Carrboro Arts and Innovation Center: Smart Public-Private Partnership?

Note: I posted this blog entry on my personal website on Sunday, January 4th, 2015, but opted to share it here as well at the invitation of OP editors. While I'm eager to learn what others think about the proposed Arts and Innovation Center and the numerous, interesting issues related to the proposal at hand, I'm not contributing this piece to start or stoke a debate between me and OP readers and contributors. I'm just throwing it out there as a thought piece.  My mind might change.  So might the proposal.  Who knows?  (It's Carrboro!)  Looking forward to reading other people's comments and ideas, and to hearing from residents, business owners, in-town workers and others at the public hearing or beforehand. The BOA already is getting really thoughtful comments by email as a result of the broadly-distributed notice of public hearing.  Hope you'll consider weighing in as well.

At Mayor Lavelle’s suggestion, the Board of Aldermen will hold a public hearing on January 20th to get feedback on a proposed “Arts and Innovation Center” and something similar to a synthetic Tax Increment Financing (TIF) scheme to pay for it. (I say similar, because in this case public financing would be repaid with new tax revenues generated by a not-yet-approved hotel, as opposed to the incremental increases in property tax revenues that a TIF or synthetic TIF implies.) Read about the proposal and the public hearing here.

Because the town would substantially finance and own the building, the partners who are proposing the project have built into their narrative the words “public-private partnership.” People like me love to use those words to signify cooperation, “win-wins,” and other non-partisan kinds of things. In all cases, however, the word partnership needs to be taken quite seriously.

In this particular case, however, town government has been asked to entertain and pay for a high-risk plan that it has had no substantive role in designing, and to consider it under some ‘urgent’ conditions that could set the town up for failure right out of the gate. As some Aldermen have noted, this doesn’t feel like partnership. It feels like manipulation.

Fiduciary Duties of the Partners

It’s fair to say that the Board of Aldermen have received some mixed messages from the ArtsCenter and Kidzu, the two non-profit partners that would benefit most from the deal.  Neither seems to be driving the conversation from a position of strength or certainty. I’ve heard from one ArtsCenter board member that he personally “doesn’t care” if the building gets built--the ArtsCenter can always just function in place. (This same board member told me that the ArtsCenter, which has a reputation for regularly operating at a deficit, doesn’t have a comprehensive business plan.) I’ve also heard from one Kidzu board member that she’d have no problem with the interactive children's museum owning a building outright, as long as the price is right. If that’s the case, why not start there, rather than with a complicated partnership with another non-profit that lacks a comprehensive business plan?

Both these comments are disconcerting to me. Non-profit board members have fiduciary responsibility for their organizations and their financial stability, but there is no evidence that these two boards have made the case internally—much less externally—that the proposal on the table makes the best business sense for them, their stakeholders and their long-term sustainability.

For our part, the Board of Aldermen has a fiduciary responsibility to the taxpayers. Part of this duty is to provide economic development financing only when there is a fully-vetted “but for” argument—meaning, but for public financing, the capital or economic development deal would not work, and the resulting opportunity cost for the town would be too substantial to ignore. In all cases, such an investment needs to be right-sized and, in my opinion, needs to ensure the economic benefits are shared by the people who need those benefits the most: people who need the good jobs, higher wages, increased property values, lower taxes, or infrastructure improvements generated by the development.

I hope the public hearing will help us all better understand the concerns and boundaries inherent in each partner's fiduciary duties, including aversion to financial risk.

What Should Be on the Table?

I also hope the public hearing will help us better understand the true (rather than supposed) benefits of the proposal, whether further conversation should be scrapped, or whether some other iteration of public-private financial partnership could be the better way to go.

Without additional public input from people independent from the proposed financial partners, I cannot support the proposal as is written now.  I think all of the following need to be put on the table as negotiable:

  • Objectives of the project
  • Location for the project
  • Timeline for development, from raising the financing, to transition plans for partners, to breaking ground and opening the doors
  • Budget parameters
  • All available options for public and private financing—especially the latter
  • Architecture, including choosing the design firm and determining the shape, size, and appearance of the building
  • Tenants, financial partners, and standards for their sustainability, business plans, and board composition
  • Ownership structure, and thus governance structure, for the building
  • All pro forma calculations and assumptions
  • Parking and infrastructure—and who pays for it

In other words, unless the public overwhelmingly demonstrates otherwise on January 20th, I think we should start the conversation from scratch with the ArtsCenter and/or Kidzu boards, and perhaps additional, stronger or more certain partners.

