The arts: business sector, infrastructure or social good?
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.
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| South Orange Performing Arts Center |
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.
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. Read more...
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