report

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Cary Cultural District Business Plan

February 2006

table of contents

INTRODUCTION..................................................................................2

CARY ELEMENTARY AS A COMMUNITY ARTS CENTER....3

VISUAL AND PERFORMING ARTS CENTER ..........................11

OTHER NEW FACILITIES...............................................................19

CULTURAL DISTRICT OPERATIONS ........................................22

ECONOMIC DEVELOPMENT & IMPACTS ...............................24

Appendices

List of Study Participants

Comparable Community Arts Centers

Comparable Visual and Performing Arts Centers

Comparable Media Centers

Comparable Arts Incubators

Comparable Cultural Arts Districts

Cary Elementary Arts Center Pro-forma Operating Budget

Visual and Performing Arts Center Operating Budget

1. Introduction
Webb Management Services was hired as a part of a team lead by PfeifferPartners to develop a plan for new cultural facilities and a district in Cary. In the first phase of the study, we developed a Needs Assessment that made recommendations on the need for new and improved facilities in Cary, then making the case that such facilities might be organized in a downtown cultural district.
Now we proceed to the development of a business plan that considers how recommended facilities and a district should be operated, and how these components might perform financially. Our approach is to work through each of the key facilities and then to address the operation of the district. In the last chapter we will bring all of the pieces back together by estimating the economic impacts of the cultural district and all of its components.
Our business plan has been informed by significant input from Town of Cary staff, as well as individual artists, local arts organizations, regional promoters, other cultural leaders and people involved in comparable projectsaround the country. An event we call the scheduling charrette was held inCary on January 10, at which local artists and organizations were able to join with us in detailed discussions of how new facilities might be used and operated.
The business plan and the pro-forma operating budget should be considered a tool to help the Town of Cary move forward with the development of newfacilities in a district, knowing that these plans can be adjusted based on changing circumstances and assumptions.
We would take this opportunity to thank all of the many people who participated in study for their thoughtful contributions to the work. A listing of those individuals and groups is attached as Appendix A. Special thanks toMary Henderson, Lyman Collins and their staff for their support throughout the process.
2. Cary Elementary as a Community Arts Center
2.1 The Concept
The recommendation put forward in the Needs Assessment was that Cary Elementary should be renovated and upgraded as a community arts center able to support a wide range of teaching programs, rehearsals, performances and other elements of the creative process with the following spaces:
A professional-quality, 350-seat performance space with a full flytower, great acoustics and sufficient flexibility to accommodatetheatre, music, dance, opera, film, speakers and other events.
Rehearsal rooms suitable for music, theater and dance.
Classrooms and practice rooms suitable for both the visual and performing arts.
Informal visual arts exhibit space.
Other support and storage space.
2.2 Operating Goals
We would propose the following operating goals for Cary Elementary as aCommunity Arts Center:
Provide accessible and affordable performance, exhibition, rehearsal, education and work spaces to support the growth of local and regional arts organizations and cultural groups, as well as Town-sponsored programs.
Provide a broad spectrum of activity that will encourage community participation as well as stimulate increased activity and interest in Downtown.
Encourage education programs, partnerships and activities for regional school children.
Operate on a sound financial basis to ensure a sustainable annualfunding requirement.
2.3 The Operation of Comparable Projects
Before examining the issue of how Cary Elementary should be operated, here is a brief summary of what we have learned about the operation of comparable community arts centers, complete descriptions of which are attached as Appendix B.

¾ Clearly, there is not one single way to operate a community artscenter. There are different and successful models for the operation of community arts centers by local government, local arts agencies and private non-profit groups.

¾ The scale of organizations, and thus the budget and earned revenuestreams, also vary greatly. It’s not that some buildings are moreexpensive to operate, but that the nature and mix of programs, rentalactivity and presenting leads to different sizes and types of organizations.

¾ Community arts centers are usually professionally staffed, but receivecrucial administrative support from community volunteers. These volunteers often serve as docents, ushers, committee members and help with mailings, front desk reception, event coordination and more.

¾ Many community arts centers serve as an important resource for local arts organizations by recognizing ‘resident organizations,’ and providing them with reduced rental rates, office or administrative space, and professional development opportunities to local artists in the form of grant-writing workshops or networking events.

2.4 Ownership

The question of who should own the project is fairly straightforward: the Town already does. Note that this is separate from the question of whoshould operate the community arts center.

2.5 Selecting an Operator

There are many types of facility operators for community arts centers, per our review of comparable facilities. Again we see the choice as being selfevident. The Town of Cary already operates Cary Elementary, as well as aseries of other local cultural facilities. Thus we see the addition of additional staff and skills to run the renovated Cary Elementary as a logical next step for the town’s Department of Parks, Recreation and Culture.

2.6 Elements of Operating Policy

Now we proceed to a brief review of various components of operating policy.

Utilization and Access: The key to success for Cary Elementary as a Community Arts Center is to make it as busy as possible with a range of programs and activities that serve the community. We see the following types of activity as being important:

Space rental by local arts and cultural organizations: There are a number of groups seeking access to the recommended performance space, rehearsal space and support space that should be accommodatedby the building.
Town of Cary cultural programs: the Town has a large and growing set of programs that will come together and potentially flourish at Cary Elementary.
Other community rentals: Cary Elementary has a number of spaces that will be appropriate for other types of community meetings and gatherings, adding to its role as community center and bringingadditional income to the facility.

The great challenge for the building will be balancing these different types of demand and managing the needs and expectations of so many different users and use types. We would thus stress the following:

¾ All three of the types of activity listed above must be recognized as important for the building. The facility management team must do their best to balance access and demand among these groups.

¾ Explicit policies must be in place on how facilities are booked, including booking horizons, rental rates, scheduling priority,cancellation fees and other charges.

¾ Rental rates should be scaled to favor some combination of local groups and non-profit arts organizations. ¾ For the theater, user fees should be charged for the use of box office, technical labor and the rent of equipment.

¾ User fees should be separated from the base rent of the building and provisions made for emerging organizations to incur only essential additional charges.

Resident Organizations: We would recommend that a series of communitybased organizations from the visual and performing arts side have theopportunity to seek classification as a resident organization, particularly for the renovated theater in Cary Elementary. Resident groups gain preferred status for booking and rental rates in exchange for bringing a certain amount of activity and benefit to the venue. These groups can:

¾ Guarantee a relatively consistent level of daytime and nighttime activity to attract participants, audiences and tourists. ¾ Ensure greater stability in facility operations, including earned revenue potential and levels of necessary contributed support.

¾ Build an image of the facility through ongoing use, supporting ongoing marketing and fundraising efforts.

We generally favor a process where organizations qualify as residents through an open application process. In such a process, the criteria by which these organizations qualify should be published, and might include some of the following:

¾ Level of programming: the organization agrees to bring a significantportion of their annual (or seasonal) activity to the facility.

¾ Mission: the organizational mission is worthy and consistent with the goals of Cary Elementary as a cultural center.

¾ Location: the organization is located in or near Cary.

¾ Quality: the organization creates work of quality (however that is defined) that would enhance the image and reputation of the facility.

Ticketing: We recommend developing a community box office based out of Cary Elementary to benefit residents and visitors. This would be a clearinghouse for all arts and cultural activities in Cary, and could expand to includeall activities in Town-owned, operated or sponsored venues. The Center should take advantage of the new technologies in ticketing, including online services, in order to better serve users and audiences, and in order to better collect data with which to market. The building could develop its own website and support the research and data collection efforts of facility users.

Food Service: Cary Elementary should have expanded food service capabilities, including:

¾ Concessions in conjunction with performances in the theater. ¾ Vending to provide basic food and drinks for those in various classes and programs. ¾ Catering capabilities to support meetings and special events in the building.

Staffing: Cary Elementary will require professional staff trained in the management of community arts centers. Key is the Executive Director position, a person able to animate the building, balance all of the various demands on spaces, run a staff with many different skills and financially sustain the facility on an ongoing basis.

Volunteer Opportunities: As we saw with comparable facilities, community arts centers are often supported by the efforts of local volunteers. Staff should identify opportunities in such areas as ushers for performances and tours of the facility and recruit local support. This particular task should be closely coordinated and perhaps integrated with volunteer operations at the Visual and Performing Arts Center.

Cultural Arts Committee Role: We would recommend that the Cultural Arts Committee now active on behalf of the Town be engaged to play a critical rolein the redevelopment and operation of the School. The Cultural Arts Committee is a group of eleven appointed for staggered three-year terms. All but one are appointed by the Parks and Recreation Cultural ResourcesAdvisory Board; the final member is a designated representative of the Friends of Page Walker.

They can act as voice and advocate for citizens and the arts community through the planning, design and construction effort, and then act as ongoing advisors to the town on the operation of the Center - to help ratify policy,resolve disputes, and provide a community voice into operations.

2.7 Pro-forma Operating Budget

Appendix G is a pro-forma operating budget for Cary Elementary as a Community Arts Center. Following is a description of the format and structure of the pro-forma, and then a detailed review of assumptions andresults. The pro-forma projects financial performance for the renovated school based on the second year of full operation, which we would consider the firststable operating year. All of the estimates in the pro-forma are in 2006 dollars.

Format and Structure

Operating projections are presented on ten spreadsheets, as follows:

Summary Charts and Graphs
Earned Revenues
Operating Expenses and Results
Visual Arts Programs
Theatre Programs
Music and Other Programs
Room Utilization by Programs
Rental Activity
Staffing Requirements
Funding Scenarios

The second and third pages are the key, as they total earned revenues and operating expenses, which then allows us to estimate annual fundingrequirements.

