The case for the Art Museum of Kangaroo Island

>

>

>

>

>

>

>

The Art Museum of Kangaroo IslandEstablishment Association pays respectto all First Nations people and elderspast and present. We acknowledge thatthe Art Museum would be built on landsacred to the Kaurna, Ngarrindjeri,Raminjeri and Nurrungah people,and honour that land and its longIndigenous heritage.

Art Museum of Kangaroo Island: born of awild island, a living, inspiring, unforgettableart space that enriches, enlightens andintrigues:

a major art space of excellence, unique in regional South Australia

an added dimension to the island’s tourism offerings and promise of increased tourist numbers

a creative catalyst for complementary new and expanded Kangaroo Island businesses

an enriching community gathering place

gross value added of $95 million over 15 years for a $19 million investment

construction jobs benefit of 80 FTEs for 2 years

direct and indirect jobs benefit to South Australia of 70 to 120 FTEs over 15 years

sustainable revenue/cost prospect over 20 years

supported by > 80% of the community

programming and activities benefitting community mental health and wellbeing, and

furthering young people’s education

>

>

>

2

Kangaroo Island has always been aplace of nature and landscapes, revellingin rugged isolation. Over time its producehas gained renown for high qualityand pure tastiness. Now is the time forthe island’s art community to add theicing on the cake and make KangarooIsland the complete destination for thediscerning traveller.

In the Art Museum of Kangaroo Island(AMKI), island artists show their fineart to the world. The travelling artexhibitions and artists-in-residencebrought to AMKI enrich the practiceof island artists, attract a new audiencefor Kangaroo Island and encouragelonger stays.

AMKI itself is a work of art, positioned tocapture breathtaking views and constructedto buffer against external forces inprotecting the artworks and minimising CO2emissions. The surrounding restoredKangaroo Island landscape is configured forcommunity and visitor use, and culminates ina major environmental artwork. It’s a worldapart, yet near Kingscote, the island’s maintown.

3Values: Excellence . Creativity . Integrity . Enrichment . Of this place

Kangaroo Island is highly regardedworldwide for its natural beauty andlandscapes, and clean primary produce

It is Australia’s third largest island andthe fourth most recognised tourismdestination in Australia

Tourism and primary production arethe main industries in a population of4,700

Kangaroo Island's Brand values are:Authenticity, Personal relationships,Connected to unspoilt nature, Seclusion(island), Peaceful/Restored

Its global recognition attracts over~230,000 visitors annually

Kangaroo Island is poised for growthwith major accommodation and tourism-attracting developments proposed acrossthe island

The 2025 South Australian RegionalVisitor Strategy identifies that marketingshould continue to build the profile ofisland artists, as well as artisan producers.

Kangaroo Island

>

>

>

>

>

>

4

Kangaroo Island’s undeniable beauty residesin its wildness – a quality the world is finallycoming to value very highly indeed. Islandsare special places. The very act of going to anisland is a separation from the mainstreamand has immense attraction in anincreasingly disconnected world.

Where better to place a major gallery,unique in regional Australia, a work of artin itself, at one with the island’s landscape?A place that rests in a breath-taking locationthat is also convenient and accessible.

This project would be compelling at anytime, but with the profound ravages of boththe 2019–20 bushfires and COVID-19,Kangaroo Island needs beacons of hope fora future beyond simply the struggle forrecovery.

Eminent Australian architect, KerstinThompson, has taken the time to understandAMKI and its location, and even KangarooIsland. She has committed to the AMKIproject as the design direction images in thisdocument show.

The profound effect that a significant artinstitution can have on a community is well-documented. Witness the astonishingtransformations wrought by festivals intownships like Spoleto and Aix-en-Provence,and galleries like The Guggenheim in Bilbaoand, closer to home, MONA in Hobart.

The philosophy underpinning AMKI is asself-sustaining and resilient as island people.It will operate as a social enterprise andfeature a significant educational program,bringing the latest trends and innovations inthe world of art to the island. The buildingcould host small indoor cultural events andits surrounds lend themselves to largercommunity events.

