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Scottsdale Arts financial partnership agreement now before City Council

Photo of Scottsdale Museum of Contemporary Art
The Scottsdale Museum of Contemporary Art is a keystone attraction at Civic Center Plaza for local patrons of the arts in “The West’s Most Western Town.” (Photo by Arianna Grainey/
By Terrance Thornton | Digital Free Press

Scottsdale City Council Tuesday, June 21 will consider a $6 million contract with Scottsdale Arts — a public-private partnership in existence since 1987 and vital textile to the fabric of the community, proponents say.

“For 35 years, the nonprofit now known as Scottsdale Arts (formerly Scottsdale Cultural Council) has served as the principal organization managing arts and cultural activities as well as operating certain city-owned facilities and art programs for the city of Scottsdale,” said Karen Churchard, Scottsdale Tourism & Events Director, in her report to City Council.

“In addition, Scottsdale Arts promotes the city’s arts and cultural interests at the local, regional, state, and federal levels. The City Council approved a new five-year Management Services Agreement No. 2020-046-COS in November 2020.”

Scottsdale City Council will consider resolution No. 12486 — a financial participation agreement in the amount of $6,060,314 — Tuesday, June 21 at City Hall, 3939 N. Drinkwater Blvd., a part of the local governing board’s consent agenda.

City officials have constructed a revenue benchmark agreement Scottsdale Arts to ensure return on taxpayer investment, Mr. Churchard outlines in her report.

“Monitored by the city’s contract administrator through annual performance measures, programming updates and financial reports, the agreement ensures that city funds are used for the program of work as presented in the annual operation plan and report,” she explained. “Annually, the City Council must approve the allocation for the city’s financial participation for Scottsdale Arts, subject to the terms of the management services agreement.”

The management services agreement boils down to revenue benchmarks, records show. The MSA requires Scottsdale Arts increase its revenue to match $2 in both earned and contributed revenue for every $1 of unrestricted funds received from the city, Ms. Churchard says of a basic tenet of the Arts financial participation agreement.

“The goal should help decrease reliance on city funding and increase reliance on outside funding to 67% of total revenue by the end of the agreement term,” she said. “The management services fee is unrestricted and required to be matched; however, restricted funds such as for arts education, public art, conservation and grant funds do not need to be matched.”

Numbers show 40.6% of the Scottsdale Arts operating budget are taxpayer funds. The city of Scottsdale receives 30% of net revenues from events held at the Civic Center Plaza, which is set to debut anew in the first few months of 2023.

Dr. Gerd Wuestemann, Scottsdale Arts president & CEO, says he knows acutely the need for accountability in all professional matters, especially those involving taxpayer dollars.

“Every year, we work with city staff on the new fiscal year’s financial package,” he said.

“This is part of our accountability to the city and the community. We submit a number of metrics and reports, and some extensive narrative as to how we have fulfilled our contractual obligations. I am happy to report that city staff and council are very happy with the work Scottsdale Arts has done.”

The proof is in the pudding when it comes meeting expectations, Mr. Wuestemann contends.

“We have provided proven value and engagement on all aspects of cultural life and have, through our close partnership with the city, supported such projects as the new Civic Center,” he said.

“Canal Convergence was a huge success in 2021, drawing nearly 300,000 people, and will be even bigger for its 10th anniversary this year. The city has recently tasked us with a full, city-wide cultural assessment and the creation of a city-wide arts & culture web calendar. Lastly, additional funding was included in the package to allow us to restore hallmark public art pieces such as the ‘LOVE’ sculpture, the ‘YEARLINGS’ and the ‘WINDOWS’ to the ‘WEST’ to perfect condition before reinstalling them at Civic Center for its reopening.”

Scottsdale Arts management fee

The management service fee — a benchmarked stipulation of the financial participation agreement — of $5,259,314 represents a 3% increase year-over-year for unrestricted General Fund dollars, Ms. Churchard reports.

“Additionally, in the city’s FY 2022-23 adopted operating budget, a one-time $68,532 allocation for Civic Center public art restoration will be utilized by Scottsdale Arts and reimbursed by the city as the public art pieces are refurbished,” she explained of the change in the balance sheet presented to City Council.

“As such, the $68,532 allocation is not included in the FPA. Based on past City Council direction, staff incorporated into the FPA Special Revenue funding in the amount of $801,000 for Canal Convergence, Scottsdale Philharmonic, and supplemental funding for the Community Arts Grants program for a total management services fee of $6,060,314.”

City officials report, if City Council approves later this month, the payment schedule will be as follows:

• The General Fund portion of $5,259,314 is paid over a nine-month period from July 2022 to March 2023. The first payment (July) is a double payment, the second payment (August) is one and a half payment, and the final payment (March) is a half payment.

• The Special Programs Fund — Community Arts Trust portion of $51,000 will be a one-time payment in July 2022.

• The Tourism Development Fund portion of $750,000 is paid over a four-month period from July 2022 through October 2022.

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