"Arts and culture is a key component of the local economy
and generates returns to the public sector.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
Guilford Countyfs cultural institutions host more than 1 million visitors annually,
resulting in more than $30M in economic activity and $1.3M in local tax revenue.
...In order to ensure long‐term operating viability,
an ongoing subsidy should be in place before the PAC opens.
This could take several forms, such an operating endowment,
funding from a prepared food tax,
or income from revenuegenerating uses
such as on‐site restaurants or mixed‐use development
constructed above the PAC...
Any operating sources
should not require regular renewal through public approval.
On average, Guilford County residents come downtown
four times per year to visit cultural institutions,
and four times to browse local arts.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
A performing arts center (PAC)
has been under consideration for downtown some time.
...While PACs often generate net benefits,
they are rarely financially self]sufficient.
The Durham PAC hosts more than 300,000 visitors
and generates more than $11M in economic activity annually.
However, its $48M construction was funded entirely by public dollars.
...In order to ensure long‐term operating viability,
an ongoing subsidy should be in place before the PAC opens...
The same is true for Charlotte's Blumenthal PAC
which generates $52M in economic activity annually
while its $62M construction budget
came from public and philanthropic sources,
and it continues to receive an operating subsidy.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
PACs must meet unmet demand based on size and programming.
Any new performance space must be carefully designed
to provide spaces that will encourage new activity
without cannibalizing from existing facilities...
...the Aycock Auditorium is at capacity
and the War Memorial Auditorium is in need of renovation.
Additional demand exists for a large format venue,
with 2,800 to 3,600 seats,
to attract high profile music and theater events.
Touring shows evaluate locations based on potential gross revenue
assuming sold out shows.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
Therefore, a larger theater will be more effective in competing for acts
and will have greater revenue potential.
A downtown PAC will be best positioned for success.
...In order to ensure long‐term operating viability,
an ongoing subsidy should be in place before the PAC opens..
...visitors to Greensboro's arts events
typically spend $17 (in addition to ticket cost) on dining,
shopping and transportation.
This compares to $30 per visitor nationally,
indicating untapped potential for event related spending in Greensboro.
This is particularly important because non local visitors
typically spend twice as much as local visitors,
and these are net new dollars to the economy.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
...PAC projects require significant public support
in order to overcome political and financial barriers to feasibility.
A volunteer committee should include stakeholders from all sectors.
Once the committee is formed, it should:
‐ Identify Champions.
A campaign should be led by private citizens
who can effectively coordinate with the public sector
as well as solicit sponsorships from private businesses and foundations.
These champions provide project leadership and visibility from the beginning.
‐ Fund preliminary efforts.
The committee members should pool funds to support preliminary planning efforts.
‐ Investigate PAC best practices.
“Field trips” are useful ways to give public leaders and potential donors
a tangible sense of potential scale and mix of uses,
as well as to learn about creative strategies for multi‐sector collaboration.
‐ Conduct project planning study.
The volunteer committee should develop a comprehensive plan for the new PAC,
including:
‐ Demand analysis.
Many PACs have several venues.
In Greensboro, demand likely exists for a large‐format venue
as well as for spaces with less than 150
A detailed economic analysis is needed to determine the ideal programming mix.
‐ Program development and cost estimation.
The demand analysis can be used to develop a preliminary physical program,
design concept, project timeline spending impacts,
and development pro forma, including total capital cost.
‐ Operations and management plan.
Several existing cultural organizations have the capacity and interest
to manage a new PAC.
This would facilitate synergy among organizations,
ensure a qualified operator
and enable administrative economies of scale.
...income from events will likely be insufficient,
therefore any potential operating gap
should also be identified and planned for at the outset...
Obtain capital funding.
Almost all PACs draw upon a mix of public, private and
philanthropic sources.
...In order to ensure long‐term operating viability,
an ongoing subsidy should be in place before the PAC opens...
The public sector can issue a bond or set up innovative structures
such as Performance Development Financing.
The volunteer committee should also conduct a capital campaign
to solicit small donations from the community...
and large donations from prominent local businesses,
institutions and foundations.
Large donations are often effectively capital contributions.
‐ Conduct fundraising study.
‐ Establish operating funding sources.
2 comments:
“The Durham PAC hosts more than 300,000 visitors
and generates more than $11M in economic activity annually.
However, its $48M construction was funded entirely by public dollars.”
“Guilford County’s cultural institutions host more than 1 million visitors annually,
resulting in more than $30M in economic activity and $1.3M in local tax revenue. “
“The same is true for Charlotte's Blumenthal PAC which generates $52M in economic activity annually while its $62M construction budget came from public and philanthropic sources, and it continues to receive an operating subsidy.”
Abner:
The above excerpts are looking at the collective action without looking at the cost, or more succinctly the opportunity cost.
The opportunity cost of, for instance, the $48 million debt, associated debt service, and obvious cost of the annual subsidy, in the Durham example is to forego the entire project and associated costs and leave the money in the hands of taxpayers. Hence the cost of $11 million in economic activity in Durham is the forgone economic activity produced by taxpayers had the project not occurred and associated costs not occurred.
The next question is collective action of the Durham project is a specific activity for specific geographic location. The opposite would be true for the highly diffused taxpayer who’s economic activity would be for many activities over a wide geographic area.
Moreover, one must consider the public choice element and public choice theory elements, in action, given an economic choice directed by politico policy. That is, the supposed economic activity generated, the $48 construction, and the annual subsidies…..what part do politicos play in these items? Put another way:
“It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves". - Milton Friedman
Post a Comment