Programs

The most complicated part of the exercise has been the forecasting of program demand for spaces in the renovated school. Here we have worked closely with Town of Cary staff to estimate demand based on current and future programs. The three program spreadsheets (one each for the visual arts, theater and music/dance/other programs) show every current program offered by the Town in terms of activity, attendance, revenues and direct costs. Then we apply a conservative growth factor based on review and discussion with Town staff. These are critical assumptions and make clear what we observe as significant pent-up demand for new programs. We have also assumed that given new and better facilities, the Town will develop some new programs, mostly in the under-developed areas of music and dance.

Room Utilization

This spreadsheet takes all of the program demand noted above and assigns it to various spaces in Cary Elementary. This we do to ensure that there is space availability to support all of these programs and also to leave space andtime for community use of the building.

Rental Activity

This spreadsheet estimate rental activity in Cary Elementary, starting with the 350-seat theater and then multi-purpose spaces and/or classrooms. These forecasts of activity are based first on the work we did in the Needs Assessment with various local and regional groups. The SchedulingCharrette then provided an additional opportunity to update demandforecasts for specific organizations.

Also included on this page are rental rates for key spaces. These we developed in consultation with the Town and local groups, scaling them tofavor both local and non-profit organizations. We are thus able to project rental income associated with each of these spaces, as well as the box office income to be earned by those renters.

Presenting income is also projected on this page. There are four lines in the Theater section which show the presentation of various events, including the Marvelous Music Festival, live, family and film programs. Ticket sales from these events are revenues for the facility. There is no rental income, as the presumption is that the facility itself is the presenter.

Earned Income

This key page summarizes all sources of earned income to sustain operations. Program revenue totals are taken from the three-spreadsheet analysis of programs and their growth. Rental and presenting income come directly from the rental activity schedule referenced above. Modest sponsorship revenues are projected for presented events based on a per-performance charge.

Hospitality income includes some catered receptions, performance-based concessions income and a modest level of vending income. All are presented as a net income estimate.

User fees are those necessary charges to facility renters for use of key services such as box office and security. Rates are set at a reasonable level, with all labor charges based on a pass-through rate: the charge is paid directly to contract staff with no mark-up by the facility. Frequency percentages are used here to suggest how often these charges would apply.

Finally, there is a 3% ticket surcharge applied to 50% of gross income, an effective user tax paid by ticket buyers to help sustain operations.

Operating Expenses

Expense budgets are broken down by Programs, Presenting, Administration, Ticket Office, Theater Operations, and Building Services.

Presenting expenses are based on estimated profit margins for each type of presented event, meaning that direct expenses are a percentage of direct revenues from presenting. We have been very conservative with these margins, which range from -10% to +20%.

Each department budget includes the salary and benefits of full- and parttime staff. These positions are summarized on spreadsheet nine of the proforma. Projected staff includes eleven full-time employees plus part-time and contract staff. Benefit levels are set at 10% for part-time staff and 25% forfull-time staff. Compensation, staffing and benefit levels have been reviewed with Town staff.

Administrative Services expenses include personnel, professional services, insurance, travel and entertainment, telephone, and other supplies and services. This category also includes staff training and institutional promotion.

Ticket Office expenses will cover full-time and part-time staff as well as a series of hard costs, from ticket printing to maintenance of the ticket office computer system. We are assuming the involvement of an outside ticketing service.

Facility Operations expenses cover full-time operating and technical staff, as well as stage hands, house staff and cleaners. Building Services includes siteand building maintenance, security, and utilities, estimated on a cost per square foot basis given occupancy costs of other facilities in the region.

Operations Funding

The last component of the pro-forma is a review of possible funding sources to sustain operations of the Community Arts Center, shown on spreadsheet ten.In the first scenario, we suggest the size of endowment required to cover the entire funding requirement of $350,000; at a pay-out rate of 5%, the endowment required is $7 million. In the second scenario, we suggest thetotal annual funding required if the $350,000 is to be raised solely through an ongoing annual campaign; assuming that it costs $.15 to raise a dollar, the $350,000 requirement translates into a $415,000 annual campaign. In the third and most likely scenario, the annual funding requirement is covered with a variety of sources including an endowment, grants from local and regional government, the direct provision of services by the Town and a small annual campaign in the private sector.

The Cary Elementary Community Arts Center is projected to be a busy and productive operation whose annual funding requirement is in line with other Town facilities and is reasonable given the level of activity supported in the building.

3. Visual and Performing Arts Center

3.1 The Concept

Our second key recommendation in the Needs Assessment was that the community should develop a new Visual and Performing Arts Center (VPAC)that would serve local artists, some of the larger local arts groups, regional arts organizations and touring programs. The following spaces wererecommended:

A professional-quality, 1,200-seat performance space with a full flytower, great acoustics and sufficient flexibility to accommodatetheatre, music, dance, opera, film, speakers and other events.
A secure, climate-controlled exhibit space for the exhibition of visual arts.
A multi-purpose room that can accommodate small, informal performances for up to 100 people, rehearsals and special events.

3.2 Operating Goals

We would propose the following operating goals for the VPAC:

Provide access to a combination of local, regional and touring performing arts groups that attract local and regional audiences to downtown Cary.
Support the work of local and regional visual artists through the active programming of dedicated exhibition space.
Support the educational programs of both visual and performing arts users, as well as the arts programs of local schools.
Operate on a sound financial basis to ensure a sustainable annualfunding requirement.

3.3 The Operation of Comparable Projects

Here again we have conducted significant research on the operation ofcomparable visual and performing arts facilities around the country, presented as Appendix C. Following are some of our observations about the operation of these facilities as it relates to the choices faced in Cary.

¾ There is great variability in how performing arts center are owned and operated. The owner of a building and the operator of the building do not have to be the same. Generally, the ownership of the building is a function of funding and how the project was developed. Often, cities or municipalities serve as the owner and enter into a long-term leaseagreement with a non-profit to operate the building. Other times, the cities themselves will operate the building.

¾ The budgets of performing arts centers also vary greatly. This variability is usually due to choices in programming: a building with a large presenting series has a substantially higher budget than one that acts as a strict rental hall.

¾ The funding of buildings is rarely from one single source, (although it can be, such as the Hemmens Performing Arts Center in Appendix C). More often than not, the earned income (ticket sales and user fees) is subsidized by a combination of government funding, grants,investment income (endowments) and private and corporate giving.

¾ All of these buildings are operated by professional and skilled staff. The success of a building often depends on the Executive Director and his or her ability to lead the organization and the community. Staffs are generally large for these buildings, and volunteers are crucial.

¾ Some sort of presenting – done by the operator or an outside organization – is good for developing an image and is often the “bread and butter” of performing arts center.

¾ Visual arts compliment the performing arts very well, serving to draw in patrons and to give local and regional artists the ability to showcase. The operation of visual arts galleries within performing arts center can be separated, but is usually given to a staff person who specializes in visual arts.

3.4 Ownership

Ownership of the VPAC is a complicated question. We would take the position that the means by which the project is funded should drive how it is owned. For example:

¾ If significant State funding is possible and if that funding is contingent upon State ownership, then so be it.

¾ If the Town is the principal funder of the building, its interests are best protected if it takes title on the project.

¾ If the private sector is to play a significant role in funding somecombination of the development and operation of the Center, it may be easier to fundraise if ownership is placed with a separate 501c3 taxexempt organization.

Note also that ownership of the land may be different than that of the building, and that these decisions should be based on how the site is assembled.

3.5 Selecting an Operator

There are also many types of facility operators for visual and performing arts centers. There are several key options for the Cary VPAC, including:

¾ The Town is in a relatively strong position to extend their facilitymanagement skills and portfolio to a new, larger facility. The Town has significant skills in the areas of facility management and booking, and there would certainly be some operating efficiencies with the Townmanaging a set of facilities. The downsides of this option are about politics (the problems public reactions and political interference with programming) and fundraising (the perception that a Town-operatedfacility) needs no private-sector support).

¾ A new non-profit organization could be established to operate the facility. From a fundraising perspective, this is a good option; it allows the community to build a transparent organization that represents keyconstituencies and is mission-driven. The downside is the challenge ofbuilding a new organization from scratch in a community that might not have a deep pool of volunteer leadership and the prospect of thisnew organization competing for funding with user groups.

¾ Finally, a commercial organization might be contracted to operate the facility on behalf of the Town. There is already the precedent withSMG at Regency Park; companies such as this are skilled at bookingand presenting touring shows, and these arrangements can stabilize, or fix, the community support of operations. But this is still a buildingthat requires significant financial support, and often local non-profit arts groups are not well served by a commercial operator.

Each of these options might work, but the choice of how to proceed should depend on the following:

¾ A sense of the political will within the Town to take on the operation of the project.

¾ Some determination of the private sector’s interest in providing the leadership necessary to build a new non-profit operator.

¾ An articulation of the Town’s goals for the project and priorities for the building which would affect the kind of operator chosen. Specifically, a relative interest in attracting touring product might suggest the valueof a commercial operator, whereas a strong interest in supporting theadvancement of local and regional culture would favor the Town or a new non-profit as operator.

Given the above and considerable thought, our recommendation is that the Town operated the building. The Town has the skills and experience alreadyin place and a tremendous opportunity to create operating economies andefficiencies with multiple facilities.

