November 26, 1998

To:Economic Development Committee

From:Commissioner of Economic Development, Culture and Tourism

Subject:Funding Strategy for the 1999 Caribana Festival

Purpose:

The purpose of this report is to recommend a funding strategy for the Caribbean Cultural Committee (CCC) that allows the planning for the 1999 Caribana Festival to proceed in an orderly way.

Funding Sources, Financial Implications and Impact Statement:

In 1998, the City of Toronto provided $353,500.00 to the Caribana Festival. These funds were drawn from the consolidated grants budget and comprised funding provided in 1997 by the Toronto Arts Council ($40,000.00), the former Municipality of Metropolitan Toronto ($150,000.00) and the former City of Toronto ($8,500.00) for a total of $203,500.00. The 1998 grant also included an additional amount approved by Council ($150,000.00). In order to implement the funding strategy in this report, Finance will need to ensure that the amounts required for interim payments to the Caribana Festival are included in the interim appropriation.

Recommendations:

It is recommended that:

(1)the grant to the Caribana Festival be paid on a monthly installment basis, beginning in January, 1999, based on the level of the grant made in 1998 ($353,500.00) until such time as the 1999 grant amount has been approved by Council and subject to the receipt of audited statements for the 1997-98 fiscal year and the authorization of the Caribana Festival Support Group (CFSG);

(2)the Chief Financial Officer and Treasurer make provision for the monthly payments for the Caribana Festival in the interim appropriation; and

(3)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

On April 16, 1998, City Council approved Report No. 5 of the Strategic Policies and Priorities Committee that recommended funding for the annual Caribana Festival. In adopting the report, Council directed that, in addition to the previous year's grant, $75,000.00 be drawn from under-expenditure in the grants envelope. Council also directed that an additional $75,000.00 be provided for Caribana Festival mas bands and cultural producers with such funds to be added to the grants envelope.

The release of these funds was subject to conditions approved by Council which set up the Caribana Festival Support Group (CFSG) to act on behalf of Council and to monitor the performance of the CCC as well as to authorize the release of funds subject to the CCC meeting the conditions set by Council. A list of the members of the CFSG is attached as Appendix A.

There were ten conditions approved by Council for the release of funds to the CCC for the 1998 Caribana Festival. These conditions included the releasing of funds monthly based on performance satisfactory to the CFSG; undertaking an organizational restructuring process; implementing a debt reduction strategy; attaining an unqualified financial audit; and completing a business plan and marketing strategy.

In addition, Council directed the Commissioner of Economic Development, Culture and Tourism to:

(1)devise and execute an economic development study of the 1998 Caribana Festival measuring direct and indirect impacts, such study to include the value of volunteer hours and public sector impacts;

(2)in consultation with Special Events' staff, submit a report to the Economic Development Committee on the feasibility of the City of Toronto entering into a "strategic joint venture partnership" with the CCC in producing the annual Caribana Festival; and

(3)after having assessed the economic benefits of the 1998 Caribana Festival, submit a report to the Strategic Policies and Priorities Committee, through the Economic Development Committee, on the feasibility of changing the mechanism by which funds flow to Caribana to a method which would allow the CCC to market revenue-positive events with more lead time.

Council also authorized the Chief Financial Officer and Treasurer to receive financial contributions for the Caribana Parade and to assist the CCC in obtaining charitable status for the purpose of raising funds.

Further, the Municipal Grants Review Committee recommended that the Chief Administrative Officer report to the Committee on the feasibility of funding the CCC in the same context as the National Ballet of Canada, the Canadian Opera Company and the Toronto Symphony Orchestra, in that it should be regarded as an established institution and supported accordingly.

Comments and/or Discussion and/or Justification:

Report on the 1998 Caribana Festival:

The 1998 Caribana Festival was a success. With the return of the mas bands and cultural producers, the CCC was able to coordinate a vibrant and exciting Festival from July 17 until August 3, 1998. The Festival featured the King and Queen of the Bands Competition, several ferry cruises, the annual gala Parade on Lakeshore Boulevard and the two-day music festival on the Toronto Islands. The organizers estimate that 750,000 people attended the Parade, 18,000 attended the music festival and 6,500 attended the King and Queen show at Lamport Stadium.

