Consideration and Approval of Contract:   Arts, Science, and Cultural Services Contract with Flagstaff Arts Council

The City of Flagstaff procures an agency to provide leadership and services related to the arts and sciences in the community.  The approval of this contract will provide the Flagstaff Arts Council (FAC) with the role after their response to the Request for Proposals.  The contract will continue the successful previous relationship with FAC for similar services.  FAC serves to enrich the community in the areas of arts, culture, and sciences.  Serving as the lead agency in the community, FAC provides leadership, short and long term planning, coordination, and promotional activities.  As a part of these efforts, FAC contracts with the City of Flagstaff to administer on our behalf grants for arts, culture, and sciences programs and projects with funds from the Arts and Sciences portion of the Bed, Board and Beverage Tax.  Through several competitively awarded contracts, FAC has served as the lead agency and grant administrator since 2001.  Subject to annual City Budget allocations, approval of this service agreement would cause FAC to continue this role until 2021 or 2024 if contract extensions are approved.

The scope of work consists of two parts, each having different financial impacts and being subject to annual City Budget allocations, as follows:

1.  Part 1 - Local Arts, Culture, and Science Agency:  First year fee of $35,000, with a planned increase of three percent (3%) per year.  At the end of the contract plus contract extensions, this planned increase would put the fee at $43,046 in year eight.

2.  Part 2 - Administration of Grants:  Fifteen percent (15%) of the amount of any grant funds that the City allocates annually.

COUNCIL GOALS:
3) Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics
7) Continue to implement the Flagstaff Regional Plan and focus efforts on specific plans
9) Improve the economic quality of life for Flagstaff through economic diversification, and by fostering jobs and programs that grow wages and revenues

REGIONAL PLAN
Goal CC.5. Support and promote art, science, and education resources for all to experience.
Goal CC.6. Encourage Native American art and Southwestern culture.

No

The option presented is to approve the agreement.  Alternatively, the City Council could consider:
1.  Reject all offers and re-issue the Request for Proposals.  Direction to staff as to desired outcomes would be appropriate.
2.  Modify any aspect of the agreement as presented.  Please see "Key Considerations" section for some areas of potential change.
3.  Do not enter into this service agreement and direct City staff to perform these functions.
4.  Do not enter into this service agreement and discontinue funding arts, sciences and culture activities.
5.  Provide staff with other options or direction not stated here.

The Flagstaff Arts Council (FAC), known then as Flagstaff Cultural Partners, was established in 1999 and began operation of the Coconino Center for the Arts.  As an independent 501c3 non-profit corporation and governed by a Board of Directors that includes representatives from the City of Flagstaff, Coconino County, Northern Arizona University, Coconino County Community College, Flagstaff Unified School District, and members of the business, arts, and scientific communities, FAC has served since being established as the lead agency for arts, sciences and cultural activities in the Flagstaff region.  Under three competitively awarded contracts with the City of Flagstaff, FAC has served since 2001 as the grant administrator for Arts and Sciences Grants funded by the Arts and Sciences portion of the Bed, Board, and Beverage Tax.  The last two of these contracts (2006 and 2011) formally recognized FACs lead agency role and service to the City that exceeded grant administration.

The operation of the Coconino Center for the Arts includes the presentation of exhibits, concerts, performing arts events, lectures, festivals and workshops.  Their role as the regional lead agency is furthered by providing the community with a variety of everyday functions that range from coordinating programs and activities, partnering, connecting individuals or agencies with resources, mentoring, and promotional activities.  FAC also coordinates with State, national and colleague agencies and resources for the benefit of arts, sciences and cultural enterprises in the Flagstaff region.

While the attached copy of FACs latest annual report provides more detail, the following is a list of some of the projects and programs that FAC has already developed in its capacity as the lead agency:

1.  Arts and Economic Prosperity Study
2.  First Friday Art Walk
3.  Flagstaff Festival of Science
4.  Youth Art Programs
5.  Navajo Rug Auction
6.  Flagstaff365.com
7.  ArtBox Institute
8.  Viola Awards

FAC leverages the City's investment by acquiring other grant funding, business support and individual contributions, and encouraging grant recipients to do the same.  As one example, FAC has brought in a quarter million dollars in national grant funds (NEA and others) in the past five years, which is made possible partly due to its partnership with the City.

Administering the grants for arts, culture, and sciences programs and projects, FAC provides an open and transparent public process that is fair and consistent for individuals and agencies seeking financial support.  Over the years, FAC has put considerable effort into refining the process based on the feedback of grant applicants, and with an eye toward efficiency – both as a process and as an overhead expense.  The ongoing refinement has sought to broaden the inclusiveness of program not just by seeking new applicants, but also by extensive involvement and outreach to all arts, sciences and cultural enterprises, and importantly, encouraging grant recipients to broaden their inclusiveness, particularly for under-served audiences.  A full understanding of the granting process can be seen here. 

