armory Building for special events, and will include:

Reach Judgments on Feasibility and Amount of Financial

Assistance Needed to Bridge Feasibility Gaps

Survey. Prepare a survey with members of HCREDC

to send to organizations and event organizers in the State.

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THE ARMORY STUDY

[Item not part of scope]

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chapter

PARK RAPIDS & THE REGION

This chapter reviews important changes in demographic and market characteristics between 2006 and 2011, and considers the target markets for the Armory building.

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THE ARMORY STUDY

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PARK RAPIDS AND ThE REGION

CHApTER 3

Since the launch of the Downtown Plan in 2008, the City of Park Rapids has accomplished significant elements of its plan, including reconstructing Main Avenue, building a new urban grocery store, expanding the hospital, and attracting new commercial uses in the district. Other community investments were experienced, as well, including the building of a new Wal-Mart Super Center.

Map 3.1: Market Areas for Park Rapids

TRADE AREA DEFINITION

Park Rapids is regionally known as a quality community with a unique downtown and gateway to Itasca State Park and the Mississippi River, and has historically been a significant small regional market at the crossroads of Highway 34 and 71. Map 3.1 illustrates different geographic trade areas for the Downtown Park Rapids.

Primary Market. The primary trade area is the boundary

of the city limits. Residents of the city do a large amount of their shopping in Park Rapids and view downtown as a place where some goods and services can be met.

Secondary Market. The secondary trade area includes a Tertiary Market. The tertiary trade area is more broad20-mile radius from downtown and extends out to include Nevis and Akeley, Menahga, Osage, and Snelling. While residents of this area use Park Rapids retailers and service providers for their daily needs there is a significant pull to the larger markets of Detroit Lakes, Walker, Bemidji and Wadena. ly defined and includes people who visit Park Rapids for special events, tourism or destination businesses. In addition, special attractions or places in a downtown district extend the effective size of the local market area. This area extends generally sixty miles from Park Rapids to include Detroit Lakes, Bemidji, Walker, Brainard, and Wadena.

The primary and secondary trade areas continues to create the largest demand for goods and services in the city, and represent the basis for calculating commercial demand.

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THE ARMORY STUDY

DEMOGRAPHICS
POpUlATiOn CHAngE
Table 3.1 compares Park Rapids with regional communities as well as Hubbard County outside of Park Rapids. Park Rapids continued to grow, accounting for 21% of Hubbard Countys growth. The local and regional growth occurring around Park Rapids results in a growing economic base for the city and conversely the downtown. The majority of surrounding communities experienced population growth with the exception of Wadena and Walker. Table 3.2 displays the historical population growth since 1970. The City of Park Rapids continued to experience a similar pattern of growth in the early 2000s as it did in the 1990s. The projected population for 2010 in the Downtown Plan was 3,875, while the actual population was 3,709. The growth rate of 1.8% between 2000 and 2005 slowed in the second half of the decade to 0.8%, resulting in an overall 2000-2010 growth rate of 1.3%.

Table 3.1: Population Change, Comparable Communities 1990-2006 based on 2010 Census and Estimates
1990 Population Park Rapids Ada Bagley Bemidji Detroit Lakes Manahga Moorhead Wadena Walker Hubbard County Secondary (20-mile) Tertiary (60-mile) 2000 Population Change % Change 2010 2000-2010 2000-2010 Change %Change Growth rate bw 1990/2000 Growth rate bw 2000/2010

2,863 1,708 1,388 11,245 6,635 1,076 32,295 4,131 950 14,939 6,472 77,895

3,276 2,772 1,235 11,917 7,348 1,220 32,117 4,294 1,069 18,376 8,088 93,305

413 1,064 -153 672 713 144 -178 163 119 3,437 1,616 15,410

14.4% 62.3% -11.0% 6.0% 10.7% 13.4% -0.6% 3.9% 12.5% 23.0% 25.0% 19.8%

3,709 3,709 1,392 13,431 8,569 1,306 38,065 4,088 941 20,428 8,515 101,687

433 937 157 1,514 1,221 86 5,948 -206 -128 2,052 427 8,382

13.2% 33.8% 12.7% 12.7% 16.6% 7.0% 18.5% -4.8% -12.0% 11.2% 5.3% 9.0%

1.44 6.23 -0.28 0.60 1.07 1.34 -0.06 0.39 1.25 2.30 2.50 1.98

1.47 3.76 1.41 1.41 1.85 0.78 2.06 -0.53 -2.00 1.86 0.88 1.28

Source: U.S. Census Bureau, and Claritas, Inc.

AgE DiSTRibUTiOn
Table 3.3 presents the age distribution for the City of Park Rapids and the individual market areas in 2010. The median age in Park Rapids is 43, while the secondary market is slightly higher at 46. The age distribution and median age of the broader tertiary market is comparable to the City of Park Rapids. Approximately 924 people in Park Rapids are over 65, while the secondary market has about four times as many people in the same age cohorts about 3,691. The secondary area has a statistically significant higher proportion of older residents within 20 miles, but outside of the city limits.

Table 3.2: Historic Population Change, Park Rapids 1970-2010

1970 Population Annual growth rate
Source: U.S. Census

1980

1990

2000

2010 Projected

2010 Actual

Difference 1970-2010

% Change

2,772

2,976 0.7%

2,863 -0.4%

3,276 1.4%

3,897 1.75%

3,709 1.3%

937

34%

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CHApTER 3

Table 3.3: Age Distribution for Park Rapids and Market Areas
City Secondary Tertiary Total

IncOME CHARAcTERiSTicS
Table 3.4 presents the 2010 estimated median household income for residents of Park Rapids, the secondary area as a whole, and Hubbard County, while Table 3.6 shows the distribution of income for Park Rapids, Hubbard County, and State of Minnesota.

Count
Under 5 5 to 9 10 to 14 15 to 19 20 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 to 84 85 and Over Total Median Age
Source: U.S. Census

% of Total 8% 6% 5% 6% 6% 12% 10% 12% 11% 9% 9% 6%

Count 1,094 1,013 1,035 1,200 668 1,375 1,586 2,361 2,704 2,257 1,067 367 16,727 ~46.1

% of Total 7% 6% 6% 7% 4% 8% 9% 14% 16% 13% 6% 2%

Count 15,446 14,357 14,045 18,307 11,081 25,313 23,878 32,921 32,435 24,116 12,788 5,759 230,446 ~42.3

% of Total 7% 6% 6% 8% 5% 11% 10% 14% 14% 10% 6% 2%

Count 16,823 15,590 15,266 19,726 11,976 27,116 25,842 35,730 35,535 26,725 14,199 6,354 250,882

% of Total 7% 6% 6% 8% 5% 11% 10% 14% 14% 11% 6% 3%

283 220 186 219 227 428 378 448 396 352 344 228 3,709 43.4

Median Income. The median income in Hubbard County is higher than that of Park Rapids and the secondary area. This indicates a significant number of higher income households living just outside of Park Rapids, while nearly a third of residents living in Park Rapids earn less than $15,000.

Unemployment.

Unemployment rate grew between 2000 and 2010, starting 4.9% and reaching 11.8% in 2010 (city-data.com). Park Rapids population is considered in poverty. This figure is double the national unemployment rate and three times the rate of the State of Minnesota.

Poverty. Table U.S. Census reports in 2010 that 20% of

Table 3.4: 2010 Estimated Household Income, Park Rapids and Region
2000 Park Rapids Hubbard County Secondary Market
Source: U.S. Census, Claritas, Inc.

Table 3.5: Pover ty Rates

Change % Change All People Park Rapids State of Minnesota United States
Source: U.S. Census

2010

Family

$23,628 $35,321 $32,656

$28,586 $45,066 $41,316

$4,958 $9,745 $8,660

21% 28% 27%

20.8% 10.6% 13.8%

20.7 6.8 10.1

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THE ARMORY STUDY

POPULATION PROJECTION
Table 3.7 considers a number of potential growth scenarios for Park Rapids. According to U.S. Census data, the growth rate experienced by Park Rapids in the 1990s was 1.22%. Building construction data and census projections at the time of the downtown plans initial publication suggested a growth rate of nearly 2%. Changes in the economy since the plans completion slowed growth to less than 1% annually. Future projection of population indicates a strong growth rate at 1.4% annually.

Table 1.6: Household Income for Park Rapids, Hubbard County, and State of Minnesota
State of Minnesota Hubbard County Hubbard Co. Outside of Park Rapids Park Rapids

Estimate
Total households < $10,000 $10,000 -$14,999 $15,000 -$24,999 $25,000 -$34,999 $35,000 -$49,999 $50,000 -$74,999 $75,000 -$99,999 $100,000 -$149,999 $150,000 - $199,999 $200,000 < Median HH income Mean HH income
Source: U.S. Census

% 100% 6% 5% 9% 10% 14% 20% 14% 14% 5% 4% (X) (X)

Estimate 8,616 659 585 1,005 1,048 1,537 1,841 901 708 147 185 45,066 56,198

% 100% 8% 7% 12% 12% 18% 21% 11% 8% 2% 2% (X) (X)

Estimate 6,883 321 364 767 833 1,325 1,539 807 676 114 137

% 5% 5% 11% 12% 19% 22% 12% 10% 2% 2%

Estimate 1,733 338 221 238 215 212 302 94 32 33 48 28,586 45,093

% 100% 20% 13% 14% 12% 12% 17% 5% 2% 2% 3% (X) (X)

2,085,917 119,223 99,885 195,722 200,204 291,875 419,619 298,118 285,427 93,216 82,628 57,243 73,561

Table 1.7: Population Grow th Scenarios for Park Rapids, 2010-2035

2010 Natural Population Change 0.8% CAGR 1.4% CAGR 1.75% CAGR
Source: U.S. Census, RDG Planning & Design

2015

2020

2025

2030

2035

3,709 3,709 3,709 3,709

3,584 3,860 3,976 4,055

3,503 4,017 4,262 4,433

3,444 4,180 4,569 4,847

3,402 4,350 4,898 5,299

3,361 4,527 5,251 5,794

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PARK RAPIDS AND ThE REGION

CHApTER 3

RETAIL PERFORMANCE
One way of evaluating downtowns retail role in the region is to consider the change in the Citys share of total regional retail sales. Table 3.8 indicates total retail sales in Park Rapids and the secondary market area for 2006 and 2011. In 2006, well over one-third of all retail sales reported in the 20 mile radius took place in Park Rapids. This proportion shifted to about a 50/50 split in the 5-year span with a significant amount of retail spending increasing in the City of Park Rapids. Overall, spending has increased by about $32 million, or an annual increase of $6.4 million annually.

Food and Beverage Sales.

From 2006 to 2011, food and beverage sales (grocery stores) have increased by nearly $9 million. food service and drinking places (restaurants) has changed from capturing the local demand to capturing well beyond the local demand 2011, and attracting an additional $3 million into the local market.

Food Service and Drinking Places. From 2006 to 2011,

RETAil SAlES
Table 3.9 (next page) identifies the gap between expected consumer demand (expenditures) and retail sales within Park Rapids for 2006 and 2011. A positive value results from demand exceeding supply and reflects a leakage of consumer dollars to outside markets. In other words, residents have dollars to spend but they are spending them outside Park Rapids. A negative value results from sales exceeding demand and indicates a flow of regional dollars into the citys retail market. In Park Rapids, 2006 retail sales exceeded the demand of residents within Park Rapids by over $29 million, illustrating the communitys ability to attract regional retail and consumer spending. In 2011, the surplus increased to $97 million, representing an increase of about $68 million.

As communities across the nation compete for a share of the retail market, many communities have found success in specialty or niche markets in their traditional downtown. Downtowns that have successfully competed against the big box retailers have focused on service oriented and specialty retailing. Specific market sectors that appear to hold potential for Downtown Park Rapids include:

Table 3.8: Share of Total Retail Sales with Park Rapids, 2006 and 2011
2006 Total Retail Sales Park Rapids Secondary Total 2006 % of Total 2011 Total Retail Sales 2011 % of Total

Home furnishing Clothing & clothing accessories store Miscellaneous Store Retailers (florist,
souvenir stores)

$76,280,988 $183,916,832 $260,197,820

29% 71% 100%

$145,138,666 $147,237,803 $292,376,469

50% 50%

gift, novelty and

Source: Claritas, Inc.

Food service & drinking establishments

Although it can be difficult to compete with the bigger retails in the clothing and clothing accessory market, Park Rapids continues to experience an outflow of dollars in this area. For this reason the downtown should look at ways to capture this market, especially in the more specialized clothing accessory market.

Department Stores Growth. A significant proportion of

the change is reflected in the sales captured in Department Stores where it was once leaking $5 million to outside markets to now attracting $50 million into the market.

Note: Numbers in Table 3.9 show the difference between demand (Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics) and supply (Census of Retail Trade from the U.S. Census Bureau). Numbers in parenthesis reflect a greater supply than demand, while numbers without parenthesis reflect a greater demand than supply. Case in point, total retail sales in Park Rapids was $145,138,666 (Table 3.9), while demand was $47,714,592 for a difference of $97,424,074. This represents a greater supply than demand.

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THE ARMORY STUDY

Table 3.9a: Retail Sales and Expec ted Consumer Expenditures

2006 Demand (Consumer Expenditures) Total Retail Sales Incl Eating and Drinking ADJUSTED RETAIL SALES (-auto, gas, non-store) Motor Vehicle and Parts Dealers Automotive Dealers Other Motor Vehicle Dealers Automotive Parts/Accsrs, Tire Furniture and Home Furnishings Stores Furniture Stores Home Furnishing Stores Electronics and Appliance Stores Building Material, Garden Equip Stores Building Material and Supply Dealers Lawn, Garden Equipment, Supplies Outdoor Power Equipment Stores Nursery and Garden Centers Food and Beverage Stores Grocery Stores Specialty Food Stores Beer, Wine and Liquor Stores Health and Personal Care Stores Pharmancies and Drug Stores Cosmetics, Beauty Supplies, Perfume Optical Goods Stores Other Health and Personal Care 2006 Supply (Retail Sales) 2006 Opportunity Gap/Surplus 2011 Demand (Consumer Expenditures) 2011 Supply (Retail Sales) 2011 Opportunity Gap/Surplus Change 06-11 Retail Sales % Change 06-11 Retail Sales

$46,909,552 29,468,290 9,525,483 8,104,064 642,299 779,120 1,096,682 597,101 499,581 1,009,635 4,499,409 4,068,617 430,792 64,507 366,285 6,145,637 5,568,561 177,440 399,636 3,041,700 2,626,520 113,240 101,121 200,819

$76,280,988 53,027,264 6,092,894 2,314,425 153,909 3,624,560 1,345,058 1,231,603 113,455 682,958 9,561,199 8,899,176 662,023 x 662,023 30,224,911 29,234,034 479,223 511,654 4,372,785 4,137,689 47,000 121,100 66,996

($29,371,436) (23,558,974) 3,432,589 5,789,639 488,390 (2,845,440) (248,376) (634,502) 386,126 326,677 (5,061,790) (4,830,559) (231,231) 64,507 (295,738) (24,079,274) (23,665,473) (301,783) (112,018) (1,331,085) (1,511,169) 66,240 (19,979) 133,823

$47,714,592 31,805,168 7,278,951 6,074,617 593,548 610,786 839,903 433,289 406,614 935,471 4,058,524 3,660,734 397,790 70,874 326,916 7,210,738 6,547,122 200,951 462,665 3,602,297 3,127,636 132,096 110,806 231,759

$145,138,666 120,471,302 14,888,808 12,954,382 516,302 1,418,124 751,647 684,340 67,307 2,000,065 4,783,010 4,469,112 313,898 x 313,898 39,046,965 38,492,092 510,083 44,790 6,176,029 5,914,362 x 143,221 118,446

($97,424,074) -88,666,134 (7,609,857) (6,879,765) 77,246 (807,338) 88,256 (251,051) 339,307 (1,064,594) (724,486) (808,378) 83,892 70,874 13,018 (31,836,227) (31,944,970) (309,132) 417,875 (2,573,732) (2,786,726) 132,096 (32,415) 113,313

$68,857,678 $67,444,038 $8,795,914 $10,639,957 $362,393 ($2,206,436) ($593,411) ($547,263) ($46,148) $1,317,107 ($4,778,189) ($4,430,064) ($348,125) x ($348,125 $8,822,054 $9,258,058 $30,860 ($466,864) $1,803,244 $1,776,673 x $22,121 $51,450

90% 127% 144% 460% 235% -61% -44% -44% -41% 193% -50% -50% -53% x -53% 29% 32% 6% -91% 41% 43% x 18% 77%

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PARK RAPIDS AND ThE REGION

CHApTER 3

Table 3.9b: Retail Sales and Expec ted Consumer Expenditures

2006 Demand (Consumer Expenditures) Gasoline Stations Clothing and Clothing Accessories Stores Clothing Stores Shoe Stores Jewelry, Luggage, Leather Goods Sporting Goods, Hobby, Book, Music Sportng Goods, Hobby, Musical Inst Book, Periodical and Music General Merchandise Stores Department Stores Excl Leased Depts Other General Merchandise Stores Miscellaneous Store Retailers Florists Office Supplies, Stationery, Gift Used Merchandise Stores Other Miscellaneous Store Retailers Non-Store Retailers Foodservice and Drinking Places Full-Service Restaurants Limited-Service Eating Places Special Foodservices Drinking Places -Alcoholic Beverages
Source: RDG Planning & Design; Claritas, Inc.

2006 Supply (Retail Sales)

2006 Opportunity Gap/Surplus

2011 Demand (Consumer Expenditures)

2011 Supply (Retail Sales)

Opportunity Gap/ Surplus

Change 06-11

% Change 06-11

5,143,500 1,645,901 1,190,291 224,790 230,820 756,483 516,714 239,769 5,606,771 2,469,514 3,137,257 1,230,787 83,691 492,388 92,498 562,210 2,772,279 4,435,285 2,006,271 1,843,185 369,662 216,167

16,499,434 494,788 26,160 275,626 193,002 731,264 427,044 304,220 587,543 x 587,543 1,012,189 65,221 360,203 155,648 431,117 661,396 4,014,569 x 3,692,381 721 321,467

(11,355,934) 1,151,113 1,164,131 (50,836) 37,818 25,219 89,670 (64,451) 5,019,228 2,469,514 2,549,714 218,598 18,470 132,185 (63,150) 131,093 2,110,883 420,716 2,006,271 (1,849,196) 368,941 (105,300)

4,928,692 1,720,406 1,202,354 258,318 259,734 838,816 582,515 256,301 6,397,681 2,866,596 3,531,085 1,312,655 89,248 479,223 88,169 656,015 3,701,781 4,888,677 2,187,894 2,042,795 403,070 254,918

8,876,821 405,582 87,508 181,301 136,773 1,826,726 1,380,601 446,125 56,895,381 x 56,895,381 1,487,761 317,887 294,236 121,535 754,103 901,735 7,098,136 2,647,690 4,280,021 1,592 168,833

(3,948,129) 1,314,824 1,114,846 77,017 122,961 (987,910) (798,086) (189,824) (50,497,700) 2,866,596 (53,364,296) (175,106) (228,639) 184,987 (33,366) (98,088) 2,800,046 (2,209,459) (459,796) (2,237,226) 401,478 86,085

($7,622,613) ($89,206) $61,348 ($94,325) ($56,229) $1,095,462 $953,557 $141,905 $56,307,838 x $56,307,838 $475,572 $252,666 ($65,967) ($34,113) $322,986 $240,339 $3,083,567 $2,647,690 $587,640 $871 ($152,634)

-46% -18% 235% -34% -29% 150% 223% 47% 9584% x 9584% 47% 387% -18% -22% 75% 36% 77% x 16% 121% -47%

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THE ARMORY STUDY

CONCLUSIONS
This analysis of population and potential markets leads to the following conclusions:

Retail sales have increased gradually in the City of Park

Rapids according to data provided by the Department of Revenue. Sales tax has increased, as well, growing from $3.4 million in 2007 to nearly $4 million in 2009. Data provided by Claritas, Inc. indicates that retail spending has doubled in the City of Park Rapids between 2006 and 2011 ($76 million to $145 million). A significant portion of the growth can be attributed to Wal-Mart, but also additional business occurring in other retail markets.