It is the unique and engaging experiencesAMKI would offer that will lure more peopleto KI – and stay for more than two tightlypackaged days. The island is alreadyextraordinary but with a must-see culturalattraction it will be irresistible.

AMKI is a project to support, treasure andenjoy.

The opportunity

5

Mr Beare’s tents Nepean Bay Kangaroo Islandby Col William Light, 1836, in the collection ofState Library of South Australia

The programming reflects the promise ofKangaroo Island, and offers exhibitionsand experiences found nowhere else inSouth Australia, for example:

the Easter Art Exhibition and an annualSALA Festival hub for the islandpopular exhibitions such as the ArchibaldPrize, and digital light and immersiveexperiencesquirky, bold and unexpected exhibitionsfor discerning art loversartists-in-residence who engage with thecommunity, attract visitors to their studio,and assign their output to the collectionexpert analysis and programming foradults and school studentsa venue for intimate performances andlarger outdoor eventsnight sky experiencesa unique large-scale permanentenvironmental artwork placed in arestored Kangaroo Island landscape andsculpture garden.

In a Covid-constrained world a focus onbringing international exhibitions toKangaroo Island would attract peoplewho are no longer able to travel overseas.

Programming expectations

>

>

>

>

>

>

>>

6

In 2017–18, the Island to Inland Exhibition,showing the work of ten of KangarooIsland’s major artists, was a feature ofCountry Arts South Australia’s annualprogram. It opened to acclaim in FlindersUniversity Museum of Art on North TerraceAdelaide and toured to 14 regional galleriesacross South Australia. It could not be shownon Kangaroo Island because there was nofacility with the capability and conditions tohouse it. That was the catalyst for four of theexhibition’s participants to plan and buildjust such a facility.

The committee has operated strategicallysince then: keeping the island communityinformed of their plans; joining relevantisland, state and national peer groups;networking with, and gaining the supportof, the Art Gallery of SA, Country Arts SA,SA Tourism Commission, RegionalDevelopment Australia Adelaide HillsFleurieu and Kangaroo Island, and localmembers of parliament; visiting numerousregional galleries across Australia; attendingAustralian Museums and GalleriesAssociation conferences; learning fromgallery and tourism professionals and artists;and raising funds through grants,crowdfunding, events and donations.

In 2020, the AMKI organisation ran its firstartist-in-residence program with CedricVarcoe, which focused on recovery from thebushfire trauma of 2019–20. Cedric’sworkshops were an inclusive, healing,magnificent joy for all who participated andproduced a mural, now resident at ParndanaCampus of KI Community Education, andAMKI’s first acquisition – a weaving thatbrings together 75 individual pieces wovenby islanders in the Ngarrindjeri tradition andincluding many pieces of personalsignificance.

artmuseumkangarooisland.org/artist-in-residence/

The fires also prompted Maudie Palmer AO,inaugural director of both Heide andTarrawarra – major regional galleries inVictoria – to offer her expertise. She used herexperience to develop the working brief forthe layout and elements of the art museum,and recommended the concept architectKerstin Thompson. Arts administrator andcultural programmer Rob Brookman AM alsobrought his networking and fundraisingexpertise to the committee.

The story so far

Lakun Yalani dreaming, Weaving mat dreaming, Cedric Varcoe and Kangaroo Islanders, 2020

7

>

>

>

>

>

>

In 2020, AMKI’s comprehensive communityconsultation attracted almost 350 responses,85% of whom were island residents orproperty owners.

All respondents:

> 90% – AMKI would add to the visitorexperience on KI

> 90% – AMKI would have a positive impacton the island’s art community

> 80% – AMKI would be a major touristattraction for South Australia

> 80% – AMKI would have a positive impacton the island community in general

80% – AMKI would fit the preferred site’sdedication of ‘scenic value’

80% – the preferred site is suitable for AMKI.