Section 3.7 explains the pro-forma operating budget created for the building as a stand-alone facility fun by an independent non-profit, and then attemptsto express the efficiencies possible with the Town as Operator.

3.6 Elements of Operating Policy

Now we proceed to a brief review of various components of operating policybased on the non-profit operator.

Utilization and Access: Once again, the key to success is a building as busy aspossible with a range of programs and activities that serve artists, organizations, audiences, local businesses and the broad goals of the Town. We see the following types of activity as being important:

¾ Space rental by local arts and cultural organizations: There are a number of groups seeking access to a mid-size performance space, rehearsal space and exhibit space.

¾ Touring programs (both visual and performing arts) that attractregional audiences to the facility.

¾ Other community rentals for corporate events, community events and private events (e.g. weddings) that bring pride to the community and earned income to the facility.

As with Cary Elementary, the balancing of these activities will requireexplicit policies and the expression of a building mission that speaks to the importance of programming. Rental rates should be scaled in a mannerconsistent with building goals. User fees should also be kept separate for the use of box office, technical labor and the rent of equipment.

Resident Organizations: A series of regional and community based organizations from the visual and performing arts should have the opportunity to seek classification as a resident organization for the theater. The process whereby organizations qualify as residents should be through an open application process with explicit criteria agreed by the facility owner and operator.

Ticketing: A professional ticketing system and facility will be critical for this building to benefit users and audiences. This should employ state-of-the-art technologies and relate closely to other ticketing initiatives in the Town.

Food Service: Professional food service capabilities will also be veryimportant to the successful operation of the facility, including concessions related to performances, vending for backstage and catering capabilities for meetings and special events. The system should be one whereby local and regional caterers are qualified to work in the building, providing a high level of service but also some flexibility for users.

Staffing: The new Center most certainly requires professional staff trained inthe management of visual and performing arts centers. The Executive Director, the Development Director, the Marketing Director and Programming Director are all critical positions that will require a national search.

Community Voice in Operations: Depending on the choice of operatingstructure, there should be some way for the community to have an ongoing voice in the operation of facilities. If the Town is the Operator, that might be the Cultural Arts Committee. Other options should also lead to ways inwhich artists, organizations and audiences can have their interests represented.

3.7 Pro-forma Operating Budget

Appendix H is a pro-forma operating budget for the new Visual and Performing Arts Center. Following is a description of the format and structure of the pro-forma, and then a detailed review of assumptions that form the basis of this operating plan.

Format and Structure

Operating projections for proposed facilities are presented on six spreadsheets. The first summarizes activity and financial results with a series of charts and graphs. The second shows key assumptions about rental activity and presenting in the two performance spaces. The third identifies earned income. The fourth details operating expenses and results. The fifth page details staffing requirements. And the sixth reviews funding scenarios.

Activity

Rental rates for the theater, 100-seat multi-purpose room and gallery havebeen established for resident groups, other non-profits and commercial users. Preparation day rents are 50% of the event day fee.

Types and levels of use of recommended facilities are based on previous discussions with users and surveys of needs. The level of use represented bynon-specific users is conservative. We have projected presenting activity, here an important part of the facility’s calendar. As with the CaryElementary pro-forma, we project that 67% of available seats will be occupied at all events. Projected ticket prices are based on current pricing levels for the identified users with slight escalations in some cases to account for the jump in facility size. The gross revenue figure is used to compute other income categories, such as a proposed ticket surcharge. Attendance at convention, corporate, and private events contributes concession and facility rental revenues only.

Earned Income

Revenues for each project component start with gross presenting revenues that are based on presenting activity estimates on page one. Sponsorship income is projected on a per performance basis. Fees are scaled according to the room and type of performance. Rental income from the performance spaces is again taken directly from the activity summary.

Hospitality income in the facility could be significant, including bothperformance-based concessions and additional catered events. The question of who will actually operate concessions is still to be determined. By using a net per capita calculation, we can account for different options.

We have made a series of assumptions about the establishment ofeducational programs in the new building. The hall is to present performances for K-12 audiences, host after-school and summer programs, facilitate teacher-training, and develop a program that sends artists into schools. There is some earned income generated by program fees. There is also fundraising for education programs that is minimally competitive withoverall fundraising for the facility. These income sources are groupedtogether on spreadsheet three of the pro-forma. There are also directexpenses associated with the programs, including staff and program costs grouped together on spreadsheet four. This grouping makes clear the fact that these programs operate on a near break-even basis, with staff and program costs matched by program fees and fundraising.

Overall, these programs will play an important role in helping the facilitiesfulfill the educational component of their mission, introduce the arts to theaudiences of tomorrow, and impact the quality of life for all who live in and around Cary. They will bring people to the new facilities that might not otherwise come, and support the broader fundraising efforts of the facility by providing value and positive impacts in the community.

Ticket office operations are critical for the operation of all new facilities. Our key assumption is that there is a professional box office staff at the theater, probably connected to the one at Cary Elementary. A per-ticket charge to users for box office operations is based on charges at comparable facilities. User fees are also applied for the use of stagehands, the rent of technical equipment, custodial services, security services and front of house services. Rates have been set at reasonable levels to ensure that local groups are not priced out of the building. As with Cary Elementary, labor charges are passthrough, not marked up by the facility.

A 3% ticket surcharge is again proposed to offset operating expenses, in effect on 90% of ticketed events.

Operating Expenses

Expense budgets are broken down by Presenting, Education Programs, Administration, Ticket Office, Facility Operations, and Building Services. Presenting expenses are based on small estimated profit margins (gross revenues less direct cost) for each type of event.

Projected staff includes twelve full-time employees at the new hall, plus parttime and contract staff. Benefit levels are again set at 10% for part-time staff and 25% for full-time staff. Compensation, staffing and benefit levels have been reviewed with town staff.

Administrative expenses include the same set of basic overheads seen in performing and visual arts centers, at a higher level than Cary Elementary. Ticket Office expenses will cover full-time and part-time staff as well as a series of hard costs, from ticket printing to maintenance of the ticket office computer system. We are assuming the involvement of an outside ticketing service.

Facility Operations costs cover full-time and contract staff and basic occupancy costs estimated on a cost per square foot basis given occupancy costs at regional and comparable facilities. We have also added a rental allowance fund that would allow the operator to subsidize the rent of groups who do not charge for attendance at their events or others for whom the rentis a significant burden.

Funding Requirements

The last portion of the budget is a series of funding scenarios, starting withthe size of endowment required to cover the entire funding requirement, theannual funding requirement if fundraising is the sole source, and then themost likely scenario, a combination of sources including endowment income, government services, grants and an annual campaign in the private sector.

Potential Operating Efficiencies

As mentioned earlier, the pro-forma for the Visual and Performing Arts Center is based on the assumption that the building is operated by a separatenon-profit as a stand-alone organization. Thus, if the Town were to take on the responsibility for the operation of this new hall in conjunction with its other facilities, we would project a series of operating economies and efficiencies that would reduce the annual funding requirement of this building and other facilities. Such improvements should occur in thefollowing areas:

¾ The ability to share full-time staff and other resources across multiple

resources. ¾ The increased profile of the Town as a facility operator allowing for cost reductions through bulk purchasing and negotiations covering multiple sites.

¾ Joint promotion and advertising for multiple venues and events.

In total, we would project that these improvements would reduce the annualfunding requirement for the visual and performing arts center and other facilities in the base year of operations by some $200,000 to $300,000.

4. Other New Facilities

***4.1* *The Community Media Center***

Our third key recommendation in the Needs Assessment was that the community should develop a new Media Arts Center that would serve the community-at-large. Media Arts Centers are a relatively new type of building and operation in the arts world. The centers are generally education-driven, and seek to train and equip the community with technology skills. Some key issues with the development of Media Arts Centers:

¾ The most important component of a media arts center is developing programming and having the proper staff to undertake that programming.

¾ Partnering with a public radio or television station is often the start to a community media center and offers creative funding streams. ¾ Partnering with high-tech companies for financial or technologicalsupport can also be key.

¾ There are many, many artists who are exploring the world of technology and art. These artists are often the best source for teachers and staff.

There are also specific physical requirements for media art centers. The CaryMedia Arts Center should include all or some of the following:

¾ Computer lab(s) that have specialized equipment for animation,

graphic design, and film and sound editing. ¾ Film and/or sound recording studios. ¾ The proper equipment for radio and/or film broadcast. ¾ A screening room seating no more than 100 people that can house

multi-media programs, exhibitions, theater and showcases. ¾ A few classrooms that are wired with the latest technology for information transmission and display.

Attached as Appendix D are three comparable Media Arts Centers. Here is a summary of key elements to the success and operation of those facilities:

¾ Media Arts Centers are vibrant, creative and unusual organizations that do not have a “standardized” approach to operations.

¾ Media Arts Center can find creative ways to fund operations, attracting funds from donors and winning grants that might not be available to more traditional arts centers.

¾ The staffing of a Media Arts Center is complex, requiring very skilled and highly trained individuals who are also dedicated to the arts.

¾ The physical requirements of Media Arts Centers are also complex and expensive, especially because technology is constantly changing.However, finding creative ways to get new equipment is also possible.

¾ Media Arts Centers do a very good job of engaging a broad cross section of a community. Some believe Media Arts Centers are not “stigmatized” by the perceived elitism that some traditional arts centers are. In addition, Media Arts Centers attract youngeraudiences and users without much effort.

