What Ancillary economic benefits associated with the ...



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SUFFOLK UNIVERSITY

CAPE COD MPA PROGRAMS

CAPE COD PUBLIC POLICY INSTITUTE

2240 IYANOUGH RD, WEST BARNSTABLE, MA 02268

Cultural Arts Center: Ancillary Economic Benefits

Final Report

September 5th, 2007

Suffolk University Cape Cod Public Policy Institute/Center for Public Management

Prepared by Leah West, M. Lavin, Thomas Lavin

In an article entitled “Art-Related Economic Development Strategies in Small Art Towns: Impacts on Downtown Economic Revitalization”, John Villani, the Director of Communications for the Institute of American Indian Arts in Santa Fe, New Mexico and one of the foremost U.S. authorities on the development and characteristics of “Small Art Towns”, offers a blueprint of ancillary economic benefits that have accrued in communities that foster arts and culture as integral elements of their economic redevelopment strategy. According to Villani’s well documented research and professional experience, a significant cohort of Americans have shifted their non-work lifestyle to blend outdoor recreation with arts and cultural tourism, and throughout the U.S., small to medium size towns, like Hyannis (Barnstable), have intentionally redefined local land-use policies and downtown economic redevelopment strategies to maximize this opportunity.[1]

Villani summarized major ancillary economic benefits of arts and cultural tourism to include rebuilt local tax bases, restored property values, and new investment incentives for developers and entrepreneurs. The likelihood that these benefits will accrue is increased when a community or a region, such as Hyannis and Cape Cod, already has outdoor sports and recreation infrastructure and facilities, as well as accessible highways and airports.[2] Under these conditions, arts and cultural tourists and daytripping visitors are more willing to travel longer distances, extend their stay in target location accommodations, and spend disposal income in ancillary activities that generate local and regional sales and tax revenues, including outdoor recreation, retail sales, food services, and transportation. Many of these ancillary economic benefits directly or indirectly enhance a community’s downtown economic revitalization achievements, increase individual and family incomes, and grow the workforce as well as physically link arts and culture districts with adjacent commercial enterprise zones.

Another major ancillary benefit of a project such as the Cultural Arts Center is the restoration of civic pride and direction.[3] This includes invigorating and engaging leaders and volunteers from the business community, local government, and nonprofit organizations, in addition to interested parties representing arts and culture. Civic pride also translates into citizen and community confidence in their leaders and their future being enhanced or restored in the glow of the genuine public-private partnership that is usually necessary to make this kind of endeavor successful. In the case of the Cultural Arts Center, civic pride and direction is also likely to translate into a “willingness to support” the construction and operational costs by both local citizens and organizations and major donors, both local and outside the community.

John Villani is the author of several guides to “Art Towns” globally, including The 100 Best Art Towns in America, 4th Edition.[4] According to Villani, examples of “hyper-charge arts economies” that are generally similar to Hyannis include Santa Fe, NM, Aspen, CO, Park City, UT, Hilton Head, SC and Ashville, NC. A perusal of Art Town websites also reveals some other interesting comparison communities, including:

✓ Berkley Springs, WV

✓ Niagara-on-the-Lake, Ontario

✓ Northport, Alabama

✓ Lenox, MA (home of Tanglewood)

✓ Oxford, MI.

Generally, Arts Towns are home to cultural arts centers or performing arts theatres that effectively integrate the town’s land-use and economic development plans by providing a focal point for arts and culture tourism. Branching out from this focal point, many Arts Towns similar to Hyannis have also incubated the variety of ancillary economic benefits discussed above. According to Villani, Grand Marais, NM, Vail, CO, Ruidoso, NM, Missoula, MT and Park City UT are particularly worthy of note. These places have “opened performing arts centers whose positive economic impacts have resulted in everything from more meals served in local restaurants to more gallons of gas pumped at local gas stations…(and) parallel entrepreneurial investments (have been) made in dozens of communities in terms of art-filled coffeebars, live music nightclubs, artist cooperative galleries, interior design showrooms and high-end craft galleries.”[5]

Given Hyannis’ already well-established reputation as a recreational tourism destination, its well-planned and ongoing downtown and Harbor area economic redevelopment, plus the determination and expertise of the Town’s business, government and nonprofit leaders who are working together to foster the Cultural Arts Center, there is every reason to believe that Hyannis will achieve the primary goal of building the Center and subsequently garner the same ancillary economic benefits as the communities cited above.

