Friday, November 20, 2009

The Star Advocates Lavish Public Spending On the Arts, Points to Carmel's Civic Theatre Boondoggle as Example of Good Public Spending

Today the Indianapolis Star editorializes about the need for more spending on the arts and laments the loss of the Indianapolis Civic Theatre to Carmel. The thrust of the editorial "Don't Let Curtain Fall on the Arts" is summed up in a quote from the editorial:

Carmel Mayor Jim Brainard contends that investing in the arts is a sound economic development strategy. "It's important to have cultural amenities, just like it's important to have professional sports teams,'' he told The Star's Jason Thomas.

That's an argument that Brainard's counterpart in Indianapolis, Greg Ballard, needs to hear and understand. While Carmel appears to be aggressively targeting Indianapolis' cultural institutions, the leadership in this city remains complacent.
First, I'm not at all certain why the Star believes that Mayor Ballard has somehow shortchanged the arts. Arts spending continues unabated. The City continues to pour millions into the Arts Council of Indianapolis which acts as a distribution mechanism for local arts spending. As I have pointed out previously, only a small percent of our tax dollars paid to the Arts Council actually makes it to the artists. (See additional column on this topic as well.) Most of the money is spent on the Arts Council salaries, other administrative costs or stashed away in investments, which now total several million dollars.

Second, the Star's citing professional sports investments as an analogy for why it makes economic sense to pour money into the local arts also fails basic economics. People who attend professional sporting events are typically local people spending their discretionary income. If they spend their money on going to the Pacers game or to the Indianapolis Symphony, that is money they don't spend to take the family out to the movies or to dinner. You don't have an increase in spending with the professional sports or the arts. You're simply moving around the spending.

Finally, it is mystifying why the Star would write an editorial praising the Carmel Regional Performing Arts Center as a good example of public spending while completely ignoring all the problems and scandals that have been associated with that project. Mayor Brainard low-balled private contributions to the Arts Center, leaving taxpayers picking up the tab. Further, he, his attorney and the city's spokesperson were put in control of the private foundation to run the Arts Center. I explained this set up in an earlier column.

A troublesome twist to this public-private setup is that Carmel Mayor James Brainard is one of the founding directors and an officer in the Carmel Performing Arts Foundation. [Foundation director Nancy] Heck, also a founding member, is the City's spokesperson. A third officer/founding member is Douglas Haney, who is Carmel's attorney. Heck and Haney both receive their positions through appointment by Mayor Brainard, as do a majority of members of the Carmel Redevelopment Commission.
Taxpayer money is being used to pay new artistic director for the Performing Arts Center, Michael Feinstein, a $500,000 (maybe more) annual salary. It is not clear though that Feinstein is going to actually have much time to earn that salary. As the IBJ notes:

It looks like Michael Feinstein, the high-profile Artistic Director of the Carmel Performing Arts Center, will have a busy 2010.

His show "All About Me" will be opening on Broadway in March. It's his first Broadway bow since 1990's "Michael Feinstein in Concert: Piano and Voice." More on the show from Playbill.com.

Feinstein also owns his own NYC club, Feinstein's at Loew's Regency and, according to his website, will be serving as Director of the Popular Song Series for Live at Lincoln Center.

And that's not all. He's also now working on a proposed Broadway musical version of "The Thomas Crown Affair." Plus he's prepping a globe-trotting PBS TV series, "Michael Feinstein: Man on a Mission."

The question, of course, is: How much time will he have for Carmel?

Feinstein won't have any time of course. Carmel is using at least a half million dollars of taxpayer money to purchase Feinstein's name under the guise of his doing work in running a facility, work he is never going to do. (Which raises interesting ghost employment issues since tax dollars are being used to fund Feinstein's salary.) Because Feinstein is not going to be available to do the work, Carmel taxpayers are having to pay $200,000 more for an executive director to actually run the Carmel Arts Center.

For the Indianapolis Star to cite Mayor Brainard's Carmel financial misadventures as an example Indianapolis should aspire to is a frightening thought.

14 comments:

HOOSIERS FOR FAIR TAX said...

Wait til those payments come due. Carmel's citizens, many of whom live well beyond their means, will be crying when they see their tax bills.

Paul K. Ogden said...

Yep, HFFT, last time I checked even Carmel doesn't own a money tree. The bill will becoming due.

Nick said...

Paul,

You have a point on the effectiveness and return on investment for some of these non-profits.

While I support your efforts for more transparency, accountability, and increased effectiveness in public spending, I don't believe every publicly lead initiative is evil or can be designed to be directly profitable. (i.e. spending on roads maintenance, environmental protection, law enforcement, fire protection, education, and even convention centers)

I do remember a downtown Indianapolis that did not have a circle center mall and many of today's amenities. A city that could have been the next Detroit or Cincinnati with a dying urban core and little to cheer about.

Paul K. Ogden said...

Nick,

I agree. You point to good public expenditures.

It's when government tries to prompt economic development, using tax dollars, to manipulate the market, that you have problems.
How many developers now are going to invest in downtown Indianapolis without a taxpayer subsidy?