We remain positive about the prospects for developing a media arts center as a part of this project. It may be a good fit in the Human Resources building. It represents an excellent opportunity to respond to younger people in the community. It can easily be operated by the Town in conjunction with other cultural facilities. And it should attract significant funding and support from the corporate sector, such that the Town’s investment would be quite reasonable. For purpose of this exercise, we would suggest an annual allowance of $75,000 to $150,000 of Town funding to support the venture.

***4.2* *The Arts Incubator***

Finally, we have recommended that additional facilities (i.e. the Fire Administration Building) might be used as a home for local arts organizations and serve as an arts incubator. An arts incubator is a particular kind of facility that provides support for a set of emerging artists and organizations at a particular point in their evolution, then sends then on their way once they reach a level of size and financial stability. The hard part, of course, is sending groups on their way; many so-called incubators end up as permanent homes for small arts organizations.

Whether or not the facility is a true incubator, the concept of a facility thatprovides cheap space and services to local arts organizations is a strong one.We have imagined a facility that includes rehearsal space, a studio/gallery, office space for individual arts groups, shop space and storage facilities.

The challenge of such a facility will be deciding who gets to participate and then setting the terms for that participation. These decisions should beaddressed in terms of the willingness of the Town to financially support local arts groups. We would suggest that the Town make a determination as to what resources are available to redevelop and sustain the facility. If resources are unlimited, the Town has the luxury of supporting artists and groups with limited means. If Town resources are limited, the Town isobliged to approach the project and potential tenants in terms of cost recovery goals, which will certainly influence physical choices in the space, as well as decisions about who gets to be a tenant.

Attached as Appendix E are three comparable Arts Incubators. Here is a summary of key elements to the success and operation of those facilities:

¾ Arts Incubators are organic both in operation and often, in physical structure.

¾ Arts Incubators do not have to have large budgets, but do usually serve a wide variety of arts and artists.

¾ The artists themselves often can help staff Arts Incubators in a “co-op” form.

¾ Arts Incubators rarely make-up a large percentage of their budget from earned income, but memberships are one good revenue generator.

5. Cultural District Operations

5.1 District Goals

Our final recommendations concern the overall operation of a cultural arts district. Within the Needs Assessment portion of our study, we proposed the creation of a district to oversee the development and operation of therecommended facilities and activate attention, collaboration, and growth. In our experience, cultural arts districts have provided positive benefit to the arts and to communities as a whole because they have the ability to:

¾ Streamline the operations of current arts programs and facilities and oversee the incremental development of new programs and facilities.

¾ Provide a means for artists and local arts organizations to communicate and collaborate.

¾ Earn government and foundation funding and recognition in support of economic development and civic planning.

¾ Position and market themselves in a cohesive and attractive way to entice commercial development.

5.2 The Operation of Comparable Districts

Further research has led us to make the following conclusions about culturalarts districts that are comparable to the proposed Cary Arts District. Full profiles of six cultural arts districts exhibiting similarities to the potential Cary district are attached in Appendix F. Elements that affect the success and operation of these districts are summarized here:

¾ A detailed strategic plan and timeline for the development of the Cultural Arts District can ensure its economic growth and development. The plan should include all facets of the District and itsancillary effects, such as the development of both existing and new business, signage and beautification efforts, and more.

¾ Successful initiatives involve City or County entities that often collaborate with local arts groups, civic organizations, and local businesses to form a Cultural Arts Commission or Arts Board. This group usually oversees the creation and implementation of theDistrict’s overall strategic plan.

¾ Revenues to support cultural districts come from a variety of sourceswhich include but are not limited to government funding, sales taxrevenue, and foundation grants.

¾ Many cultural arts districts and commissions often create financial incentives to draw local and corporate businesses, artists and residentsto the developing district. Tax incentives can also be made available to landlords to inspire the development facilities in support of a district plan. These projects often include adaptive re-use of existing buildings.

5.3 Recommendations for Cultural Arts District Operations

We believe that the development of a Cultural Arts District will succeed in the Town of Cary, and provide the following operational recommendations in support of the District:

Governance: The District could potentially operate in a number of ways, but we believe that the Town of Cary has the best ability to operate the newCultural Arts District. The Town already has the skills necessary to provide the District’s successful operation, as they currently manage several local facilities. The Town also has a committed interest in the development of itsarts and cultural environment. It is also possible that the funding of the District and included projects might eventually lead to the development of some kind of authority with fiscal responsibility for the collection and disbursement of funds. This makes great sense if the district is pursued as a TIF district of related area with special taxing authority. If such an authority is suggested by the funding plan, we would then recommend consideration of this group as the operator for the District.

Staffing: We recommend that a new position at the Division Manager levelbe added to activate the District. One of the primary functions of this staff position would be to involve the District in greater community planning and economic development efforts. This position also requires the skills necessary to oversee the marketing and promotion of the District to commercialdevelopers, residents and visitors. The position would play a critical project manager role in the development of the District itself. Additional supportwill be required as the District comes online.

Operating Allowance: We would recommend that the Town (or the related authority) set aside funds to support the operation of the District on an annual basis. There is certainly some discretion as to the amount of funding, and some opportunity to generate earned income with sponsorship and special events. We would recommend an allowance of between $100,000 and $150,000 for the first several years, building to an annual budget of between $200,000 and $300,000.

6. Development Impacts & Strategies

6.1 Economic Impacts

The following report is an analysis of the potential economic impact of new and improved cultural facilities making up a new cultural district in downtown Cary.

In our experience, the key to comprehending fiscal and economic impact work is first understanding the definitions of terms used in the analysis. Here are the definitions we use:

Economic Impacts: There are two types of impacts: economic and fiscal. Economic impact means that something has happened to increase economic activity, which includes new sales, new earnings, and new jobs in the local economy. These are divided between the impacts of construction (which are counted as one-time impacts) and the impacts of operation (which arecounted as an annual impact). Then we divide impacts of operation again. First, there are the impacts of the operating organization, a new entitymaking expenditures in the local economy. Then there are the impacts of all those new audiences, spending money in association with their attendance at events.

Direct Impacts: All economic impacts are also split between direct and indirect impacts. In 2002, Americans for the Arts authored a seminal report entitled Arts and Economic Prosperity, which has been a great resource to allin the field. That report defines direct impacts as the measure of the economic effect of the initial expenditure within a community. The three types of direct impacts are construction, operation and ancillary spending.

Construction: Here we estimate the costs of construction and estimate impacts over the term of construction.

Operation: Here we estimate the expenditures made by the organization running new facilities and the impact of those expenditures on an annual basis (typically we’ll estimate for the base year of activity). We like to use a “bill of goods” approach, which means that we estimate what this organization spends within a series of defined industry groups in order to project new sales, earnings andjobs created within those industries.

Ancillary Spending: The trickiest and often most important elementof economic impact is the spending of audiences when they attend events. Arts and Economic Prosperity establishes how much peoplespend when going to an event on food, drinks, shopping, transportationand so on. So we are able to calculate these inputs and outputs basedon projected attendance. The tricky part is that we can only really count attenders that come from outside the market area who were not attending the arts before the Center opens. Current attenders and people inside the City and County would simply be shiftingexpenditures from one place to another, so it is not a new impact. People love to debate this point, but from a purely economicperspective, the only activity that counts is new attendance that comes from outside the market area under consideration.

Indirect Impacts: Each time a dollar changes hands, there is a measurable economic impact. When people and businesses receive money, they re-spendmuch of that money locally. Indirect impact measures the effect of this respending on jobs, household income, and revenue to local and stategovernment. It is often referred to as secondary spending or the dollars“rippling” through a community. When funds are eventually spent nonlocally, they are considered to have “leaked out” of the community andtherefore cease to have a local economic impact. Indirect impact is the sum of the impact of all rounds of local spending. Sometimes there are references to“induced impacts,” but these are closely associated with, if not the same as, indirect impacts.

Multipliers and the Input/Output Model: The way we get from direct impacts to indirect impacts is to employ multipliers that are developed by the Bureau of Economic Analysis in Washington, DC. These translate an input (say a dollar spent on food) into an output (the total impact of the spending and respending of that dollar on the local food industry in terms of new sales, new earnings for people associated with that industry and new jobs created in that industry). The challenge is figuring out all of the various inputs, finding the right multipliers and then adding up the outputs. Multipliers are purchased for a defined market area, with counties as the smallest geographic area for which distinct multipliers are available. For this analysis, the multipliers are for Wake County.

Now we can work through each of these types of impacts.

Construction

The following chart shows the sum of construction expenditures (a very preliminary estimate) and resulting impacts.

One-time Impacts of Construction on Wake County

Cary Elementary CAC $18,000,000 VPAC $55,000,000 Total Construction $ 92,700,000 Comm Media Center $700,000 Arts incubator $2,000,000 Impact Final Demand Multipliers Project Outputs Parking $10,000,000 Output 1.9417 $179,995,590 Park Improvements $6,000,000 Earnings 0.4982 $46,183,140

Employment (person-Other District Costs $1,000,000 years) 16.1099 1,493

Ninety-three million dollars spent on construction will yield, over the course of the construction projects, new economic activity (i.e. sales) of $180 million and new earnings for County workers totaling $46.2 million, as well as 1,492 person-years of new employment in the market area.

Operations

The following chart shows how we calculate operating outputs based on a series of estimated expenditures by the organizations running the Cary Elementary Community Arts Center and the Visual and Performing Arts Center. The difference between the sum of these expenditures and the total operating budgets for the two facilities is that we are not counting wages, nor funds spent outside the County on touring programs.

