Arts District--Are We Helping the Arts?

The new Arts and Cultural District http://fredericksburgva.gov/agenda/2010/1214/8d.pdf
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?