Overall, the retail market in Park Rapids is healthy and

growing according to retail data available.

Park Rapids and the surrounding region have experienced

consistent population increases since the 1990s and are expected to continue growing. The strong growth of Hubbard County outside Park Rapids indicates an increasing number of regional residents that will most likely look to Park Rapids for retail goods and services.

Downtown

If the City of Park Rapids is able to maintain a growth rate

of no less than 1.4%, its 2020 population will be greater than 4,262 (the growth rate projected in the 2007 plan was revised from 1.75%).

continues to experience retail growth and more specialty markets that are traditional to downtown markets. While Park Rapids as a whole is an importer of retail dollars, this has not been the case for the niche markets of home furnishing, clothing and clothing accessories, and miscellaneous stores. pears to have declined due to growth of new retail business establishments (visual survey). While some businesses are no longer operating, such as Wimpys, new restaurants have opened to serve the market, such as the Good Life and Chinese restaurant.

Downtowns building vacancy rate from 2006 to 2011 ap-

Retail sales in Park Rapids exceed consumer expenditures,

which reinforces the communitys ability to serve local residents as well populations in the secondary and tertiary trade areas. As the regional population continues to grow, demand for retail goods and services in Park Rapids will also increase.

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chapter

STATE OF THE ARTS

Before drawing conclusions about the most feasible approach to developing a sustaining presence for the arts within the Armory Building, it is important to take stock of the assets available within the community. It is only with this understanding of the state of the arts in Park Rapids that reasonable recommendations can be constructed and conveyed.

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THE ARMORY STUDY

METhODOLOGY FOR DATA COLLECTION

Given that the overarching purpose of this study is to create and assess strategies for occupying physical space by arts groups, the following inventory of the arts in and around Park Rapids will construct a model of the arts community as classified into two distinct elements:

Users and Venues

Among the first priorities in interviews with the users of arts space, was to get a sense of the range and scope of their individual efforts in the arts. Additionally, questions focused on the nature of their craft and how they made use of space both to create and display their art form, whether it is performance- or physically-based. When speaking with those in control of performance and exhibition venues, the focus was on their cost structure and rate of utilization. Additionally, the discussion explored what, if any, types of expansion or improvements were being planned for their facilities.

Users. Users of space, in the form of practicing artists,

performance groups, and educational offerings, and

INTRODUCTION

Venues. Arts venues, in the form of facilities that provide

space for free or at nominal cost to artists and performers. Of course there are areas of specific overlap between these two elements. A performance group that owns and operates its own performance space is one example. Ultimately however, this dichotomy is thought to offer the best lens through which to assess the need for additional spaces for the performing and visual arts. In each case, data was collected through independent research, in combination with in-person and telephone interviews members of the arts community of Park Rapids. Different, but interlocking, sets of questions were posed to consumers and providers of space for the performing and visual arts.

Methodology for Data Collection Influence of the Arts Arts in the Park Rapids Region Visual Artisans and Venues Performing Arts Organizations Performing Arts Venues

Common Ground
Interviewees were asked a number of broad questions designed to elicit information that could suggest areas for strategic development and retrenchment within the Park Rapids arts community. These questions asked respondents to assess what they saw as the current strengths and weaknesses of the arts community as well as to suggest some perceived latent opportunities and future challenges to development in the arts.

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STATE OF ThE ARTS

CHApTER 4

INFLUENCE OF ThE ARTS

Its hard to overstate the range and depth of arts offerings available in north central Minnesota. It is home to a number of theater and musical groups, collaborative art galleries, local and regional museums, and individual working artists. These contemporary offerings share a heritage in the areas long tradition of art and craft brought to the region by its early settlers.

ORgAniZATiOnS in THE ARTS

Region 2 Arts Council

The mission of the Region 2 Arts Council is to strengthen the presence of the arts by supporting opportunities for arts creation, promotion, and education for the people of Beltrami, Clearwater, Hubbard, Lake of the Woods, and Mahnomen counties. It is one of 12 such boards state-wide, each of which is tasked with allocating state grant funding to and insuring ongoing support for the artists of their region. Local stake/role. The Region 2 Arts Council has a long history of direct grant making to arts organizations in the Park Rapids area. While this role is expected to continue, it is important to keep their envisioned role centered within the context of growing austerity in state budgets. It is entirely possible that, despite the councils long track record of financial support, in an era of persistent budget shortfalls at the state and local level, this resource may become less available precisely as more and more arts organizations turn to it for support.

Park Rapids Lakes Area Arts Council Region 2 Arts Council Minnesota State Arts Board Charitable Foundations Additional Resources
Park Rapids Lakes Area Arts Council
Organized in 2005, the Park Rapids Lakes Area Arts Council serves as the umbrella organization for 19 arts and cultural organizations in the Park Rapids area. Representatives of these 19 organizations, as well as champions of individual local arts projects meet monthly to coordinate a calendar of events, share information between organizations, create connections between creative endeavors, and incubate interest in new arts projects. Local Stake/role. Park Rapids Lakes Area Arts Council serves as the parent organization for many local arts events including the Red Bridge Film Festival and the Arts Leap weekend. Additionally, PRLAAC helps create a mutually supportive ecosystem for the arts in the Park Rapids area and to foster coordination between organizations. Apart from the role it plays in presenting events, PRLAAC serves primarily as a vehicle for collaboration between fundamentally distinct arts entities. That is to say that, despite their involvement in the council, each organization operates independently.

ARTS in THE PARK RApiDS REgiOn

Park Rapids has a robust and active arts community. There are a number of practitioners of both visual and performing arts across a range of disciplines. As is the case in the region as a whole, these run the gamut from people for whom their chosen art form is merely a hobby to established professional artists and performers, who have a regional and national reputation for excellence. Additionally, this community includes a growing number of educational opportunities which provide access to the arts for those not directly involved in its creation. The breadth of arts offerings and organizations in and around Park Rapids is supported by a number of local, regional, and statewide organizations including state agencies, non-profit organizations, and charitable foundations. These supportive organizations play an invaluable role in ensuring the ongoing wellness of the local arts community through the organizational, material, and financial support they provide.

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THE ARMORY STUDY

Minnesota State Arts Board

The Minnesota State Arts Board (MSAB) is the key state agency active in the arts for the state of Minnesota. Formed in 1903, it has been a steadfast source of support for the arts statewide for well over a century. Their goals include ensuring that the arts are interwoven into every facet of community life, to support the belief of Minnesotans that the arts are vital to the identity of the state, to ensure access to the arts for people of all aged, ethnicities, and abilities, and to serve as a responsive and responsible steward of Minnesotas public arts funding. Local stake/role. The Minnesota State Arts Board is active in the creative life of Minnesota through a range of statewide and regional programs, including the supporting creative and artistic endeavors with on the role of public arts in society and economic development, and by lending support to touring events. The primary local role of the MSAB is realized through grant-making at the local level, which is delegated to 12 regionally-focused arts boards, to ensure local accountability and responsiveness.

Charitable Foundations
A number of charitable foundations make it their mission to specifically serve the community of artists in Minnesota. Notable among these organizations are the McKnight Foundation and the Jerome Foundation. The McKnight Foundation focuses on the following areas within the arts in Minnesota: mid-career artists, artist-service organizations, small and midsized arts organizations, targeted support to large organizations, and limited capital grants for space, equipment, or technology. Their grants also help fund the aforementioned Regional Arts Councils, which will be discussed in greater detail. By contrast, the Bush Foundation, which supports exclusively in Minnesota and New York City, seeks to contribute to a dynamic and evolving culture by supporting the creation, development, and production of new works by emerging artists. They pursue this goal through the financial support of emerging professional artists and arts organizations. For 2011-2012, the funding priorities of the Jerome Foundation focus on literature in New York City, dance (especially choreographers) in Minnesota and New York City, and music, in diverse styles, in both of their operational geographies. Local stake/role. While neither of these organizations have had a significant direct stake in the Park Rapids area arts community, support surely has been gained through the McKnight Foundations support of Minnesotas regional arts councils. Moving forward they offer an area of additional pursuit in targeted, project specific, funding opportunities.

Additional Resources for the Arts

Springboard for the Arts. Springboard for the Arts is

an economic and community development organization for artists and by artists. Their work focuses on building stronger communities, neighborhoods, and economies, using artists as an important leverage point. The organization focuses on a reciprocal relationship between artists and communities, where artists are key contributors to community issues and are visible and valued for the impact they create. These outcomes are pursued through the creation of simple, practical solutions and systems to support artists. Those programs support the goal of creating a local cultural movement.

Minnesota Artists Online. Minnesota Artists Online is

an online database of Minnesota artists and organizations from all disciplines. It offers to Minnesota-based artists a central gathering place on the Web, and is intended to become a marketplace and community hub. It offers the public a new way to explore art and get to know artists. In addition to providing artists and organizations with a web page containing images and information, the site provides news and features about the local arts scene from a variety of sources.

Forecast Public Art Toolkit. This online toolkit provides

citizens, artists, and activists with information and examples of all aspects of public art, from contemporary ideas and resources, to a step by step guide to the entire process of creating public art. Although it is focused on Minnesota, many of the resources are applicable nationally, tracing the steps of a public art work from the codification of the concept, through the planning, community engagement, construction and finally the preservation of the work.

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STATE OF ThE ARTS

CHApTER 4

Map 4.1: Ar t Facility Locations

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THE ARMORY STUDY

VISUAL ARTS ARTISANS & VENUES

ARTiSAnS

VEnUES Blank Canvas Gallery

Blank Canvas Gallery is located in a 1,000 square foot storefront on Main Street in Park Rapids. The gallery is open from May through December, closing in the late winter and early spring months to account for the seasonally slow retail traffic. It is organized as a non-profit arts organization to serve both as a collaborative gallery for fine artists to display and sell their work and as a place for local and regional artists to offer classes to the public. In addition to featuring the work of the gallerys 12-15 member artists, a different guest artist is featured each month. The gallery celebrates the work of both the guest artist and one or two of the member artists with an opening reception. Member artists are selected through a juried process, with the focus being on established and emerging artists from the area and nearby region. Those selected pay $600 in member dues to help defray the cost of operating the gallery as well as a small percentage of the price of those works they sell from the gallery. Occasionally, the gallery will host worthy nonmember artists from the region. These artists do not pay dues, but are required to give a larger share of their sales to help fund the operation of the gallery. Blank Canvas began offering educational classes two years ago with a focus on two key segments. For beginning artist they offer one-day weekend classes on a range of topics. Over the course of a year, they will offer 4-6 of these sessions on a range of topics. Those participating are most often from the area immediately around Park Rapids, or are summering there. The second type of classes the gallery offers are more advanced three-day master classes designed for more advanced hobbyists or even beginning professional

Individual artists. The Park Rapids area has developed to

feature a concentration of practicing professional artists in a number of mediums as well as a number of dedicated hobbyists and craftspeople who are retired from their previous profession and practice their handiwork as a second career. While some of these practitioners opt to promote and sell their works through collective galleries or consignment shops, many operate private studios which serve a second function as independent galleries. Northwest Minnesota is home to 1,820 individual artists. Artistic spending by these artists totaled $17.1 million during 2005. About $13.2 million of those expenditures were made to merchants and businesses located within the state. This spending supports 490 jobs, and generates $9.4 million in resident household income and $1.7 million in state and local government revenue. Average artistic expenditures of this areas individual artists (fulltime, part-time and hobbyist) during 2005 were $9,373 per artist (source: The Economic Impact of Minnesotas Individual Artists, 2007 Minnesota Citizens for the Arts).

artists. These sessions draw participants from a larger area and, typically, participants will stay overnight in an area hotel or lodge while taking the class. Classes take place in either a back room space at the gallery or in an art studio at the high school. That studio space is only reliably available during the summer months, however, which presents a challenge to scheduling classes on a consistent basis. There is a stated desire from the gallery to continue expanding its educational offerings, but expansion is a challenge due to the space constraints.

Nemeth Art Museum

Located in the Historic Hubbard County Courthouse, the Nemeth Art Center features a collection of 40 paintings, spanning six centuries. The collection, which had been brought to the United States after World War II by art restorer Gabor Nemeth were originally destined for St. Johns University. Ultimately, however, Nemeth decided that his collection should remain Park Rapids, in his summer home. The Nemeth Art Center, originally founded in 1977 as the North Country Museum of Arts, serves as the keeper of Gabor Nemeths collection. The Nemeth Art Center is open Tuesdays, Thursdays, and Saturdays from May through September. A curated selection of paintings from the Nemeth collection is exhibited on a rotating basis, with some of the collection always on view. In addition to 5 annual shows featuring the centers standing collection, the Nemeth offers a range of opportunities to experience the work of local, regional, and national artists. In the coming summer season these offerings will include:

Hands-on

arts instruction. Several individual artists also offer group art classes and individual instruction to a range of age groups as a way of promoting their particular art form while helping to support their art. These sessions can take a range of forms from daytime summer art camps for school children to small group and individual lessons in the evenings for adults. Additionally, local artists will occasionally partner with a local gallery to present instructional classes.

A juried show of the work of artists at local high schools; An event featuring the work of northwest Minnesota photographers;

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STATE OF ThE ARTS

CHApTER 4

A dual show featuring Los Angeles-based painter Danielle

Kimzey and Iowa-based painter Mary Laube;

A show featuring work made in multiples or editions from

across Minnesota and surrounding states; and

An exhibition of the works of a local painter Kayleen

Horsma. Additionally, the center will occasionally work with outside artists to coordinate off-site shows. Recently, for instance, the center worked with Fargo artist Cameron Peterson to present a show of his works at The Good Life Caf, in Park Rapids. These kind of off-site events serve to extend the reach of the art center and increase public awareness of its core offerings. While each of these events has a strong educational component that resonates strongly with the mission of the Nemeth Art Center, each has a secondary element designed to broaden and expand the ability of the center to secure patrons and raise funds.

While the space the center currently occupies is made available to them free of charge, there are significant challenges posed by continuing operations at this site. First and foremost, the space is unheated. This limits the season during which the works can be comfortably displayed, and threatens the fragile historic pieces with radical shifts in temperature and humidity. Already the poor conditions have caused minor damage to the more fragile historic works. Secondarily, the current facility is not fully accessible; limiting the ability of some visitors to experience the centers offering and potentially limiting the centers ability to raise funds through grants. Finally, the layout of the spaces themselves restricts the ways in which the pieces can be displayed. For all these reasons, the Nemeth Art Centers board of directors has made it a stated priority to relocate their operations to a new or rehabilitated facility, expressing a stated preference to occupy a portion of the Park Rapids Armory.

ter, however there is a significant uptick in visitors and sales surrounding the holiday season. As the number of visitors expands and contracts with the tourism/retail seasons, so too shifts the geographic range of the customers visiting the store. During the busiest times, hail from across the Midwest and nation; as the season turns colder and the crowds dwindle, customers are more from the local area, occasionally from as far away as the Twin Cities. In addition to the wares that are offered for sale, the galley has offered an artist-in-residence program, with a featured artist teaching classes. Previous artists have concentrated in such diverse fields as lapidary, silversmithing, and mosaics. This coming summer, in addition to the hands-on education offerings, the gallery plans to continue encouraging artists to promote themselves by offering demonstrations and public discussions of their work.

Smoky Hills Gallery

Smoky Hills Gallery is a for-profit gallery located on Main Street in Park Rapids. Its focus is on local and regionally produced arts, crafts, and gift items sold on consignment. The retail space measures 1,250 square feet and the works of approximately 80-95 artists and craftspeople are on display at any given time. While the works on display are not admitted by jury, the selection is curated by the owner. While the gallery does remain open year-round there is a significant seasonal fluctuation in foot traffic and sales. During the high season, the owner estimates that the gallery has 1,000-1,500 visitors a week. This number drops as low as 100-150 visitors a week during the slowest parts of the win-

Open studios and Arts Leap weekend

The Park Rapids area is home to a significant number of artists and craftspeople who work in private studios. While some offer regular open hours at their studio, most work in private and then show their works at local, regional, and national galleries and exhibitions. Open studio hours allow the public to visit the artist in their work environment and offer a window into the creative process. Every fall, the Park Rapids Lakes Area Arts Council sponsors a celebration of this unique artistic experience, by coordinating a weekend of open studio hours throughout the area. This event, called Arts Leap, extends beyond the studios of individual artists to include exhibitions, educational offerings, and extended hours at area galleries and well as live performances by local bands and ensembles.

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THE ARMORY STUDY

PERFORMING ARTS ORGANIZATIONS

Park Rapids is also home to a number of performing arts organizations, representing a wide range of mediums including dramatic and musical theater, musical revue, instrumental music, and film.

Northern Light Opera Company

Located in Park Rapids, the Northern Light Opera has been offering one full production every summer for the past 11 years, occasionally staging a second smaller production or benefit concert in the autumn or winter. The larger productions typically run for 6 performances, using performers from Park Rapids and surrounding areas as cast and technical crew members, and importing senior creative staff from elsewhere. These productions use the Park Rapids Senior High School auditorium, and accessory spaces to produce, rehearse and perform, at a cost of approximately $6000 each season. The smaller productions have traditionally been staged during the off-season, at the performance space owned by the Long Lake Theater at a cost of $500 per production. Tickets sell for $20 for adults and $10 for students, with approximately 2,200 people attending the full productions. The expenditures by the organization have steadily increased from $6,800 in 2002, to $52,600 in 2011 and in only one season has the organization ended the year in the red. Based on the financial information provided, NLOC should have cash-on-hand in the amount of approximately $65,000.

the knowledge and appreciation of the culture and heritage of the United States. The companys summer season runs from mid-June through August. Over the course of a typical season, the company presents three productions with 10 performances each. This coming seasons productions include, Judy Why Cant I, Nunsense, and On Golden Pond. Tickets sell for $12 for adults, $10 for seniors and $8 for children, with a one dollar increase when the production is a musical. Each performance draws an average attendance of 1,000 people. Detailed financial was not available.

ORgAniZATiOnS

Northern Light Opera Company Minnesota Folklore Theater Red Bridge Film Festival Long Lake Theater Jasper Theater Woodtick Theater Park Rapids Area Community Band

Red Bridge Film Festival

Founded in 2007, the Red Bridge Film Festival seeks to bring worthy films to Park Rapids that might not otherwise be seen by area residents and to present visiting filmmakers along with their projects. The festival, an initiative of the Park Rapids Lakes Area Arts Council, is typically presented over five or six days in mid-April, with the movies shown at the Park Theater in Downtown Park Rapids. This past season, the festival presented 6 feature films and one documentary, centered on a theme of alternative dystopian futures. Each film is shown 2-3 times over the course of the festival to ensure a number of opportunities for viewing and discussion. The 2012 festival presented titles including The Adjustment Bureau, District 9, Gattaca, Ghost in the Shell, The Hunger Games, Metropolis, and This Is Not A Film. Due to budget limitations, the festival was unable to continue the tradition of hosting a visiting filmmaker.

Minnesota Folklore Theater

Minnesota Folklore Theater is a summer stock company based in Walker, MN. With a mission to create, develop and present professional community-based musical and dramatic productions that will further
32

STATE OF ThE ARTS

CHApTER 4

Single tickets sell for $7, and a pass for 7 admissions sells for $30. Multiple admission passes may be shared. Originally, use of the theater facility was secured as an in-kind donation, with the festival merely paying for the staff expenses of operation. Presently, the festival pays a small stipend in addition to the theaters expenses. The festivals funding is typically split roughly evenly between ticket sales, grants, and sponsorships. Detailed budget information was not available, but based on some rough figures provided in conversation the budget for the festival can be reasonably estimated at $17,000-19,000. The film festival would like to expand to offer occasional smaller events throughout the year, offering a greater value to their members and patrons. However, this ability is limited, given that the festival operates inside a for-profit space.

information was not made available, the theater does not rely on public support and is not a registered non-profit organization. They do receive some sponsorship from local businesses.

