Wednesday, December 22, 2010

Arts District--Are We Helping the Arts?

The new Arts and Cultural District
provides a BPOL (Business, Professional, Occupational, Licenses)tax reimbursement to qualifying existing arts establishments of up to a maximum of $250.00 a year for five years. Businesses within the zone that are not arts related but put aside at least 120 square feet for the display of local art also qualifies for the BPOL reduction. There is also provisions for the waiver of city fees of up to $2,000.00 for a new arts business or an expansion of at least 30%. New or expanded arts businesses also qualify for 100% BPOL reimbursement for five years. The total cost of the Arts District in revenue to the city for a year is projected at $11,500.00. There are no revenue or job creation requirements as with the city's other economic development zones. So, how much of a benefit is this ordinance to both the city's art community and the city itself?

The yearly BPOL reimbursement figure is set at $6,500.00 and is based on (40) businesses currently meeting the criteria. That translates to an average reimbursement of only $162.50 a year. For most of the businesses directly related to the arts that average BPOL benefit is probably less if one considers that the number of businesses qualifying include restaurants providing 120 square feet of display space, which will have gross receipts to qualify them for the entire $250.00 reimbursement. If we set the number of restaurants qualifying at say (6) their total reimbursement would be $1,500.00 a year. The average for the remaining (34) businesses would decline to $147.06. Even a $250.00 reimbursement a year will have a negligible impact on the businesses involved.

The same will be the case with new and expanded arts related businesses that qualify for the 100% BPOL tax reimbursement . There is no question that the arts community (including local musicians and bands) are both a cultural and economic asset to the city. They attract visitors from the region and beyond. And after enjoying the arts these visitors eat, shop, and sleep in our city. But if one looks at the typical business model for an arts establishment the profit margin is not great. A few hundred dollars a year probably won't even cover the light bill let alone impact capital or operational costs.

The reimbursement of city fees up to $2,000.00 per project also raises some questions. The cost of renovations, especially within the city's Historic District, and new construction, will be in the 100s of thousands of dollars. Don't believe a one-time waiver of fees is going to tip the scales much in deciding whether or not to locate in the Arts District. Also considering that a large part of the Arts District is in the Historic District the question becomes how much expansion is realistically possible and how much would we really want?

Under the ordinance if a business takes advantage of the tax and fee breaks accorded by the Arts District they are barred from apply for any other incentive program. The city already has both a Tourism Zone(TZ), in which "theaters, cultural arts centers" qualify; and a Historic District Tax Credit (HDTC) program, both that overlap with the Arts District. They do have requirements of their own--performance measures in the case of the TZ and investment criteria with the HDTC. But the benefits to these two are greater than what is applicable to the Arts District. This leads to two questions, 1) Why not consolidate as opposed to just creating new districts and zones in the same areas. 2) If we agree that the arts community is important to the city both culturally and economically should it receive less support than any other type of business?

I do believe the city's arts community is important and should be supported--through marketing, joint ventures with the city, and yes some tax breaks. The job of both the arts community and the city to make the case to the city residents that with some creative thinking, and investment of time and money, by all parties, we can create a win win situation for the arts community and the city. The establishment of the Arts District looks to be more symbolic than substantive. The city can now say they recognize our arts community and that about all the arts community is getting.

How much support should we be providing the arts community? Should we be providing incentives for business at all?


Tom Byrnes said...


The City Council's creation of an Arts District is a first step, even if awkward and insignificant.

It is true the Arts District will be irrelevant to any business contemplating any new arts initiative downtown, like a performing arts center. Those businesses will consider the city's antiquated Historic District Tax Credits and self-limited Tourism Zone benefits when deciding whether or not to locate downtown, as you so aptly illustrated above.

Even with this new otherwise well intentioned arts designation, the city's investment in the arts is still laughable and embarrassing. If the city treated the arts community like the magnet it is for tourists and visitors who spend money and leave (not that hard to do), the city would make very significant gains — both in terms of money and destination status.

For a small city like Fredericksburg, an effective investment in the arts should total in the thousands of dollars each and every month. The city needs to advertise like it's loaded with artists and their sought after artistic wares (because, duh, it's true).

If the city spent $100,000 a year just on noticeable advertisements in and around Washington, DC and Richmond, enticing day trippers to a quaint downtown art Mecca, for example, it would soon reap gains not just in meals, gas and lodging taxes, but increased exposure and subsequent media coverage (free advertising) as well.

I agree with all the disappointed who think the city needs to think much, much bigger, but I disagree with your third paragraph implication that the return on an investment in the arts "is not great." The literal dollar return to the city per artist may not be that great (and it may help explain why the city can't figure out how to think bigger), but the aggregate benefit of a more worthy, significant and prudent investment in the arts will surely surpass any investment we scared Fredericksburgers dare make.

Anonymous said...

It is hard to quantify the benefits to the city of an Art District. We recently received a grant from the EDC for an Art Gate on Lafayette Blvd. at Gallery 915. Our vision is to create a "Gateway to the Arts" in Fredericksburg. We want to establish a sculpture garden and outside venue for art events in conjunction with the existing gallery. This is an ambitious project which we hope will turn into a major attraction in the city.
In our experience our fair city has suffered as Mr Byrnes writes from some small thinking. We have consistently limited our growth thinking to a couple of blocks in the historic district. Instead of trying to pack ten pounds in the proverbial eight pound bag, we should be thinking sections. This is beginning to happen naturally as can be observed on William St. and Liberty Town. Those businesses restaurants and shoppes have created another area of interest and have spread the parking and traffic. Our area from Hanover to Lafayette seems to be moving in that direction. The role of government should, in our opinion, be to facilitate those willing to take the risk and willing to put the time into developing these venues. And in the larger sense, they need to get the people here and to move them around when they are here. We are lacking in imagination in facilitating tourism and promoting what we have to offer. We suspect it is an identity crisis. If we get the tourists here the rest will take care of itself. First they must have a reason for coming.
We are in favor of anything that facilitates our adding value and creating interest to new and existing businesses. Our experience would rate the past cooperation and facilitation of our city departments as poor and generally restrictive. There seems to be an effort to move forward and change the attitude, recognizing that constrictive policy is the death knell for the town's fragile economy.
As an artist and gallery owner, I will tell anyone that if one is expecting a huge financial return from this enterprise their chances are slim. However, the potential for cultural and personal rewards are enormous. That the world will be a better place is not measured so much in dollars, we just know and feel it.
Alan Howard

MATT KELLY said...

As for my comments in the third paragraph I would say that the projected income loss to the city from arts based businesses indicates that they are not having a large direct impact on the city's economy. However, they do have a large indirect impact by attracting visitors to the city as noted. Alan Howard is correct when he notes that a good marketing campaign could help art related businesses directly while also increasing their indirect benefits to the city.