Larry Houstoun's Urban Public Spaces & Business Improvement Districts

The center of American cities are enjoying a revival that is not attributable entirely to the current unexpectedly long period of national prosperity.  For decades, cities have struggled – with varying degrees of success – to keep, if not attract, retail and office activities.  Now, however, impressive results are emerging from a more recent appreciation of cities as the centers of American culture. This is hardly a new phenomenon; when Philadelphia was the nation’s capital, presidents George Washington and John Adams enjoyed performances there at the country’s first theaters.

What is new is the recognition that there is gold to be found in front of the footlight s and at museums and galleries that can contribute to local employment, business prosperity, and tax revenues.  Under proper conditions, these secondary economic effects can be impressive.  Also new is the recognition of the important of a city’s overall reputation –good or bad—in economic development.  Part of that reputation is based on the city’s arts and cultural institutions, which are seen as a significant factor in attracting and retaining skilled professionals and managers.

Finally, there is new recognition of the synergy that can emerge from collaborations among arts institutions as well as between these entities and related business interests.  This synergy appears most promising when there is public recognition of a district where the arts are a prominent attraction.

Ideally, an urban arts and cultural district should be diverse in its offerings and integrated into the fabric of the city.  The core mix may include museums, symphony and recital halls, art galleries, theaters, opera houses, art house cinemas, and arts education facilities.  To create its own identity, the district should have at least four or five of these attractions within a three- to four-block radius in each direction, and the walkway between them should be inviting.

If arts and cultural facilities are the district’s bricks, success also depends on the mortar –related and intermixed private enterprises, including cafes, restaurants, and bars; frame and print stores; hotels; night clubs; and various specialty retail shops that are open at night.  These districts can encourage public art and murals, artist-in-residence programs, street-corner performances, and festivals.  Districts can emulate New York City’s SoHo, where old converted buildings house galleries and artists, or places where large public facilities, such as museums or theaters, set the tone.  In an arts and cultural district, the public, nonprofit, and commercial activities reinforce one another.  A performance at 8:00 pm, for example, can be preceded by dinner nearby and followed by window-shopping and a stop at a patisserie or nightclub.   Arts and cultural facilities can help encourage downtown growth, and commercial enterprises can augment it.

The economic potential of such districts is becoming more widely recognized.  Six counties in the Denver metropolitan area instituted a 0.1 percent sales tax that directly funds nonprofit cultural institutions serving the region.  The city’s scientific and cultural facilities district (SCFD) includes well-established institutions and smaller neighborhoods alike.  Generating more than $27 million in tax revenues, SCFD channeled funds to 301 cultural and science-related organizations in 1997.

Arts-related institutions in the United States currently draw more visitors than professional sports events, and Denver is no exception.  SCFD’s cultural institutions drew 7.9 million people in 1997, exceeding by 41% the 1996-1997 season home-game attendance of the Broncos, Nuggets, Rockies, and Avalanche combined.  Moreover, from 1989 to 1997, total SCFD admissions grew by 56 percent: paid admissions increased by 50 percent, from 3.25 million to 4.87 million, and free admission increased by 79 percent.

As economic engines, arts districts are exceptional.  Many of their core facilities and related commercial enterprises are open daily, unlike those of sports facilities, which operate infrequently and typically exist beyond walking distance at the edges of downtowns.  Contributing to the success is the frequency with which evening performances occur—100, 200, or more times a year.  People come, spend money, and tell others about the positive things that they experienced downtown.

While not all subsectors (e.g. symphony orchestras) are sharing the arts boom equally, the boom overall is impressive.  The significant growth over the past decade in opera, especially in its appeal to young adults, is widely recognized.  Also, New York City’s Metropolitan Museum of Art reported its highest attendance ever for 1996.  The league of American Theaters and Producers, also in New York City, reported a one-year increase of 11.8 percent in attendance for the 1996-1997 season.  The New York City Convention & Visions Bureau reported an increase of 1.5 million visitors in 1996, up 4.9 percent from the previous year.  In the past decade, Philadelphia’s Center City has seen three arts cinemas and two new legitimate theaters open one by one.