Over the last fifteen years, the City of Flagstaff has provided between $270,000 and $330,000 in funding for Arts and Sciences Grants.  Each year, the number of applicants and the amounts requested far exceed the available funds.  The challenging task of evaluating requests and determining award amounts is accomplished comprehensively, not only considering the applicant’s ability to perform and the need in the community, but considering these factors in relation to other applicants and other needs.  This mechanism and process takes a substantial burden off of City staff and the City Council.

The attached FAC annual report shows the grant recipients for the last year which is indicative of the outcomes of prior years.  One important distinction of Flagstaff’s Arts and Sciences Grants is the availability of funds for the operations of arts, sciences and cultural agencies.  In addition, over the years, at the request of the City Council, FAC has provided additional grant cycles for purposes such as economic stimulus or to target particular sectors with additional funding.  Historically, FAC has taken on these expanded duties without passing along the notable additional expenses to the City.

The City of Flagstaff sent out an official RFP Solicitation on October 6, 2016 on our electronic bidding system called Planetbids. The closing date was October 27, 2016 and we received one response from the Flagstaff Arts Council. After negotiations with the organization, the costs were agreed upon with a 3 percent increase each year. The Flagstaff Arts Council has been the only organization to bid on this contract for the last several years. The Purchasing Department has attached a copy of the contract, Attachment A which is a copy of the Flagstaff Arts Council detailed Scope of Work, and Attachment B which is the Grant Administration Scope of Work. Additional grant information can be found at the Flagstaff Arts Council website at http://flagartscouncil.org/wp-content/uploads/2014/02/AS-GOS-Guidelines1.pdf. 

In considering the possible agreement before the City Council, there are a few key considerations that differentiate this agreement from previous iterations for these services.

In the past, the fee for "lead agency" and the fee for "grant administration" have been a combined amount.  This has proven difficult at times and does not recognize the two aspects of the scope of work.  Before the City Council is an agreement that provides funding for FAC's lead agency work as one figure and and funding for FAC's grant administration as a second figure.

Notably, the amount for grant administration has been changed from a fixed amount to an amount that is relative to the grant funds being awarded.  This makes this overhead expense proportional in general, but also addresses and compensates FAC for additional granting activities that are asked of them from time to time.

Also included is a planned three percent (3%) escalation of the fee for lead agency work.  Note that the fees of the agreement remain subject to annual City Council budget allocations so that in the event of an economic downturn or other need of change, the City Council retains the right to not follow the planned fee increase.  However, the planned increase is designed to encourage the growth of FAC.

Finally, the term of the agreement as presented is five years with the possibility of three one year extensions.  Previous agreements have been three years with two one year extensions.  This reflects the expertise of FAC and the successful outcome of three previous competitive contract awards.  It also introduces an efficiency in City and FAC staff time.

In addition to the noted change of separately identifying the fees for the two aspects of the scope of work, the agreement as presented reflects an immediate increase in the support of FAC as the lead agency.  Recall that the agreement as presented makes the fee for FAC lead agency work grow by three percent (3%); the fee for grant administration is a fixed fifteen percent (15%); and FAC would be compensated for the added grant services.  If FAC had been compensated this year under those terms, their "regular" fee this year would have been $83,481 instead of $73,000.  And, they would have received approximately $4,500 as compensation for the added special grant cycle funding STEM programs. The current FY2017 budget for this contract is $75,000 in account 054-07-216-0873-5-4273.  Any estimated increase in this fee for FY2018 will need to be addressed as part of the FY2018 budget process.

Over the last eight years, the grant monies that FAC administers has been as low as $270,000, but was $360,000 this year.  The compensation to FAC eight years ago was $70,000 and dropped during the economic downturn, and is currently $73,000.  At the same time, the services being provided by FAC have grown notably.  This proposed fee increase is designed to recognize these circumstances.

Empower

The services provided by FAC have a direct community benefit by providing “sense of place” and “quality of life”.  The arts help us express our values, build bridges between cultures, and bring us together regardless of ethnicity, religion, or age.  The arts spark creativity and innovation.  A high concentration of the arts in a city leads to higher civic engagement, more social cohesion, higher child welfare, and lower poverty rates.  Healthcare institutions provide arts programming because of their healing benefits to patients resulting in shorter hospital stays, better pain management, and less medication. 

And, the arts mean business (Some economic benefits identified in the 2012 Arts & Economic Prosperity study):

A vibrant arts community not only keeps residents and their discretionary spending close to home, it also attracts visitors who spend money and help local businesses thrive.  Arts and culture organizations supported by Arts and Science funds are resilient and entrepreneurial businesses. They employ people locally, purchase goods and services from within the community, and market and promote their regions.

The non-profit arts and science industry, a $72M industry, annually generates $3.8M in City/County tax revenue and an additional $3.8M in state tax revenue.  For every dollar that the City of Flagstaff invests into non-profit Arts and Science programs, sixty-four dollars is pumped back into the local economy.  $22.8M of “outside” money is funneled into Flagstaff as a direct result of arts, culture and science programs.

This agreement was developed after a competitive Request for Proposal process posted on October 6, 2016 and closing on October 27, 2016 at 3:00pm local time on our electronic bidding website called Planetbids.