Much of the success of this year's Festival is the result of the support provided to the CCC by its Advisory Board (chaired by MPP Alvin Curling) and the Caribana Festival Support Group (chaired by the Honourable Lincoln Alexander) which respectively secured additional financial support and monitored the expenditures of the organization.

The Advisory Board was responsible for securing funding for the Caribana Festival from the Province of Ontario ($350,000.00), the Federal Government ($100,000.00), and the Royal Bank ($100,000.00). The CFSG met on several occasions to review cash-flow projections and financial variance reports from the CCC to ensure that it was following sound business practices. A preliminary report on the financial performance of the CCC indicates that the organization will record an operating surplus of $157,236.00 for the 1997-98 fiscal year. A copy of the CCC's preliminary year-end financial statement is included as Appendix B.

The CCC now operates under the guidance of a newly selected Chief Executive Officer and is developing a comprehensive restructuring plan. The CCC will hold its annual general membership meeting to select new board members after receipt of the audited financial statements for the 1997-98 fiscal year in January 1999.

Economic Impact:

The Caribana Festival has a large impact on the Toronto economy - probably greater than any other single event that takes place during the year. Hundreds of thousands of people attend the Parade each year. Survey data indicate that almost half of the audience comes from outside Toronto. What's more, Caribana has a demonstrated ability to attract tourists - 36 percent of the people watching the Parade indicated that they travelled to Toronto specifically for Caribana.

The economic impact of the Caribana Festival was last studied in 1990. The Province of Ontario and Caribana's corporate sponsors funded a $100,000.00 consultant study that surveyed the people attending the 1990 Caribana Parade and generated economic impact figures based on the estimated size of the crowd.

Updating this information for the 1998 Festival would have required a comparable allocation of resources plus several months to organize the required surveys. The priority in May and June was to secure enough funding for the Festival itself, and it was not possible to also allocate resources or find funding partners for an economic impact analysis. Therefore, an updated estimate of the economic impact of the 1998 Caribana has been calculated based on information already available and secondary sources of data. If a more rigorous study is considered necessary, it can be undertaken in 1999 with sufficient lead-time to plan and access to the required resources.

Appendix C summarizes the calculations and results. The greatest variable in determining the economic impact of Caribana is estimating the number of people who attend. Calculating the size of the audience for parades and other unticketed events is very difficult, and estimates typically vary widely. Caribana is no exception. There is no generally agreed upon estimate of the size of the audience for Caribana.

In view of this uncertainty, the economic impact estimates in this report are expressed in terms of every 50,000 people who attend the Parade. If the actual attendance figure is half a million people, the impact would be ten times these numbers. If one quarter of a million people attend the parade, the impact would be five time these numbers. The impact of producing the Festival (direct expenditures of $1.3 million by the Caribbean Cultural Committee plus an estimated $2 million in expenditures by the producers of the mas bands) is added to the impact of the visitor expenditures.

As Appendix C shows, every 50,000 people who attend the Caribana Parade spend about $11.8 million on accommodation, shopping, entertainment and local transportation. These expenditures generate about 157 person years of employment in Ontario (mostly in the GTA), federal taxes equal to about $1.1 million and provincial taxes equal to $637,000.00. There would not be a discernible impact on the municipal property tax base from these types of expenditures.

The money injected into the economy by Caribana visitors and production activity will in turn stimulate increased economic activity throughout Ontario as businesses and employees increase production and spend the additional money they earn. This "indirect" impact is calculated by applying a "multiplier" of 1.8. Hence, the total impact on the Ontario economy of every 50,000 people attending the Caribana Parade is estimated to be $21.2 million. About 282 person years of employment would be generated, as would $2 million in federal taxes and $1.1 million in provincial taxes.

Appendix C calculates the total economic impact of the 1998 Caribana Festival for three illustrative crowd sizes - 750,000, 500,000 and 350,000 people. If the actual crowd size is in the order of 750,000 people as has been estimated by the Caribana organizers, for example:

(1)the direct impact on the economy would be $180 million which would generate about 2392 person years of employment, federal taxes $17.1 million and provincial taxes of $9.7 million;

(2)the direct plus indirect impact on the Ontario economy would be $324 million which would generate about 4319 person years of employment, federal taxes of $30.9 million and provincial taxes of $17.5 million.

