February 14, 2001

To: The County Board of Arlington County, Virginia

From: Ron Carlee, Acting County Manager

Issues: None

Background: The County Board entered into a 10-year Lease with Landlord dated February 5, 1997 for approximately 7,840 square feet of space in Rosslyn Plaza C, 1601 North Kent Street, for the County’s use of the space as a theatre for the performing arts between the hours of 6 p.m. and 2 a.m. Monday through Saturday and from 12 noon Sunday to 2 a.m. Monday. Under the Lease, the County may also use the space for receptions, meetings, and similar events held by the County, or by others under supervision of, or contract with the County, and may use the space during other hours with approval of the Landlord’s Conference Center Manager. The County has one 5-year renewal option.

The Landlord retained the right to use the space for a Conference Center outside the above hours, and contracted with Marriott to manage the Conference Center. The Landlord terminated the management contract with Marriott in the summer of 1998.

The County paid 30% of the theatre space build-out cost ($250,000), primarily with funds from the Rosslyn Fund. The Landlord paid the remainder of the build-out cost.

The First Amendment to the Lease grants the County 24-hour a day, every day of the week, use of the Theater space during the remainder of the lease term for the presentation of performing arts events and for receptions, meetings and similar events held by the County or others under supervision, contract or permission of the County, subject to the rights of another tenant at 1601 Kent Street to use the Theater space a minimum of 125 hours a year described below. The First Amendment also grants the County the right to place a sign at the County’s expense on the existing sign pylon at the corner of Wilson Boulevard and Kent Street to announce current attractions.

The First Amendment increases the rent from $50,000 ($6.38 per square foot) to $70,000 ($8.93 per square foot) annually for the remainder of the first 5 years of the lease term and from $55,000 ($7.02 per square foot) to $75,000 ($9.57 per square foot) for the second 5 years of the lease term. In addition to the increase in the rent, the First Amendment requires the County to pay the cost of utilities and custodial services to clean the Theater space (estimated annual costs are $20,000).

Income received by the County from others for events held in the Theater space in excess of $40,000 annually will be split 50-50 between the County and the Landlord. The first $40,000 of income belongs fully to the County. "Income" is defined in the First Amendment as net revenue the County receives from others to use the space during the year outside the hours of 6 p.m. to 2 a.m., Monday through Saturday, and 12 noon Sunday to 2 a.m. Monday. Income excludes revenue received from concessions and revenue received by County for services provided to others to use the space (staffing, technical assistance, etc.).

Landlord agreed in a lease with another tenant at 1601 Kent Street (International Education Group, LLC doing business as Graham Webb Academy) to provide Graham Webb Academy with a minimum of 125 hours of use of the Rosslyn Theater space, subject to the rights of the County in its Lease to use the space. The Letter defines the terms between the County and Graham Webb Academy for Graham Webb’s use of the space.

The Spectrum Theatre provides much needed space for theatre performances in Arlington County. However, existing restrictions governing the use of the theatre space have proved to be a problem for organizations that use the space, and have deterred organizations from considering use of the theatre space. From the first production at the theatre in September 1997, staff has received feedback from citizens and arts organizations on facility problems, including: design limitations of the stage and auditorium (due to its function as joint use space), the requirement to take down sets each night, limited hours of access, and lack of clear signage that makes finding the theatre and parking difficult.

County staff has developed a plan for the County to (1) lease and operate the space full time, (2) address the operational challenges of the theatre facility and (3) effectively market Rosslyn Spectrum to the public and raise the facility’s profile in the community to bring in corporate and other conference/meeting activities when the space is not used for performing arts events.

The budget follows:

Additional rent $40,000

Utilities and cleaning expenses 40,000

Marketing 20,000

Programming 15,000

Signage improvements 20,000

Capital improvements 75,000

Total $210,000

Fiscal Impact: The Rosslyn Fund currently has a balance of $176,052 with additional payments of over $200,000 expected from 1801 Lynn Street, Commonwealth and Waterview site plans prior to the beginning of FY 2002 in order to fund this $210,000 initiative over the next 24 months. Of this, a total of $115,000 will be appropriated to the Department of Parks, Recreation, and Community Resources for operating expenses in FY 2001, FY2002 and FY2003. The remaining $95,000 for signage and other capital improvements will be spent directly from the Rosslyn Fund Trust and Agency account.

In FY 2001, the DPRCR appropriation needs to increase by $10,000 to cover the additional rent and operating costs for the last three months of FY 2001. These additional funds will come from the Rossyln Funds with no increase to net tax support.

In FY 2002, the DPRCR appropriation needs to increase by $57,500 to cover the additional rent and operating costs for all of FY 2002. These additional funds will come from the Rossyln Funds with no increase to net tax support.

In FY 2003, the DPRCR appropriation needs to increase by $47,500 to cover the additional rent and operating costs for the first nine months of FY 2003. These additional funds will come from the Rossyln Funds with no increase to net tax support.

The decision to continue this expanded use of the Spectrum Theater space for the remainder of FY 2003 once the authorized Rosslyn Fund dollars have been exhausted will be made as part of the FY 2003 budget approval process. Approximately $10,000 will be needed to cover this last quarter of FY 2003. Beginning in FY 2004, $40,000 will be required for the additional rent and the utility costs. It is anticipated that there will be revenue generated to partially offset these costs as well as marketing and programming costs.