09/06/12 — Museum specs: The numbers are in

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Museum specs: The numbers are in

By Ty Johnson
Published in News on September 6, 2012 1:46 PM

It had been two weeks since the Air Force Museum Citizen Committee had learned how much it would cost to renovate the former Arts Council building to museum specifications and the estimates were encouraging.

A little more than $2.3 million would be needed renovate the former bank building into the museum that has been envisioned for the city -- a bargain considering that estimates given last year by a structural engineer suggested it would cost $1.4 million just to bring the building up to code.

But the consulting firm hired by the city didn't have such uplifting news Wednesday regarding the costs of operating the museum. Bob Brais with ConsultEcon told committee members via teleconference that operating costs would likely be about $750,000 a year.

After the meeting, committee Chairman Jimmie Edmundson expressed his initial reaction to the report with his fellow committee members.

"The numbers concern me," Edmundson said.

What was most disturbing about the operating costs, he said, which include more than $390,000 in salaries, was the amount of contributed revenue expected to cover those costs, especially since estimates showed the museum bringing in no more than $363,000 annually during its first five years of operation.

About half of that revenue is predicted to come from ticket sales -- admission for adults would be $7.50 -- while retail sales would be expected to account for about $58,000 of annual revenue. The remainder would come from flight simulator revenue, memberships, programs and rental fees.

The consultant's net income summary assumes that the museum will attract more than $370,000 in contributed revenue -- corporate sponsorships, gifts and grants -- in its first year and would maintain at levels in excess of $429,000 annually through year five to allow the museum to break even.

The report also assumes the museum will be able to raise more than $10,000 annually through fundraising events and begin with a $100,000 endowment.

Committee member David Perry asked Brais about a figure that wasn't included in the financial analysis -- debt service.

Brais explained that the report was created without taking debt service into consideration. The assumption was that the building's renovations would be paid for up front, he said.

The renovation costs had grown since the previous meeting, as well, with a new report showing additional repairs to the roof would push the price up by more than $138,000. Those costs also don't include the cost for asbestos testing or abatement.

Following the teleconference, however, the sticking point was the operating costs.

"I think you can cut a lot out of that," Edmundson said, noting that the plans call for six full-time positions and four part-time positions to operate the museum. "But that's a big pill to swallow."

Unlike the one-time $2 million payment for renovations, Perry explained, those costs would have to be paid annually.

Edmundson said the report showed the museum would likely need substantial support from other entities -- the city, county or some other benefactor.

The committee charged itself with looking through the financial report -- a heavy packet condensed into 17 slides for the meeting -- in its entirety and identifying areas where cuts could possibly be made.