In 1997, the Alliance for the Arts in New York City published the results of a study of the economic impact of the arts in the city and the state. The economic assessment includes both the direct expenditures of arts organizations and of the tourists they attract as well as the indirect and ripple effects of these expenditures. Cultural tourism is emerging as a significant segment of tourism, one of the nation’s fastest-growing industries, and the arts are attracting growing numbers of foreign and domestic visitors who spend money that otherwise would not be captured.

Arts and cultural organizations were defined as fo llows:

• nonprofit cultural institutions: performing and visual arts, nonprofit film and media, and other cultural organizations;
• commercial theater: for-profit Broadway and off-Broadway productions and touring companies;
• commercial art galleries and auction houses; and
• motion picture and television production studios.

Major findings for New York City (FY 1995) included the following:

• The total economic impact of the arts on the city was $11.1 billion.
• Employment generated by the arts, both directly and indirectly, totaled 130,466.
• Taxes returned to the city as a result of this activity exceeded $221 million.
• Nonprofit organizations generated $3.2 billion.
• Commercial theater generated $1 billion.
• Commercial art galleries and auction houses generated $823 million.
• Motion picture and television production studios generated $3.4 billion.
• Visitor spending generated $2.5 billion.
• Capital spending by nonprofit institutions and commercial art galleries, auction houses, and theater generated $170 million.

Some years ago, a Philadelphia tourism official was quoted as saying “Culture doesn’t pay:’ Not long after that, that city’s principal museum, the Philadelphia Museum of Art, became the exclusive U.S. site for the worldwide Cezanne exhibit, attracting more than a half-million visitors (80 percent from out of town), who spent $86.5 million and broke all previous weekend records for hotel occupancy. By 1998, the Pennsylvania Economy League (PEL) undertook a study of the economic development dimension of arts and cultural activities. According to its findings, greater Philadelphia’s nonprofit cultural industry generates $300 million a year and employs more than 5,500 fulI – and part-time workers. Its economic impact on the five-county region is impressive. It supports $564 million in spending and more than 11,000 jobs, and it collects more than $10 million in state and $6 million in city income and sales taxes. In the diverse regional economy, the nonprofit cultural industry stands out as a leader, the study asserts, helping to define the region’s image and adding significant value to regional companies that wlderstand its potential. Partnerships between regional businesses and cultural leaders help the region by:

• creating a regional image of quality of life and creativity;
• helping companies recruit talented workersi
• providing venues and opportwtities for business development;
• making the region a leader in the growing cultural tourism market and
• enhancing the for-profit cultural industry.

In 1998, approximately 45 percent of all organizational and audience revenue came from outside of the five-county southeastern Pennsylvania region. These “new” doUars enter the region solely because of the presence of regional arts and cultural organizations and account for $265 million in total regional spending. Nonprofit cultural activity generates nearly $6.5 million annually in sales and income taxes for the city of Philadelphia. “Combined with additional business, property, and other taxes;’ the PEL report states, the business of arts and culture is clearly a significant generator of tax revenue.”

The ultimate goal in the economic development business is to become a “hot” city–one that is known to every recruiter, business analyst, and newspaper reporter as a great place to live and work. The PEL report quotes economist David Birch of the Massachusetts Institute of Technology: “In today’s economy, the traditional ‘factor cost’ argument is largely irrelevant. [Entrepreneurial) firms are not locating so as to minimize taxes or costs associated with labor, energy. transportation. etc. In fact, if there is any pattern. it is a shift to higher, rather than lower, cost areas …” The arts can be a powerful enhancement to a community’s attractiveness. “‘Why People Move to and away from New York City:’ a survey of people moving to New York City in 1992, found that a majority (56 percent) cited the variety of cultural attractions as a major motivation for moving. This was the second most commonly cited reason after job changes (61 percent).

Washington, D.C.’s East End

Are arts districts part of an important new economic movement? Washington. D.C:s Downtown Business Improvement District (BID) director Richard Bradley thinks so, quoting Joseph Pine’s book The Experience Economy. Pine notes the historic transition from agriculture to manufacturing to service economies and suggests that the important new forces will be related to buying and selling education, aesthetics, escape. and entertainment as people move from passive engagement to more active lives. An arts district can be the venue for all of these experiential commodities, hence Bradley’s interest in Washington’s burgeoning East End. (See “Resurgence in Downtown Washington:’ March 1998 Urban Land.)