If the actual number of people at the Parade was instead 500,000, the direct economic impact would be $121 million; if the actual number was 350,000, the direct economic impact would be $86 million.

Council requested that the economic impact study include public sector impacts and the value of volunteer hours. The taxes generated are the major public sector impact. As Appendix C and the above figures indicate, substantial provincial and federal income and sales taxes are generated by the visitor expenditures from Caribana. The municipal property tax base is not directly impacted in a discernible way since Caribana-related expenditures do not entail property development activity or directly impact long-term property values.

The value of the volunteer hours contributed is the production of the Festival itself and the $21.2 million addition to the economy for every 50,000 people who watch the Parade, for Caribana could not take place without the thousands of hours that volunteers contribute to the mas bands and festival production. However, the contributions that people make to society by volunteering their time (including charitable work, unpaid housework and childcare, etc.) are not quantified in conventional economic impact analyses because these contributions do not result in increased income.

Special Events Assistance:

Toronto Special Events has met with representatives of the CCC to discuss the feasibility of entering into a "strategic joint venture partnership" with the City of Toronto in the production of the annual Caribana Festival.

Caribana is a dynamic, grassroots event that has flourished in the community for many years. Events such as this take on a spirit of their own precisely because they have roots firmly planted in the community. As the primary stakeholder, the Caribbean community takes great pride in the Caribana Festival and feels a sense of ownership. The festival is their gift to the people of Toronto.

A partnership with the City for this unique event could be perceived as an intervention and stifling to the creative process. For this reason, both Special Events and the CCC agree that such a partnership would not be in the best interests of the Caribana Festival.

While a partnership is not recommended, the Festival Liaison Office of Toronto Special Events will be able to provide some measure of support and service to the producers of Caribana. The goal of the Office is to offer streamlined services to Toronto event producers including one-stop shopping for road closure information, permit applications, bylaw information and grant applications. A menu of festival consulting services will also be available. This service will facilitate Toronto signature events such as the Caribana Festival, and help build a strong Toronto event calendar grounded in each season.

Funding Strategy for 1999:

A funding strategy for the 1999 Caribana Festival is required to provide stability for the organization and assurance to the mas bands and cultural producers that the planning for the Festival will proceed in an orderly way. The City can play a key role in providing this stability which will allow the new Chief Executive Officer to concentrate on marshalling the required private sector financial support. In keeping with the recommendation of the Municipal Grants Committee, staff have examined ways to fund the CCC in the same context as the National Ballet of Canada, the Canadian Opera Company and the Toronto Symphony Orchestra. Since 1982, these major cultural organizations and the Art Gallery of Ontario have received their grant on a monthly installment basis. The payments are based on the level of the previous year's grant with payments being adjusted after Council has approved the current year grant amount. This system has worked well, providing cash flow and stability for the organizations while spreading the City's payments over the entire year.

It is recommended that the grant to the Caribana Festival be paid on a monthly installment basis, beginning in January, 1999, based on the level of the grant made in 1998 until such time as the 1999 grant amount has been approved by Council. The initial payment in January 1999 should not be released until the CCC has provided audited statements for 1997-98 fiscal year. In addition, the financial accountability measures employed in 1998 should continue with the authorization of the Caribana Festival Support Group (CFSG) required for the release of the monthly payments.

On March 1, 1999, the major cultural organizations listed above will submit grant applications to the Culture Office. The CCC will fulfill the same application requirements and be required to provide detailed plans for the 1999 Caribana Festival as well as their restructuring and debt reduction strategies.

In order to allow the monthly installment payments to proceed in January 1999, the Chief Financial Officer and Treasurer will need to include the appropriate amount in the interim appropriation.

Conclusion:

The 1998 Caribana Festival was a success and the Advisory Board and the Caribana Festival Support Group have helped to create a positive business-like environment for the organization. The new Chief Executive Officer is taking the necessary steps to place the CCC on a sound financial footing. The funding strategy recommended in this report will assist him in his efforts by providing the stability that will allow the planning for the 1999 Caribana Festival to proceed in a orderly way.

Contact Name:

Beth Hanna, Culture

392-5225

Christine Raissis, Economic Development

392-3385

Jaye Robinson, Special Events

395-7310

Joe Halstead

Commissioner of Economic Development, Culture and Tourism