Tax Relief Effort FAQ 

David Pincus 
4/20/2011 

We've been asked a lot of questions about the Performing Arts Real Estate Tax Relief Proposal, so we thought we'd take the time to answer the most asked questions.

What is the the Basic Idea?
We are proposing a real estate property tax relief for commercial landlords who rent performance venues to non-profit performing arts organizations below market rates.   

What would this accomplish?
The goal is to incentivize commercial landlords to donate space, extend longer term leases and renew upcoming leases at rates that the sector can afford.

Why is that important?
The non-profit performing arts sector is in crisis now.  According to New York Innovative Theater Foundation’s 2008 study, over the previous 5 years, the small to mid-sized theater community has lost a number of theatres in Manhattan to development.  In mid-town Manhattan for example, over 20 theater spaces were lost, which accounts for over 25% of the available theatres in that area of town. There is every indication that many more theaters are in danger of losing their space and/or lease.  Everyone realizes that the performing arts are an economic engine, on a smaller scale for neighborhood businesses and on a macro scale for keeping the City competitive and attracting creative business talent.  

Isn’t this “idea” too big to succeed?
Not really.  In fact there is a very small core of non-profit theaters and performing arts companies that hold leases on performance venues.  The rest of the sector, however, depends on the ability to rent these venues from this core group.  By targeting the core group, we actually facilitate badly needed, affordable performance space for the entire sector.  

How much money are we talking about?
The pilot year would be capped (we are currently anticipating, based on a 40% response rate to our survey so far - 4/20/11) a program cost in the $2 - $4 million dollar range - depending on the number of organizations that would qualify.  We believe this relatively small amount of money could be the difference between the life and death of many organizations that comprise New York City’s non-profit performing arts sector.

Why only are performing arts organizations eligible?
The logic is that the revenue lost by the City to the tax relief would be recaptured in sales tax on ancillary spending that audiences bring to the neighborhood and spend at local businesses, like restaurants and parking garages.  The reason the tax mechanism pays for itself is because it will sustain the performing arts sector, which will have the breathing room to create more jobs, and new people will come to the neighborhood to boost spending on a nightly basis.
 

Aren’t arts groups already tax exempt?
If a group owns a space they do not pay property taxes.  If they rent, however, they generally do pay property taxes as a direct pass-through from the landlord.
Won’t this create a hardship for other non-profits seeking to rent at below market rates?:
The tax relief is very specifically only available to spaces that meet certain performance-based criteria (i.e., 2 means of egress, minimum 10 foot ceilings, public assembly worthy, etc.). This will narrow the list of potential affected spaces substantially.  We are not targeting the types of spaces that are typically used for or sought by social service delivery agencies.

Isn’t this a bad time to be talking about new tax relief?
No.  It is a very small amount of money and the need is beyond critical.  If we don’t do something right away, the cultural landscape of the City could be severely damaged or destroyed for a long time to come.  If you have a better idea for action, we are all ears.  We also believe that there is an opportunity to fundraise from philanthropic sources to help offset the cost to the City for at least the pilot year.

What is the process?
All 12 Manhattan community boards organized and unanimously cast votes to pass resolutions supporting this idea as it related to small-to-mid-sized performing art venues.  The newly formed coalition of art support and art advocacy organizations (A.R.T./New York, The Innovative Theater Foundation, Institute for Culture in the Service of Community Sustainability and The League of Independent Theater) have taken that initial idea and have now broadened it to include all non-profit performing art organizations in the City of New York.  This group has been meeting with tax specialists at the City Council and with a team from the office of Manhattan Borough President Scott Stringer and Chris Quinn’s office, in addition to taking meetings with representatives from the Department of Cultural Affairs, to explore the parameters of the tax mechanism and the data we need to collect for policymakers to be able to make informed decisions.  We are currently in the midst of conducting a survey to collect data on how many spaces might be eligible and what the cost of the program would be.  We will soon be reaching out to both policymakers (at the City and State level) and the community boards of the 4 other boroughs.  Ultimately, the City must request a “home rule” from the State in order to be able to affect this tax legislation.

This sounds like a great idea!  How can I help?
Send an email addressed to chair@theatertaskforce.workshoptheater.org, and write “SUBSCRIBE ME” in the subject line so that we can keep you informed of developments.  At some point, we may ask you to work with us as we meet with political and community leaders to discuss the above-proposal.  Writing letters and/or emails, attending relevant Community Board meetings to voice your support, or voting for candidates that share your concerns about the arts, are all things we can do together to ensure that this important sector we love and work in receives serious consideration from the relevant policy makers.


 

 

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