Jaspers Jubilee Theater

Located just east of Park Rapids, Jaspers Jubilee Theater is a second musical and comedy review. Jaspers Theater performs in a historic barn which has been converted into a 380-seat theater. While there is some minor variation in the numbers presented in any given performance, there is essentially one show performed through the season. As a variety show, Jaspers caters both to the local residents as well as to tour operators who book package trips to the Park Rapids area. Tickets to Jaspers Jubilee Theater sell to adults for $19, seniors for $18, and children for $9. There is also a discount offered to groups of 20 or more, when they pay as a group. In addition to ticket sales, the theater is supported by an onsite gift shop and concession stand. Because Jaspers Theater is a private, family-owned company their finances are not a matter of public record.

Rehearsals and performances are in a commercial building remodeled to hold a 167-seat theater. The company has been in operation since 1992 performing from mid-June thorough mid-September. Performances are Wednesday through Saturday nights during the performance season. Tickets sell to adults for $16.50, seniors for $15.50, teens for $9.50, and children for $6.50, with special discounted rates offered to groups. Woodtick Musical Theater is a private organization and detailed financial records have not been made available.

Park Rapids Area Community Band

The Park Rapids Area Community Band has been a fixture in the region since 1991. The ensemble presents two major concerts each year, one each in the fall and spring. Additionally, the ensemble presents several performances over the course of the summer at various venues. In preparation for their spring and fall concerts, the band rehearses bi-weekly at the Park Rapids Senior High School, which is also where the performance occurs. The performances of the community band are offered free of charge, with the ensemble drawing financial support from the contributions of its members, the community, and local businesses. Ongoing support is realized through a program of sponsored chairs the naming rights to which are made available on an annual basis, for a $100 contribution. These sponsored chairs raised upwards of $3,500 for the 20112012 performance year.

Long Lake Theater

Long Lake Theater is a stock theater company that rehearses and performs in two restored and reused historic churches near Park Rapids. Each church has been converted into a 100 seat theater. They present both a summer and fall/winter season, with each season having 3-4 productions. Productions generally run for four weeks, with performances four evenings a week (Wednesday-Saturday). The 2010 summer season will include productions of Over the River and Through the Woods, Dont Hug Me Country Fair, and Barefoot in the Park. Adult tickets cost between $14 and $18, with discounts for children and groups of 15 or more. While detailed budget

Woodtick Theater
Located in Akely, Woodtick Musical Theater is one of the Park Rapids areas Branson Style musical/comedy reviews.

33

THE ARMORY STUDY

PERfORMAncE VEnUES
While there are a number of performance groups in and around Park Rapids, many of them are for-profit entities operating in their own privately owned performances spaces. This makes for a strong diversity of arts opportunities, but a constrained number of venues available to non-profit arts groups looking to stage a performance.

Park Rapids High School Auditorium

The auditorium at Park Rapids High School serves as the primary public performing arts venue for the area. The theater seats 590 attendees. While the auditorium plays host primarily to school events, it is also rented out to community groups for performances, events, and meetings. Attendance varies greatly based on the type of event and utilization figures werent readily available, however school district estimate suggest that the space is in use 4-5 days a week, throughout the year taking into account rehearsals, performances, and events. The auditorium is, of course, used without charge for school district events. The district makes it available to the public with a two-tiered pricing structure. For community and non-profit groups, the per-day cost is $76, and to for-profit groups the cost is $298/day. This does not include the expense of specialized technical assistance with the lighting system and presumes that the building will be staffed with janitorial and support staff. In some cases community groups are able to use accessory spaces to support their functions in the theatre.

Century School Cafetorium

The cafetorium at Century School is available for events and performances. This is a flexible space, essentially a cafeteria with a stage, temporary seating, and rudimentary lighting and sound equipment. The seating capacity of the space as a performance venue is 300 attendees. While this venue is occasionally rented out for events, meetings, and performances, it primarily serves the school district. Much like the high school auditorium, the space may be rented by the public on an as-available basis, after deconflicting with school district events. Again, a two-tiered pricing scale is used: $65/day for community and non-profit groups and $227/day for outside groups and for-profit entities.

Park Rapids High School Auditorium Century School Cafetorium Long Lake Theater Spaces

Long Lake Theater Spaces

The Long Lake Theater, in Akeley, MN, has some history of renting out their performance spaces when they are not in use for one of the organizations productions. These spaces are essentially historic churches converted into theatres. Each of the two theaters seats approximately 100 attendees and plays host to the staging, rehearsal and performance of 48 in house performances, over 6-8 productions each year.

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STATE OF ThE ARTS

CHApTER 4

Table 4.1: Per forming Ar ts Organizations

Name Northern Light Opera Company (School Auditorium)) Location Performances/showings Events Frequency Capacity Attendance % Attendance Seasons Expansion Plans FT/PT Staff Actors

Park Rapids, MN

1 production, 6 performances

Fri., Sat., Sun; over two weeks during the summer

400 School Auditorium

85%

11

Yes

Primarily part-time volunteers, some technical staff hired for summer season.

Local, generally non-professional

Jasper's Jubilee Theater Woodtick Theater

Park Rapids, MN Akeley, MN

1 production, 20 performances 1 production, 55 performances

380 seats

Unknown

No

No report

Local, generally non-professional Local, generally non-professional

Wed., Thurs., Fri., Sat.; mid-June through midAugust

167 seats

Unknown

No

No report

Long Lake Theater

Park Rapids, MN

6-8 productions, ~100 performances

One summer and one winter season. Each has 3-4 productions, with 12-16 performances each. Thurs., Fri., Sat., Sun., the last two weeks of June, July, and August

100 seats in each of two different theaters.

Unknown

No

Owner/artisitc director is nearly full time, supported primarily by part-time volunteers.

Local, generally non-professional

Minnesota Folklore Theater

Walker, MN

3 productions, 30 performances

Unknown

20

Potentially

Primarily part-time staff, consisting largely of an extended family and their network of friends. Exclusively part-time volunteers with some support from staff at movie theater.

Primarily local actors from an extended family and network of family friends. N/A, occasionally a filmmaker will come to give a lecture/Q&A along with their film.

Red Bridge Film Festival

Park Rapids, MN

7-8 films, shown 2-3 times each

5-6 days in mid-April

150

Potentially

Source: RDG Planning & Design and interviews with facility operators.

35

THE ARMORY STUDY

CLEAR LAKE ARTS CENTER CASE STUDY: CLEAR LAKE, IA

The Clear Lake Arts Center is a community-based non-profit arts organization, serving north-central Iowa. The centers mission is, to ignite the creative spirit through the visual, performing, and literary arts. The centers innovative model combines the promotion and sale of local and regional artists and craftspeople with educational and public-service programming featuring a wide range of art forms.

HiSTORY
The foundation of the art center lies with the establishment of the Clear Lake Arts Council in 1977, as a collaboration of area artists created for the promotion of the arts in the region. In the organizations early years, it operated without a physical presence, creating signature annual events including the Clear Lake Art Sail, an open-air are sale and festival, held on the shores of Clear Lake. In 2002, after decades of operating as an organization without a physical home, the members of the arts council decided to increase the organizations visibility and ability to offer programs on a continuing basis. Through the City of Clear Lake, the organization was able to occupy a storefront on Main Street that was publically-owned and awaiting redevelopment. It was here that the organization changed its name to the Clear Lake Arts Center, and expanded beyond occasional public events to become a true artists cooperative. Through a juried evaluation process, artists were allowed to place their work in the space, in exchange for a percentage of the proceeds from sales of their artwork and a commitment to work a set number of hours in the gallery each week. The center operated at this location for several years, but always with the knowledge that when a redevelopment proposal came along, they would be forced to move.
36

A NEW HOME
After three years of successful operations in the Main Street storefront, it became apparent that the art center would be required to vacate to make way for the redevelopment of the site. Supporters began the search for a new building that they could inhabit on a permanent basis, a true home. Supporters found a building a block and a half off of Main Street in downtown Clear Lake that had been rendered surplus though a series of mergers between area banks. By this time the building had been vacant and unused for 6 years. Working with an architect, the centers board created plans to modify, update, and improve the building on-site such that it could house the full range of programs they hoped to offer. This meant extensive renovations to the existing bank building as well as expanding the structures footprint to incorporate a half-finished building shell on an adjacent property. The final cost estimate for site acquisition and construction was $1.3 million. Along with the bank building and immediate site, the center acquired an option to purchase an adjacent parking lot for visitor parking and supportive exterior spaces.

CApiTAl FUnDRAiSing
A professional was hired to assess the areas capacity and willingness to support a fundraising campaign. The fundraising potential for the new art center was estimated at $600,000 an admirable sum, but not half of the estimated cost of site acquisition and construction for the new facility. Undeterred, the fundraising campaign, named Arts Reach, began with a $75,000 donation of seed money. This initial donation was crucial, because it was large enough to give other potential donors a sense of confidence that the project had the momentum to progress to completion. One of the key steps in moving forward was changing the composition of CLACs board. Previously, it has operated as a large committee of 20 or more, with representation coming primarily from the artists themselves. In order to make decisions more efficiently, and to reach out to the broadest spectrum of interested community members, the board was reduced to eight. Artists continued to be represented collectively by one or two board members. The other board positions were filled by officers who brought with them expertise in supportive fields or extended the reach of the art center to a larger social network of potential donors.

STATE OF ThE ARTS

CHApTER 4

CLEAR LAKE ARTS CENTER

The capital campaign can be divided into three primary elements: large fundraising events, ongoing outreach to potential donors, and the underwriting of named spaces in the new facility. From the beginning of the fundraising campaign, an emphasis was placed on direct outreach to individuals and small groups within the community. This approach could mean everything from a conversation over cups of coffee at a local diner to presentations to local religious and civic groups. One key element of this local, boots on the ground outreach was the Show and Tell presentations conducted at the construction site as work progressed on the new facility. These sessions, which presented previous and potential future donors updates on the progress of fundraising, programming, and construction, provided supporters tangible evidence of the impact their donations were making. Through these sessions and other community outreach efforts, the art center was able to sustain small to mid-sized gifts beyond any projections theyd generated at the outset. From its early days, the art center had sponsored an annual event known as the Clear Lake Art Sail. In support of

the capital campaign, a new fundraising event was created to augment revenue of the center. Held on the last Saturday in April, the new fundraising event is a two-part affair. Over the course of the day, the center manages a public, open-air secondary art market at which they sell gently used pieces of art and decorative craft that have been donated to the center. In the evening, there is a more formal, ticketed event, called the Harbors Bazaar. At this event, there is both a silent auction and a live auction, of new and original works by local and regional artists. The works are donated to the center, and the proceeds from these sales along with the revenue from the sale of tickets provide a significant stream of revenue to the center. Finally, the layout of the building enabled the creation of a number distinct spaces ranging from intimate galleries to the larger performing arts gallery, and each of these spaces were offered to for underwriting as a named space. Depending on the size, prominence, and purpose of the space, the naming rights were offered from anywhere from $20,000 for one of the smaller galleries, to $250,000 for the performing arts gallery. The underwriting of these named spaces alone raised donations totaling over $500,000.

FAciliTiES
The art center is approximately 9,200 square feet in size and includes the following:

Reception area and gift shop, Six small galleries and one large gallery, A space dedicated to the performing arts, A library of art books, One childrens art studio, One adult art studio/clay workshop, One digital arts classroom/studio, Art center administrative offices.
Its important to keep in mind that while the center was constructed as one project, the facilities on site developed over time, as the budget allowed. A significant amount of the equipment on site came through in-kind donations and partnerships with other area and regional non-profits. For instance, the screen and video projection equipment in the performing arts gallery was donated to the center by the Iowa Independent Film Festival. The mortgage on the art

37

THE ARMORY STUDY

CLEAR LAKE ARTS CENTER

center is held by a local bank branch, while this has the benefit of enabling some minor flexibility with payments, the true benefit has come through the desire of the bank to build and maintain goodwill in the community via charitable contributions and in-kind donations. Recently, the bank forgave nearly half the principle remaining on the centers loan, lessening the annual mortgage payment significantly. This enables the center to work towards a visible future in which they can work toward building an interest-bearing trust to fund continuing operations in perpetuity. There are no plans to expand the footprint of the building itself, the art center does have plans to expand they types of experiences they provide on sight. There are plans for a landscaped sculpture garden and patio area that would be accessible from both the main gallery and the performing arts space. This would provide a new exhibition of artworks as well as an expansion of the space that could be rented for special events, given cooperative weather. A second additional outdoor space is planned off of the adult art studio/ clay workshop. This patio would serve as an outdoor area for clay working and other outdoor classes.
38

PROgRAMMing
In addition to the consistent draw of the gallery arts shop, the center strives to be an active place with a range of ongoing programs that appeal to a wide range of people.

classes in a range of mediums. Most of the education programs are available for a fee, although once a month there is a free Second Saturday class offered to the community.

PERfORMing ARTS
In addition to hosting performing arts events from various community and regional organizations, the center produces a number of events in-house. Primary among these are plays by the Cup O Joe theatre company, which casts local residents in short dramatic and comedic plays. The company performs two productions annually, each with three or four performances. Additionally, the center hosts the Clear Lake Nonsemble band for their rehearsals and community performances.

ViSUAl ARTS
The main gallery show rotates on roughly a monthly basis. This primary exhibition is supported by shows within the smaller galleries. In addition to these shows of works for sale by local and regional artists, the center will occasionally host installation pieces which are not for sale, but are associated with a holiday or pubic event. One recent example is a cooperatively-produced textile sculpture, made of stacked layers of secondhand clothes, created in honor of Earth Day.

EDUcATiOn
Scarcely a week goes by that one or both of the centers two studio classrooms arent used for an educational event. These range from a weekly after-school arts program that focuses on creative development and basic art skills for young elementary school students, to day and weekend-long adult arts

SpEciAl EvEnTS
Although they are not produced by the center, some of the additional events that are presented using the facility bear mentioning. These independently created events range in scope from small recitals for local piano studios to the various screenings of the Iowa Independent Film Festival, which uses the facility as its center of operations for three days in

STATE OF ThE ARTS

CHApTER 4

CLEAR LAKE ARTS CENTER

By making nearly all of the works on display available for sale, the center can present itself in marketing materials as something beyond just a dusty old museum. This draws a wider spectrum of visitors and, in doing so, introduces them to the centers wide range of programmatic offerings.

OpERATiOnS AnD STAff

The day-to-day operations of the center are coordinated and led by a pair of part-time Executive Directors, each of whom work approximately 20 hours a week. They are supported by a bookkeeper who works approximately 8 hours a week and is responsible both for the centers budget and the financial operations of the gallery. The gallery itself is operated by a gallery coordinator who is responsible for overseeing the installation and removal of artwork and shows.

July. In each case, these events help cement relationships between the art center and other local and regional arts nonprofits and are to the benefit of the center through increased awareness and revenue through gift shop and gallery sales. Through a diverse and inclusive approach to programming, the art center is perceived as a place of interest to all people. This increases the number of community members and tourists visiting the center and increases awareness of the centers core of arts programming.

works typically sell at a price point ranging from $50$500. These works are held on consignment basis so long as they are generating sales activity. Works are shown on consignment, with proceeds split between the center and the artist on a 40/60 basis.

REvEnUE STREAMS AnD BUDgET

Table x.x shows the income and expenditures for the Arts Center. The yearly operating budget for the CLAC is approximately $130,000. There are four primary sources of income for the Clear Lake Art Center, including (1) revenue from fund-raising and in-kind donations, (2) revenue from fees paid for participation in educational events, (3) revenue from major public events like the Harbor Bazaar and Clear Lake Art Sail, and (4) revenue from sales made through the gallery and gift shop. These sources of income accounted for nearly 97% of the total receipts in 2011. Some additional income is realized through facility rentals, interest on held capital, and grants reviewed by the center. These sources combined accounted for only 3.7% of the centers income, in 2011. While these sources of revenue may seem small by comparison to the others, they account for more than half of the centers positive balance of operating income for the year.
39

Works from local and regional artists that are on dis-

RETAil STRATEgY
With few exceptions, everything that is on display at the art center is for-sale. Merchandise falls into three primary categories:

General arts-related gift shop merchandise, at a price

point between $10 and $50. The center includes in its annual budget approximately $15,000 to purchase new gift shop wares and to operate/maintain the retail store and galleries.

play as a part of one of the centers featured exhibitions. These generally are priced between $300 and $1200. These works are held in conjunction with specific programmed shows in CLACs primary galleries, in some cases they may be offered on consignment basis in the smaller galleries or gift shop area after their featuring show has ended. Works are held on consignment with proceeds split between the center and the artist. For more expensive pieces the division of proceeds begins at 40/60 and shifts to 33/67 for pieces over $500.

Works from local artists that have works available at

the art center on a fairly regular/standing basis. These

The merchandise sold outside the galleries is rotated regularly, to give the impression of a heavily rotating stock. Although this creates some additional work for center staff and volunteers, its benefit is immeasurable. By creating the illusion of a constantly changing stock, visitors are encouraged to return to the center on a frequent basis to see whats new.

THE ARMORY STUDY

Table 4.2: Prof its & Losses, 2011 CL Ar ts Center

Income

SYnOpSiS
The Clear Lake Arts Center is a potential model for future arts development in Park Rapids. However, in order to pursue this model there are some key lessons to be learned from the story.

FINDINGS AND TRENDS

The Park Rapids area is home to a noteworthy community of artists and performers that is both broad and diverse. This community is supported by a range of organizations at the local, regional, and state levels. Challenges

Charitable Giving Education Offsite Fundraising Facility Gift Shop/Gallery Grants Earned Interest Facility Rental Cost of Goods Sold
Total Income Expense

$36,543.42 $13.247.10 $41,805.24 $236.00 $36,480.74 $500.00 $45.70 $3,860.43 $7,413.01

$125,215.62

The arts community must mobilize and work mutually

for the betterment of all art forms.

Mobilizing the fundraising by the Arts Community to

support the Art Center. One of the challenges presented by having such a wide range of offerings is ensuring that as each group works effectively for their own goals, the larger goals of the arts community remains in their thoughts. This idea comes from an understanding that, while each group has specific needs and interests, the community as a whole can develop further and faster working together than through incremental piecemeal efforts.

The ability of an arts center to sustain itself is inherently

tied to its programming and public outreach.

The management of the art centers retail component is a

critical variable in attracting visitors.

A significant seed money donation is critical to launch a

major fundraising campaign, as it generates confidence in the ultimate success of the project.

Accounting Administration Fundraising Costs Education Events Facility Gift Shop/Gallery Grants Marketing/PR Payroll Processing Miscellaneous
Total Expenses Net Operating Revenue
Source: Clear Lake Arts Center

$705.00 $60,400.48 $533.92 $2,550.08 $9,881.32 $24,147.23 $14,655.91 $355.00 $3,730.41 $771.99 $80.67
$117,630.67 $7,584.95

Establishing a leadership structure and cooperation for

leading the arts community. The Park Rapids Lakes Area Arts Council does exceptional work serving as an intermediary between various groups and working to foster new artistic endeavors in the area, including the Red Bridge Film Festival and the ArtsLeap weekend. PRLAAC could well take on a greater leadership role within the arts community to pursue new goals and to help share resources. In the future, this type of leadership could create more comprehensive integration between currently separate arts organizations including shared staff, joint fundraising events, and cooperatively managed spaces. It is this kind of collaborative cooperation that will be necessary in order for any of the areas many performing and visual arts groups to corroboratively manage an art center set within the Park Rapids Armory.

A nimble executive board, which brings a range of skills

and connections to their positions, is a key variable in a successful fundraising campaign and sustained operations. The group should be less than 10.

40

STATE OF EVENTS

CHApTER 5

chapter

STATE OF EVENTS
The Park Rapids region is a popular destination for events and activities. The City of offers many opportunities for outdoor gatherings, but

41

THE ARMORY STUDY

USER GROUpS
An event space is only as useful insofar as there are groups available and willing to rent it for their functions. This section recaps the information collected over the course of a telephone survey of fraternal and professional groups, tradeshows, and event professionals. It is intended to give an order of magnitude estimation of the types and scales of events likely to consider the event space at the Armory for their functions, and to suggest some potential avenues for marketing the space to potential users.

of revenue, they bring with them the secondary benefits of fostering goodwill to community groups and introducing a wider cross-section of the local community to the Armory.