Category Operating Impacts of the District on Wake County Bill of Goods Approach Multipliers Utilities (aggregate) 1.4593 Retail Trade 1.9194 Transit & passenger transportation 1.8863 Postal Service 1.6686 Couriers and Messengers 1.7113 Sound recording industries 1.5768 Telecommunications 1.8321 Data processing services (box office 1.9136 Insurance Agencies/Brokerage 1.6592 Funds, trusts, other finanical service 1.9722 Equipment Rental 1.5626 Legal Services 1.9725 Accounting & Bookkeeping Services 1.9352 Computer related services 1.8447 Management consulting services 1.9609 Advertising & related services 1.8461 Travel arrangements & reservations 2.0594 Office administrative services 1.8685 Business support services 1.7589 Security services 1.7883 Services to building 1.9139 Waste management 1.7822 Performing arts companies 1.9089 Promoters of performing arts 1.7704 Hotels & motels 1.7443 Food services 1.8508	Output (dollars)	Earnings (dollars) 0.2627 0.5062 0.5004 0.5635 0.4395 0.2640 0.3694 0.6257 0.4278 0.4068 0.2808 0.6915 0.6901 0.4548 0.7013 0.5468 0.5761 0.5894 0.4654 0.6256 0.5202 0.4217 0.5937 0.5063 0.4742 0.5240	Empl't (jobs)I5.639220.435624.569213.810216.62727.39959.220014.066112.009110.47018.032915.646224.481210.891221.647116.559722.569916.869518.644032.862527.366914.078334.666034.414322.084634.1906	Pro-forma Purchases nputs $ 260,000 $ 115,000 $ 25,000 $ 15,000 $ 2,500 $ 15,000 $ 15,000 $ 25,000 $ 40,000 $ 7,500 $ 25,000 $ 20,000 $ 20,000 $ 15,000 $ 10,000 $ 225,000 $ 10,000 $ 35,000 $ 45,000 $ 25,000 $ 75,000 $ 15,000 $ 60,000 $ 25,000 $ 25,000$ 35,000 1,185,000 $	New Sales ($000's)Outputs $ 379,418 $ 220,731 $ 47,158 $ 25,029 $ 4,278 $ 23,652 $ 27,482 $ 47,840 $ 66,368 $ 14,792 $ 39,065 $ 39,450 $ 38,704 $ 27,671 $ 19,609 $ 415,373 $ 20,594 $ 65,398 $ 79,151 $ 44,708 $ 143,543 $ 26,733 $ 114,534 $ 44,260 $ 43,608 $ 64,778 2,083,922 $	New Earnings ($000's) $ 68,302 $ 58,213$ 12,510$ 8,453$ 1,099$ 3,960$ 5,541$ 15,643$ 17,112$ 3,051$ 7,020$ 13,830$ 13,802$ 6,822$ 7,013$ 123,030 $ 5,761$ 20,629$ 20,943$ 15,640$ 39,015$ 6,326$ 35,622$ 12,658$ 11,855$ 18,340552,188 $	New Empl't (jobs) 1.5 2.4 0.6 0.2 0.0 0.1 0.1 0.4 0.5 0.1 0.2 0.3 0.5 0.2 0.2 3.7 0.2 0.6 0.8 0.8 2.1 0.2 2.1 0.9 0.6 1.2 20.4

Using the Wake County multipliers, we add up the three types of impacts to say that new annual expenditures in the base year of $1.2 million will annually yield new economic output of $2.1 million, new annual earnings of$1 million and 20 new jobs in Wake County.

February 2006 Page 26

Ancillary Spending

Finally, we project new audiences for the two major recommended facilities:

Ancillary Spending Impacts
CECAC Base Year Attendance				38,000	VPAC Base Year Attendance					120,000
Less Relocated Attendance				24,000	Less Relocated Attendance					50,000
Net New Audience				14,000	Net New Audience					70,000			Totals
Wake County			80%		11,200 Wake County					70%	49,000		60,200
Regional (non-County) Attendance Visiting Attendance			15% 5%		2,100 Regional (non-County) Attendance 700 Visiting Attendance					20% 10%	14,000 7,000		16,100 7,700
Wake County Attendance	Per Capita Expenditure Estimate				Total Direct Expenditures		Output Multiplier	Total New Outputs (Sales)		Earnings Multiplier	Total New Earnings	Job Creation Multiplier	Total New Jobs
Food Services and Drinking Places	$9.99				$601,398		1.6381	$985,150		0.5051	$303,766	35.0381	21.07
Retail Trade	$1.15				$69,332		1.6963	$117,608		0.4588	$31,810	19.2534	1.33
Ground Passenger Transportation	$2.39				$143,878		1.6057	$231,025		0.4104	$59,048	21.1839	3.05
Hotels and Motels	$2.13				$128,226		1.5560	$199,520		0.4393	$56,330	21.2878	2.73
Sub-total					$942,834			$1,533,303			$450,953		28.18
Regional (Non County) Attendance
Food Services and Drinking Places		$9.99			$160,839	1.6381			$263,470	0.5051	$81,240	35.0381	5.64
Retail Trade		$1.15			$18,515	1.6963			$31,407	0.4588	$8,495	19.2534	0.36
Ground Passenger Transportation		$2.39			$38,479	1.6057			$61,786	0.4104	$15,792	21.1839	0.82
Hotels and Motels		$2.13			$34,293	1.5560			$53,360	0.4393	$15,065	21.2878	0.73
Sub-total					$252,126				$410,023		$120,591		7.54
Visitors
Food Services and Drinking Places		$15.12			$116,424	1.6381			$190,714	0.5051	$58,806	35.0381	4.08
Retail Trade		$1.32			$10,189	1.6963			$17,284	0.4588	$4,675	19.2534	0.20
Ground Passenger Transportation		$5.74			$44,198	1.6057			$70,969	0.4104	$18,139	21.1839	0.94
Hotels and Motels		$7.80			$60,060	1.5560			$93,453	0.4393	$26,384	21.2878	1.28
Sub-total					$230,871				$372,421		$108,004		6.49
Total Impact of Ancillary Spendin		Total Excluding the County			$1,425,832 $482,997				$2,315,747 $782,444		$679,548 $228,595		42.21 14.03

We have taken the total projected annual audience for both the Community Arts Center and the Visual and Performing Arts Center, estimated how much of that audience is new (as opposed to re-located from another Wake County facility) and then broken down the balance as coming from inside the County, from the region surrounding the County, and then from further away; that latter difference is defined as people who come to the area to stay overnight at least partly because of the opportunity to attend a performance.

These estimates then allow us to project expenditures by new outside audiences (estimated at $1.4 million in the base year) that lead to new outputs of $800,000, another $228,000 in new earnings and 14 jobs created.

The last chart is then a summary of the construction impacts and the sum of the two types of operating impacts.

Summary of Economic Impacts One-time Impacts Construction Ongoing (Annual) Impacts Operation	Output (Sales) Earnings Jobs Created Output (Sales) Earnings Jobs Created	$165,044,500 $42,347,000 1,369 $2,083,922 $552,188 20
Ancillary Spending	Output (Sales) Earnings Jobs Created	$782,444 $228,595 14
Total Operating Impacts	Output (Sales) Earnings Jobs Created	$2,866,366 $780,783 34

6.2 Economic Development Strategies

Finally, we would offer observations and a general approach on the matter of economic development strategies for the District. Since the beginning of this study, the Town has stressed the importance of integrating our work withbroader efforts to craft an economic development strategy for Cary. On thatbasis we have reviewed the work done by The Sanford Holhouser Business Development Group and met with their staff in January.

Economic Development Potential: in their article Cultural Districts and Urban Development (International Journal of Arts Management - Winter,2001), AC Brooks and RJ Kushner state the following:

Success (with respect to increased cultural activity, urban revitalization and economic growth) depends on leadership. Effective leadership comes from:

Political and civic figures: provide—both directly and indirectly—moral suasion and access to policymaking tools
Philanthropic and not-for-profit figures: provide administrative expertise and marshal private resources for development
Business leaders position the district as a top priority for firms either through donation, participation or verbal support.

Leadership in the form of pure investment financing by private business is also key. This form of financing ranges from large-scale infrastructure investment to more small-scale investments made by entrepreneurs in businesses within a cultural district.

Economic Development Goals: Given this potential, we have agreed with theTown and the economic development consultants that the development of a Downtown Cultural District should be pursued with two goals in mind:

The economic development of downtown Cary as an active and vital area supporting residential, commercial and public uses.
The broader economic development of Cary itself as a community offering destinations, amenities and a quality of life to support therecruitment of attractive industries and their workers.

The Challenge of Developing Downtown Cary: The great challenge of developing downtown Cary is that it is so unlike other downtowns in redevelopment mode. Cary does not have a large inventory of empty structures in an urban environment that might catalyze redevelopment. What it does have is a series of businesses and property owners who alreadyimagine great value in their properties. Thus, the Town must approach district development carefully, working with existing property owners andbusinesses as partners to pursue a plan that supports cultural andcommercial development at a cost (and over a period) that is reasonable.

A Pro-active Approach: Previous planning efforts for downtown Cary have been fairly slow-moving. Recently, Town staff invited developers to come forward with ideas for project, which lead to a series of discussions but not much else. It is now clear that the Town, or a group acting on behalf of the Town, must take a more pro-active approach to commercial development, finding partners and funding with which to move the project forward.

