The Wollongong Conservatorium of Music will have no choice but to raise tuition fees if it is forced to pay an estimated $100,000 a year to lease Gleniffer Brae, its chief executive says.
The conservatorium is locked in negotiations with Wollongong City Council over the terms and conditions of a five-year lease extension on the manor house and the amount of rent the organisation should pay.
Conservatorium boss Andrew Snell said the financial conditions outlined in the current lease, signed in 2003, required the conservatorium to pay 40 per cent of the market rental value, the property's council rates, water and sewerage charges, and 40 per cent of the manor house's maintenance costs.
The council has waived these payments since 2006 after the conservatorium pleaded severe financial hardship.
Mr Snell predicted the conservatorium's profit for 2012 would be between $50,000 and $60,000 - suggesting the organisation would also be unable to cover future bills unless it raised more cash.
Mr Snell said the conservatorium had agreed to begin paying rent from January 1 this year.
He said the site's market rental value had been independently valued at $225,000, but included the use of the entire manor house. The conservatorium only occupies half the house.
"We're waiting for the council to come back to us with a revised valuation figure - we estimate it could be around $180,000 - which would put our annual rent costs at about $72,000," he said.
"On top of that we estimate paying about $12,000 for rates, water and sewerage, and $10,000 for electricity before we even consider the maintenance bill.
"Our total yearly cost could quite easily top $100,000."
Mr Snell said such a hefty bill would likely force a 10 per cent rise in tuition fees, which could lead to a fall in student numbers.
"Basically every dollar we have to pay out has to be added to the lesson fees," he said.
"Some of our families are struggling to pay the fees already, while others have multiple children enrolled in multiple classes.
"That 10 per cent might be the difference between children enrolling and not enrolling."
Farmborough Heights mother Lori Beswarick spends almost $2000 a year on private violin lessons and group orchestral practices for daughter, Jaslyn, 10.
While the family highly values the arts and the role the conservatorium plays in the community, Mrs Beswarick admitted a rise in tuition fees would make her think twice about whether to continue Jaslyn's lessons.
"We send her there because they have the best teachers, but it's getting expensive," she said.
"If the fees go up we'll have to reconsider our options."