Webinar: Undertaking Capital Projects and Buying Equipment

In this webinar, Steve Mannix, Executive Director of The Mercury Theatre in Colchester, talks about his experience of taking on repayable finance to undergo a complete refurbishment of their existing building. The original theatre was run down, inaccessible and didn’t have the capacity for all their activities. The loan from Arts and Culture Finance was part of a wider, £10million fundraising effort to create a building worthy of the theatre’s programmes and ambitions and was used to underwrite future fundraising and build confidence with other funders. The Mercury took their customers on a journey with them throughout the fundraising and refurbishment process, to build excitement and keep an open dialogue with their community, a ticket levy on all tickets sold from 2016 onwards went towards meeting the costs of the loan.

The Q&A with Steve begins at 15:52, preceded by an introduction from the Arts & Culture finance team that explains what we offer, what we look for and other examples of capital projects that the team are currently pursuing. Key points from the webinar are also written below.

Advice for organisations who are considering investment 

• Have a very clear vision and answer as many questions as possible early on in the process. Including what you want to do, how you want to use the asset and how you will future proof staff and artists as well as identifying any future risks.
• Capital projects are difficult and challenging so surround yourself with advisors and knowledgeable people. 
• Work with a trusted design team who won’t impose their own views and will make sure the building is functional, not just from a creative perspective but who will also think about the functionality i.e how much it will cost you to lock and unlock the building.

Getting approval from your board to take on investment

• When approaching ACF for financing, the team already knew the ticket levy was successful. 
• The team proved their income stream and business case to the board through providing a five year projection for income and expenditure. This demonstrated the impact the capital project would have on the organisation and what money it would release by not running other buildings. 
• It was important to create a narrative around what impact the organisation could have in the new building.
• The board also has an independent quantity surveyor, separate to the core construction and project team who has advised them throughout the process. 

Working with local authorities (LAs) and dealing with LA cuts

• The borough council were very supportive throughout the project but the Mercury had a total funding cut from Essex County Council. However, the team was able to work with the council to find other solutions. 
• LAs are currently bulk buying utilities, so the Mercury negotiated a green tariff with their LA to reduce their utility bills. Mercury are fortunate to have the theatre building on a ‘peppercorn lease’ for 40 years which provides a significant saving per year. 
• The Mercury led on any partnership applications with the LA to Arts Council England and also did capacity building with LA staff. 
• The Mercury were also able to pursue European Regional Development Funding for capital and revenue through their relationships with different councils. 

How the loan was viewed by other funders

• Very positively by trust funders, as some are funders of Arts and Culture Finance. Corporate funders saw the loan as very mature of the organisation.

Working with Local Enterprise Partnerships and negotiating their criteria

• This will depend on an LEPs’ priorities and how they’ve recognised what the creative industries give to your particular region. 
• Original assessor for the Mercury’s LEP bid had very traditional infrastructure experience. Went back to the LEP and articulated the economic impact but also the broader wellbeing impact of the new building and how it would be able to house local at-risk groups. 
• The LEP was open to looking at broader metrics but this had to be initially pushed by the Mercury.

Evaluating the impact of capital projects

• It’s important to link back to your organisation’s overall theory of change and the outcomes that are trying to be achieved. Think about how the building will feed into this internally through staff learning and skills acquisition but also externally with your local community and the various beneficiaries of your organisation. Consider what will take people on a journey, rather than just presenting the hard facts