I think if you examine virtually every one of these public-private partnerships in the last 20 years you'll find that they were not good investments for the taxpayers.

Nick said...

There is merit to economic developers and urban planners ideas on "creative class", "global cities", "industry clusters","regional synergy", and "sustainable competitive advantage" that do shape the attractiveness and economic vibrancy of communities.

Much of this does not happen without public investment in some form and central Indiana can not become isolationist or unilaterally disarm by eliminating public incentives and subsidies.

However, it can use its limited resources in a focused manner that should be able to unlock multiples of its original outlay in private and non profit dollars for a measurable greater good.

Citizen Kane said...

Nick, transferring wealth from many taxpayers to a few is not public investment; it is public theft. The problem with government is that it doesn't invest in anything; it only transfers money to the privileged few (campaign contributors). Meanwhile, the rest of suffer with deteriorated infrastructure and services while

".. and even convention centers." No, not ever. The so-called convention center "business" is a biggest scam going other than professional sports. If it was really a business, a private entity would form and operate it. It is not a business; it is nothing more than a subsidy to hotel conglomerates who don't want to bear the expense of running such a money loser.

HOOSIERS FOR FAIR TAX said...

Nick, it is not the Circle City Mall that is the money pit of Indy. I'm thankful that the Simons did not give up on the project.

Stop Indiana said...

The half pregnant logic of "non profit, public-private partnerships, public investment," etc. are nothing more than bandit costumes for knocking over the private sector. "Thou shall not steal," applies to people in government too.

If these schemes were investment grade, the private sector would fund them for INVESTMENT RETURN.

Nick said...

Citizen Kane,

You are right.

I have studied the "convention business" and have yet to see a convention center that can achieve a "direct" profit or achieve an average occupancy level more than 60%, even if they have "private" sector managers or quasi-private ownership.(Some of these arrangements fare much worse in losses and occupancy than our current structure)

Regardless, every city of any size has one. Clearly informed public officials view this activity as a "loss leader" to attract "new" dollars into the local economy and showcase their cities to outsiders and prospective investors and clients.

(Its no different than Walmart selling milk and diapers at a loss in anticipation creating a larger volume of shoppers who on average will buy more products, leaving the store with a larger profit than if they had not participated in this activity)

Paul K. Ogden said...

Nick,

The problem is that all we ever have is "loss leaders." At some point, we need to be turning a profit.

I heard the same thing argued with Conseco - that it didn't matter if we picked up all the operating costs on the building while the Pacers continue to get all th eprofits from Conseco. Even though we lose money on the arrangement, the argument goes, we benefit from getting more tax money and increased business surrounding Conseco.

I don't buy that. First, there is no reason to be even negotiating with the Pacers now. They have no leverage to get out of the contract. But regardless operation of the buildings should be paid for out of the income stream produced by the building. To rely on indirect benefits from the building seem to be a stretch to justify a sweetheart deal.

Nick said...

No argument from me on the Pacers or Colts.

If direct expenditures are not matched with direct revenue then there are no metrics to measure any level of performance. Even if you understand it will always show a direct loss.

Until recently, no one even tried to minimize the losses or measure performance.

Just increase taxes and spend even more.

Toni said...

Michael Feinstein is a man of integrity. He is purchasing a house in Carmel and will follow through on his commitments. He brings incredible knowledge, depth, honesty, and talent to the position. He works extremely hard even when he is not performing. He continues to write and contribute to the arts in many ways. Mr. Feinstein is a national treasure and will attract some of the best performers in the country. He is a brilliant, talented man and you should be excited that he is taking on this challenge. I have no connection to him, other than as a music and theater lover, admiring his work and being amazed at his intelligence, talent, kindness, and productivity. In the U.S. celebrities and athletes do command higher salaries. Were he performing he could earn this in just a few nights, but he clearly is committed to keeping music and the popular American Songbook alive and of interest to young people.

Downtown Indy said...

Toni, it appears Feinstein WILL be performing elsewhere, still. A lot.

The arrangement seems very much like that of the ISO, which eventually caused them to terminate their imported 'star' due to his lack of local involvement and the high price they paid to have a big name on the program.

CARMEL TRAIN WRECK said...

Brainard has a habit of lowballing most projects so that he can feed new contracts to his campaign contributors. This year alone, in respect to the PAC, his strongly controlled CRC, Carmel Redevelopment Commission, has forked over $550K to the shell PAC Foundation 501c3 despite the fact that most Carmel citizens are against taxpayer money going for the arts.

He also gave another of his phony lines to the Indy Civic who will probably meet their demise in Carmel, while taxpayers will have to absorb millions in operating deficits for that white elephant boondoggle of a PAC and City Center.

The IndyStar must be on Brainard's payroll because they shoot from the hip without investigating the scam and scandals that are going on with this probably corrupt government.

Carmel voters are going to be paying for decades for these nonsensical excesses which begins with over $26 million in debt service alone in 2011. You can bash Brainard all you want, but with a million dollar campaign fund he is successful in keeping citizens dumb and blind while he plays his antics with our money.