Arts serve as a catalyst for economic development

In times like these, funds supporting new building projects that ultimately spur overall growth and development are necessary to keep the economy moving onward and upward.

Minnesota Business Journal

(Thanks to Mark Martin of the Missoula Cultural Council for passing this along. Russ)

The arts industry, especially in Minnesota, has in the past and will continue in the future to prove itself a fundamental contributor to our economy, not only through the jobs it sustains but also in the economic activity generated by arts organizations.

Major arts building projects are often the centerpiece of renewed and revitalized economic activity and can become cultural icons that define a city. Therefore, a lot of responsibility rests on the shoulders of organizations that take on such projects. "The question of investing millions of dollars in a new building project is often the single biggest financial decision an arts organization will face," says Peter Kitchak, president of Keewaydin Real Estate Advisors of Minneapolis. Cultural organizations like the Guthrie Theater have turned to Keewaydin for advice on making these decisions, and for help building their own future.

The Guthrie’s $125 million theater campus on the Mississippi River, which will include three major performance spaces, will not only further define Minneapolis as a cultural destination, but like many other proven projects, will also play a significant role in Minnesota’s economy through its own economic business contribution and through its influence on other developments in the city.

Building economic activity

Communities across the nation have discovered two things: that culture is good business and that investments in the arts make sense. A 2002 study by Americans for the Arts noted that the total economic activity of nonprofit arts organizations in the United States in 2000 totaled $134 billion, and that these organizations generated 4.85 million full-time equivalent jobs in that same year.

An economic impact statement prepared for Guthrie by Anton, Lubov and Associates of Minneapolis states that the construction of the new Guthrie complex will be a one-time addition of $336 million in economic activity and will add the equivalent of 1,831 full time jobs to the state’s economy for two years. Once complete, the theater will be able to expand its programs and increase its annual economic impact to more than $82 million each year beginning in 2006, a number that includes tourist spending of more than $15 million per year. Furthermore, the expanded operations will add the equivalent of 200 full-time jobs to the state on an ongoing basis.

Building business

The creative economy brings benefits that extend beyond direct employment and tourist spending. One of the greatest strengths of a vibrant arts community is its ability to attract other business and encourage neighborhood development. Richard Florida of Carnegie Mellon University, author of "The Rise of the Creative Class,: says: "…Talent has become the single most critical factor of production. In the knowledge economy, those places that have talent thrive, while those that do not decline."

Culture helps build community by influencing commercial and residential development, which in turn attracts workers and residents. When companies make decisions to relocate, they seek markets with concentrations of talented workers. In turn, the power of industry to attract talented workers depends largely upon a city’s quality of life. Florida says that "quality-of-place" is vital to maintaining an advantage in the marketplace. In his report, "Competing in the Age of Talent: Quality of Place in the New Economy," he says: "Simply put, regional advantage accrues to places that offer the lifestyle advantages required to attract talent, as well as the economic and career opportunity and the ability to attract firms and industry."

Building communities

Arts and cultural amenities in urban areas also attract city dwellers, specifically young professionals and empty-nesters, to upscale housing. To these groups, close proximity to cultural activities is an important factor in their choice of location. They want to be in a neighborhood that doesn’t shut down at 5 p.m., one that offers dining and entertainment choices within walking distance and a vibrant street scene at all times of the day.

The new Guthrie Theater and the Mill City Museum are two important cultural elements of an ongoing effort to revitalize one of Minneapolis’ oldest neighborhoods. The Minneapolis Riverfront Development District represents a partnership between civic entities, real estate developers and cultural organizations that aims to convert the area from a utility to a vital public amenity. The district, which spans both banks of the Mississippi River between Interstates 94 and 35W surrounding downtown Minneapolis, includes 4.6 million square feet of commercial, industrial and cultural space, more than 600 hotel rooms, 3,400 residential units, and 9,800 parking spaces. In an area recently dominated by surface parking lots, condominium developments started after the announcement of the Guthrie project are being occupied at prices ranging from $317,000 to $1.5 million.

Other cities like Philadelphia, Seattle and Fort Worth, Texas, have experienced booms in overall economic activity after new arts venues moved in. The Kimmel Center and other new and renovated theater venues along Philadelphia’s Broad Street have helped to revitalize the city. The office vacancy rate along Broad Street has dropped from 40 percent to 7 percent. More than 2,500 residential units were added to the area. National retailers have moved in, and the city has experienced 167 percent growth in restaurant business. In addition to its positive impact on Philadelphia’s economy, Kimmel has helped to establish Philadelphia as an international arts destination, welcoming more than 1 million visitors since its opening in December 2001.

Building public and private partnerships

In a 2001 brief, the National Governors Association advised members to consider the role of arts in economic development. "Governors can position their states to use the arts effectively by promoting new partnerships among state agencies, communities, and the business sector and by harnessing the power of the arts and culture as tools that unite communities, create economic opportunity and improve the quality of life," the brief said.

Kathy Ehrmann, a principal with Keewaydin, says that looking at examples like Philadelphia, where the interests of civic leaders and arts organizations combined to create Kimmel Center, are especially useful in showing how partnerships can benefit the entire community. "The community leaders want to strengthen their cities, and the arts organizations want to improve and expand their cultural offerings, but they need help from each other," she says. "It’s often our job to get everyone singing off the same sheet of music."

Keewaydin has not only been involved with the Guthrie Theater in developing partnerships, but the firm has expanded its arts consulting business nationally. Last year Keewaydin completed a study for four performing arts organizations in Portland, Ore., to help them determine the feasibility of a new performance venue for their city. The study resulted in a Master Plan for the Arts, which includes construction of two new venues within a seven-year period and capital improvements to two existing venues, all at a cost of approximately $200 million. Keewaydin recommended a crucial first step in the process: The establishment of a Community for the Arts Task Force made up of civic officials, community leaders, and arts representatives.

Why invest in the arts?

So in an era when public and private coffers are depleted, it’s easy to ask why arts investment should be a priority. With more than $500 million dedicated to projects like the Guthrie Theater, the Walker Art Center, the downtown Minneapolis Public Library, the Children’s Theater and the Mill City Museum, Minneapolis is an example of a community building for the future. Minnesotans understand that every dollar spent on such projects yields many multiples of payback in direct economic activity from jobs and tourism. More importantly, we know that cultural enhancements are a catalyst for long-term economic vitality, attracting the knowledge workers who influence commercial and residential developments that build solid foundations for our future.