Mixed-use Development: As already mentioned, mixed-use development is both desired and preferred. The cultural development recommended in our study should be flexible enough to incorporate and support residential, retail, and office projects. Specifically, market rate housing is a critical addition to the project, and therefore the cultural components and their challenges (e.g.: pre-performance traffic and a monolithic stage-tower) must be made sure not to deter housing developers.

Parking: Parking is an absolutely critical element to these plans; ifapproached correctly, parking might serve as a catalyst for the development of the district. In the short term, the Town must work with current groups in the area to come to terms with short-term parking needs and how those might be resolved in such a way that long term goals are supported.

A General Approach: Here then are the next several steps as the Town moves from the development of plans to their execution:

The Leadership Group: The Town should soon organize a group totake leadership of the development of downtown, including the Cultural District. This group might come out of an existingdepartment, or be created as an outside group. In either case, the group must be given responsibility for the project and be accountable for its progress, especially limiting obstacles for developers that offer plans worthy of support.
Funding: The leadership should quickly focus on the pursuit of funding sources to support the development of the downtown and the Cultural District. This might mean the creation of a quasi-governmentauthority able to create a tax increment financing district or similar funding vehicle.
Community Input: Our study has made clear that there are many people in the community who have strong ideas and opinions about thefuture of downtown. Thus the new leadership team should stay in touch with the public and channel their ideas and energy in such a way that the project is made stronger and is widely supported.

6.3 Commercial Development Strategy

Of particular interest to the Town is the encouragement and fostering of commercial development within the proposed cultural district. And so, in addition to the general strategy for economic development in the previous chapter, we would add more specific comments and recommendations relating to commercial development.

Lessons from Comparable Projects: Following are quick notes from a series of successful cultural districts on commercial development impacts

Avenue of the Arts, Philadelphia

The districts' construction has spawned development in initiatives in adjacent neighborhoods. The University Community Homes, Inc., offers home and business ownership initiatives for African-Americans in the area. A developer purchased 20 properties to adapt for retail use. Fourteen other buildings were purchased by another developer to create a pedestrian district similar to New York's SoHo, with boutiques, restaurants and loft-style apartments.

Pittsburgh Cultural Trust, Pittsburgh

Formed by concerned commercial developers, investors and owners to

support existing commercial development initiatives and to inspire

increased developments. The Trust now promotes spaces within the district to developers and businesses. Commercial facilities within the cultural district now include CNG Tower (office building), Lazarus Department Store, Roosevelt Building, Fulton Building, the David L. Lawrence Convention Center, 5th Avenue Place, Joseph Horn Company Department Store, Vista International Hotel, Federated Investors Office Tower and residential buildings.

Fort Worth Cultural District, Fort Worth

The district is inspiring adaptive re-use of spaces for residential areas at district's edges to define a "frame" to the district. The district now includes 20 commercial office buildings and over 250,000 square feet of office space; 45 separate retail spaces and over 293,000 square feet of retail space; and 118 residential units.

Chattanooga, TN

Independent of central planning, the Bluff View district was created by entrepreneurs who perceived a market demand and made private investments to fill it. These entrepreneurs own and operate the majority of the district's businesses and buildings.

Worchester, MA

The City's Cultural Development Officer believes that once you identify yourself as an arts and culture district, this designation makes for a self-selecting group of retailers. Real estate prices in Worcester rose almost as soon as the district was declared an arts and culture district, affecting the type of retail the district is able to attract.

Lowell, MA

Seven years ago, none of Lowell's mill space was occupied. Now, over 75% of the mill space is either renovated or under construction. There are even new housing units planned for the downtown, including high-priced loft spaces.

Peekskill, NY

As Peekskill was beginning efforts to revitalize the downtown area, rising real estate prices in New York City were driving artists to move further away from even the outer boroughs. Peekskill took an active role in pursuing displaced artists by taking out advertisements in SoHo art magazines and offering low interest rates. This helped artists buy buildings and convert them into useful spaces. In addition to occupying once-vacant spaces in the downtown, artists have brought businesses into the area. Several restaurants, coffee shops and boutiques have opened up downtown since the arrival of the new artist tenants. Landlords in Peekskill are offered tax incentives, grants, facade improvements, and loans to renovate buildings that can be used as live-work spaces by artists.

Syracuse, NY

Downtown residences are now 100% occupied, which has not been the case in the past. New residences have also been built. New local businesses are opening downtown. And, Syracuse has been able to maintain itsexisting businesses, including its corporate 'giants.'

Bloomington, IL

Together, 2002 and 2003 saw significant developments in residential and

commercial developments in the downtown area. Civic leaders see this as

a turning point. A sign of that is the new businesses that have joined the

downtown in 2003, including two wine shops, a jewelry shop and a

massage studio. Downtown churches have also been credited for their

commitment to their current location.

Our previous discussion about the potential of commercial development within larger cultural districts, together with this anecdotal review of results in similar communities, makes it clear that the Town of Cary Cultural District could well become a catalyst for the type of mixed-used development of office, retail and residential uses that the Town desires. The question then is whether to follow the Worchester approach of letting commercial developers “self-select” based on the designation of a cultural district, or to follow the Pittsburgh model of building a strong leadership group and organization that plays a more pro-active role in directing development.

We would take the position that the Pittsburgh model is more appropriate, on the basis of the following:

Previous attempts to simply invite and inform developers of opportunities in Cary have not been particularly successful.
With other downtown redevelopment efforts underway in the region

(i.e. Durham), Cary must approach the opportunity from a competitive perspective, having something to sell and a target audience in mind.

The Chesapeake Downtown Assessment: To come back to the issue of what commercial development should be encouraged in downtown Cary, we went back to the 2001 Chesapeake Downtown Assessment, which included a comparative assessment leading to the identification of gaps and opportunities in the regional marketplace.

Following are the types of commercial outlets under-represented in Cary that might be found in traditional downtown areas: Clothing, furniture, carpet, draperies, house-wares, electronic equipment and supplies, eating and drinking establishments, insurance agents, real estate offices, hotels, cleaners, photographers, beauty salons, barbers, shoe repair, wedding consultants, advertising agencies, commercial artists, computer services, decorators, business brokers, embroidery, health/legal/educational services, and accounting & tax services.

After then defining the size and attractiveness of primary, secondary and tertiary market areas, the report then proposes a direction for downtown retail development that includes the following ideas:

Downtown Cary will ultimately be limited by land mass and access issues, but aided by its character and charm. Nevertheless, an additional level of activity is required to develop greater synergism in the commercial core.
Not all retail is desirable from a character perspective, including automotive services.

It then suggests additional retail that could be supported at thepresent time (2001):

Gourmet Food Eating and Drinking Women's Apparel Miscellaneous Total

9,500 (square feet)

75,000 15,000 25,000 124,500

On the office development side, the Chesapeake report suggests that the Cary Market could support an additional 2.5 million to 2.9 million square feet of space over the next ten years, with much of that marketable at present (2001). It then suggests that the central core area could capture as much as 500,000 square feet of that space, but noted that a minimum capture of 100,000 square feet is required as critical mass to foster redevelopment.

Opportunity Sites: The proposed cultural plan, in keeping with Cary’s Town Center Plan, identifies nine Opportunity sites where mixed use development can and should occur.

Total		Residential	Office/Retail	Retail
Opportunity Site #1	267,000	267,000
Opportunity Site #2	147,000	147,000
Opportunity Site #3	117,000		117,000
Opportunity Site #4	120,000		120,000
Opportunity Site #5	153,000		153,000
Opportunity Site #6	271,000		271,000
Opportunity Site #7	275,000	275,000
Opportunity Site #8	29,000			29,000
Opportunity Site #9	109,000			109,000
Total	1,488,000	689,000	661,000	138,000

In reviewing the overall plan, along the size, configuration and location of the various opportunity sites, it is clear that some sites will best be candidates for residential development, some for mixed use with retail and residential development, some for pure retail some for a combination of office and retail. We have made assumptions about each of these sites in order to compare potential demand against order-of-magnitude supply of space. This analysis allows us to conclude that the commercial development components of the opportunity zones should be well-supported by the market in 2006, given:

Demand levels in 2001 did not reflect plans for a train station in downtown Cary.
The types of retail enterprises recommended in 2001 are in sync with the kinds of development that usually emerges around new culturalfacilities and districts.

Development Tools: finally, in support of these development activities we would stress the importance of three tools:

Promotion of the Plan: The overall plan itself represents a powerful tool with which to recruit commercial development and residential developers to downtown Cary. Included information on projected week-end and nighttime activity, attendance estimates and ancillary spending potential is credibleand compelling.
Parking: Probably the single most important element of the plan likely to drive commercial development is an effective response on the Town's part to the challenge of parking. Developers and business operators will see parking plans as real, meaningful efforts to attract and support new customers and workers in the downtown area.

Improvements to the public realm. By installing new streetscape, makingneeded traffic/circulation improvements, and a creating a new park in the heart of downtown, developers will recognize the ongoing commitment the
town has to this area, and will be thereby be encouraged to make similar private investments. The first step in the realization of the Dallas West-End project (now a booming success with converted warehouses into lofts and office space, multiple entertainment venues, dining establishments, etc.) was the City’s commitment of $5 million in streetscape and traffic improvements.

