How you finance the arts depends on how you define the arts

In one of the most artsy towns in one of the most artsy areas of New Jersey, the South Orange Performing Arts Center is struggling to pay back a $3.9 million loan to the township. One South Orange official openly questioned whether SOPAC will ever be able to pay back its debt.  This author has heard SOPAC called a failure.

South Orange Performing Arts Center

Well, that depends on how you look at it. As a business, SOPAC is not doing well, and might not for years to come.  (The "bad economy" argument is not compelling.  While we might expect subscriptions and donations to go down, local theaters should be a more attractive alternative to those who want to enjoy performances and save money.)

On the other hand, there are plenty more stores and restaurants in South Orange Village than were there in 2005, a year before SOPAC opened.  (In other words, there were more places to shop, eat and visit in the worst years of this recession than there were in the best years before the crash.)

And SOPAC adds several benefits for South Orange and surrounding communities: A large event space, more opportunities to highlight community and student performers in a professional setting, and more choices for movies -- all within walking distance of the train.

So the question for South Orange and other communities looking to the arts for community and economic development is:  Should an arts center be considered a business sector, infrastructure or a social good?

The answer can help determine whether a municipality supports the arts, or just allows it to happen.  The answer also can help officials decide whether arts activities supported by communities should be managed by economic development, community development, or parks and recreation agencies.

If the arts are just another business sector, then a community should judge their success by their return on investment to the public.  Nonprofit institutions don't pay property taxes, but they can give a Payment In Lieu Of Taxes (PILOT).  Community leaders should negotiate for a PILOT that covers the center's share of municipal services, plus extra to make up for the fact that a tax-paying business could be on the site.  If, as in the case of South Orange, the community invests in a center, the community should demand that the center generate as much revenue as possible.  But the center should be free to charge as much as the market will bear, without any consideration for community arts or events that wouldn't bring in much revenue.

If the arts are seen as community infrastructure -- like a road or a storm drain system -- then their success should be measured in how many businesses, revenue-generating development or self-supporting residents it attracts and supports.   To make it work financially, communities could support the arts with some of the revenue that would be generated by new development.  That's what Rahway did in March, when its City Council unanimously approved an $8.5 million bond to propel its growing arts district.

It can make sense to take on this much debt for large projects that generate enough revenue to pay back their costs  That's why tax increment financing is successful around the country.  (In New Jersey, it's known as a Revenue Allocation District.)  But there are other ways to support small initiatives.  Governments could reserve a portion of the added tax revenues or fees that come about because of the arts.  Or perhaps Special Improvement Districts could dedicate a percentage to the arts from the revenues they receive from restaurants, shops and other businesses that benefit from all the people coming to enjoy the arts -- then staying to shop and eat.

Under the infrastructure scenario, cultural organizations and artists that receive support should be encouraged -- if not obligated -- to promote local businesses and projects who can bring more revenue to the municipality.

A third option is to see the arts like parks -- an overall benefit to society that are not expected to pay for themselves. School-based  and community arts programs, small community theaters and the like are probably not going to be self-supporting over the long term. (Especially not in north and central Jersey, where there are so many options for arts lovers.)

In this view, the community supports the arts through its property taxes or other fees. As with other social goods, measures of success include the number of people served and how those people feel they benefit from the arts.

The responsibility of cultural organizations and artists in this scenario would be to serve as many people as possible, and especially those who do not have as much access to art.

The three options are not mutually exclusive.  Larger cities like Newark and Jersey City might be able to do all three.  But in smaller communities like South Orange and Rahway, the choices are more difficult.

By choosing among these options, community and cultural leaders can make better choices about how public resources should be spent, and reduce the type of controversy now facing initiatives like the South Orange Performing Arts Center.

 Leonardo Vazquez, AICP/PP

For more on the SOPAC struggles, see this report in NJ.com


For more on Rahway's support for the arts, see this report in NJ.com

Photo credit: David Gard, New Jersey Local News Service.  The image was published in NJ.com on October 10, 2010.

For the time being, make small plans

Make no little plans. They have no magic to stir men's souls and probably themselves will not be realized.

Attributed to Daniel Burnham, a godfather of  American urban planning

Sorry, Mr. Burnham: Realistically, small plans may be all we can do now.

There is a lot less support for big infrastructure projects than there might have been two years ago.  Consider: The recent election of so many fiscal conservatives across the country, New Jersey Governor Chris Christie's killing of a new train tunnel to New York, and the loss of 14,000 architectural and engineering jobs in the U.S. the past year.  (While the economy added 151,000 jobs in September, hiring was flat in the A&E field, according to the federal Bureau of Labor Statistics.)

There are still some pockets of support for big projects, but here are things you can do if you're a placebuilder in a place that wants you to help solve problems at the lowest costs possible:

• Understand why people and leaders are reluctant to do big things in times of economic uncertainty and concerns about long-term debt. If you don't, you're going to have a hard time persuading communities and their leaders, and building their confidence to do more, and do better.
  
• Frame community and local economic development strategies around small business development.  The one thing conservatives and progressives seem to agree on is supporting the growth of small businesses.  For example, if you wanted to do public art downtown, you would be better off talking about it as a way to attract visitors who can support retail businesses.
  
• Encourage more public/private partnerships, and partnerships between business and community groups.  This can help with small ticket items -- such as place marketing or business assistance centers -- that in normal times are done by public agencies.  And no, it's not enough to just write that into a plan -- if you want it to happen, you'll probably need to do some matchmaking.
  
• Get influential people and especially fair-minded representatives of small businesses on project steering committees and advisory boards.  In an age when so many people are standing on soapboxes and shouting from their blogs and TV appearances, the quiet conversation can be quite powerful.
  
• Have the courage to question your assumption about big projects.  Do the critics have a point?  Are there ways to move toward the same goals without large up-front investments?  Note to New Urbanists, architects and civil engineers:  Not every problem needs a design solution. 

Be creative.  You can think outside the box without having to build it.

Leonardo Vazquez, AICP/PP 

The Leading Institute and the Bloustein Online Continuing Education Program offer great courses that build your capacity to do more in times of limited resources.  Learn more.