In the older, eastern portion of Washington’s downtown, where the department stores closed and the office market never penetrated, there exists a respectable clutch of cultural facilities from the distant past. Ford’s Theater, where President Abraham Lincoln was sbot, the National Portrait Gallery, and the main branch of the District’s library system are serving as anchors for the arts venues that are coming to the low-numbered streets where few tourists venture. The area received a major boost three years ago, when local sports mogul Abe Pollin opened the MCl Center on top of a subway station, bringing hockey fans and concert-gaers alike into blocks newly relighted and made safer by the presence of the BID’s supplementary security personnel. However, there have been some hitches along the way in creating Washington’s new arts district.

The decision in the 1960s to locate the Kennedy Center-with its concert hall, opera ho use, Eisenhower Theater. and two smaller theaters–far from downtown reflected the tendency of that era to disregard the downtown as a place for weU-lo-do patrons to converge. The fact that Washington’s 1968 riol came within several blocks of the National Thea tre served to underscore this ethos. The Kennedy Center is the cultural equivalent of the shopping mallits drive- to locatio n is a long walk from the d osest subway stop. and although there are three restaurants within its marble-d ad walls, where are few shops or restaurants nearby.

Efforts to convert the former WoodWard and Lothrop department store in the heart of Washington’s downtown into a space for the Washington Opera company, directed by Placido Domingo, stalled and failed, destroying yet another opportunity to put a star-class cultural amenity close to a subway station. Despite the loss. the development momentum for businesses located downtown continued to build. Altho ugh a number of downtown theaters were lost during the redevelopment of the 1960s and 1970s, two survived at 13th Street. N.W.-the National and the Warner theaters. Their continued success, and the move of the Shakespeare Theatre from Capital Hill to 7th Street in 1992, reminded regional patrons that th ere were slill compelling reasons to go downtown. The foUowing plans are committed or expected to be developed over the next two years:

• Kennedy Center East will provide adapted facilities to house Broadway shows and services that the theater complex on the Potomac River has outgrown.
• An eight-screen arts cinema is planned.
• A yet-to-be-financed museum of American popular music is on the drawing boards.

It is unclear how much of the optimism leading private investors and nonprofit organizations to look again at the old downtown can be traced to the BID, now three yea rs old. It is probably true, however, that this formerly seedy end of commercial Washington owes some of its comeback to the BCD’s $5 million security and cleaning services, marketing, and programs for the homeless. Now that significant negative factors that deterred investment have been nullified, the area is being hyped by professional marketers. The presence and convenience of subway stops in this pa rt of Washington and the comfort that Washington area residents feel in using the 100-station regional transportation system also st rengthen the Jft!;l’S appeal.

Sixty percent of MCI Center attendees, fo r example. arrive by subway. Without first-rate public transit, the arts facilities, restaurants, and the MCI Center would have required quantities of parking structures that would have seriously impaired the small-scale ambience that is an essential part of the 7th Street arts district’s appeal. On the down side, the economic prospects of the MCI Center, plus an arts expansion in the neighborhood, have encouraged rents to rise in anticipation of new restaurants, galleries, and condominiums–in many cases driving economically marginal artists from their homes and work and exhibition spaces.

Philadelphia

Less than ten years old, Philadel phia’s Avenue of the Arts has gained momentum in the past five years both in its arts and cultural offerings and in the commercial revival that has accompanied them. Although the formally designated district is three and a half miles long, the major cluster of fac ilities and related businesses lies in the half-mile segment of South Broad Street below city hall. The Kimmel Center for the Performing Arts, with 6,000 seats in three venues, is being crealed there, and the 350-room Ritz Carlton has relocated into a 100-year-old marble bank tower.