(Full report artmuseumkangarooisland.org/community-consultation/)

Community consultation

Location of Art Museum, north of Kingscote

8

Without a high-quality arts and culturalvenue, with professional staff, KangarooIsland is unable to realise its full culturaland tourist potential:

Long-running KI tourism sta�s�cs (TOMMVisitor Exit Survey) show most tourismindicators return acceptable ra�ngs.However, sa�sfac�on with the range,quality and availability of ac�vi�escon�nues to be below the acceptable level.The opportunity to learn more about theisland's history is also below acceptable.

The island has few a�rac�ons/ac�vi�es suitable for cold or wet weathercondi�ons, limi�ng visitor experiences,especially in the colder months when thereis more capacity for expanding touristnumbers.

Kangaroo Island's ar�sts have limitedpoten�al to market and show their work totourists on the island, for example KangarooIsland Easter Art Exhibi�on being shown in atown hall with inadequate facili�es, nofocus venue for SALA, a major SouthAustralian fes�val, and group exhibi�onssuch as Island to Inland having no suitablevenues to be shown on KI.

Young people on KI have limited artsand cultural experiences, and schools,community groups and individuals of allages have li�le access to arts-basededuca�on programs.

Without a premium venue and professionalcultural organisation, Kangaroo Island is notable to take full advantage of the currentexplosion in popularity of arts-basedworkshop programs, which generate incomefor small business, support creative industriesand facilitate social connectedness.

The island has few attractions/activitiessuitable for cold or wet weather conditions,impacting on the quality and diversity ofvisitor experiences, especially in the coldermonths when there is more capacity forexpanding tourist numbers.

If we do nothing

>

>

>

>

>

>

9

Mural at the Parndana Campus of KangarooIsland Community Education, Cedric Varcoe

and Kangaroo Islanders, 2020

Health and wellbeing

Offers activities that improve socialconnections, increase a sense ofbelonging and support betterphysical and mental health

People with 100 or more hours per year ofarts engagement had significantly bettermental health and wellbeing than peoplewith no or lower levels of engagement.University of Western Australia, 2016

The social return on investment for creativecraft making activities is 1:118, mainly inforegone treatment bills, reducing GP visitsby 28% and attendance at emergency wardsby 24%. Wellbeing Enterprises UK, 2017

Education creative industries

Opens educational opportunities forindividuals and schools, supportingthe integration of arts into learning

Eighth graders with high levels ofarts engagement in primary school showedhigher test scores in science and writing thanthose with lower levels of arts engagementover the same period. National Endowmentfor the Arts, 2012

Music and arts-based programs bridge thegap in school achievement and improvegrades in English and STEM for children indisadvantaged and high-need communities.The Song Room, 2011

Cultural tourism + the economy

Attracts visitors to the region andboosts the local economy

In 2018, the average length of stay for anovernight trip to enjoy arts and culturalexperiences was five nights; for otherovernight trips, three and a half nights. Theaverage spent by visitors enjoying the arts onovernight trips was $1,068; the overall averagewas $685. Australia Council for the Arts, 2020

Cultural tourism is growing more quicklythan tourism overall, increasing in 2015 by15% for international and 11% for domesticvisitors; and by 8% and 7% respectively foroverall tourism. Transport and TourismForum, 2016

Bendigo Regional Gallery is often cited as aneconomic success story. Of the 124,715 out-of-region attendees at the Grace Kellyexhibition, more than 99,840 (80.0%) wereprimarily visiting Bendigo because of theexhibition; a further 2,041 (1.6%) extendedtheir planned length of stay. The economicimpact on the Bendigo economy wasestimated at more than $16.31 million(1.82 multiplier effect). Melbourne BusinessSchool, 2013

Social, cultural, wellbeing benefits

>

> >

>

>

>

>

Creative industries

Artists, both practicing and emerging, reachwider audiences; other cultural experiencesdevelop that support visitation

The UN Conference on Trade andDevelopment recognises creative industriesas a new dynamic sector in world trade.