Some Other Questions to Consider

The notice of public hearing outlines some fundamental questions the Board of Aldermen has for the public. Here are some of my own:

  • What should be the future of the Carrboro Century Center if the town chooses to participate in this venture? (Food for thought: Carrboro’s Vision 20/20 document which is considered “policy” on most days, can be found here. I’ve compiled cites pertaining to the Century Center here.) Bear in mind the town also owns an empty condo downtown that is valued in excess of $500,000.
  • Currently recreation and parks investments constitute 7% of the town’s budget, or $2.2 million in 2014-15. This includes just over $500,000 in capital funds. Is there a trade-off that could help pay for the cost? For example, could the town make adjustments to its recreation and parks budget, such as outsourcing arts programming to the partners involved in the Arts and Innovation Center?
  • The proposal asks us to borrow against future tax revenues generated by a not-yet-approved new hotel downtown. Are there other capital improvements that the town could pay for with that tax revenue that otherwise won’t get paid for? What does this mean for the individual taxpayer?
  • The building would require a great deal of accessible parking, especially for parents with young children. Would a traffic and parking analysis demonstrate that another site would be better than the one suggested on the corner of Main and Roberson Street?
  • Racial equity questions are looming large in policing, but also as relates to economic development strategies, including affordable housing and job creation. If this building and partnership concept were designed to meet the town’s goals to advance social and economic equity, what would it look like? Who else would be involved in the visioning?

I’m looking forward to hearing from the public on January 20th on these and other important questions. Ultimately I’m confident the town will make a good decision—but only with the guidance and good input from a diverse public. Please join in!

Issues: 

Total votes: 180

Comments

Thanks for posting this, Bethany. Kind of confused by the invitation to hear views, but the desire not to start a debate. I'm writing separately and directly to the Carrboro Board of Aldermen. But I'll share my thoughts here, too.

I'm delighted we're being asked. Citizen design seems to be my new mantra. Ask before you impose. Great! That said, I'm actually not a great fan of public funding of the arts. Way too much subjectivity about art. And I'd just as soon citizens be allowed to choose what art to support and which not. Quite aside from anything else, I pursue my own art on the basis that, if it commands interest and individual financial support, then it's a career; if not, it's a hobby. And I don't expect the taxpayer to bridge the difference.

But, that's a personal view. As far as the specific proposal is concerned, if the taxpayers of Carrboro choose to fund a new Arts Center, in part or in whole, then that is their decision. If I'm given a vote, I'll vote 'no.' Not least because, if I was given a vote, I'd find a whole bunch of other stuff on which I'd prefer to spend $4 million (I believe the figure I saw mentioned in the leaflet that I found in my mailbox?) of taxpayer money.

Like maybe $4 million on building or buying affordably rentable property for all the folks who provide us with services in our cozy little town, but have to live in and commute from Durham every day. Maybe?

I support the concept of creating an arts incubator as part of the arts district (economic development) that has been discussed in 4-5 meetings over the past 2 years, with all the caveats raised such as ensuring such development would not negatively impact affordability. But this new proposal confuses me. The Arts Center already has a building which I understood they would sell to help build the new one. Is that no longer the plan? Without a solid business plan, I'm not sure why this is coming forward for public input.

Unlike Geoff, I support public funding for art. Since medieval times, there has been government support and that's as it should be. The arts simply do not generate sufficient revenue to keep costs affordable and yet having an active arts community is a key to community health. There was a report recently that also linked it to economic development. https://www.planning.org/research/arts/briefingpapers/vitality.htm

However, building a facility more like DPAC is a commercial activity where performances should help support local artists. Under that design scenario, I would not support government funding. Until we know what is being asked for, how can anyone make an informed decision?

Last year? I went to Friends of Downtown meeting and learned of a fundraising effort to put Kidzu on top of the Rosemary  Parking Deck. What happened to that proposal?

 

Today's newspaper says they are moving to a "permanent" location at University Mall.

If you're referring to this Daily Tar Heel article, the new U Mall location is still temporary. They've just had to move around the mall a bunch, thanks to the movie theater's need to apparently take over their old space (where the temporary library was located), and this is supposedly Kidzu's "permanent" temporary space.

Loren, the town agreed to allow Kidzu to build a permanent space on top of the Wallace deck. Kidzu's been very quiet about that recently, however, and I don't know if this (poorly-thoughout-out, IMHO) Carrboro gambit is due to fundraising issues, other problems with the Wallace site, or just a backup plan.

Both the Arts Center and Kudzu need to come up with a business plan, preferably for the next 5 years, before Carrboro should even think of giving a go-ahead on this. No entitiy without a business plan would be taken  seriously by any bank. 

Borrowing money against FUTURE tax revenues for a project that has not been approved, let alone built, is a real risk for our town. Care must be taken to ensure we keep the town's finances in order, long term, and if this project goes ahead, I would be more comfortable if a different source of revenue were found.

A different location, with more parking available for parents, perhaps adjacent to a park where kids could play, would prove to be much better and a bigger draw for such a facility. 

Without a business plan showing both have the capability to pay the rent, I say no.

 

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