Until the 1980s. South Broad Street was the site of Philadelphia’s top financial and law firms. As they moved into new Class A space built by Willard Rouse and others on blocks westward, South Broad Street was left with half empty office buildings, the Union League Club, the historic Academy of Music. and the Schubert (now Merriam) Theater, which had seen better days. So moribund was South Broad Street that people safely left their cars on the median strip for days. Beneath the street, the subway pedestrian concourse became an unofficial dormitory for the homeless.

When the concept for an a rts district was first launched by the Central Philadelphia Development Corp., the district’s name. location, and size seemed overly ambitious, given the economic vacuum that South Broad Street had become. To begin, the city implemented a streetscape project that added period light fixtures, a paved median, pedestrian safety islands, trees, plante rs. and new sidewalks and crosswalks. The capital project proved to be precisely the kind of public investment required to change attitudes about the area. Next, a new theater for plays was created in conjunction with the expansion of the Doubletree Hotel’s parking garag’e-the $8 million, 300-seat Wilma Theater is now the sening for a decades-old local company and the place to see a Tom Stoppard or Harold Pinter play. The once slightly shabby Academy of Music, built in 1855, is the o ldest grand opera house in the United States still used for its originaJ purpose. The Opera Company of Philadelphia. having undergone a $25 million modernization,last year reported its best season ever.

Renamed the Merriam Theater, the former Schubert’s is an 1,800-seat setting for road company shows that was acquired in the 1990s by the University of the Arts and completely refurbished. The university itself recently has converted an older office building into residential, studio, and classroom space, thereby infusing more life into the district. The unive rsity now has seven performance spaces and six gallery and exhibition sites, principally the result of the conversion of obsolete commercial and public buildings.

last year brought another new theater,converted from a vacant movie house. The Prince Music Theater, named for director Harold Prince, has 450 seats with full-size Broadway stage, concert shell, and film screen used by the Festival of World Cinema.

The keystone of the district, however, is the $245 million Kimmel Center for the Performing Arts, now under construction at Broad and Pine streets.. The Rafael Vifioly-dcsigncd complex will include a new 2,500-seat concert hall for the Philadelphia Orchestm. plus a 650-seat adaptable recital hall enclosed in a vast. glazed winter garden that spans the entire block.

The rebirth of the historic BelJevue Stratford Hotel helped to generate the o pening of a half-dozen new restaurants nearby, and a popular. African American-owned jazz club relocated to the Bellevue’s lower level. An additional benefit is the proximity of the Avenue of the Arts to the Pennsylvania Convention Center, an eight-acre facility that soon will be expanded to North Broad Street.

Two names amo ng the many who have helped to create the district stand out. Willard Rouse, the city’s leading developer in the 1980s, led the group that produced the convention center and currently heads the organization raising funds for the Kimmel Center for the Performing Arts. Mayor Ed Rendell, having made the city solvent, has supported the Avenue of the Arts in making physical improvements and in fundraising. His wife, Judge Midge Rendell, chairs the board of Avenue of the Arts, Inc., a nonprofit corporation founded in 1993 and supported principally by corporate contributions to promote and guide the Avenue’s expansion. Street festivals featuring classical music, jazz, and dining are among the group’s accomplishments. The corporation serves also as the district’s planning arm and maintains the streetscape.

Miami Beach

Miami Beach’s Lincoln Road is the setting for arts, arts-related commerce, and artists; performance venues include the Old Colony Theater and a symphony hall. A pedestrian mall near the convention center and the restored hotel strip along the ocean, Lincoln Road was rebuilt in the 1990s and has generated large crowds in part because of the appeal of its outdoor restaurants and quality art galleries.

The rebirth of this once-acclaimed ” Fifth Avenue of the South” came after a long decline that produced rents low enough for artists to enjoy the favorable setting. Local attorney Stanley levine, an a rts devotee, was a leader in capitalizing on their presence by building and expanding on a single theme-the arts. Lcvine led the fight against a supermarket (a conflicting use), for preserving and upgrading the pedestrian area, and in forming a business improvement district to patrol and clean the area, to market the arts and arts-related businesses, and to produce arts-based special events. Levine also recognized that the gradual economic success of his vision would raise rents and drive out the artists who originally had given the place the character that he was trying to preserve. To avert this loss, Levine purchased neighborhood buildings when the prices were low and continues to make space available to artists at rents they can afford.