Partner with existing projects and initiatives, most importantly the proposed Economic Development Organization, to provide the staffing and infra-structure that helps advance these ideas.
Tax Incentives: Finally, there are the traditional tax incentives and zoning provisions available to the Town to attract new commercial activity. Hereagain we would stress the importance of using these tools selectively and proactively to drive the development of the district in a direction that best serves the long-term goals of the community.

Appendix A – List of Study Participants

Town of CaryErnie McAllister, Mayor Jack Smith, Mayor Pro Temp Marla Dorrell, Council Member Jennifer Robinson, Council Member Julie Robeson, Council Member Nels Roseland, Council Member Michael Joyce, Council MemberBill Coleman, Town Manager

Town Hall Meeting at Cary Elementary September 30, 2005Chris & Virginia Snyder Dan Pike Brad Morrow Carl Regutti Joyce McKeeWilliam M Britt John Pachuta Tom & Laura Hemrick Michael & Donna Hubbard Denise & Mike TallyElla Williams Michael McDadeHerb Young Kathryn & Andy JalbertRudina Thayer Elaine Wood Mark AndersonOlene Ogles Charlie & Wendy MusserWendy Lemus Carol Christmas Willie Green-Aldridgue Connie Belton Constance PappalardoMr. & Mrs. Michael Clifton Scott Korbin John & Sandy DuncanJohn Lambert Susanne Portanova Karl Moraski Gale O'Neal The Sampson FamilyAnn Marie Smith Tullie Johnson Toby Kennedy Matt Schedler David Sardinha Bobbi HoppLayne Snelling Julia Morrison Travis Smith Ivan Andjelkovic Fay Beebe Allen & Liane Watson Thea Blake Holly & David Greene Kelley Dennings Meredith ChandlerJerry & Jean Harris Debra Grannon Bob Knott John McLawhorn Tim & Karen Beaver Amber FarrellyBillie Jo Herr Frank Gallo David & Karen Dumers Michelle Yellin Wilson Pietzsch Jerod & Anne Kratzer Linda Bailey Patti Merz Chia Sampson M. Anne Mackie Nik Nikololaev Shirley Barnes Robert Myers Stephanie TrojanScott RamageSarah Sheffield Juliet Andes Andi Dick Keri Bemar Veronica Bucki Maurice Weaver Greg Lytle Janis Coville Kay Stuffolino Nona Hunter Susan Tilley Toby Coleman Nanci Tanton Thom HaynesThea Blake Sue & Jim Burcsu Joseph Peery Aimee Cuthrell Henry Rogers Bianca Bradford

B.J. Smith Scott Lockheed Charles Griswold Needs Assessment Presentation at Community Center November 29, 2005 Dan Pike Tullie Johnson Nik Nikolaeo

Tom & Laura Hemrick Herb Young Meredith ChandlerWillie Green-Aldridgue John & Sandy DuncanWilliam & Virginia TrautmanCynthia Mollenkopf Patty & Michael CliftonMike & Ginger HayesJane & Peter Muldoon-Smith Laurie Stockwell Margaret PartridgeRonnie Thuockmorton Don Frantz Charles Pierce Julie AndersonDavid Byerley Scooter Holcombe Greg Boytos Ella Williams Thea Blake Nona Hunter John McLawhorn Michael McDade Elaine Wood Wendy Lemus Billie Jo Herr

Jerod & Anne Kratzer Toby KennedyDan Steen Chen TaylorAndy & Kathryn Jalbert Greg Guy Mr. & Mrs. Rob Evans Julia Morrison Myrna Cooper Steve Smutko Mr. & Mrs. Alex Sotomayor Leta Huntsinger Nan Hannah Laura HolleyRob Alexander Denise & Mike Tally Terry Neely Carroll Ogle Nathaniel Parker Nick Ditcheos Mike Yellin Wade CooperDick Ladd Mandy Matson David Lindquist Maria Alicea Dana Stockwell John McLawhorn

Scheduling Charrette at Cary Elementary Participants

Town of Cary Cultural Arts Division Staff

Mary Henderson, Director, PRCR Sara Maultsby, Page-Walker Center SupervisorLyman Collins, Cultural Arts Mgr, PRCR Darrell Stover, Page-Walker Program SpecialistJoy Cox, Festivals Coordinator Vicki Hayes, Cultural Arts Administrative Secretary Rachel Green, Youth Theater Coordinator Sarah Bunch, Performing Arts CoordinatorDenise Dickens, Public Art Coordinator

Cultural Arts Committee Members:

Toby Kennedy, Cultural Arts Committee Chair Ginny Trautman, Cultural Arts Committee Member Dennis Hoadley, Cultural Arts Committee Member Mamta Bisarya, Cultural Arts Committee MemberCynthia Mollenkopf, Cultural Arts Committee Member Rob Rusczak, Cultural Arts Committee Member Kay Struffolino, Cultural Arts Committee Member Gyan Gupta, Cultural Arts Committee Member Katie Crain, Cultural Arts Committee Member Andrew Shears, Teen Council Representative for the Cultural ArtsCommittee Bob Myers, Friends of Page-Walker Representative for the Cultural Arts Committee Susan Espin, FALCDon Hamilton, FALC Ella Williams, FALC Jean Scholz, FALC Rocky Alexander, FALCHolly BankoskiCarl Regutti, PAAB Carol Aupperle, PAABAndi Dick, Cary Clay CooperativeBrenda Taylor, Cary Clay Cooperative Cate Parrish, Artist Carolyn Sampson, MLK Task Force Larry Speakman, Concert Singers of Cary Mr and Mrs. Filippo, FALC Joyce McKee, FALCCharles Pierce, FALC Meena Jeyakumar, Hum Sub Inc.Pat Hudson, CVA Sterling E. Stevens, FALCDavid Lindquist, Concert Singers of Cary Diane Villwock, Concert Singers of CaryThea Blake, Miniature Museum Sue Guenther, Cary Community ChoirCathy Phipps, Triangle Wind EnsembleDan Squillace, Triangle Wind EnsembleLizette Cruz-Watko, Diamante, Inc. Julia Morrison, Friends of Page-Walker/PAABLinda Fuller, Festival Committee Gale O’Neal, Cary Players Margaret Partridge, Philharmonic Association Debra Grannon, Cary Players Greg Lytle, Cary PlayersAimee Cuthrell, FALC Carol Aupperle, Public Art Advisory BoardT. Smythe Richbourg, Public Art Advisory Board

Additional Interviews: David Worters, Executive Director, North Carolina Symphony

Lisa Jones, General Manager, Carolina Ballet Jim Hammerle, Cary Town Band Angela French, First Methodist Church Tom Moore, Cary Town LibraryShawn Braden, Greater Raleigh CVBWilliam Eastern, David Lindquist, Roberta Thompson and Larry Speakman, Concert Singers of Cary Dan Squillace, Triangle Wind EnsembleJoy Besisi, ArtistDawn Mecklenburg, Artist Dan Martschenko, Debra Grannon Cary Players Matma Bisarya, Meena Jeyakumar, Kishan Gjona and Sonali Luniya, Hum Sub Suzanne Laliberte-Clark, Cary BalletLizette Cruz-Watko, Diamente Daphne Ashworth, Cary Visual Arts Laura Coats, Cary Visual Arts Lester Thomas, The Ujima GroupChia Sampson, Viola Lee and Carolyn Sampson, MLK Task Force Winnie Ferguson , Artist Ginny Zehr, United Arts Council of Raleigh and Wake CountyJulia Morrison, Friends of Page-Walker Angela Carter,United Arts Council of Raleigh and Wake County Ann and Jerod Kratzer, Friends of Page-WalkerMario Nizich, Fine Arts League of CaryKay Struffolino, Cultural Arts CommitteeElla Williams, Fine Arts League of Cary David Sardina, Six String Café and Music HallHolly Bankowski, Community VolunteerDavid Mellnik, Cary Community Choir Margaret Partridge, Philharmonic Association, Inc.

Appendix B: Comparable Community Arts Centers Lakeville Area Arts Center, Lakeville, MN

The Lakeville Area Arts Center is becoming a central part of Lakeville, the fastest growing suburb of Minneapolis. Now in its third year ofoperation, the Center is home to two communitytheatre companies, a children’s theatre organization and a community symphony. In addition, the Center presents professionalartists on available weekends. The Center also houses offices, pottery and painting studios, a large classroom and a gallery space where local artists display their work.

The building itself was formerly a historic church in downtown Lakeville. In addition to receiving money from the State of Minnesota, many local real estate developers and construction companies donated money toward the adaptive re-use of the church. One company donated the money to pay forthe seating in the auditorium, while another donated money for potterywheels and a kiln. Total renovation costs were about $1 million.

The church’s former worship area now houses a 300-seat auditorium, whichboasts remarkable acoustics and a flexible seating arrangement. On the main floor, 160 seats are retractable, to allow flexible seating if desired. Some of the Center’s most popular offerings have been jazz and cabaretperformances with cabaret-style seating. The space also boasts a 60-seatbalcony and a flexible orchestra pit that provides additional seating when not in use. The stage is a 24-foot proscenium that is 40 feet deep.

The community of Lakeville has truly embraced the Arts Center. In the three years since its inception, it has seen rising attendance rates. This pastyear, the Center welcomed 25,000 visitors, when the population of Lakeville is 43,128. The Center is often used for community functions. The unique and flexible space is suitable for luncheons, children’s art-themed birthday parties, wedding receptions and club meetings. The auditorium is used every weekend of the year, and its overall schedule accounts for approximately onethird of the calendar year.