Private Events
Private events, like weddings, banquets, and receptions, present a different value proposition. These events, by their nature, generate revenue through the rental of the event space. It is difficult to precisely estimate how many of types of events occur in and around Park Rapids each year. Interviews with several area resorts, hotels, event spaces, and florists, suggest that the Park Rapids region hosts approximately 45 to 60 weddings each year, across various venues. Capturing even 20% of this market would automatically account for between 9 to 12 events each year. Other private banquets and receptions, assumed to be booked at twothirds the frequency of weddings, could account for another 6 to 8 events each year. A review of comparable facilities charge for a full day of event space rental, exclusive of tables, chairs, linens, and place settings, suggests that $550 is a marketable rate. This suggests that a conservative estimation for the potential proceeds from these types of private events would range from $8,250 to $11,000 a year. These types of private events also bring a range of secondary benefits, above and beyond serving s a source of revenue. Frequently guests at weddings, receptions, and banquets will be from out of town, producing spillover effects in lodging, shopping, entertainment, and food and beverage sales. Furthermore, the use of the Armory for these types of functions would have the benefit of exposing visitors from a wider geographic area to a new landmark attraction in Park Rapids, potentially serving as good word of mouth marketing for the city and region.

INTRODUCTION

These events fall into two broad functional classifications, including:

Methodology for Data Collection User Groups Comparable Facilities Auxiliary Services
METhODOLOGY FOR DATA COLLECTION
In order to gain an understanding of the potential use of the Armory as an event facility, a phone survey was conducted. This survey focused on three key factors in the use of an event space:

Users originating from Park Rapids and its immediately surrounding areas and ones which originate from elsewhere in the state, region, or nation. The locally-originating events can be further broken into two sub-categories, inculding:

Routine meetings of local civic organizations Larger private functions, such as weddings, banquets, receptions, and special events.

Local Civic Meetings

The meetings and events of local civic organizations to be smaller and occur with good frequency. Currently, these events are often housed in other small, local venues ranging from the basement of the Park Rapids library, to the local American Legion post, to the community room at Northwoods Community Bank. Because these are largely community groups, they tend to gravitate towards spaces that are both appropriately scaled for their events and, more importantly, can be secured with limited, or without cost. While these types of events arent perceived as a significant source

User Groups. Identifying potential users of the space. Comparable Facilities. Reviewing similar event space in
the region.

Auxiliary Services.

Reviewing the availability auxiliary services like hotels, restaurants, event parking, and transportation.

42

STATE OF EVENTS

CHApTER 5

Table 5.1: User Groups Expressing Interest of the

Group Name Minnesota Department of Natural Resources Governors Fishing Opener League of Minnesota Cities Minnesota Dental Association Minnesota Association of School Administrators Association of Minnesota Counties Minnesota Heating and Cooling Association North Harvest Bean Growers Association APA Minnesota Trout Unlimited Ducks Unlimited Size of Organization Attendees Duration Lodging Needs Contact

Statewide
Statewide

Many smaller meetings, <100 people. 350 banquet 100+ at smaller meetings Approx. 125 at smaller meetings Approx. 100 at smaller conferences Varies, 100-500 Undisclosed 20-25 at smaller meetings 20-30 at smaller meetings 20-30 at smaller meetings Approx. 100

Typically 1 day
Typically 2 days

No Some. Depends on turnout. Some, vary based on location and turnout 100-125 rooms for smaller meetings
Typically for most attendees. For multiple day events. Not typically. Not typically. Not typically. Not typically. Not typically.

Minnesota State DNR 651-296-6157

Jill Boldenow 651-757-862 League of Minnesota Cities 651-281-1200

Statewide Statewide Statewide Statewide Statewide Regional Statewide Statewide, local chapter Statewide, local chapter

Typically 2-3 days Typically 2 days Typically 2.5 days Typically 2-4 days Typically <1 day Typically <1 day Typically 1 day Typically 1 day Day-long, typically not overnight

Minnesota Dental Association 651-646-7454 Minnesota Association of School Administrators, 651-645-6272 Association of Minnesota Counties 651-224-3344 Minnesota Heating and Cooling Association 952-928-4660
North Harvest Bean Growers Association 218-334-6351

APA Minnesota 888-882-5369 Trout Unlimited - Headwaters Chapter, 218-243-2574 Ducks Unlimited 952-820-8174 Park Rapids Armory. Based on an appraisal of utilization and rental rates at comparable event spaces in the region, and taking into account some of the factors which may limit the appeal of the Armory as a convention venue, it is reasonable to suggest that the Armory could attract 1-2 of these events annually, each of which is estimated to last an average of two days. Given the previously suggested rental rate of $550 per day, these events might yield $1,000 to $2,000 each year.
43

Statewide, Regional, and National Events

Larger organizations, whose functions might draw an audience from across the state, region, or nation, form the final category of potential users for an event space within the Armory. These events could be anything from a day-long seminar or retreat for a northern Minnesota-based organization to a several days long conference or trade show for a regional or national professional organization, with many permutations in between. These events frequently have spe-

cific needs in terms auxiliary services including nearby entertainment, dining, and lodging options. In order to ascertain the number of events that might be attracted to a rehabilitated event space in the Park Rapids Armory, 69 statewide, regional, and national groups were identified as potential candidates. Forty of these organizations were successfully contacted; twelve of them were willing to discuss their plans relating to large meetings or conventions. Of these twelve, nine expressed interest in a rehabilitated event space at the

THE ARMORY STUDY

Key Findings

Groups

already holding meetings in Park Rapids expressed an interest in a newer, larger, more flexible space. ings in major cities believe that Park Rapids might be an ideal location for their smaller regional or topic specific meetings, which are held more frequently throughout the year.

Multiple organizations that frequently hold large meet-

party, or meeting Examples of these in the Park Rapids area meeting spaces at the American Legion, Park Rapids Public Library, the Eagles Club, and spaces in various churches and schools.

Smaller event centers presented lower rates of utilization,

generally filling their calendars with weddings, receptions, and dinners. Hobby groups and trade shows were the exception, rather than the rule for these centers.

Public Event Center.

Several

additional statewide and regional groups were open to the idea of meeting in Park Rapids, including those that had in the past but had stopped. Appendix A.

A table with the full results of the survey is available in

COMpARAblE FAciliTiES
The event space at the Armory will be in competition with other event spaces in the Park Rapids area, each of which offers a slightly different amenities. This survey is intended to place the Armory event space within the context of other local and regional event spaces, in order to gain an understanding of attributes might distinguish it from comparable facilities. Additionally, by understanding the prevailing rental rates at other facilities, an estimation of a reasonable rate of rent for the Armory space can be generated. Information on selected comparable venues is presented in Table ##.##. Facilities in the area can be divided into three categories:

These are larger community and event centers, which are frequently purpose built. These publicly owned buildings serve to attract conventions, meetings, seminars, and trade shows to the community. While, in some cases, they may be privately managed, these facilities are publicly owned and frequently will have differential cost structures when renting event spaces to public and non-profit groups, versus private events or business functions. Examples of this type of facility include the Sanford Center in Bemidji, the Hutchinson Event Center in Hutchinson, and the Detroit Lakes Community and Cultural Center in Detroit Lakes. These are typically hotels or hotel/casinos which also have some banquet or meeting rooms. Or, in some cases, resorts which offer a large pavilion or event space. The former frequently host all manner of events from trade shows to wedding receptions, while the latter tend to focus on the serving the special event market. Lodging and catering are typically available on-site. In some cases space rental rates may be discounted if the in-house catering service is used.

Broadly speaking, publicly-operated event centers seemed

to have a higher rate of utilization, hosting a wider range of groups that other event spaces. This is potentially because of the favorable differential between the rental prices necessary to support a non-profit operation versus a forprofit one.

AUXiliARY SERvicES
Regardless of the types of event and users potentially available in an area, without the correct types of supportive auxiliary services nearby, recruiting events to occupy and use the space on a regular basis will be a challenge. This section reviews the depth and breadth of these types of services that have functional proximity to the Armory, in order to assess its current standing and needs going forward.

Hotel/Casino/Resort with Event Space.

Lodging
Park Rapids has a long history as a resort community, playing host to a significantly larger population of seasonal residents and tourists in the summer months. As such it has offers a significant number of temporary accommodations, which fall into two general categories.

The full results of the survety of event spaces can be seen in Appendix B.

Resort properties. These properties make up the bulk of

the Park Rapids temporary housing stock. They typically offer one, two, or three-bedroom cabins and bunkhouses for rent on a nightly or weekly basis and often have additional recreational amenities like access to a one of the lakes. In some cases, these resorts will have an on-site restaurant. Some of these businesses operate on a seasonal

Key Findings

Local Civic Gathering Spaces.

These venues are those usually made available to non-profit and community groups free of cost. Sometimes, they will charge a nominal fee to the public to host a private event like a banquet,

Many of the large event centers indicate that they are experiencing high rates of utilization, noting a return to prerecession levels over the past 12 months (2011-2012).

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Table 5.2: Comparable Area Venues

Name Mantrap Lodge Location Capacity Lodging Catering Utilization Rental Rate

Park Rapids

100

Up to 150 on-site
None on site

Catering available on-site Yes

50-60 events per year; Avg. 1.5 days. Waiting for response 75-80 events/ year; Avg. 2.25 days 45-60 events/ year

Varies. $2000 for 100 attendees, incl. tables and linens Waiting for response

These offerings run a wide gamut with something for nearly every taste. Nearby eateries range from local cafes and coffee shops, to restaurants with full table service, to national chain fast food eateries, to American bar and grilles. Most restaurants can host between 50 and 100 people. A full catering service is unavailable in Park Rapids, yet carry-out or delivery is available from some restaurants. Additionally, one of the Armorys on-site retail spaces is intended to be a restaurant. The tenant must be able to provide on-site catering for special events as an option. Table x.x summarizes the available restaurants in walking distance from the Armory.

Sanford Center

Bemidji

450

Bigwood Event Center Hutchinson Event Center Detroit Lakes Community and Cultural Center

Fergus Falls

1,600; but typically, approx. 600

96 rooms on-site

Catering available on-site Full kitchen, but outside catering typical

$600/day for an Armory-equivalent sized space

Hutchinson

525 for banquet, None on site, 1,100 for two nearby conference None on site

$325 for 200+ people, 600 for 400+ people. Linens/tables extra. Waiting for response

Parking and Transportation

Access to the armory is critical for events and activities. Some of the events at the Armory may attract over 300 people, which will create significant competition for available parking in downtown. The City of Park Rapids, in association with event organizers, should develop a strategy for improving curb-side access and relieving parking demand in downtown. The strategy must include a combination of shuttle services to lodging, area destinations, and park-andrides. The City of Park Rapids has private and public transit service available for transporting people from the Armory to hotels and other destinations. Public events are best served by the Heartland Express, a subsidized program by Hubbard County that can contract transportation services for special events under the following conditions:

Detroit Lakes 375-420

Full kitchen, large events 50-65 events/ are catered by outside year, inc. 15-20 provider weddings

basis, from late spring through late fall. A survey of area properties affirmatively identified 98 cabins of various sizes and configurations in the immediate area of Park Rapids, capable of housing approximately 510 people.

of filling hotel rooms and resort properties in the shoulder seasons of early spring and early winter present a potential opportunity for event-based partnerships between the operators of the Armory and area resorts and hotels.

Hotels. Park Rapids also has three hotels.

These offer the same amenities typical to middle-range hotels in many other cities, including extended basic cable, a swimming pool, fitness center, internet access, complimentary continental breakfast. Combined, these three hotels offer 150 rooms, with a capacity of 300 guests, assuming double occupancy. There are few accommodations within an convenient walk of the Armory, which limits its appeal as a location for large, multiple day conferences. However, the challenge

Restaurants
People get hungry. This is the reason conferences frequently have beverages and snacks available between sessions. The ability to find a meal nearby is an important variable in the success of an attraction designed to draw people from any distance. As a function of its location within downtown Park Rapids, the Armory is well-served by a number of restaurants all within an easily walkable distance or less than three blocks.

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THE ARMORY STUDY

Map 5.1: Comparable Area Venues

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CHApTER 5

Table 5.3a: Event Facility Sur vey Results

Facility Name Location Gross SF Event Space Kitchen/Prep Meeting / Classrooms Lodging Rates Utilization

Smokey Hills Wilderness Retreat Chase on the Lake

Osage Walker

2,400 SF Ballroom

full kitchen commercial kitchen

Total capacity: 120 person in 3 event spaces Total capacity: 200 in ballroom 15 in boardroom 40 in meeting room 1 large room with seating for 100 ppl, and one smaller Den for smaller groups Total capacity: 1,100 in meeting rooms 525 in banquet Great Room divisible into 3

13 cabins (100 people) 8 condos (2-3 bedroom), 1 cottage

Lodging - $96-250 walker ballroom max 200. 170 classroom. Good Could not give on specific rate because fee is dependent on lodging needs (often waived,) season, and relationship with the group. 1 00 person max. (seated $50-4 hrs $75-5 hours 5 + $100 extra $25 for catered food. (320) 593 2691 . Was unsure of square footage event for ~200 ppl: 1/2 of Great Room= $325 Fri.& Sat.; $250 Sun. 4000s.f. 12 hr. Also rentable linen and A/V equip. Good to excellent

4 Bz Event Center

Litchfield

full kitchen

None within walking distance

City of Hutchinson Event Center

Hutchinson

24,000 SF 8,000 SF

full kitchen Caterer ready

Several hotels nearby

Blaisdell Mansion

Minneapolis

18,000 SF 320 PPL Ballroom

full kitchen catered

3 other rooms that could be used Several hotels nearby as separate gathering spaces. Each can hold 60-80 people. Total capacity: 750 people. Main room can be divided into three rooms. There is also one other room with 60 person capacity. Total capacity: 600 people. Can separate into 7 different meeting rooms. Total capacity: 800 people. Ballroom can be made into 8 separate rooms, and Event Center can be split into 6 smaller rooms 33 rooms on site

Excellent

Prairie Event Center

Wadena

15,000 SF 8,000 SF

full kitchen

Good to Excellent

Northern Lights Casino Shooting Star Casino

Walker

9,000 SF

800 PPL

full kitchen

105 rooms on site

Good

Mahnomen

28,000 SF 15,000 SF

full kitchen

390 rooms on site

$300 for 2500 s.f.section of divisible event space (100 person capacity in each section. NO CHARGE if a meal is served. Meals range from $8-$12 /person with tax & gratuity.

Good

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THE ARMORY STUDY

Table 5.3b: Event Facility Sur vey Results (...continued)

Facility Name Location Gross SF Event Space Kitchen/Prep Meeting / Classrooms Lodging Rates Utilization

Northern Pines Camp

Park Rapids

Dining Hall

full kitchen catered

Total capacity: 200 in summer, 80 in winter. 3 meeting rooms can accommodate 25-30 people each.

200 rooms on site

1-50 ppl: $100/day 200 ppl.: $225/day

Excellent. Weekends are booked in summer. A weekday meeting needs 3 months advance reservation.

Arrowwood Resort & Conference Center

Alexandria

28,000 SF -

full kitchen

Total capacity: 675 people

200 rooms on site

Bigwood Event Center/Best Western

Fergus Falls

12,000 SF 7,245 SF

full kitchen

Total capacity: 800 in theater configuration 16-56 in meeting rooms (8)

96 rooms on site

$150 theatre $100 classroom. Rents for $200/day

Excellent. Just 3 weekend day openings through August. April is busiest. Fair

Willmar Conference Center/Holiday Inn

Willmar

21,880 SF 10,080 SF

full kitchen

Total capacity: 1,000 in theater configuration 150 in U-shaped configuration Space is divisible into 9 separate rooms. Total capacity: 1,000+ people. 8 different meetting rooms. Can combine in a variety of ways.

98 rooms on site

Thumper Pond

Ottertail

11,000 SF

restaurant

78 rooms on site

Good

Bemidji Regional Events Center (Sanford Center) Detroit Lakes Community & Cultural Center

Bemidji

185,000 SF

24,000 SF arena; 10,000 SF ballroom Ballroom full kitchen catered

Total capacity: 4,700 people in arena 500 banquet/700 theater

None on site. Close to Hampton Inn, Double Tree, and Country Inn Suites

Jorgette 218-441-4004

Steady throughout year. Several large weddings.

Detroit Lakes

Total capacity: None on site. 420 in ballroom Conference room, senior center, Fieldhouse, party room, and Holmes theatre accommodates a variety of meeting sizes and types.

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STATE OF EVENTS

CHApTER 5

Event is a community wide event sponsored by another government agency or notforprofit service organization. The service is not available for private functions, such as weddings and reunions.

are provided. Standard rate is $55 per hour. Private events can be served by Park Rapids sole taxi service, Snow Enterprises Taxi Service. Snow Enterprises is a singleperson operation and during peak times, demand is likely to exceed their capacity. While Heartland Express has five (5) vehicles in its fleet, it is prohibited by state law to be in competition with private operations. In these types of circumstances Heartland Express may be eligible to assist.

There are a number of candidate locations for overflow event parking, including J&B Foods. As previously mentioned some of these locations might require a shuttle service between the off-site parking lot and Armory building. Ultimately, the hosting of events that begin to approach the capacity of the Armory space must consider public transportation to relieve the parking demand in downtown.

All transportation is provided within the service area established by the MnDOT contract which includes all of Hubbard County & the cities of Walker and Bemidji.

Services are paid for at full cost of service bus and driver
Table 5.3c: Event Facility Sur vey Results (...continued)
Facility Name Location Gross SF Event Space

Kitchen/Prep

Meeting / Classrooms

Lodging

Rates

Utilization

Holiday Inn Express Hotel and Conference Center Mantrap Lodge

Bemidji

2,300 SF

Breakfast only. Large meeting room

70 rooms on site

Fair

Park Rapids

150 people

full kitchen to serve capacity cater

No dedicated event spaces.

Lodging for 150 on site

3 day / 2 night weekend-$2000 Excellent. $1,200 for 12 hours Booked solid through Labor Day. Typically catered weddings. Slow in the fall. Closed November and December Large meeting space drives revenue from trade, boat, home, consumer shows. Conferences keeping people in town for 4 day.

St. Cloud Rivers Edge Convention Center

Saint Cloud

180,000 SF

largest space is 61,000 SF, divisible by three

prep kitchen for any of the 14 caterers they contract with.

Total capacity: 3,800 for concert 2,000 for trade show. 19 total meeting rooms. Meeting rooms accommodate 40-120. Total capacity: 350-400

2 hotels directly attached offer 480 rooms total

Eagles Club

Park Rapids

unknown 350 people

full kitchen

3 hotels in walking distance

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THE ARMORY STUDY

FINDINGS AND TRENDS

Recruiting events for Local, Private, and Regional/State user groups have a significant role to play in the successful programming for a functional reuse of the Armory. Although few, if any, of the meetings held by local civic groups will be revenue-generating events for the Armory, these types of events offer a number of secondary benefits. First and foremost, they enable the Armory to be a functional amenity that serves a wide range of the community groups. This is an important factor in establishing significant civic support for any type of public funding of the facility. These meetings also present an opportunity for the arts-focused tenants of the Armory to market themselves to a group of people who might not ordinarily be exposed to their offerings. This is a useful approach to growing public support for their organizations. The same principle holds true of the retail tenants leasing space in the Armorys annex. The increased number of visitors that frequent civic meetings can only help drive additional business through their doors. The market for special event rentals, for weddings, banquets, receptions, appears to present the most lucrative opportunity for space rental. Based on the prevailing rates at, and amenities offered by, comparable spaces in the area, potential annual revenue for these evens is estimated annual revenue of $8,250-$11,000. Additionally, these types of events frequently attract attendees from within a reasonable driving distance of Park Rapids, which nicely coincides with the target market area for

many of the arts groups who hope to make the Armory their home. Each guest at one of these functions has the potential to be a new supporter of the tenant organizations, a repeat visitor to the region, and an ambassador for the exceptional qualities of Park Rapids to their social circle in their home community. Finally, although there are some factors which limit the appeal of an event space at the Armory to larger statewide, regional, and national conferences, these types of events present a significant opportunity in terms of attracting the discretionary dollars of visitors from afar. The events themselves arent anticipated to be a significant source of revenue for the Armory, generating only a few thousand dollars a year. However, attendees of this type of event have great additional value to the Park Rapids business community, as they will likely be staying overnight, spending significant amounts of money in local hotels, stores, and restaurants. The auxiliary services that might support an event space, the lodging, restaurants, and transportation that enable visitors to have an enjoyable time are all present in Park Rapids. However in the case of lodging and transportation, additional work should be done to facilitate convenience for visitors. This can be accomplished through making shuttle services available for large events. Another possibility would be a marketing strategy around an arts event in which either the local Chamber of Commerce or, potentially, PRLAAC partnered with local hotels and resorts to create promotional packages which bundle together lodging, dining, transportation, and entertainment.