Wilmington, Delaware

The state of Delaware formed a redevelopment corporation to convert a former shipbuilding and shipping area in Wilmington, Delaware, that had last seen prosperity during World War II into a space for cultural attractions, baseball, nightclubs, offices, outlet sto res, and a riverside park. The slale agency remains in place to support the business and nonprofit interests, and a BID has been formed to provide supplementary security, grounds maintenance, cleaning services, and marketing.

The district’s arts facilities include the First USA Riverfront Arts Center, which opened in 1998, occupying a 125,000-square-foot converted warehouse. The fa cility has 89,000 square feel of conference space and can seat 1,500 in theater-style seating.

The Delaware Theater Company, also housed in converted warehouse space, offers plays by John Steinbeck and Noel Coward, as well as contemporary playwrights. Although its principal performance location is in the historic Grand Opera House at the opposite end of the business district, the Opera Delaware Studio, located in another converted building, is the site of ex:perimental and educational opera offerings, including new works produced

in association with the nearby University of Delaware. The Delaware Center for Contemporary Arts is relocat ing here and a children’s museum may fo llow. The Philadelphia Inquirer recently attributed strong weekend hotel business in northern Delaware to the riverfront activities, especially the major art shows.

A unique funding strategy was used to form the riverfront BID. To ensure that the security, cleaning, and maintenance se rvices were in place as soon as the Riverwalk and park were open and before retail leasing began, financing began based primarily on voluntary multiyear agreements. As retail leasing proceeds, the voluntary contributions will decline as the assessment revenue increases, starting this fall. The unifying physical element in this melange of business and art enterprises is the Riverwalk, carved out of the edge of the Christina River by the state’s Riverfront Development Corporation. The economic advantage of the Riverwalk is the ease with which arts patrons can walk to the large collection of outlet shops occupying the space once dominated by the sheds used to build ships. An L.L. Bean store is well positioned between the arts facilities and Frawley Stadium, where the Blue Rocks minor league baseball team plays. As much as 400,000 square feet of retail is planned on this site, which is visible and accessible from Interstate 95. The Shipyard Shops, a joint venture involving the Riverfront Development Corporation and Pettinaro Construction Company, Inc., has leased 90,000 square feet of retail. The state corporation, which keeps the riverfront lively with festivals and other activities, continues to promote redevelopment with a six-story warehouse conversion for residential space, a restaurant. and a public market expected to come next. The riverfront district is close to Amtrak, the Philadelphia commuter rail line, 80,000 walk-to-work jobs in Wilmington, and other amenities.

Denver

Located in the late-blooming Lower Downtown (LoDo) area, Denver’s arts district is somewhat removed from the Denver Center for the Performing Arts, although it is a close neighbor of Coors Field. LoDo is undergoing development-as are virtually all other segments of the city’s downtown–but the results are still spotty. Gains and losses have resulted from juxtaposing a major athletic field and an arts district. Coors Field is a major new force for investment in the area, and increasingly, as leases expire, restaurants and sports bars pitched to the fans fill space used previously by artists and small galleries.

The arts district is near Denver’s famed Larimer Square, a varied and prospering preservation of old Denver, and includes Metropolitan State College’s Center for the Visual Arts. LoDo has its “First Friday” open house, which attracts strollers from throughout the region to the art galleries in modest-scale converted buildings. The district’s performance arl venues include the Denver Center for the Performing Arts, which offers a full selection of ballet, opera, and symphonies. The center’s leadership prefers to have exclusive parking available close to the performance hall. Regional patrons’ safety concerns, as well as convenience, drives such decisions, despite the presence of supplementary security personnel supplied by the Downtown Denver Partnership. The center’s structure addresses two needs simultaneously by sheltering audiences with a sweeping glazed roof over the street and leaving the space open at both ends so that pedestrians can walk through it or walk to and from performances.