The Center is owned by the City of Lakeville and operated by the Parks and Recreation Department, which provides two full-time staff; an arts center coordinator and an arts center secretary. Teachers are contracted to teach the community arts classes, and the Center utilizes volunteers for box officeand ushering functions. The Lakeville Area Arts Center Board, an 8-member citizen advisory group, advises the City Council on matters pertaining to the promotion, development and accessibility of the arts in the City of Lakeville. Friends of the Arts Center, an independent 501(c)3 organization is alsoassociated with the Center. Fundraising efforts and grant proposals are made under the auspices of this organization. The Center’s yearly operatingbudget is about $114,000, and is funded entirely by the City of Lakeville.

Groups that continually use the Center are considered resident companies insofar as this is the only space they perform in; they do not rehearse in the space. Prices per performance are $220 for weekend days and $135 forweekdays and for rehearsals the charge is $140 for weekend days and $82 for weekdays. Additional hourly fees apply when the four-hour maximum per performance/rehearsal is exceeded. Event ticket prices range anywhere from $5-20 dollars; dinner theater tickets are most expensive at $35. Some of the groups that rent the auditorium do so for only one weekend, some have 10show runs over several weekends.

Fort Worth Community Art Center, Forth Worth, TX

The Forth Worth Community Art Center isowned by the City of Fort Worth andoperated by the Arts Council of Fort Worthand Tarrant County. The Arts Council has set up a separate 501(c)3 organization inthe name of the Fort Worth Community Arts Center.

The Center’s budget is $570,000. Facilitycosts, including maintenance and operation of the building, are paid by the City. The City allows the Center to keep the revenues the building earns from rentals and events. The rest of the budgetis filled in with money from the Arts Council. 51% of the Center’s income is earned, while 49% comes from the Arts Council. The Arts Council accepts donations from private individuals, foundations and corporations on behalf of the Center. The levels of donation range from $64 for an individual to$50,000 + for major sponsors like the Fort Worth Star-Telegram.

The Center has its own staff of three people: a Theater Manager, a GalleryManager and a Grant Applications/Special Events Manager. These three positions are part of the larger Arts Council staff which also includes anExecutive Director, a Director of Development, a Development Project Manager, Public Art Manager, Public Art Project Manager and Public ArtAssistant. The Center does not have its own board separate from the Arts Council’s. The Arts Council board consists of 34 people and decides how to allocate its $1.1 million annual re-granting budget. Because the Arts Council has a large number of grants, projects and programs to fund, theoperation of the Center is not always its priority. The Arts Council also operates Forth Worth Public Art, an organization that oversees the installation of public art in Fort Worth.

The Center is located in the Forth Worth Cultural Arts District in downtown Fort Worth. Within the arts district there are three museums and the Will Rogers Memorial Center, which includes an auditorium and coliseum. There are 13 different tenants in the Center, one of which is the Arts Council. Other tenants include two choruses, three theatre organizations, the Fort Worth Opera Association and the Texas Commission on the Arts.

The building totals 77,000 square feet and houses a 500-seat theater and a 120-seat theater, galleries ranging from 273-square feet to 2992-square feet, which are available for monthly rental and office space available for rent by arts organizations as a part of an arts incubator program. Currentlyapproximately 20 organizations participate in this program, many are Arts Council grant recipients. These groups also receive a reduced tenant rate forany performances or exhibits they present in the Arts Center.

Flushing Town Hall, Flushing, Queens

The Flushing Town Hall is a Cultural Center housed in a restored historical building in Flushing,Queens. The former town hall, built in 1862, had fallen into disrepair while being used for commercial purposes in the 1970s and 80s. The Flushing Council on Culture and theArts took over the abandoned building in 1991, and proposed aplan to the City for adaptive re-useof the building. The City accepted; the building is still owned by the City, and is operated by the Council.

After a $6 million City-funded renovation, Town Hall’s facilities include three galleries, offices, a concert space, a 340-seat concert hall and a jazz café. The renovated façade speaks to the building’s status as a national historicallandmark. After much lobbying by the Flushing Council on Culture and the Arts and the then-borough President of Queens, The Flushing Town Hall was given “Cultural Institutions Group” status, the elite group of arts organizations that are located on city-owned land. This group receives the majority—85%—of the money granted annually by the New York City Department of Cultural Affairs. This was a huge victory for the Town Hall,whose operating budget is now comprised of primarily City funds.

Town Hall’s programming includes music, gallery exhibits, dance and children’s events. By researching the surrounding community, the Council discovered that in order to truly be of importance to its neighbors, Town Hall’s programming would need to reflect the immense diversity of Queens. Programming includes classical music, jazz, stand-up comedy, offerings specific to the surrounding Asian communities, many children’s programs and a “Queens Jazz Trail”—a tour of some of Queens’ great jazz landmarks. The Council also hosts a composer-in-residence, education/outreachprogramming, and provides assistance to local artists in the forms of seminars and grant writing, and special holiday programming.

Town Hall has recently formed a partnership with The Smithsonian Institution, allowing Town Hall to borrow from the Smithsonian’s galleries and benefit from its curatorial expertise. This pooling of resources has allowed Town Hall to explore certain programming areas in greater depth. In 2004, just after their alliance had been formed, Town Hall presented “Red, Hot & Blue: A Salute to American Musicals.” This seven-week multimedia festival celebrating the history of musical theatre would have been difficult to pull off without the help of a larger, more seasoned institution.

The Flushing Council on Culture and the Arts’ primary function is theoperation of Town Hall. The group operates and curates both the performance space and the gallery space. The 18-member staff is supplemented by 80 volunteers.

Town Hall receives most of its $1.5 million budget from the New York CityDepartment of Cultural Affairs (DCA). Total government funds received is about $700,000, $500,000 of which is received from the DCA. The remainingincome is received from private donations and foundations. Town Hall also has a membership program, with levels ranging from $40 to $500.

Crooked Tree Arts Center, Petoskey, MI

Crooked Tree Arts Center was founded by the Crooked Tree Arts Council, an independent 501(c)3, in 1971 to sponsor and encourage arts activities within the Petoskey and Northern Michigan region. The Arts Center quickly grew and in 1980, with the support of area residents and businesses, the Arts Council purchased a Victorian-era Methodist Church and began to adapt it for re-use as a new, expanded community arts center.

Owned and operated by the Crooked Tree Arts Council, the Arts Center now houses two art galleries; a 241-seat thrust stage theatre; studios for dance pottery, painting, and music lessons; and offices and meeting rooms.

Plays, films, concerts, and other small scale events are presented in the stage theatre as partof a steadily growing calendar which includesboth professional and student performances.Each session of the Community School of the Arts offers more than 350 hours of instruction in music, art and dance. The School’s newest offerings include the Crooked Tree Youth Orchestra and the Beginning Strings Program. Crooked Tree Arts Center also conducts a greatdeal of education and community outreach, presenting in-school dance and music performances to students in the surrounding region.

Serving as Petoskey’s primary arts facility, the Arts Center attracts more than 50,000 patrons each year who attend performances and exhibitions, and attend classes and workshops. More than one dozen visual arts exhibitions are mounted annually within its two climate-controlled galleries. An active docent program helps interpret these works for school children who visit and then participate in related hands-on activities.

The Arts Council employs 8 full-time and 2 part-time staff members who manage the programming and operations of the Arts Center and also present programs in off-site spaces. Volunteers also provide crucial support. Over 200 volunteers work over 10,000 hours each year as docents, front desk receptionists, ushers and committee members and provide support withevents, mailings and more.

The Arts Council operates a budget of $1.2 million, the majority of whichsupports the operations of the Arts Center, as the Council’s main function is to advance the Arts Center. There is no charge for general admission into thegallery spaces, but the Arts Center does earn revenue from event ticket sales. Thirty-five percent of the annual budget comes from this earned revenue, and the remaining is contributed. In addition, the Arts Center’s endowment is currently approaching $4 million.

Arlington Center for the Arts, Arlington, MA

Located on the outskirts of Boston, The Arlington Center for the Arts was established as an independent non-profit organization in 1988 by a visionary group of artists, writers, musicians and educators.

ACA is located in a portion of the Gibbs Center, a former junior high school which was made available by the town for rental tocommunity arts organizations during a timeof decline in the 1980s. One of six communityorganizations housed in the former school building, the arts center occupies 12,000square feet including a 500 square footgallery, 15 individual artists’ studios, classrooms and a 2,000 square foot, 170-seat theater, suitable for theatre, dance, and music.

Managed by a staff of five, ACA’s annual budget is $415,000. From revenue and fees associated with its active program of events and classes,membership and rental income, ACA earns 83% of its revenue. The City owns the building and charges each resident organization minimal rent to cover heat, air-conditioning, and water.

ACA offers 250 programs annually, serving more than 7,500 Greater Boston residents. These programs range from one-night workshops to 9-week courses and promote diverse arts media and culture, offering opportunities ranging from studio classes to cultural performances. Literary and performing arts events include poetry readings and performances by local and emerging artists as well as nationally recognized talent. ACA’s on-line literary journal also supports emerging writers around the world.

ACA offers opportunities for visual artists to present their work and for thepublic to experience contemporary art

report

4. Other New Facilities

4.1 The Community Media Center

4.2 The Arts Incubator

***4.1* *The Community Media Center***

***4.2* *The Arts Incubator***