Tag Archives: municipal master plan

Trend # 6: Should Cultural Institutions Pay Property Taxes in 2011?

Happy New Year everyone! May your year be creative and exciting as you lead the way in the world of arts, culture, and creativity.

Today is the first business day of 2011, and today’s trend in our Eleven Trends for 2011 sets the tone for thinking about the relationships between local governments and nonprofit cultural organizations this year.

Does your organization expect to pay taxes on your building this year? NGO watchers expect municipalities to look increasingly at various forms of tax on land-owning nonprofit institutions that have traditionally remained exempt. While the early targets of this have been entities such as nonprofit senior living centers and educational institutions, along with some churches, it will be increasingly hard for governments that are starting to tax these types of nonprofits to leave museums, cultural centers, and nonprofit cultural facilities off the municipal tax rolls. Some of the taxes will come in the form of user fees – sewer, water, street maintenance, snow removal, security – but others will be a straight property tax. Expect this to come up for discussion as budget season starts everywhere and local government face shortfalls. Be ready to advocate, and organize to develop win-win solutions.

And win-win scenarios can happen. Economic development specialists and many others recognize the importance of nonprofit cultural institutions and related districts to economic vitality. Cultural districts that work can literally save urban areas, which economic leaders well know.

Performing arts centers or museums that need a subsidy to keep their programming alive, at the same time create the restaurant scene that keeps downtowns lit, exciting, safe at night, and create business for nearby parking facilities, retail, and more. The net positive economic impact is usually much greater than any subsidy, but this equation may need to be stated and documented with more clarity than ever before.

When good documentation of this net positive benefit is offered, look to economic development and planning specialists to be strong advocates and important allies in finding equitable solutions that keep tax/fee costs down while stressing -and building – the value of nonprofit cultural institutions as drivers of business and property values. Cultural organizations that have never met their colleagues in local economic development agencies need to start building good partnerships now for this to happen.

A tested and viable approach is service in lieu of taxes (or fees) that can be win-wins for the public sector and NGO cultural organizations. These approaches have typically included options such as free admission days to the public for museums, or free performances for civic celebrations. While not always easy to arrange – i.e. the contractual issues of professional musicians or actors doing free events – the public willl see tremendous benefits and the in-kind arrangements are almost universally more favorable than the tax or service fees would be.

Among other scenarios: look to more currently unaffiliated groups of nonprofits in a downtown or other part of the city to define themselves as a group and establish BIDs or similar districts, with strength to market themselves as a group and create an advocacy base that establishes favorable contracts with municipal departments and works toward building the excellent reputations that attract developers to a neighborhood. While this, too, has been a tested practice, count on seeing it more widely used with the goal of creating economic value for the municipal government by boosting the overall property values in what could be multiple small cultural and creative districts. (Sometimes smaller districts, each with a unique identity and niche, can be more effective in notching up investment a few blocks at a time.)

Look, too, at the marketing and fundraising opportunities that may come about as groups see strength in banding together. Even donors that aren’t particularly interested in, say, a historical society or community arts center may get behind “The Cultural Centers of City X” based on what the group of institutions make possible in economic growth.

Consider this to be a newly focused type of united fund concept, in which savvy organizations work in small and symbiotic coalitions – perhaps subsets of larger cultural funds, or groups coming together for the first time – to attract attention from today’s cause-oriented donors. Look to coalitions like this to develop joint case statements about their combined contributions to the six or eight block areas they anchor, demonstrating their value in social and economic stories that compel more financial support – even in the face of municipal fees – because of their combined net value. When groups can show that “in our six blocks, our four organizations make X economic difference” and when they can show that the net positive difference far outpaces the cost of public services for their few blocks of geography, they can develop quite a case for support.

At the end of the year, expect there to be some impressive new models in place, where marketing, advocacy, and excellent working partnerships with municipal governments and economic developers pave the way for actual boosts in overall local support for cultural institutions.