However, the artists living and working there, wbo have helped define the area’s character, are finding affordable space increasingly rare. Hilary DePollo, former head of the LoDo Arts District organization, reports that the number of galleries has dropped from 35 to 18 in recent years. As the critical mass of galleries declines, DePollo’s former organization is reconsidering its mission, which had included promotions, events, tours, and other cooperative ventures supported by the businesses in the district. The arts district appears to be losing out to reinvestment in prosperous downtown Denver.

Quality of Life

Are the arts a catalyst for redevelopment? Obviously, the answer to that question differs depending on time and location. It is premature, for example. to expect a building renaissance around New Jersey’s Performing Arts Center in Newark, now less than five years old. Playhouse Square, however, a four-theater complex created from former vaudeville houses in Cleveland over a period of years, has spurred investment of more than $225 million in the surrounding neighborhood, according to Art Falco, Playhouse Square’s president. It also has increased audiences for its resident companies by more than 50 percent in ten years. Nevertheless, Playhouse Square’s success was 20 years in the making.

The arts have contributed to downtown real estate successes, even at the expense of the arts themselves. Denver, enjoying a significant long-term boost in downtown jobs and housing, has seen LoDo’s amenities spur an explosion of renovations and conversions. Philadelphia, even before it renamed South Broad Street, drew high-rise residential development to the blocks nearest to the Philadelphia Orchestra, the Opera Company of Philadelphia, and the Merriam Theater’s road shows. Where stable upscale residential areas and multiple arts facilities converge, restaurants and even some evening shopping follow. Today, such areas are seeing conversion of obsolete office buildings into residential and hotel towers.

The link between arts and retail on the Wilmington waterfront depends principally on the substantial daytime crowds generated by the art shows and the extensive region from which visitors are drawn. The area was planned for multiple pedestrian trips; the walkways between the somewhat disparate public and private activities link them in a convenient and attractive setting that probably generates more and longer walks between destinations than more urban sites. Most important, Wilmington began with a well-thought-out plan in which the arts were a prominent element, and the state created a redevelopment arm to ensure that the retail and residential spin-offs became reality. In the main, arts-related real estate investment will favor restaurant and residential development, which may endure, and galleries, which may not

How people move around influences economic spin-off potential. Attractive walkways and dear destinations can help generate spending. In contrast, dedicated parking lots separate people from their next possible destination. Where the culture crowd uses nearby parking structures built for daytime office staff-as in Philadelphia-husinesses benefit from the short walk that patrons have to take to get to the theaters. The worst commercial option is when the principal fucility’s parking is contained within the complex itself, such as at the Kennedy Center. Cultural facilities can serve to anchor arts districts, yet their monumentality sometimes separates the arts from supporting commercial amenities. .The glazed roof that ties together the various components of Denver’s center represents an effective effort to embrace the street and to accommodate pedestrians.

While few arts districts have their own BID or one that gives them special attention, it is hard to overestimate the importance of these self-help, assessment-financed entities. Philadelphia’s University City District was not formed with arts in mind. but BID director Paul Steinke has corralled museums, theaters, artists, restaurants, and others into an arts driven marketing campaign. BIDs have the capacity to enliven districts by organizing festivals and evening street entertainment. Art facilities themselves are certainly part of the excitement. but the setting for those facilities–the exterior lighting. the outdoor bustle that comes from several facilities and many private enterprises-are equally important.

BIDs raise the money to maintain and improve the public environment and to market the area through assessments on private property. There are devices other than BIDs by which professional marketing can be financed and managed, but only BIDs have the capacity to convert enhancements in private property values into revenues that support audience generating promotions. When arts districts take off, in large measure because of supporting nonprofit corporations, private property values rise. It is fair and necessary that this added arts-induced private sector value be tapped to reduce some of the problems associated with the arts districts’ prosperity and to create new opportunities for the arts facilities as well as the private enterprises that depend at least partly upon them.

As quality-of-life factors increasingly are accepted as vital to economic development, more downtown master plans will focus on the benefits of clusters of arts-related enterprises, nonprofit and commercial. Arts districts are not without problems and are far from being quick solutions to downtown revitalization goals as a whole. Still, such districts can be important in downtown revitalization, as much for the residents they attract as for the secondary benefits of increased retail sales, businesses, and jobs.