Additional ancillary economic benefits are expected to result from the construction and the operation of a Cultural Arts Center. At the onset, this project will positively impact construction employment; creating approximately 240 on-site jobs during each year of construction.[6] It will also produce inter-industry job opportunities in areas such as building supplies, tools, sand and gravel, concrete manufacture and delivery, etc.

Once built and operational, the Center will create the opportunity for new and redistributed year-round jobs, such as performing artists, art center administrators, musicians, writers, directors, stage hands, maintenance workers, and carpenters as well as jobs in recreation and tourism, arts and crafts, food services, communications, advertising, retail and wholesale sales, and other ancillary and entrepreneurial endeavors. It is likely that this employment pattern will have a salutary impact on reducing the Town’s unemployment rate to a level at or below the statewide average of 5.4%.[7]

With the completion of the Center and the attendant revitalization and beautification of the immediate site and the abutting business, harbor and residential districts, experience in other places similar to Hyannis supports the projection that property values will increase, existing uses will expand, planned development will progress, and entrepreneurs with new venture ideas and capital will be attracted. These outcomes will produce additional state and local tax revenues that will trickle down to Hyannis, including personal and family income taxes, corporate income taxes, sales and luxury taxes, and personal and real estate property taxes.1

Ticket sales will add economic benefit, but it is unlikely to produce excess revenue after operating expenses are debited. However, there is a real opportunity here for the start-up of secondary businesses associated with the Center. Valet parking, an internal art gallery, a catering service, cocktail bar and educational classes would all produce ancillary economic benefits.

The opportunities for creative arts and cultural events that draw local businesses in conjunction with the Center are boundless, will create diverse revenue streams, and will serve to add community cohesiveness and targets for promoting local sales and tourism. For instance, the Flynn Center for the Performing Arts in Burlington, Vermont, hosts the annual “Fine Wine and Food Festival” bringing together local chefs, vintners from regions around the world, as well as local performers; selling out at $100 per ticket.[8] A review of websites for Arts Towns across the U.S. yields information about similar events ranging from an Art Walk and Auction in Berkley Springs, WV to a Western Film Festival in Gene Autry, OK to a Shaw Festival in Niagara-on-the-Lake, OT, to the Boston Symphony Orchestra at Tanglewood in Lenox, MA. Villain concludes that these ancillary economic benefits “have sprung up from the continental landscape like mushrooms after a spring rain.”

The Cultural Arts Center will be a venue for public-access municipal, nonprofit and community events and meetings, private functions, trade show, and conferences. While many community events and meeting will be co-sponsored without charge, private functions such as wedding or reunions or trade shows will generate revenue. At the time of the Arts Consulting Group Feasibility Study, there were approximately 200-250 meeting events per year on Cape Cod at a size of 20-200 participants attending those meeting events, and the Center will focus its marketing strategy to gain a share of these events.6 Additional arts and culture events such as literary conferences, seasonal or year round artist and theatre workshops, or touring art exhibitions held at the Center will produce primary income and trickle-down economic benefit to surrounding businesses.

The number and variety of ancillary economic benefits are and should be considered vital in attracting potential major donors and patrons as well as local ticket-buyers and art and culture tourists. As a “destination” attraction, the Center will draw visitors from all around the New England and beyond. This visitor population will increase occupancy rates in local hotels, inns and bed & breakfasts and the number of meals served at local restaurants; stimulating an economy that usually only enjoys a 10-week season of economic prosperity.[9] There would also be increased revenues for other local businesses, such as retail stores and tourist-attraction venues and others (local ferry services, gas stations, spas and museums). In one recent study, the direct economic impact of travel and tourism in Massachusetts alone positively affected the following categories of businesses by bringing millions of dollars in revenue to their industry ($ Millions):[10]