Museums are major tourist attractors andinnovators of new products and experiences.Regional creative precincts are significanttourist attractors and bring creativebusinesses together with complementarysectors. SA Creative Industries Strategy, 2020

>

10

The AMKI proposal aligns with relevantnational, state and regional strategies:

Domestic Arts Tourism, Connecting theCountry Report. Australia Council, 2020

International Arts Tourism ConnectingCultures Report. Australia Council, 2018

Arts and Culture Plan South Australia2019-2024

Kangaroo Island Council Strategic Plan2020-2024; and Arts & Culture Policy

The AMKI proposal also aligns with manyUN Sustainable Development Goals,which are vital for a recovery that leadsto greener, more inclusive economies,and stronger, more resilient societies.

The economic and financial projections onthe following pages are based on:the quantity surveyor’s costings of theconcept designconservative revenue assumptions informedby average tourism returns rather than themore profitable 'arts and cultural' tourismsectora conservative estimate of new visitation toKangaroo Island attracted by AMKI.

Economy.id industry structure and industrysector profiles use a National Accountsregional econometric model developed byNational Economics (NIEIR micro-simulationmodel). This model is based on replicatingthe outputs of the National Accountsframework for local areas such as LGAs,using a range of data sources to model theaccounts to show local trends.

Work on the early stages of the projectwould begin only if significant federal and/orstate government funding has been secured.

The complete original files from which thegraphs and tables were made are availablefrom AMKIEA on request.

Business case nitty gritty

>

>

>

11

Revenue assumptions

VisitationAnnual average tourism growth rate 1.43%Proportion of existing visitors 35.00%New visitors attracted to KI 10,000Total visitors – locals 15.00%

Adult entry fee (per person) $10.00Child entry fee (per person) $0.00Locals free of charge Yes

LeasingCafé area 210 sqmCafé rental rate $120/sqm/year

Apartment rental rate $400/monthApartment annual utilisation 50%

Other annual revenueGift store $25,000Sponsorship $40,000Workshops $5,000Donations $30,000Annual events $30,000Collectors’ Club acquisitions $20,000

Timing and economic assumptions

Project start Nov 2021Construction period 24 monthsConstruction end April 2024

Operations start date April 2024Operations period 20 yearsOperations end date March 2044

Local government price index – Inflation 3.00%Other expenses – Inflation 3.00%Revenue – Inflation 2.00%

Project costs and funding

Project costsTrade costs $8,901,927Design contingency $445,000Locality factor $4,673,000Preliminaries $1,682,073Margin $628,000Construction contingency $816,000Other construction costs $1,747,000Other project costs $225,000Debt financing costs $314,762Total $19,432,762

Project fundingFederal government grants ~$10,000,000State government grants ~$5,000,000Cost funded by donations funding $3,000,000Cost funded by debt funding $1,432,762Total $19,432,762

12

13

Cross section

Long section

Fundraising planFundraising of the estimated cost of organisational establishment, administration, design,construction, fit-out and landscaping of AMKI (rounded to $20,000,000) is proceeding inthree phases:

Feasibility $100,000 Completed from grants, crowdfunding and events

Design development $200,000 50% completed (major philanthropic foundation)50% being raised by the end of 2021 fromfoundations and individuals

Capital cost $19,700,000 Submissions being developed for majorgovernment grants, and philanthropic andcorporate supportAnticipated completion 30 June 2022

Funding sourcesProposed funding sources range from substantial government grants to a grass-rootscampaign to build community buy-in to the project. Up to $1.4 million could be raisedthrough loans which the Business Case indicates can be serviced through annual operatingrevenue. The notional break-up of such support is at present:

Australian Government grants (major) $10,000,000SA Government grants $5,000,000Major foundations/philanthropic $2,900,000Major individual donors $300,000Broad-based community campaigns $150,000Corporate support $200,000Other small grants $50,000Debt financing $1,400,000Total $20,000,000

Other fundingA further campaign will be developed in support of initial acquisitions, commissions andexhibition programs, particularly in the first two years of establishment until accumulatedsurpluses provide sufficient cash-flow to support such programs.