Table 5.4: Restaurants within 3 blocks

Restaurant Style Blocks to Armory Cater Ability Seating Capacity

Armory Restaurant Tenant 3rd Street Market Bella Cafe Beyond Juice

Sit down

Yes

TBD

Deli Cafe Cafe

1 1 1 1 1 1 1 1 1 1 2 2 2 3

Yes Yes Yes Yes Yes Yes

80 60 30 80 99 90 57 90 75 95 55 130 55 100

Four Seas Chinese Sit down Good Life Cafe Great Northern Cafe McDonalds Minnesoda Fountain Royal Bar Schwarzwald Inn Subway Rockys Pizza House Pizza Hut Burger King Upper Crust Caterers Sit down Family Fast Family Bar Sit down Deli Family Family Fast Catering

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Table 5.5: Lodging Sur vey (addresses listed in Park Rapids)

Hotel Address Phone Rooms Rates Occupancy Meeting Room (SF)

Cmon Inn AmericInn Rustic Inn Super 8 Riverside Point Resort Motel

1009 1st St E 1501 1st St E 607 1st St E 1020 1st St W 700 Park Ave N

(218) 732-1471 (800) 634-3444 (218) 237-2828 (218) 732-9704 (218) 732-9711

42 rooms 2 suites 41 rooms 11 rooms 62 rooms 9 cabins (3) motel-like (6) 2 br 4 guestrooms, each with queen beds Capacity of 150 throughout 23 cabins 100 person capacity throughout 18 cabins. No response - 3 attempts No response - 3 attempts 14 cabins with total capacity for 78 people 4 cabins with total capacity for 18 people 6 units: (2) 3 bedroom units. (3) 2 bedroom units 4 cabins. (1) 3 bedroom, & (3) 2 bedroom 10 cabins, (8) 2 bedroom, (1) 3 bedroom, (1) 4 bedroom 5 cabins with capacity for about 17

$109- $135 $105 (regular, weekday) $160 (suite, weekend) $60-$80 $80-$100 (weekends) $60-$160. Queen is $55-96 in summer $60-$130

80-90 % full in summer 90% full in summer, 50% in off-season 50-80% full in summer 20-30% in off-season 90% full in summer 20-30% in off-season 90% full in summer. Some availability during weekends. 90% in the summer, 30% in the off season. Undisclosed Significant repeat visitors. Undisclosed Undisclosed 80-90% full in summer 80% in summer. Significant repeat visitors. Undisclosed Undisclosed.

40 person capacity (<$100 /day) 20 person capacity None 15 person capacity None

Loon Song Bed & Breakfast Lake Itasca #27 Timberlane Lodge (Long Lake) Evergreen Lodge Family Resort Stovers Stop Inn Hilltop Inn (Hubbard) Loons Nest Resort (Fish Hook Lake) Northern Pine Lodge (Potato Lake) Pine Park Resort (Island Lake) Boulder Beach Resort Weigelwood Resort Kings Cottages 18454 Dayspring Dr 17838 Goldeneye Ln 14354 Chippewa Loop 12371 Co 6 19331 Eagle Pointe Trl # 1 14588 Northern Pine Road 26009 Co Rd 89 15424 Co 18 56698 310th St 608 North Park Ave

(218) 266-3333 (218) 732-8489 (218) 732-4766 (218) 732-8424 (218) 732-5644 (218) 732-3028 (218) 732-5103 218-732-4857 218-732-5376 (218) 732-4775 (218) 732-4526

$125-$150 /night $882 /week $763 - $3,300/week $100-$200/night $80-$220 /night. $750-$1545 /week $450-$650 /week $703-$1,366 /week Weeks are Sat.-Sat. $450-$650/week (3 br) $450-$490/week (2 br) Undisclosed $85-$120 /night $510-$720 /week

None None None None None For use by guests. None Undisclosed None

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SPACE PROGRAM

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chapter

SPACE PROGRAM
This chapter presents concepts for the reuse of the Armory building. Its purpose is to advance concepts from discussions with the property owner and potential users of the space. The chapters organization includes: Tenancy Possibility Auditorium Upper Annex Lower-Level Armory

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THE ARMORY STUDY

TENANCY
EchoPoint Development designed the reuse of the Armory and Annex building to be separated into 5 zones of occupancy, which can be independently operated and maintained. These spaces include

TEnAnT #1: RETAil SpAcE

The 1,3666 square foot space is occupied and leased by Summerhill on 2nd, a clothing retail store. The tenant has been in the space since May 2011.

TABLE 7.1: Armor y Building Re-Use Program

Net Building Area Square Feet

T1: Retail T2: Restaurant T3: Lower Level T4: Upper Annex T5: Auditorium T4/5: Common Area Total
Sources: EchoPoint Design & Development; Tinjum Appraisal Company Inc., 2011; RDG Planning & Design; Gruen Gruen + Associates.

1,366 3,944 5,024 2,400 8,329 1,720 21,063

Tenant #1: Retail Space (Lower Annex Building) Tenant #2: Restaurant Space (Lower Annex Building) Tenant #3: Lower Level Tenant #4: Upper-Annex (offices) Tenant #5: Auditorium Space (Main Level)
Basic rehabilitation of the building is complete for the five tenant spaces. Each zone of the building may now be completed and occupied separately as tenants and users are identified. This study considers the reuse of the Armory building (tenants 3, 4, and 5) to become a facility to serve as a regional community arts, education, and cultural center in downtown Park Rapids. Meanwhile, the Annex Building (tenants #1 Retail and #2 Restaurant) is near completion and full occupancy. The following is a brief overview of each tenant space and its possible use.

TEnAnT #2 RESTAURAnT SpAcE

The 3,944 square foot restaurant space is significantly complete. The building owner is recruiting potential tenants for the space for use as a restaurant. Furniture and equipment are required to complete the space. UPDATE: In Fall 2012, The tenant space welcomed a new Mexican restaurant. The Minnesota Department of Health has issued a Certificate of Occupancy and a plan review approval letter for construction of a full service restaurant and bar. State permit approvals for the kitchen layout and general design, plumbing, electrical, HVAC, and fire sprinkler system have all been issued. Work on the restaurant suite will soon be ready for equipment installation and fixturing.

TEnAnT #4: UppER-AnnEX SpAcE

Studio spaces range from 331 square feet to 760 square feet for a total of 2,400 square feet. Tenant possibilities include offices, studios for artisans, and common meeting room and equipment.

TEnAnT #5: AUDiTORiUM TEnAnT #3 LOWER lEvEl SpAcE

The lower-level of the Armory is about 5,024 square feet. Discussions with artisan groups and community members indicate interest in rehabilitating the space for visual arts. The space could be a combination of gallery, retail, storage, and offices. The 8,329 square foot auditorium is one downtowns largest covered open space. Discussions with participants in the planning process indicate a strong interest for the space to remain flexible, yet allow the space to be adaptable for performing arts, banquets, weddings, and other special events. The following pages explore the programming of the individual tenant spaces and the opinion of probable cost. The results are used for guiding future decisions and understanding the needs for rehabilitating the Armory as a Arts Center for the Park Rapids Region.

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Figure 6.1: Lower Level Tenant Spaces

Figure 6.2: Main and Upper Level Tenant Spaces

Tenant #1: Retail

Tenant #4: Upper Annex Offices

Tenant #2: Restaurant

Tenant #3: Lower Annex Visual Arts

Tenant #5: Auditorium Performing Arts & Events

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THE ARMORY STUDY

AUDITIORIUM
The Auditorium space has a floor area of approximately 6,800 square feet and a volume of approximately 157,000 cubic feet (BHH Partners). The tenancy is anticipated to be primarily used as an event space and for performing arts. The program presented in this study emerged through discussions with Northern Light Opera Company, the building owner, and members in the community.

west wall

east wall

SpAcE PROgRAM
Figure 6.3 identifies the program for the auditorium space, while Figures 6.4-6.9 illustrate various configurations of the space for special events This study suggests creating auditorium space separated by an entrance lobby. The lobby space is enclosed to control sound and access between the lobby and main auditorium. The enclosure creates a mezzanine above the lobby, overlooking the auditorium space. Retaining the openness of the auditorium allows for the space to be flexibly used. The space can be arranged to have the space setup for performances, banquets, weddings, exhibitions, black box theater, and other alterations. The concept for preparing an opinion for probable cost anticipates Northern Light Opera Company to be one of the principal tenants of the auditorium space. Northern Light Opera Company expected to relocate their performances from the high school to the Armory in downtown. This change will allow them to expand the number of performances each year to a space that provides them more flexibility and greater access. Stage equipment and chairs could be assembled or stored in the auditorium space. Figures 6.10-11 are illustrations of the possible design of the lobby and perfomance space.
56

OpiniOn Of PRObAblE COST

The opinion of probable costs do not include any contractor general conditions or fees, or escalation. Adding a design contingency of 5% to 10% is typical. The figures presented in this chapter are not bid numbers.

This recommendation should be implemented with the reuse of the space. The clear span of the auditorium is approximately 68 feet x 102 feet. The steel bowstring trusses are 206 on center. The height of the bottom chord of the truss is 20 feet above the auditorium floor. The center ridge line of the roof is 10 feet above the bottom chord, for a total interior height of 30 feet.

Flooring.

Taking the total square footage is 8,400. Assuming $15 per square foot, which could be a combination of light-weight concrete and carpeting or non-structural fibrous reinforcing material, then the flooring will cost $126,000. shades. Three windows ($800 per shade (10x10) /$300 installed): $3,300 for three 10x10 windows installed. cluded at this time.

Acoustical treatments. Acoustical treatments would consist of fixed wall panels on the flanking walls and rear wall. Quantities, densities, and shaping will need to be developed with Kvernstoen Ronnholm in later design phases. Moveable wall curtains may also be considered. Improvements may cost between $40,000 and $80,000.

Blackout

Electrical. A budget number was not prepared and is ex Truss System Improvements.
Ulteig Engineers reviewed the truss system in the Auditorium in 2010. The structural engineer designed lateral bracing to improve the loading capacity of the structure to withstand heavy snow.

Lobby and Mezzanine

The design assumes to be non-combustible construction, such as steel or concrete. The structural capacity of the floor requires further investigation, and may require additional footings to support the structure. The mezzanine space creates a platform for production support, including direction,

SPACE PROGRAM

CHApTER 6

Figure 6.3: Armor y Auditorium

lighting, and audio/video equipment. Access is limited to stairs only, so the space would not be available for all access. The opinion of probable cost includes mechanical, electrical and finishes, and is $220,000.
Senior Center

Conditioning the lobby space for HVAC system is $12-14

SF at 1,800 SF or about $21,000. The existing mechanical system could be used to reduce this amount. Outside air requirements would need to be reviewed with the new occupancy to determine if additional outside air is needed which could increase the cost.
Auditorium Space Lobby Access

Mezzanine includes a basic metal railing that meets current codes.

Utility

Includes new doors and hardware and basic finishes. Demolition and patching is projected to be about
$10,000.

Restrooms Mezzanine

Production Equipment - Tenant

Many of the elements can be installed incrementally, meaning that they do not have to be purchased at one time. However, the infrastructure and end result for the room should be planned from the beginning. Electrical installation is not included in the estimate.

Table 6.2: Auditorium & Common Area Estimate

Description Estimated Cost

Table 6.3: Lobby Estimate

Description Estimated Cost

Stage Lighting. Dimmers, lighting console, house light

control, and distribution devices for a complete theatrical lighting system of 96 circuits. A portable system could also be designed that would allow incremental purchasing of equipment to build up over time.

Mezzanine Lobby Auditorium Flooring Acoustical Treatments Blackout Shades Truss System Improvements/Insulation Common Area TOTAL
Source: RDG Planning & Design, Schuler Shook, 2012

$220,000 $44,600 $126,000 $40,000 80,000 $3,300 TBD 138,000 $433,900-$473,900

Ticket Booth Bar/Concession Lobby Benches (8) Lobby Hi Top Tables (6) HVAC ($12 /SF @ 1,800 SF) Total Lobby
Source: RDG Planning & Design, 2012

$4,000 $5,000 $8,000 $6,000 21,600 $44,600

Stage Lighting fixtures. The range in cost is indicative of

the quantity of fixtures as well as LED technology at the upper range of costs.

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THE ARMORY STUDY

Armory Photos - Entrance and Auditorium

4
1: View of Armory Building from Park Avenue. 2: View looking into the Armory from Park Avenue entrance. 3: View looking towards Park Avenue in entryway stairs. 4: View looking into auditorium space, facing west. 5: View of auditorium space from the west wall. 6: View of the enclosed spaces along east wall.

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SPACE PROGRAM

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Stage rigging. On the low-end, there would just be some

fixed pipes and a front curtain with backdrop. On the high end, a motorized front lighting pipe would be included, more curtains, travelers, and retractable backdrop.

partitions, accessories, and some demo/patching work. For budgeting purposes, the figure is slightly high. However, it may come down as the scope is better defined.
1

Table 6.4: Produc tion Equipment Estimates

Description Estimated Cost

Wall Panels. The

proscenium wall panels could range from fixed curtain panels to hard faced wall panels on a track that could slide into place; they could be wood veneer like the rendering or a painted finish.

Each restroom is projected to be $15,000. However, that figure excludes plumbing. Each bathroom fixture is $2,500 (or $7,500 per room) and wall and floor finishes are $7,500.

Stage Lighting Dimming & Control System Stage Lighting Fixtures & Accessories Stage Rigging & Curtains Proscenium wall panels/system Front of house rigging accommodations & lighting positions Telescopic Seating System Stage Platforms Loose Chairs for Audience Seating & Storage Carts Portable Marley stage dance floor Portable wood tile dance floor Musician chairs (60) Music stands w/ lights (40) Conductor riser, chair and music stand Projection Screen Podium Backstage Equipment/Lift Audio System Video System Auditorium Decorative Lighting TOTAL
Source: Shuler Shook, 2012

$104,000 $30,000 - 135,000 $35,000 - 115,000 $5,000 22,000 $40,000 $84,000 $40,000. 60,000 $92,000 $9,000 $10,000 $6,000 $5,000 $2,500 $16,000 $7,500 $25,000 $90,000 $30,000 $30,000 $661,000 - 883,000

Three of the current walls are brick and plaster construction. The current back wall has plaster on lath. The hefty wall materials on three walls benefit musical sound by providing good support for low frequency reverberation. Some of this wall surface would not be exposed when the new support spaces are constructed. The exposed vaulted ceiling deck has wood boards with 12 purlins. There are large bow trusses supporting the ceiling. The current ceiling configuration provides beneficial sound diffusion. The focal point of the curved ceiling is well below the floor level of the space and the curve is slight enough that we would not expect sound focusing from the curved surface to be an issue.

Bathroom Fixture: $2,500 Base Tile: $1,300 ($10 LF x 131 LF) Floor Tile: $3,700 ($10 SF X 370 SF) Wall Tile: None Paint: $2,500 No mirrors, toilet accessories, etc.
Senior Center Connection
The potential reuse of the senior center was not included in the original scope of the study, yet the armory shares walls with the facility. The senior center has limited use and would benefit from remodeling. A possible scenario is for the Senior Center to relocate to one of the office spaces in the armory, allowing for the Armory to expand its programming into the Senior Center. The reuse of the Senior Center would provide Northern Light Opera Company (and other performing arts groups) convenient space to design and construct sets, dedicated space for dressing rooms and off-stage preparation.

Common Area
The build out of the restroom, janitorial space, and halls are around $138,000 ($80 SF x 1,720 SF). This cost includes interior finishes, plumbing (assuming that connections are in the general vicinity), HVAC, sprinklers, electrical, toilet

Additional Expenses: Demolition and Hazardous Materials Abatement Dressing Room & Green Room Furnishings Structural Accommodations for Rigging Tables and art display walls Control Room and Follow Spot Locations Orchestra shell Electrical installation

59

THE ARMORY STUDY

Figure 6.4: End Stage with Lec ture Seating (428 seats)
Senior Center

Schuler Shook, 2012

60

SPACE PROGRAM

CHApTER 6

Figure 6.5: End Stage (304 seats)

Senior Center

Schuler Shook, 2012

61

THE ARMORY STUDY

Figure 6.6: Banquet/ Wedding Seating with Plat form (300 seats)
Senior Center

Schuler Shook, 2012

62

SPACE PROGRAM

CHApTER 6

Figure 6.7: Cabaret Seating (260 seats)

Senior Center

Schuler Shook, 2012

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THE ARMORY STUDY

Figure 6.8: Central Plat form (296 seats)

Senior Center

Schuler Shook, 2012

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SPACE PROGRAM

CHApTER 6

Figure 6.9: Exhibit Floor

Senior Center

Schuler Shook, 2012

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THE ARMORY STUDY

Figure 6.10: Rendering of Per formance Space, staged for a presentation.

RDG Planning & Design, 2012

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CHApTER 6

Figure 6.11: Lobby, Ticket Sales and Concessions

RDG Planning & Design, 2012

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THE ARMORY STUDY

LOwER LEVEL ARMORY

The lower-level of the Armory has a floor area of approximately 6,000 square feet. The concept for this study suggests limited new construction for the space. The program presented in this study emerged through discussions with Nemeth Arts Museum, Blank Canvas, the building owner, and other artisans in the community. The tenancy is anticipated to be primarily used by the Nemeth Arts Museum, retail space for visual arts, and offices/ classroom space by the arts community. Blank Canvas could have a second location.

Space Program
Figure 6.13 on page 61 presents a possible model for the lower-level of the Armory. The space is serviceable by elevator and stairs from the main entrance on Park Avenue. Access is also available by a stairwell west wall and through the restaurant. The proposed use of the lower-level of the armory is described as follows:

Gallery. The concept for the space is to remain open and

flexible. A series of short walls could be constructed to display art from the Nemeth Arts Collection. Moveable walls could be incorporated to improve the flexibility of the space. Improvements to the lower-level are intended to be simple with the art and lighting defining the character of the space.

Gallery Storage. The former gun range could be used for

storage. Improvements to the space could be limited to conditioning the space to protect the art collection.

5
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CHApTER 6

Figure 6.12: Lower-Level Visual Ar ts Program

Doors to restaurant Main Entrance Stairs Elevator

Permanent Collection

Rotating Collection

Offices/Classroom Space

Possible Storage

Security doors shut during closed hours, allowing access to the bathrooms.

Stairs

Restrooms open for events in upstairs

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THE ARMORY STUDY

Retail. The retail space expands the existing storage space

to create retail space for the arts community. The concept of including retail in the lower-level originated from Blank Canvas Art Gallery having a second location.

Opinion of Probable Costs

The opinion of probable costs do not include any contractor general conditions or fees, or escalation. Adding a design contingency of 5% to 10% is typical. The figures presented are not bid numbers, and are intended for projecting a range of costs for development.

Gallery. A significant proportion of the interior improvements for the lower-level gallery is attributed to mechanical, electrical, and plumbing (MEP). Despite the finishes in the gallery likely being minimal, a $80 a square foot is being used to accommodate a high-level of finish. The gallery program is in total about 5,000 sf, leaving a budget of $400,000. The budget is generous due to any unknowns and includes a contingency in the estimated $/sf cost.

Reception Desk.

The reception desk is placed to greet visitors to the gallery. The concept is for the space to be simple and uncluttered.