• Lodging: $2,397.7

• Foodservice: $2,271.0

• General Retail Trade: $794.9

A study titled Arts & Economic Prosperity showed that arts and culture organizations leverage additional event-related spending by their audiences that pump vital revenue into restaurants, hotels, retail stores, and other local businesses. For instance, they spend dollars at local gas stations, purchase dinners at restaurants and desert after shows. This study showed that the typical attendee (local, non-tourist) spends $27.79 per person, per event in addition to the cost of admission, and non-local (tourist) audiences spend more; an average of $40.19 per event.[11] In addition, the same study showed that tourists who traveled to an art and culture destination extended their trips in order to attend a cultural event, and contribute more to the local economy than other travelers in the following ways:

• They spend more on their trip ($623 vs. $457)

• They travel longer (5.2 nights vs. 3.4 nights)11

In an article titled “Arts Economy Facing a Changing Cape” by Debi Boucher Stetson, Liz Hunter, Director of the Cape Cod Museum of Art, states that the Dennis museum contracts with local businesses for landscaping, payroll and other services that totaled $22,000, and paid out an additional $24,000 in 2005 to instructors in their education program.[12] The Center will certainly engage similar service providers and professionals resulting in direct payments into ancillary markets.

Value-added pecuniary outcomes for both the Center and the community include the following:

• More arts and cultural activities availability right on Cape Cod (decreased need for local residents to spend their dollars outside of the local area).

• Beautify, enhance and brand the image of Downtown Hyannis; increasing confidence of residents in local leaders; providing needed community-access benefits.

• Provide cultural access to those who may not have previously had it.

• Stimulating the interest and enthusiasm of local residents in other cultural venues; such as opera and ballet to those who may not previously had it.

• Providing arts and cultural education to all sectors of the community and beyond

• Providing volunteer opportunities for Seniors and others; providing cohesiveness to the community and giving them a sense of civic pride, purpose and contribution.

• Extension of the tourist season to include four seasons and arts and culture tourism

• Hyannis Area Chamber of Commerce estimates that 81,000 tourists arrive in Hyannis Harbor on any given day, but just 14,760 of those tourists visit Main Street in Hyannis.[13] The Center would draw and link a higher percentage of these tourists to Downtown.

To paraphrase John Villani, when the Cultural Arts Center becomes a reality and the arts and culture scene begins to realize the direct and ancillary benefits discussed above, there will be a vast improvement in both economic opportunity and the quality of life in Hyannis for residents and visitors alike.

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[1] John Villani, “Art-Related Economic Development Strategies in Small Art Towns: Impacts on Downtown Revitalization”, , p.1. He makes the point that including arts and culture as part of a comprehensive economic redevelopment strategy has proven especially effective in mid-size towns and small cities (similar to Hyannis) facing downtown deterioration including declining property values, vacant space, out-movement of businesses, out-migration of resident, and income and workforce decline.

[2] Ibid., p. 2.

[3] Ibid.

[4] John Villani. The 100 Best Art Towns in America, 4th ed. (Countryman Press ), 2005. The author takes credit for coining the term “Art Towns” as it is used in this context. Art towns generate a good portion of their economy, existence, and tourism draws from establishing a culture of the arts (hhtp://en.wiki/Arts_Towns).

[5] Villani, op.cit., p. 3.

[6] Proposed Cape Cod Cultural Arts Center Facility Feasibility Study; Town of Barnstable, April, 2007

[7] Unemployment Figures for Cape Regions in 2005; Division of Unemployment Assistance

[8] Flynn Center for the Performing Arts website; , retrieved July 26, 2007

[9] “Trends and Trials Facing the Restaurant Industry”, Cape Business, November / December, 2006

[10] “An Estimate of the Economic Impact of the Visitor Industry in Massachusetts with Special Emphasis on Historic/Cultural Tourism; MASSTAC, June 26, 2007

[11] Arts & Economic Prosperity III; The Arts Mean Business, March, 2007

[12] “Arts Economy Facing a Changing Cape”, Cape Business, 2006

[13] Hyannis Area Chamber of Commerce

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