Economic impact and job creation

Economic impact:

Investment = $19 millionGross added value (GVA) = $95 million over 15 yearsNet present value (NPV) = $52 million

Job creation forecast:

Construction jobs over 2 years in SA67 direct FTEs18 indirect FTEs

Operations jobs over 5 years in Adelaide Hills, Fleurieu,Kangaroo Island region52 direct FTEs per annum9 indirect FTEs per annum

14

>>>

>>

>>

Project and operating costs

15

If necessary, up to 7% of the construction cost could be coveredby debt funding, which on the projected operating balancewould be repaid within 16 years.

Visitation and operating revenue

Healthy and increasing visitation translates into a steadily risingrevenue stream

16

The Visitation graph shows the proportion of existing adult visitorswho are expected to visit AMKI, as well as a modest projection ofnew visitors to Kangaroo Island attracted by AMKI.

Underground level

Art Museum of Kangaroo Island concept layout and siting

Ground level Mezzanine level

17

Delivery capability

The Art Museum of Kangaroo IslandEstablishment Association Inc has taken astrategic measured approach from the startand shown its capacity to manage a largeproject. It has:raised almost $200,000 from a majorphilanthropic foundation, grants,crowdfunding and events, without securedland or business casesecured the support of leading state andnational gallery directors, SATC, KI Businessand Brand Alliance, Country Arts SA, theKangaroo Island community and key islandbusinessesset up a pathway to transfer to a not-for-profit, DGR corporation to operate theart museumwritten and reviewed policies, strategiesand a risk management matrix.

AMKIEA Inc, a member of:

Risk management

Path to completion

>

>

>

>

18

Risk

Blow out in construction costs

Operational cost over-run

Tourist numbers do not increaseenough and visitor numbers tothe art museum do not reachtargets

Secure sufficient donations tocover funding gap

Extreme weather events suchas fire, flood, hailstorm

Mitigation

Contract an experienced independent project manager to runthe construction phase, in turn overseen by a BuildingCommittee of AMKIEA Inc, which will have construction,gallery, business and hospitality expertise and experience

Lease café to independent operatorRationalise staffing levelsMinimise costs of internal environmental control withunderground gallery designSecure sponsorship for specific elements e.g. naming right toa gallery; transport sponsorship for travelling exhibitions

Reach maximum audience in target markets with marketingcampaign that includes use of existing proven KangarooIsland marketing avenuesEnsure programming appeals to diverse audiences

Explore alternative funding sources e.g. sponsorshipTake out an increased loan against the assetGo back to government and increase the askModify design or defer elements of build to bring back tomanageable budget

Ensure building sited and constructed to highest standardsfor withstanding such eventsDevelop a disaster preparedness planMaintain highest insurance level against such events

19

Delivery timeframe Duration Start Finish 2021 2022 2023 2024

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Art Museum of Kangaroo Island 627 days Nov ‘21 Apr ‘24

Contract documentation/approvals Nov ‘21 Apr ‘22

Contractor procurement Mar ‘22 Jul ‘22

Client pre construction works Apr ‘22 Aug ‘22

Construction period Aug ‘22 Apr ‘24

Handover Apr ‘24

Art Museum of Kangaroo IslandEstablishment Association Inc

Committee: Ria Byass, Janine Mackintosh,Deb Sleeman, Kathie Stove

Advisers: Sue Arlidge (business), RobBrookman (fundraising), Lauren Mustillo(collections), Jess Mensforth (projectmanagement)

Business Case consultants: Design directionby Kerstin Thompson and Christopher Kellyof Kerstin Thompson Architects; economicand financial modelling by Dougal McOmishof EcoAdvisory; social and cultural content byMaz McGann of Play Your Part; costing andtimeframe by Sam Paddick of WTPartnerships

Documents containing comprehensiveresearch and modelling are availableon request.

Email amki.committee@gmail.comTelephone 0417 086 870www.artmuseumkangarooisland.org

This Business Case was funded throughthe Regional Arts Fund, Recovery Grant

September 2021

20