If you read the FAQs on the site that Sharyn and ruinexplorer referenced you will find that the Public Performance license they do offer for K-12 institutions requires that no admission fee be charged other than to
cover costs, if you did charge admission then there would be a different license required.
The type of use noted has several aspects that require some form of license to be obtained. For one, it is a public performance, it is not limited to members of any specific group or organization. For another, it is not academic in nature as it is not part of a class setting nor related to a core curriculum. The fact that it is a City event also does not matter, that is not exempt from Federal copyright laws.
Where this should matter to the school is that they are likely to be liable for what is shown. From the Movie Licensing USA site referenced:
What if an outside organization such as an After School Program or Summer Camp wants to show an entertainment movie in our facility?
This is only legally permitted if the school itself has a Public Performance Site License from Movie Licensing USA. Schools without such a license will be held liable if an outside organization involves them in copyright infringement by permitting movies to be used in their facility.
It is typically the
venue that is required to have the appropriate licenses and that is liable for any action or penalties, something the school may want to consider addressing when they let outside groups use their facilities.
On the
projector, you have several time mentioned using a smaller
image. If you are using a typical
portable projector then you will likely have some
zoom capability but you can't just put the
projector anywhere you want and get any size
image you want, the
lens will be limited in the
image size possible based on the distance the
projector is from the
screen. Also consider that if the
projector was intended for typical classroom use then that is likely the size
screen and viewing area it will support. If the
Auditorium is darker then you may be able to have a larger usable
image than in a classroom, but unless the
projector is overkill for the classroom applications or you have very large classrooms, then it may be limited in the
image size and
projector location possible.
The ambient light levels my require some balance. Not being
clear on the application, it sounds like you may have a situation with people coming and going during the event, if so that may require having more ambient light in the space for people to safely enter and exit than you might in a normal cinema application.