Vault. The vault could be used for storing valuable items

in the collection and supplies.

Office Space. The office space can be used for administration by the curator or designed to be used for classroom instruction. The program in Figure x.x illustrates a computer lab for graphic design.

Restrooms.

Having the restrooms in the lower-level are critical to meeting the fixture requirements (building code) for hosting events in the auditorium. A stairway can be constructed along the south wall to improve access. The placement of the restrooms align with the restrooms on the main level, creating an efficiency and use of plumbing. The adjacent restaurant could provide catering service to special events held in the gallery. The final configuration of the lower-level should consider the access and circulation of carting food into the gallery space.

Table 6.5: Lower Level, Opinion of Probable Cost

Description Estimated Cost

Bemis Arts Center/unknown source

Restrooms.

Each restroom is projected to be $15,000. Fixtures represent half of the cost, while the remaining $7,500 is for wall and floor finishes. This figure excludes plumbing.

Bemis Arts Center/unknown source

Corridor.

The corridor space can be designed allow patrons attending activities on the upper-level to view the art collection, while the main gallery spaces are secured. Doors could be placed in hallways to limit access to areas.

Gallery Restrooms Elevator, emergency lighting, fire doors, basic HVAC, and polished concrete Stairs
Source: RDG Planning & Design, EchoPoint Development

$400,000 $30,000 $130,000 $750,000

Gallery space at Bemis Arts Center in Omaha. Source: Bemis Arts Center

Annex Restaurant.

70

Figure 6.13: Lower-Level Lobby Space

Bemis Arts Center/unknown source

Bemis Arts Center/unknown source

SPACE PROGRAM

CHApTER 6

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THE ARMORY STUDY

UPPER ANNEX
The upper-level of the annex building has been significantly rehabilitated. The spaces have been cleared, insulated, and conditioned. The spaces present a significant level of flexibility for a variety of users.

Common Meeting Room.

Space Program
Target tenants could be arts-related or civic-oriented to coincide with the reuse of the reuse of the Armory as an Arts Center. The organizational structure of the buildings ownership will influence the civic or private nature of the tenancy in the space. Office uses will typically pay market rate rents, whereas non-profit organizations may not. Possible uses include:

Two of the smaller meeting rooms could be combined to provide a common meeting room. The space could be reserved by community members, but priority given to tenants of the Armory. The room could be adapted in the future to provide distance learning for area colleges and universities, or offering a location for remote conferencing. Seating in the space should be flexible to allow tables and chairs to be setup as a classroom or conference table. The current Senior Center could be incorporated into the overall development program of the Armory, allowing it to be used as auxiliary space for performing arts and production. One of the office spaces would be an adequate comparable to the Senior Centers existing space, while establishing a bond between the arts community and senior services. cation overlooking 2nd Street and activity in downtown. The space could be marketed to an existing business in the Park Rapids region looking for a more modern space. Office uses can often pay rent at market rate where artsrelated and civic-oriented groups are not able.

Opinion of Probable Cost

Adapting the rooms for various uses does not influence the cost significantly. The envelope of the spaces are complete, with future improvements including flooring, walls, electrical, and lighting. Tenants should provide furniture and support equipment. Table 6.6 identifies the base-level improvements by the building owner, while tenant improvements include furniture, fixtures, and equipment (FFE). Base-level of improvements at $70/SF for 3,550 square feet (2,600 SF in office and 1,150 SF in common space) is about $248,500. Tenants should anticipate about $6,000 to $15,000 for FFE. The common meeting room FFE is expected to be $9,000 with presentation wall.

Senior Center Room.

Artisan Cooperative Studio. Civic Offices.

One or multiple spaces could be converted to an artisan studio that could be dedicated to multiple artists. One of the rooms could be dedicated to civic organizations supporting the Positively Park Rapids initiative, including Main Street and PRLAAC. Multiple groups could share the space and equipment.

Office spaces. The spaces provide an appealing central lo-

Table 6.6: Of f ice/Studio Spaces

Description Estimated Cost

Walls/Flooring/Electrical/Lighting Furniture, Fixtures, and Equipment (tenant) Total

Source: RDG Planning & Design, 2012

$248,500 $6K-$15K $251-260,000

1
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CHApTER 6

Figure 6.14: Upper Annex

Access to 2nd Avenue

Demonstration for office layout and small conference.

Private studio(s) or potential classroom for arts program.

SENIOR CENTER (Image 1) (Image 2) (Image 3)

Possible Access

Senior Center incorporated into the Armory building program

Alternative: Storage space with access to meeting room.

Access to Auditorium

Access to Park Avenue

Opposite Page, images1-3: View of individual office/studio spaces. The middle space was finished in 2012. 73

THE ARMORY STUDY

Figure 6.15: Upper Annex

Awning structure to define the entrance.

The rendering illustrates minimal improvements to the buildings facade. Possiible improvements include:

Light tube

Awning. A new awning will emphasize the main entrance

to the building.

Art Installation. Replacing the flag pole with a light tube

Interchangeable banners exhibiting upcoming performances.

wrapped with art will attract the attention of motorists traveling along Highway 71. Anticipated cost is $50,000.

Banners. Interchangeable banners could project from the

side of the building and identify upcoming events and performances.
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CHApTER 7

chapter

COST ANALYSIS
-

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THE ARMORY STUDY

INTRODUCTION
This section presents a business and financing plan for the Armory Square development and presents a feasible alternative for realizing the vision for the building. This discussion, prepared by RDG and Gruen, Gruen + Associates (GG+A), presents base proformas for the project, establishes initial assumptions, considers strategic options, and presents an overall program for realizing the concept presented in Chapter Six. It also addresses the nature of community benefits that may result from occupancy and operation of the project. To complete this assignment, the consultant team interviewed the current owner-developer about the project, operating and leasing activities to date, future plans, anticipated occupancy, and the existing equity and debt capital structure. Consultant team staff also spoke with representatives of local banking institutions, City and County assessors, and potential tenants. This research assembled information about operating costs, property taxes and financing alternatives and terms, market demand possibilities, and the types of tenancies that Armory Square could attract, the markets they would serve, and sustainable rent levels. The chapter begins with a base case that defines basic assumptions and demonstrates many of the challenges faced by a financing program. It continues by presents a preferred scenario that demonstrates the funding needs of the project, its ability to support some level of debt, and its ability to sustain itself as it begins operations.

OVERALL OBJECTIVES
The objectives of this analysis and the eventual financing plan that it proposes are to: 1. Identify a program for capital development that is within the means of the community of Park Rapids and the surrounding region. 2. Demonstrate whether a project consistent with the vision presented earlier in this document can sustain itself economically an contribute economically to the community without requiring ongoing public subsidy. 3. Rationalize financing of the project and create a framework for avoiding loss and providing a reasonable return to the current owner-developer of the Armory whose purchase and subsequent investment of the building has saved this important civic landmark.

TABLE 7.1: Armor y Building Re-Use Program

Net Building Area Square Feet Cost to Complete $ Total

T1: Retail T2: Restaurant T3: Lower Level T4: Upper Annex T5: Auditorium Total

1,366 3,944 5,024 2,400 8,329 21,063

0 0 160,000 150,000 200,000 510,000

Sources: EchoPoint Design & Development; Tinjum Appraisal Company Inc., 2011; RDG Planning & Design; Gruen Gruen + Associates.

very basic level of tenant finish. It also assumes that available funds are adequate to complete the restaurant space, now under construction in the annex and a portion of the lower level of the Armory space. Table 7.2 lists the current debt obligations that the Armory Square project has undertaken. The project is currently capitalized at about $2.1 million, of which $616,000 represents debt held by six public or nonprofit community development agencies. These loans range from a very-short term note that will mature in 2013 if not refinanced to longer term, 15-year instruments with deferred interest in earlier parts of the term. Table 7.3 identifies revenue assumptions for commercial development, primarily in the Annex, based on existing rents and the Park Rapids market. Leasable space generally realizes about $12 per square foot, excluding utilities. Currently, the primary retail space in the Annex is occupied, and a restaurant is scheduled to open in the remaining space by the end of 2012.

A BASIC SCENARIO
TESTING AND DEFINING THE PROBLEM
Tables 7.1 through 7.5 present the assumptions used during this base case analysis and the subsequent financing and development concept presented later in this chapter. Table 7.1 illustrates the reuse program used in the base case analysis. This program is very basic, and includes no provision for special equipment, lighting, and other construction appropriate to a contemporary flexible theater or art museum. It is sufficient to elevate the space in the Armory to a basic state of public use. The concept also includes conversion of the second level of the Annex to office occupancy. This program anticipates upgrading of the 21,000 square feet of leasable space at an average cost of $25 per square foot, a

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CHApTER 7

TABLE 7.2: Existing Debt Ser vice Obligations 1

Principal Payments $ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 2 Year 7 Year 8 Year 9 Year 10 Remaining Balance After Year 10 Interest Payments $ Debt Service $

11,900 96,600 23,500 24,600 25,700 37,500 37,100 39,100 41,200 43,500 385,000

19,200 18,400 16,600 15,500 14,400 31,200 29,300 27,300 25,100 22,900

31,100 115,100 40,100 40,100 40,100 68,700 66,400 66,400 66,400 66,400

Table 7.4 presents a revenue assumption for nonprofit visual and performing arts occupants within the Armory space itself. At present, these arts groups use facilities at nominal cost. The Nemeth Gallery, for example, occupies free, if relatively inaccessible space on the second level of the historic Hubbard County Courthouse. The Northern Lights Opera Company, another principal prospective tenant, utilizes the Park Rapids High School auditorium for its annual production. The base model projects a nominal occupancy cost of $2 per square foot for these community arts-related spaces. Table 7.5 illustrates operating and maintenance costs for the project in year three of the proforma. Utility expenses will depend to a large degree upon the frequency of space utilization and the energy consumption characteristics of different tenants and activities. Basic janitorial and maintenance costs will also depend largely upon the frequency and intensity of not only day-to-day use but also special events, exhibits, and performances. These estimates also used secondary operating expense data from the U.S. Department of Energys Commercial Building Energy Consumption Survey, International Facility Management Association benchmarking data, and the Urban Land Institutes Dollars & Cents of Shopping Centers publication. Interviews with the City and County Assessors and reviewed property tax data for other Downtown properties were used to develop expense assumptions related to property taxes. Total maintenance costs are projected at slightly over $4 per square foot, about twice the basic occupancy cost identified in Table 7.4 for arts organizations. It is important to note this overall cost is subject to adjustment. For example, if all or part of the Armory is publicly owned, the tax component of O&M projections is eliminated. Because the projections call for commercial occupants to pay their own utilities,
77

1 Figures are rounded. Year 1 begins in July 2012. Does not include debt service obligations associated with the City of Park Rapids Economic Development Authority loan of $150,000. All property tax increment generated by the project is pledged as collateral against the loan and will be utilized to retire the loan. 2 Beginning in Year 6, the Midwest Minnesota Community Development Corporations $300,000 preferred equity investment in the project will rollover into a permanent loan that will be amortized on a 15 year schedule. Sources: EchoPoint Design & Development; Gruen Gruen + Associates.

Table 7.3: Income Parameters of Commercial Components

T1: Retail Base Annual Rent Per Square Foot Occupancy: T2: Restaurant T4: Office

$11.87 + utilities 100% 100% 100% 10% every 5 years

$13.18 + utilities 50%1 100% 100% 10% every 5 years

$12.00 Gross 50% 100% 100% None assumed

Year 1 Year 2 Year 3+

Rent Escalation

1 We assume a 6-month concession will be required to secure a restaurant. Thus, the space will be generating income for only 6 months of the first year. Sources: EchoPoint Design & Development; Gruen Gruen + Associates.

THE ARMORY STUDY

Table 7.4: Income Parameters of Community Ar ts Components

Art Galleries and Studios Base Annual Rent Per Square Foot Occupancy: Multi-Purpose Space Events/ Performances (Auditorium)

$2 0% 100% 100% None assumed

$2 0% 100% 100% None assumed

the project does not generate sufficient funds to repay the current ownerships investment or to provide a return on that investment. Under this scenario, net operating income ranges from approximately $15,000 to $24,000, accumulating over ten years to about $220,000. The proforma assumes continuation of existing debt service payments and securing of a new loan to complete the basic level of rehabilitation anticipated here. The analysis indicates that expected revenue falls far short of debt service requirements. Principal and interest payments range from $31,100 in the first year to a peak of $113,200 in the sixth year and $110,800 in the subsequent years for total debt service costs of $1,001,000 over this 10-year period. Prior to the hypothetical sale of the project, deficits after debt service range from $7,000 in the first year to $124,000 in the second year (caused by a large balloon payment on a shortterm loan), stabilizing in the range of $61,800 to $89,900 in subsequent years. The accumulated cash deficits over the 10 year period is estimated at $721,000. These shortfalls would require substantial community and charitable subsidy, and would not generate the capital necessary to take out existing ownership without a large additional fund-raising effort. Overall, under these assumptions, it appears that the project accumulates an unsustainably large deficit. It is important to note as well that this assumes a very basic level of rehabilitation that produces marginal space for its visual and performing arts tenants. This base scenario assumes a low rental rate for the use of the very basic Armory space for cultural and arts related tenants. Additional substantial construction costs would be incurred to develop a facility that meets the standards proposed earlier in this study.

Year 1 Year 2 Year 3+

Rent Escalation
Sources: Gruen Gruen + Associates.

Table 7.5: Operating Expense Parameters Year 3

Operating Expenses $ Per Gross Square Foot Utilities
1

Operating Expenses $ Total

1.42 1.29 0.59 0.26 0.52 4.07

33,900 30,900 14,100 6,200 12,500 97,500

Taxes and Assessments Maintenance/Repair & Janitorial Insurance Other Total

2

1 Retail and restaurant tenants assumed to be responsible for their own utility expenses. 2 General property administration and management costs, reserves for capital replacement, etc. Sources: EchoPoint Design & Development; U.S. Department of Energys Commercial Building Energy Consumption Survey; International Facility Management Association; Urban Land Institute; Hubbard County Assessor; Park Rapids City Assessor; Gruen Gruen + Associates.

these costs are also shifted away from building obligations. On the other hand, all costs for non-revenue common areas must be borne either by the building owner or through common area maintenance charges.

Table 7.6 illustrates a base level cash flow analysis based on these specific assumption. It also assumes purchase of the current ownership interest of the project within the first ten years of operation. Under this base case forecast, projecting a $2/square foot occupancy cost for nonprofit organizations,

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TABLE 7.6: Annual Cash Flow (Base Case), $2 SF in Gross Rent

Year 1 $ Net Operating Income: Annex Income Operating Expenses Net Operating Income Armory Income Operating Expenses Net Operating Income NET OPERATING INCOME1 TIF Revenue:2 Additional Increment Available Debt Service:
3

Year 2 $

Year 3 $

Year 4 $

Year 5 $

Year 6 $

Year 7 $

Year 8 $

Year 9 $

Year 10 $

Total $

55,800 (14,700) 41,100 (16,700) (16,700) 24,400

93,600 (22,600) 71,000 26,700 (62,300) (35,600) 35,400

93,600 (27,100) 66,500 26,700 (70,400) (43,700) 22,800

93,600 (27,600) 66,000 26,700 (71,800) (45,100) 20,900

93,600 (28,200) 65,400 26,700 (73,200) (46,500) 18,900

100,100 (28,800) 71,300 26,700 (74,700) (48,000) 23,300

100,100 (29,300) 70,800 26,700 (76,200) (49,500) 21,300

100,100 (29,900) 70,200 26,700 (77,700) (51,000) 19,200

100,100 (30,500) 69,600 26,700 (79,300) (52,600) 17,000

100,100 (31,100) 69,000 26,700 (80,900) (54,200) 14,800

930,700 (269,800) 660,900 240,300 (683,200) (442,900) 218,000

(11,900) (19,200) (31,100) (6,700)

(110,500) (49,000) (159,500) (124,100)

(38,200) (46,400) (84,600) (61,800)

(40,200) (44,400) (84,600) (63,700)

(42,200) (42,300) (84,500) (65,600)

(55,000) (58,200) (113,200) (89,900)

(55,600) (55,200) (110,800) (89,500)

11,800 (58,800) (52,100) (110,900) (79,900)

25,100 (62,100) (48,800) (110,900) (68,800)

25,100 (65,600) (45,300) (110,900) (71,000)

62,000 (540,100) (460,900) (1,001,000) (721,000)

Principal Interest Total NET CASH FLOW Property Sale Proceeds: Sale Value Principal Repayment Net Sales Take Out TOTAL CASH FLOW
4

(6,700)

(124,100)

(61,800)

(63,700)

(65,600)

(89,900)

(89,500)

(79,900)

(68,800)

144,300 (735,400) (591,900) (662,100)

144,300 (735,400) (591,900) (2,502,100) 4

1 Operating expenses are assumed to grow at two percent per annum. Based on Armory space annual gross rent of $2 per square foot, which is not assumed to escalate over time. 2 All tax increment revenue in Years 1-7 will be utilized to retire the City of Park Rapids EDA loan of $150,000. Debt service related to this loan is not included here. 3 Debt service related to project completion assumed to begin in Year 2. We assume a 20-year amortization schedule at an annual interest rate of 6 percent. 4 Total cash flow includes an assumed sale of the property at a 10 percent capitalization rate and repayment of all debt at end of Year 10. The developer-owner initial equity investment ($1.19 million) is also included in the total. Source: Gruen Gruen + Associates

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AlTERnATivE FOREcAST ScEnARiO

Table 7.7 shows an alternative forecast scenario that uses most of the assumptions of the base scenario but uses a $12/square foot revenue yield for the Armory space as well. In this scenario, net operating income ranges from $24,400 in the first year to a peak of $168,900 in the second year and over the 10 year forecast period generates approximately $1,420,000. Net cash flow substantially improves to a total of $480,500, ranging from a low of a loss of $6,700 in the first year to a high of $71,700 in the third year. This scenario does generate sufficient capital to buy out current ownership interest and investment, albeit without a significant return on equity.

would need to generate about $2,500,000 or a present value of $2 million, assuming a discount rate of five percent. This also assumes that the developer-owner will forego a return on equity. 2. The resulting space still does not meet state of the art standards that would warrant this high level of regional support. To achieve that level, a major capital campaign would also have to be undertaken. However, these initial projections show that the commercial space (retail, restaurant, and office space) in the Annex is self-sustaining from an operating point of view without significant additional capital contributions. The forecast net operating income of approximately $65,000 to $71,000 per year starting in the second year is appears sufficient to cover: (1) the additional construction costs associated with preparing the Annex space on the second floor for occupancy; (2) existing debt service obligations for the entire project; and (3) almost all of the future debt service costs associated with the Midwest Minnesota Community Development Corporations $300,000 preferred equity investment and additional loans needed to complete the project. As stated above, the primary prospective user groups who have expressed interest in relocating to the Armory collectively currently pay less than $15,000 annually to use their

current facilities. Both our interviews and review of operating statements suggest these prospective tenants do not presently have the financial capability to pay rent that will be sufficient to operate and maintain the main Armory building. The alternative forecast scenario suggests that unless rent or equivalent financial contributions will approximate $12.00 per square foot per year, the developer-owner would be financially better off to not rehabilitate the main building in the Armory, to not assume additional debt attributable to the rehabilitation, and to minimize operating costs in order to wring out whatever income could be generated from the building in its present condition. Therefore, the key question on which to focus the subsequent planning and adaptive reuse efforts is whether the arts and cultural organizations may be able to either afford to pay more rent or obtain more charitable and other contributions towards the costs of adapting and operating the main building in the Armory for their functions because of benefits of co-locating their organizations that accrue to both the organizations and to the community. The key challenge is whether it is possible to marshal resources reasonably within reach of the Park Rapids region to create a sustainable and practical method of achieving the vision of an iconic community arts center.