Good News on the Horizon: Research from other sectors

A big part of what I do is bring trend information to the table for clients. I look beyond the arts to other sectors that can guide us. Today’s good news comes from Commercial Property News, a publication I regularly comb for trends regarding cultural center development, arts facilities in mixed use development, and even the trends witnessed by retailers who are the prime tenants in commercial properties.

This week’s issue focuses on a new study by RREEF Research, which is a highly regarded property research company, in this case through a study they did for Deutche Bank, on trends in US commercial real estate.

1. They see that the decline in sales of commercial properties will halt by mid summer, and that we will start seeing upturn by the last quarter this year.

2. Vacancies will decline by the start of 2010.

3. Neighborhood and community centers will be the first to start doing better.

What does this mean for our field?

1. Be ready. Those projects that you may think won’t be forthcoming may be just timed right for investment. Construction costs are lower by far than they were, and good deals can be found. Timing is great.

2. If yours is a community center mixed use venture, you should be working now to line things up. Developers will be ready to move by the last quarter of this year.

There’s one other interesting finding here. CPN reports that the “luxury goods” retailers will be among the first to see the uptick by the end of this year. I look at that and think that your subscription ticket sales next fall may be better than we could anticipate right now. A week ago, when I read that the Chicago Art Institute was increasing its admission prices to $18 come May, I thought it was not such good timing. But they seem to be right in line with this report of pent up demand meshed with a bit more expendible money. All in all, a good read of tea leaves that gives new energy to us all as we look to next season! Let’s banish fear, and get to work.

Thoughts on Developing a Cultural Plan

I am starting a new cultural planning process for Mercer County, NJ, and thought it would be interesting to use this as an opportunity to go back and pull out a copy of the Community Cultural Planning Work Kit, which I wrote on commission from the NEA back in 1990.   I thought I’d return to it and see if it still holds true as a guidebook to the process.  (Good news, it does.) 

Here are some thoughts from it that ring true:

1) A community cultural plan should become the blueprint for building livability into an area. 

2) It should mesh with all other community masterplans, and in its pages detail how culture plays an integral role in shaping the community’s look, feel, spirit, and design.  Other civic plans, in turn, should reference the cultural plan’s role and responsibilities.

3) The planning process iteself should allow each community to define those aspects of cultural development that are most appropriate and essential to its own way of life and future growth. 

4) A classic planning error is to develop a good solution to the wrong problem.  Before a plan is developed, problems, opportunities, and needs must be identified, and perferred solutions or scenarios identified.

5) Don’t confuse planning with a needs assessment process.  The assessment is the process of investigating the community’s cultural needsd, priorities, strengths, weaknesses, and potential within the context of the community’s general economic and social conditions.  The assessment is conducted to provide a frame of reference for decision making – planning. 

6) A plan is more than recommendations.  It is the outcome of a public process that develops vision, goals, and workable strategies, and that identifies how those strategies will be accomplished.  Open meetings that allow the community to hear proposed goals and respond with their own views are important. 

7) The key to turning a plan into reality is the buy-in of all those involved in implementingt goals, objectives, and strategies.  If there are goals or strategies that require the support of groups or decision makers not represented in the planning process, it will be necessary to take the rough draft of ideas to them and to seek their involvement.  Before you begin a plan, meet with all the community agencies, civic leaders, and government agencies likely to be touched by a cultural plan.  Let them know how important their input is to the development of a realistic and workabple plan.  Incorporate them into the planning process.

8) You will need to provide your community with a framework of expectations as to the outcome and value of the plan.  

9) You will need to determine the resources required to implement a cultural plan.  But, a cultural plan isn’t just a plan or a new strategy for funding the arts.  A real cultural plan specifically addresses how your community can and will be transformed and improved through vital arts and culture.   

10) Cultural planning isn’t a one time deal.  Every five years is a good rule of thumb. 

11) The agency plans of implementing organizations – local arts councils, community foundations, civic arts commissions as well as school districts and municipal offices – should continuously respond to cultural plans, taking their cue on priorities and timelines from the overall plan.