IMplicATiOnS DRAWn fROM FOREcASTS

It is clear that although its financial performance is better than the base case, the alternative scenario is also unfeasible. Specifically: 1. The scenario requires local arts groups to raise significant funds annually to occupy space. A theater company or operating authority occupying the upper level of the Armory would have to raise about $100,000 annually, simply to occupy the space. This may well be beyond the capacity of local arts groups to raise solely to support a building envelope. Over a 10-year period, fundraising for building operation

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TABLE 7.7: Annual Cash Flow(Alternative Scenario), $12 SF in Gross Rent

Year 1 $ Net Operating Income: Annex Income Operating Expenses Net Operating Income Armory Income Operating Expenses Net Operating Income NET OPERATING INCOME TIF Revenue:2 Additional Increment Available Debt Service:
3 1

Year 2 $

Year 3 $

Year 4 $

Year 5 $

Year 6 $

Year 7 $

Year 8 $

Year 9 $

Year 10 $

Total $

55,800 (14,700) 41,100 (16,700) (16,700) 24,400

93,600 (22,600) 71,000 160,200 (62,300) 97,900 168,900

93,600 (27,100) 66,500 160,200 (70,400) 89,800 156,300

93,600 (27,600) 66,000 160,200 (71,800) 88,400 154,400

93,600 (28,200) 65,400 160,200 (73,200) 87,000 152,400

100,100 (28,800) 71,300 160,200 (74,700) 85,500 156,800

100,100 (29,300) 70,800 160,200 (76,200) 84,000 154,800

100,100 (29,900) 70,200 160,200 (77,700) 82,500 152,700

100,100 (30,500) 69,600 160,200 (79,300) 80,900 150,500

100,100 (31,100) 69,000 160,200 (80,900) 79,300 148,300

930,700 (269,800) 660,900 1,441,800 (683,200) 758,600 1,419,500

(11,900) (19,200) (31,100) (6,700)

(110,500) (49,000) (159,500) 9,400

(38,200) (46,400) (84,600) 71,700

(40,200) (44,400) (84,600) 69,800

(42,200) (42,300) (84,500) 67,900

(55,000) (58,200) (113,200) 43,600

(55,600) (55,200) (110,800) 44,000

11,800 (58,800) (52,100) (110,900) 53,600

25,100 (62,100) (48,800) (110,900) 64,700

25,100 (65,600) (45,300) (110,900) 62,500

62,000 (540,100) (460,900) (1,001,000) 480,500

Principal Interest Total NET CASH FLOW Property Sale Proceeds: Sale Value Principal Repayment Net Sales Take Out TOTAL CASH FLOW
4

(6,700)

9,400

71,700

69,800

67,900

43,600

44,000

53,600

64,700

1,445,900 (735,400) 710,500 773,000

1,445,900 (735,400) 710,500 1,000 4

1 Operating expenses are assumed to grow at two percent per annum. Based on Armory space annual gross rent of $12 per square foot, which is not assumed to escalate over time. 2 All tax increment revenue in Years 1-7 will be utilized to retire the City of Park Rapids EDA loan of $150,000. Debt service related to this loan is not included here. 3 Debt service related to project completion assumed to begin in Year 2. We assume a 20-year amortization schedule at an annual interest rate of 6 percent. 4 Total cash flow includes an assumed sale of the property at a 10 percent capitalization rate and repayment of all debt at end of Year 10. The developer-owner initial equity investment ($1.19 million) is also included in the total. Source: Gruen Gruen + Associates

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STRATEgic AlTERnATivES
In evaluating policy alternatives, there are two major variables at play: 1. Who develops and ultimately owns or manages Armory Square, and 2. Within the concept of a mixed use facility with an arts and events character, to what level of finish is the project developed. These variables have a major impact on how much the final project costs and what kind of financing is available. We can define four strategic options:

Base Private Concept

This option maintains the building in private ownership and provides a minimum level of adaptation for the Armory building itself. It is most similar to the base case analysis presented previously in this chapter.
Characteristics

Public Arts Center

This option is most similar to the complete vision for a public arts center presented in Chapter Six. Public or nonprofit ownership opens a number of financing opportunities not available to a private developer. Characteristics

Building remains in private ownership. Nonprofit or public ownership of entire facility, with buyout of private ownership. Possibility of public ownership Main Armory Space: Base finish level as private hall, with
incremental enhancements as market emerges. Catering is done by Armory Squares restaurant.

with long-term lease to a nonprofit or operating authority Armory Space: Flexible multi-use auditorium, adaptable to theater seating in different configurations and convertible for event set-up, with an concentration on single-day events; NLOC as a probable anchor tenant. with appropriate curatorial standards, retail art-related sales, storage and museum support.

Base Private Concept Public Arts Center Condominum Ownership Split Onwership

Main

Lower Armory Space: Base warehouse level for events,

art workshops and classes.

Street Annex Level: Existing retail and restaurants. Upper Annex Level: FFE retrofit for office suites.
Financing Options

Lower Armory Space: Relocated Nemeth Art Museum

Street Annex Level: Existing retail and restaurants Existing loans/obligations remain in place. Upper Annex Level: Office suites or art studios with pub Continued use of tax increment financing use. lic visibility and out-of-studio sales. Gap or wraparound loan, using USDA Business and In- Financing Options
dustry loan guarantee; typical loan terms are currently 5%, 20 year amortization. future.

Local option sales tax, with revenue bonds retired by tax

proceeds.

Private equity remains in the project for the foreseeable USDA Community Facility Loan may be used if part of
project is spun off to a public agency or nonprofit community development corporation.

Private and charitable foundation fund-raising campaign. USDA Community Facilities loan, available on a low-interest, long-term basis.

State bonding authority for public facilities.

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COST ANALYSIS

CHApTER 7

Condominium Ownership
This option envisions private development of Armory Square with a condominium regime by which arts organizations buy their individual spaces. Ultimately, it results in private ownership of commercial spaces and nonprofit or community ownership of space used by arts organizations. Characteristics

Gap or wraparound loan, using USDA Business and Industry loan guarantee; typical loan terms are currently 5%, 20 year amortization.

Financing Options

Local option sales tax, with revenue bonds retired by tax

proceeds.

Split Ownership
This concept divides ownership in the property, with the Annex continuing in existing private ownership and the Armory section of the building transferred to community or nonprofit ownership. Characteristics

Private and charitable foundation fund-raising campaign. USDA Community Facilities loan, available on a low-interest, long-term basis.

Overall private development and initial ownership with

arts organizations or the community owning specific areas through a condominium regime. Purchase price of space is determined by developers previous investment in these specific spaces.

Gap or wraparound loan, using USDA Business and Industry loan guarantee; typical loan terms are currently 5%, 20 year amortization. This would be used to take out the six existing loan obligations.

Annex remains in private ownership, Armory in community or nonprofit ownership, analogous to a subdivision split.

RECOMMENDATION: SPLIT OWNERSHIP

An analysis of the operational and financial performance of various options leads to the conclusion that the split ownership option leads to the most desirable final outcome: a productive private commercial development in the annex and a completely developed community arts center for the Nemeth collection, traveling shows, and the performing arts in the Armory area. Because a portion of the Armorys lower level has been developed for private commercial restaurant use, the ownership split should reflect this use. The subsequent analysis examines the financial performance and assumptions of this option, which has the following features.

Main

Armory Space: Flexible multi-use auditorium, adaptable to theater seating in different configurations and convertible for event set-up, with an concentration on single-day events; NLOC as a probable anchor tenant. art workshops and classes, museum with limited finish levels. Could be upgraded to museum standards.

Main

Lower Armory Space: Base warehouse level for events, Street Annex Level: Existing retail and restaurants, with
continued private ownership and management.

Armory Space: Flexible multi-use auditorium, adaptable to theater seating in different configurations and convertible for event set-up, with an concentration on single-day events; NLOC as a probable anchor tenant. er, with purchase price based on existing proportionate and direct investment in the Armory space.

Armory space is purchased from existing owner-develop Lower Armory Space: Relocated Nemeth Art Museum
with appropriate curatorial standards, retail art-related sales, storage and museum support.

Upper Annex Level: FFE retrofit for office suites with

continued private ownership and management. Financing Options

Local option sales tax, with revenue bonds retired by tax

proceeds.

Street Annex Level: Existing retail and restaurants Upper Annex Level: FFE retrofit for office suites Possible phased approach with base finish level of public
spaces as a first stage to a major fund-raising effort to upgrade to higher standards.

Phasing
Completing the ultimate project for the community arts side of Armory Square will require a significant private fund-raising campaign and a public financing instrument. In the short-term, it is advisable to start to build public exposure to the Armory and the possibilities that it presents for the community. Therefore, the recommended concept suggests consideration of a two-phased approach. In phase one, the
83

Private and charitable foundation fund-raising campaign. USDA Community Facilities loan, available on a low-interest, long-term basis.

THE ARMORY STUDY

Armory main and lower floors are finished to a basic level that invites certain kinds of public use, such as events, exhibitions, trade shows, and similar activities that can take place within a relatively generic envelope. In the meantime, the public and private financing components would be put in place that allows for conversion of the basic space to the quality performance and visual arts environment anticipated in Chapter Six. The initial conversion of the Armory space can be financed through mechanisms readily available to the city or a nonprofit community owner.

complete the private side of Armory Square; and the other refinancing exiting debt into one combined USDA guaranteed loan. The second option seems to offer significant cash flow advantages over keeping existing loans in place. Loan terms for the USDA guaranteed loans are assumed at 5% for a 20-year term.

ASSUMPTIONS AND FINANCIAL ANALYSIS

Tables 7.8 through 7.19 display the assumptions used in this analysis:

Table 7.8 and 7.9 show the estimated project cost for the
interim and final projects.

USDA Community Facilities Loans.

Transfer of Title
Title to the Armory space would transfer to a public or nonprofit owner at the beginning of the development process. This creates a distinct, non-commercial property that becomes eligible for a USDA Community Facilities loan and public financing. The limited nature of the program does not permit takeout of previous private investment in the space, which would be carried over as a deferred mortgage note. This note would be paid in full when financing for the complete facility conversion was in place, with a specific commitment to complete payment within a specific maximum period.

These loans for noncommercial facilities currently provide 3.3% financing for a 40-year term. These highly preferential terms apply to public projects, and are a significant part of the financing for the Armory side of the development. The interim project would utilize this loan financing, which would be increased with the second phase completion of the armory arts center. Rapids has experienced significant growth in taxable sales, and these can be utilized on a limited basis. State statute permits a local option sales tax for special purposes up to a maximum of 1/2%. This financing source may be appropriately be used for this facility of major regional importance. To gain maximum public support, an LOST should be used for a specific purpose for a specific time, and should not use the ful capacity for any one project. Therefore, the assumption used here is based on a 1/4% LOST for a ten-year period. This generates $250,000 annually given Park Rapids current taxable sales of about $100 million. constituency from all-year and seasonal residents in the overall region. Seasonal residents have an enormous identification with Park Rapids and a strong interest in seeing the city prosper, both from a personal and civic point of view.

Tables 7.10 and 7.11 review the sources of funds assumed

for both the interim and final stages.

Tables 7.12 and 7.13 present the basis for revenue projections in the proformas.

Table 7.14 displays the operating cost assumptions used

in the analysis.

Revenue bonds through a local option sales tax (LOST). Park

Tables 7.15 and 7.16 show a ten-year cash flow analysis

for the interim project, providing basic improvement of the Armory spaces. This assumes that the Nemeth collection would move to basic, properly conditioned space, even without the completed environment. However, the phased concept envisions completing the ultimate community arts center project before that period expires.

Tables 7.17 and 7.18 presents a ten-year cash flow analysis

for the completed project, including finishing and equipping the Armorys main level as a flexible performing arts/ event space and the lower level as a permanent home for the Nemeth collection as well as other related arts uses.

Project Financing
Financing of the interim and final projects proposes considering the following sources of funds:

USDA Business and Industry Loan Guarantees. The second Private fund-raising. This project has a significant regional
floor office development of the annex requires additional financing, and the overall Armory Square project has six outstanding debt instruments. The financial analysis examines two debt service alternatives: one that uses existing loans plus an additional USDA or other private loan to

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CHApTER 7

Table 7.8: Cost Assumptions: Interim Armor y Square Development

Component Cost Assumption

Table 7.9: Cost Assumptions: Final Armor y Square Development

Component Cost Assumption

Private Office Retrofit Total Private Owner Takeout Main Level Renovation Lower Level Renovation Fees and Testing (10%) Contingency (10%) Endowment Total Interim Arts/Events Center Cost
Source: RDG Planning & Design, 2012

$150,000 $150,000 Deferred $350,000 150,000 50,000 50,000 Deferred $600,000

Private Office Retrofit Total Private Owner Takeout Main Level Renovation (Theater) Lower Level Renovation Fees and Testing (8%) Contingency (10%) Endowment Total Interim Arts/Events Center Cost
Source: RDG Planning & Design, 2012

$150,000 $150,000 $965,863 1,208,000 753,600 234,197 292,746 500,000 $3,954,406

Table 7.10: Sources of Funds: Interim Armor y Square Development

Source Amount Comments

USDA Business and Industry Guaranteed Loan Total Additional Private Obligation USDA Community Facilities Loan Local Fundraising or City of Park Rapids Short-Term Note Total Additional Community Obligation
Source: RDG Planning & Design, 2012

$150,000 $150,000 $450,000 150,000 $600,000

5%, 20 year to complete office conversion in annex 3.3%, 40 year

Table 7.11: Sources of Funds: Final Armor y Square Development

Source Amount Comments

USDA Business and Industry Guaranteed Loan Total Additional Private Funding USDA Community Facilities Loan Fundraising Campaign Revenue bonds Total Community Funding
Source: RDG Planning & Design, 2012

$756,000 $150,000 $1,000,000 1,000,000 $1,950,000 $3,950,000

5%, 20 year to complete office conversion in annex; assumes refinancing of existing loans into new USDA loan. Incremental debt to complete 3.3%, 40 year Includes operating endowment 5%, 10-year bond repaid by 1/4% local option sales tax with 10-year sunset Includes funding for interim stage. Total additional funding to complete is $3.354 million.

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THE ARMORY STUDY

REVENUE PROJECTIONS
The revenue projections provided by Tables 7.12 and 7.13 are generally based on patterns of use of event facilities in the Park Rapids region. The projections also make certain assumptions, including:

Table 7.12: Armor y Space Revenue Projec tions: Interim Armor y Square Development
Total Attendance or Area Occupancy Revenue Museum Theater/Event Space Event Revenue NLOC Productions Traveling Shows Concert Events Day events (weddings, banquets) Multi-day events (trade shows) Museum visitation Retail sales Total Projected Revenue
Source: RDG Planning & Design, 2012, EchoPoint Development

Fee/Unit

Total Revenue Comments

The ability of the Nemeth Museum and NLOC (alone or

in concert with other users) to support a $4/square foot occupancy cost for finished space. This is roughly equivalent to a break-even rate on occupancy. Nemeths cost during the interim phase would be reduced to $2/SF. Approximately 40 to 50 percent of the Nemeth Art Centers operating income is derived from grants. A museum representative indicated that moving to the Armory was likely to improve its ability to secure State and Federal grants, although these grants would not be sufficient to justify rent on a new exhibit space. Seasonal summer visitors with summer homes in the area are a major source of patronage. A location at the Armory would represent an improvement providing more visibility and foot traffic, and properly conditioned exhibition and storage space would vastly improve curatorial standards. The Director of the Nemeth indicated a willingness to develop a planning and fund-raising campaign to support a move to what would be a preferred location and facility over the current venue.

6,250 SF 8,500 SF 0 1,200 600 10 8 5,000 $75,000

$2/SF 0 $2/seat $2/seat $2/seat $500 $2,000 $2/ticket 10% charge

$12,500 0 0 $2,400 6 dates $1,200 4 dates $5,000 $16,000 8 2-day events $10,000 $7,500 $54,600

A $2 seat charge, to be incorporated into ticket prices for

NLOC, traveling productions, and concerts, as well as a $2 admission charge for visitors to the Nemeth devoted exclusively to building occupancy. trade shows) in its interim phase. These uses are likely to

be reduced with increasing performance activities.

A 2% increase in annual revenues every two years during

mature operation.

The ability of NLOC to increase its number of produc- Higher use of the building for multi-day events (such as
tion to 12 dates, from its current level of six. Ideally, this would increase to 24 (or four shows) in the future in a new facility.

Rents for annex spaces are identified in Table 7.3.

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COST ANALYSIS

CHApTER 7

Table 7.13: Revenue Projec tions: Final Armor y Square Development

Total Attendance or Area Occupancy Revenue Museum Theater/Event Space Event Revenue NLOC Productions Traveling Shows Concert Events Day events (weddings, banquets) Multi-day events (trade shows) Museum visitation Retail sales Total Projected Revenue Fee/Unit Total Revenue Comments

OPERATING COSTS
Operating costs, displayed in Table 7.14, are based on the cost estimates indicated in the base case analysis. These estimates assume that base operating costs of $4.07/square foot are modified to reflect payment of utilities by private tenants and tax exempt status for space owned by a public or nonprofit organization. Common area costs are fully allocated and are either covered by building cash flow or distributed proportionately to the private tenants they serve through common area maintenance fees.

6,250 SF 8,500 SF 3,600 3,000 3,000 20 2 10,000 $150,000

$4/SF $4/SF $2/seat $2/seat $2/seat $500 $2,000 $2/ticket 10% charge

$25,000 $34,000 $7,200 12 dates $6,000 10 dates $6,000 10 dates $10,000 $4,000 2 2-day events $20,000 $15,000 $127,200

Table 7.14: Operational Cost for Various Spaces

Space Assignable Commercial Space Common Space Total Commercial Arts Space Area (SF) Cost/SF Total Comments

7,564 2,521

2.65 4.07

$20,044 Excludes utilities $10,261 75% efficiency $30,305

14,750

2.78

$41,005 Tax exempt

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THE ARMORY STUDY

CASH FLOW ANALYSIS

The subsequent pages present cash flow analysis tables for both the interim (Tables 7.15 and 7.16) and final (Tables 7.17 and 7.18) development of Armory Square. The annex performs identically under both scenarios, because its development is completed under both conditions. Two financing alternatives are presented for the annex. If existing financing remains in place and a USDA guaranteed loan finances the balance needed to complete the office conversion of the second floor, the building approximately breaks even, displaying a cumulative cash flow of $16,000. The building should be completed to final standards within a 10-year maximum period. As such, the interim scenario assumes a payment of about $966,000 to the current owner within ten years, whether or not the building converts to its final state. This price is based on information supplied by the owner, and represents actual investment according to this information, without an additional return. It is advantageous to refinance all existing debt with a new USDA guaranteed loan, reducing cumulative ten-year debt service by about $120,000 because of the longer term and lack of balloon payments. This generates a net cumulative

cash flow of about $100,000, not including the building buyout. This represents an approximate return on investment in the range of 10%. The interim concept for the Armory runs a relatively small annual deficit, based on the projections included in this chapter. This produces a cumulative deficit over ten years of about $127,000, or an average loss of about $12,700 per year. This could be made up in a number of ways, including public sector support or additional private fund-raising. Without major additional fund-raising, purchase of the Armory portion of the building is deferred. On the other hand, the final development of the Armory appears to be self-supporting, with the infusion of adequate capital at the front end. Debt service of a $1 million USDA Community Facilities loan, together with charitable and pubic sector funding, generates cumulative cash flow of slightly less than $320,000. Building takeout costs are not included here, because purchase of the Armory side of the Square would be funded by the initial financial package. Cumulative cash flow may be sufficient to provide the owner with a modest return on investment. Of course, all building costs and investments should be verified before closing.

The study concludes that the best implementation strategy for Armory Square, then, involves: 1. A bifurcated fee simple title to Armory Square, with building area committed to commercial use owned privately; and space devoted to public or arts center uses owned by the city, county, another public agency, or a tax-exempt organization or operating agency. 2. Refinancing existing private debt devoted to the project with a USDA Business and Industry loan guarantee, with debt service supported by the rents from the Annex and the portion of the Armory used by the restaurant. 3. An interim utilization for the Armory portion should be undertaken to establish public use and access to the building while a larger financing package is being assembled. The city or benefited agencies should fund these modest shortfalls during this period. 4. When funding is assembled as proposed here, the building should be upgraded to its final standards with a lump sum payment made to the owner based on existing investment in the building purchase, sitework, and building rehabilitation.

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COST ANALYSIS

CHApTER 7

TABLE 7.15: Annex Cash Flow Analysis: Interim Armor y Square Development, Split Ownership
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

$
Annex Income Operating Expenses Net Operating Income TIF Revenue: 2 Additional Increment Available Debt Service: 3 Existing Principal Existing Interest Existing Total Obligation New Debt Service to Finish Total Debt Service (Existing + New to Finish) Total Debt Service (Wraparound USDA Guarantee) Net Cash Flow (Existing) New Cash Flow (USDA takeout) Property Sale Proceeds: Armory % of Site and Envelope Net Sales Take Out Total Cash Flow (Existing) Total Cash Flow (USDA takeout)

$ 94,499 -22,729 71,770

$ 94,499 -30,305 64,194

$ 96,389 -30,912 65,478

$ 96,389 -28,200 68,189

$ 98,317 -28,800 69,517

$ 98,317 -29,300 69,017

$ 100,284 -29,900 70,384

$ 100,284 -30,500 69,784

$ 102,289 -31,100 71,189

$ 928,519 -276,899 651,620

47,250 -15,153 32,097

11,800

25,100

25,100

62,000

-11,900 -19,200 -31,100 -12,895 -43,995 -60,683 -11,898 -28,586

-96,600 -18,400 -115,000 -12,895 -127,895 -60,683 -56,125 11,087

-23,500 -16,600 -40,100 -12,895 -52,995 -60,683 11,199 3,511

-24,600 -15,500 -40,100 -12,895 -52,995 -60,683 12,483 4,795

-25,700 -14,400 -40,100 -12,895 -52,995 -60,683 15,194 7,506

-37,500 -31,200 -68,700 -12,895 -81,595 -60,683 -12,078 8,834

-37,100 -29,300 -66,400 -12,895 -79,295 -60,683 -10,278 8,334

-39,100 -27,300 -66,400 -12,895 -79,295 -60,683 2,889 21,501

-41,200 -25,200 -66,400 -12,895 -79,295 -60,683 15,589 34,201

-43,500 -22,900 -66,400 -12,895 -79,295 -60,683 16,994 35,606

-380,700 -220,000 -600,700 -128,950 -729,650 -606,830 -16,030 106,790

-11,898 (28,586)

0 0 -56,125 11,087

0 0 11,199 3,511

0 0 12,483 4,795

0 0 15,194 7,506

0 0 -12,078 8,834

0 0 -10,278 8,334

0 0 2,889 21,501

0 0 15,589 34,201 965,863 982,857 1,001,469

0 965,863 949,832 1,072,652

1 Operating expenses are assumed to grow at two percent per annum. Based on split ownership of the spaces. 2 All tax increment revenue in Years 1-7 will be utilized to retire the City of Park Rapids EDA loan of $150,000. Debt service related to this loan is not included here. 3 Debt service related to project completion assumed to begin in Year 2. We assume a 20-year amortization schedule at an annual interest rate of 6 percent. 4 Total cash flow includes an assumed sale of the property at a 10 percent capitalization rate and repayment of all debt at end of Year 10. The developer-owner initial equity investment ($1.19 million) is also included in the total. Source: RDG Planning & Design, Gruen Gruen + Associates

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THE ARMORY STUDY

TABLE 7.16: Armor y Cash Flow Analysis: Interim Armor y Square Development
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

$
Armory Income Operating Expenses Net Operating Income Net Operating Income 1 TIF Revenue: 2 Additional Increment Available Debt Service: 3 FHA Community Facilities Existing Interest Existing Total Obligation New Debt Service to Finish Net Cash Flow

$ 40,950 -41,825 -875 -875

$ 54,600 -42,662 11,938 11,938

$ 55,692 -43,515 12,177 12,177

$ 55,692 -44,385 11,307 11,307

$ 56,806 -45,273 11,533 11,533

$ 56,806 -46,178 10,628 10,628

$ 57,942 -47,102 10,840 10,840

$ 57,942 -48,044 9,898 9,898

$ 59,101 -49,005 10,096 10,096

$ 0 522,830 -448,993 73,837 73,837

27,300 -41,005 -13,705 -13,705

-20,085

-20,085

-20,085

-20,085

-20,085

-20,085

-20,085

-20,085

-20,085

-20,085

-200,850

-33,790

-20,960

-8,147

-7,908

-8,778

-8,552

-9,457

-9,245

-10,187

-9,989

-127,013

1 Operating expenses are assumed to grow at two percent per annum. Based on split ownership of the property 2 Excludes use of Tax Increment Financing. 3 Debt service related to project completion assumed to begin in Year 2. We assume a 20-year amortization schedule at an annual interest rate of 6 percent. Source: Gruen Gruen + Associates

90

COST ANALYSIS

CHApTER 7

TABLE 7.17: Annex Cash Flow Analysis: Interim Armor y Square Development
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

$
Annex Income Operating Expenses Net Operating Income TIF Revenue: 2 Additional Increment Available Debt Service: 3 Existing Principal Existing Interest Existing Total Obligation New Debt Service to Finish Total Debt Service (Existing + New to Finish) Total Debt Service (Wraparound USDA Guarantee) Net Cash Flow (Existing) New Cash Flow (USDAWrap) Property Sale Proceeds: Armory % of Site and Envelope Net Sales Take Out Total Cash Flow (Existing) Total Cash Flow (USDA takeout)

$ 94,499 -22,729 71,770

$ 94,499 -30,305 64,194

$ 96,389 -30,912 65,478

$ 96,389 -28,200 68,189

$ 98,317 -28,800 69,517

$ 98,317 -29,300 69,017

$ 100,284 -29,900 70,384

$ 100,284 -30,500 69,784

$ 102,289 -31,100 71,189

$ 928,519 -276,899 651,620

47,250 -15,153 32,097

11,800

25,100

25,100

62,000

-11,900 -19,200 -31,100 -12,895 -43,995 -60,683 -11,898 -28,586

-96,600 -18,400 -115,000 -12,895 -127,895 -60,683 -56,125 11,087

-23,500 -16,600 -40,100 -12,895 -52,995 -60,683 11,199 3,511

-24,600 -15,500 -40,100 -12,895 -52,995 -60,683 12,483 4,795

-25,700 -14,400 -40,100 -12,895 -52,995 -60,683 15,194 7,506

-37,500 -31,200 -68,700 -12,895 -81,595 -60,683 -12,078 8,834

-37,100 -29,300 -66,400 -12,895 -79,295 -60,683 -10,278 8,334

-39,100 -27,300 -66,400 -12,895 -79,295 -60,683 2,889 21,501

-41,200 -25,200 -66,400 -12,895 -79,295 -60,683 15,589 34,201

-43,500 -22,900 -66,400 -12,895 -79,295 -60,683 16,994 35,606

-380,700 -220,000 -600,700 -128,950 -729,650 -606,830 -16,030 106,790

965,863 965,863 953,965 937,277

0 0 -56,125 11,087

0 0 11,199 3,511

0 0 12,483 4,795

0 0 15,194 7,506

0 0 -12,078 8,834

0 0 -10,278 8,334

0 0 2,889 21,501

0 0 15,589 34,201

0 0 16,994 35,606

965,863 965,863 949,833 1,072,653

1 Operating expenses are assumed to grow at two percent per annum. Based on split ownership of the Armory Building. 2 All tax increment revenue in Years 1-7 will be utilized to retire the City of Park Rapids EDA loan of $150,000. Debt service related to this loan is not included here. 3 Debt service related to project completion assumed to begin in Year 2. We assume a 20-year amortization schedule at an annual interest rate of 6 percent. 4 Total cash flow includes an assumed sale of the property at a 10 percent capitalization rate and repayment of all debt at end of Year 10. The developer-owner initial equity investment ($1.19 million) is also included in the total. Source: Gruen Gruen + Associates

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THE ARMORY STUDY

TABLE 7.18 Armor y Cash Flow Analysis: Final Armor y Square Development
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

$
Armory Income Operating Expenses Net Operating Income Net Operating Income TIF Revenue: 2 Additional Increment Available Debt Service: 3 FHA Community Facilities Existing Interest Existing Total Obligation New Debt Service to Finish Net Cash Flow
1

$ 95,400 -41,825 53,575 53,575

$ 127,200 -42,662 84,538 84,538

$ 129,744 -43,515 86,229 86,229

$ 129,744 -44,385 85,359 85,359

$ 132,339 -45,273 87,066 87,066

$ 132,339 -46,178 86,161 86,161

$ 134,986 -47,102 87,884 87,884

$ 134,986 -48,044 86,942 86,942

$ 137,685 -49,005 88,681 88,681

$ 0 1,218,022 -448,993 769,029 769,029

63600 -41,005 22,595 22,595

-45,058

-45,058

-45,058

-45,058

-45,058

-45,058

-45,058

-45,058

-45,058

-45,058

-450,580

-22,463

8,517

39,480

41,171

40,301

42,008

41,103

42,826

41,884

43,623

318,449

Table 7.19: Estimated Annual Economic Impac t: Final Armor y Square Development
Event/Organization NLOC Productions Traveling Shows Concert Events Day Events Multi-Day Events Museum Visits Art/Retail Sales Total Direct Spending Multiplier Potential Economic Impact
92

Existing Dates/Projected Dates

Existing Attendance

Projected Attendance

Incremental Attendance

Per Capita Impact

Total Estimated Impact

6/12 0/12 6/12 0/20 0/2 NA NA 2.5

1,800 0 900 0 0 1,000 0

3,600 3,000 3,000 4,000 400 10,000 1,000 SF

1,800 3,000 2,100 4,000 400 9,000 NA

$50 $75 $50 $100 $200 $25 $150/SF

$90,000 225,000 105,000 400,000 80,000 225,000 150,000 1,250,000 2.5 3,125,000

COST ANALYSIS

CHApTER 7

ECONOMIC IMPACTS The Nature of Clustering, Spillover and Community Benefits from Co-location
Completing the Armory Square project will require close cooperation among the owner, the City, and user organizations and the overall arts community. However, we believe that the project will have substantial qualitative and quantitative rewards to the community, making this type of cooperative effort highly worthwhile. A well-programmed and marketed arts center, complemented by an adjacent restaurant expected to operate from the facility, can be expected to generate greater particles of attraction than would each individual art organization on their own in isolated locations. The clustering of complementary activities may encourage more frequent local and regional visitation, which in turn generates spillover benefits to nearby commercial uses while helping to signal the Downtown as a location for cultural activities. A consolidation of existing arts-related uses and activities would permit the linking and leveraging of arts and cultural resources through cobranding and joint marketing opportunities so that the type and scale of programming and activities offered can be increased over time. Such an expansion would enhance visitation to the Downtown as a whole. An aggregation of cultural activities can be expected to derive benefits from co-locating just like commercial uses benefit from clustering. For example, the more restaurants present in a concentrated area, the more different or specialized types of restaurants permit a better fit between divergent tastes of consumers and the kinds of restaurants available; and greater numbers of differing types of restaurants usually result in better restaurants because they can both specialize and respond to competition from other nearby restau-

rants. Park Rapids neighboring community of Dorset demonstrates this phenomenon in a rural setting. In addition, strong retail agglomerations or localized depth of restaurants provide consumers with insurance that if one restaurant is full, they can find others with openings. A clustering of cultural and arts activities often increases the feasibility of securing on-site vendors to provide beverage and/or food service during performances and events that currently is not available as a revenue source and service amenity to patrons. A location Downtown in the Armory could provide an opportunity for the simulcast of Metropolitan Opera or other performances to increase revenue-generating utilization of space not obtainable in other venues such as the Park Rapids High School at which the Northern Lights Opera Company currently performs. It would also be worthwhile to investigate whether Northwest Technical College, Itasca Community College, and/or Bemidji State University would be willing to establish distance learning or other shared classroom or studio space at the Armory.

With that disclaimer, it is important to provide a reasonable assessment of economic impact so that the community can weigh potential business benefits against commitments to the project. Fortunately, Armory Square involves a relatively modest investment, in the range of a public obligation in the range of $2 million, readily financable by techniques that will have limited impact on the individual taxpayer. Table 7.19 displays an estimate of potential direct spending and total economic impact. The analysis makes the following assumptions:

Attendees at NLOC productions and concerts will spend

an average of $50 in the community. Some of course will spend much less, others coming to town from the wider region might well spend more.

Traveling shows are assumed to generate $75 per attendee.

The higher figure is attributed to broader regional draw and money spent by performers in the production itself.

Day events, including weddings, banquets, and similar

events generate an average of $100 per participant. Multiday events, including trade shows and exhibitions, generate higher spending per person because of likely overnight stays.

QUANTIFYING IMPACTS PRELIMINARY ASSESSMENT

Predicting the actual economic impact of a facility is a tricky proposition because so many variables are at play: the administration and marketing of the facility itself, the strength of its external environment, the outside economy and its impact on overall consumer spending, and many others. Promoters of projects have often exaggerated positive impacts or taken extremely rosy perspectives, only to have reality impinge after the project is completed and loans and bonds that depended on an optimistic prospectus have to be repaid.

Museum visitors generate about $25 in local spending

and the museums art retail store is assumed to produce $150/SF, a relatively modest figure compared to a more normal retail standard between $300 and $350/SF.

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Based on these assumptions, Armory Squares visual and performing arts facilities would generate about $1.25 million in incremental direct spending annually. Using a 2.5 multiplier, this adds about $3.125 million to the local economy each year. Even if these estimates are grossly overstated (which we doubt), the project pays for itself in community economic growth in less than five years.

Of these options, the separated condominium alternative (Option 1) is least attractive. It lacks unified responsibility or management for the Armory space, and does not realize the synergies of joint fund raising. The nonprofit arts consortium (Option 2) is the preferred alternative for several reasons:

ORGANIZATIONAL CApAciTY AnD REqUiREMEnTS

The development concept for Armory Square assumes public or nonprofit ownership and management of the Armorys visual and performing arts spaces. Alternative management concepts include:

It avoids direct governmental ownership or responsibility

for the space, and the various political problems that such ownership could entail, yet retains the ability to qualify for USDA Community Facilities loans.

It could use the structure of an existing organization, such

as PRLAAC, with capacity expansion to include the ability to manage the Armory space. This in turn would solidify the relationships between the citys various arts groups, and provide a mechanism to maximize use of the facility.

The CDC option (Option 4) is a valid interim measure while the new management entity is established. The new Park Rapids Community Development Corporation could operate as an incubator to complete and manage the interim conversion of Armory Square. The CDC provides shortterm building development and management expertise that could be transferred to the arts consortium with the final financing package is assembled. In addition, the PRCDC was both organized by Armory Squares owner-developer (EchoPoint Development ) and has been certified as eligible for application for a USDA Community Facilities grant. This could provide unified management of both sides of the Armory Square enterprise at a critical time in the projects history. It is vital that there be proper separation of accounts for the private and public sides of the project during this interim period. Public ownership of the facility is a possible last resort while nonprofit capacity is developed, but is not a recommended option. A public agency would need to dedicate staff to building management, and could encounter a number of issues in helping to bring about a transition to nonprofit management or occupancy.

Option 1: City or County ownership.

In this scenario, the underlying property would be owned publicly and leased to either individual organizations (such as the Nemeth and NLOC) or to a common operating agency. to the two primary organizations, assuming that these are Nemeth and NLOC.

It can, and should, be the framework for a joint arts funding campaign. This can increase efficiency and provide access to larger funding sources, such as corporate foundations, increasing the overall pool of money available to the community. On the other hand, it does involve some challenges that must be addressed. Among these include developing an equitable distribution system; and maintaining the identity of smaller arts groups. However, because the building should be seen as a unified community facility, its support and management should also be unified.

Option 2: Separated condominium ownership of spaces Option 3: Ownership by cooperative partnership or nonprofit corporation that may be created by the two primary occupants.

Option 4: Ownership by a nonprofit community development corporation, with leases to the primary tenants.

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CHApTER 8

chapter

ARTS & CULTURAL CORRIDOR

t

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This study presents an update of the 2008 Downtown Plan with the following development strategies, and are represented in Maps 8.1 and 8.2. 1. Armory Square. The redevelopment of the armory becomes a fulcrum for improvements along the 2nd Avenue Corridor. A series of cultural icons are present along the corridor, including:

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The City of Park Rapids launched the implementation of their downtown plan with two of the more challenging projects: redeveloping Main Avenue and brokering the development of the J&B Foods grocery store. The results of those projects have further stabilized downtown and introduced new businesses and restaurants to the district. Since the Main Avenue Redevelopment Project, downtown businesses have mobilized themselves by creating a business association with a strong volunteer base and fundraising capacity, called Positively Park Rapids.

crossing the street. The shift in the sidewalk allows the pedestrian to make eye contact with the motorists, thereby alerting the motorist of the pedestrians presence. Bollards in the median and other alerting devices (blinking pedestrian signals) could be placed nearby. 4. 2nd Street Parking. Converting 2nd Street from parallel to angle parking from Washington to Gilbert will increase the amount of available parking stalls from 55 to 95. This requires reconstructing the block from 40 wide street to 60. The replacement should coincide with the reconstruction of sidewalk, curb, gutter, and replacement of the water main between Washington and Gilbert. Anticipated cost prepared by Ulteig Engineering (1/24/2010) is $322,000. 5. Parking Lot. The former school has been renovated for affordable apartments. The northwest corner of the lot should be redeveloped as a public parking lot that can be shared by residences and businesses. The lot could be constructed by the City in partnership with the church and nearby apartment buildings. 6. Development Site. The school apartments should continue to be upgraded, while the northside of the block could be redeveloped with new multi-family housing. 7. Urban Grocery. Identified as an action item from the 2008 Downtown Plan, the grocery store was built as a private/public partnership. Its development represents Park Rapids continued economic development activity. 8. CityHouses. The lots on the 200 block between Gilbert and Washington Streets are distressed, and are candidates for redevelopment. The development concept presents semi-attached, small lot single-family housing. This development would provide higher density development near the downtown. 9. New single-family (3 units). The redevelopment of this block could include single-family housing or continue the CityHouses concept that was previously mentioned.

1st Street (Highway 34)

2nd Street

Turntable on 2nd Street Alignment at Heartland Trail

10. Relocated Parking. The current efficiency of the banks parking lot could be improved by redesigning the parking to the east side of the block to align with the existing parking. 11. Roundtable Garden and Monument. The Great Northern Railway once passed through Park Rapids, then later became the Heartland Trail. The roundabout is a bookend to the Arts/Cultural District, as well as an interpretative monument to the turntable that once at this location. 12. Development Project. The site should be developed for commercial or multi-family development. The building setback should be similar to adjacent properties and parking should connect with neighboring developments, as well. 13. Heartland Trail Extension. Extending the trail past 2nd Street to J&B Foods was part of the 2008 Master Plan. The trail should connect with the emerging 2nd Street Cultural Corridor and to J&B Foods. Both of these connections promote economic activity on the eastern fringe of downtown and become pathways to the Main Avenue business district.

Armory (1922) City Water Tower Downtown City Fire Station (1930) Carnegie Library (1904), now a museum Park Rapids City School (1927, 1938, 1956) Great Northern Railway (1891)
2. Armory Loading Dock. Reserving a drive aisle adjacent to the armory building allows for convenient loading and unloading of equipment for special events. Accomplishing this will require acquisition and demolition the adjacent building, constructing a dock near the alley, and repaving the surface lot. 3. Protected Crossing Median. A mid-block crossing along Park Avenue provides a refuge for pedestrians when

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CHApTER 8

Map 8.1: Updated Vicinity Master Plan

1st Street (Highway 34)

Washington Ave

Main Avenue

10 9 11
Gilbert Ave

Park Ave

1 2

4 5

2nd Street

12

3rd Street

13
4th Street

Riverside Ave

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Map 8.2: Update 2012 Downtown Development Concept

Fish Hook River

Highway 34/1st Street Pleasant Ave Court Ave

Main Ave

Park Ave 2nd Street

Proposed Hotel/Event Center

3rd Street

4th Street

5th Street Main Ave 6th Street 7th Street 8th Street

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