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State of the Arts: Districts brand neighborhoods, draw artists, though tax breaks little used

In their quest to revitalize and repopulate troubled neighborhoods in Baltimore, business and community leaders are getting help from a unique source: the arts.

Monica Broere, a sculptor and retired art teacher uses an electric kiln to make clay cups and bowls. Broere, a resident of Highlandtown, one of the three state-designated arts districts in the city of Baltimore, said the arts has played a role in bringing a new population to formerly vacant neighborhoods like hers. "As a community, the area is attracting more artists," Broere said. "There's cheaper housing, larger spaces and the fact that the community associations are promoting it." (Josh Cooper/The Daily Record)

The Maryland State Arts Council has designated three arts districts in the city: Station North in 2002, Highlandtown in 2003 and the Bromo Tower area in June 2012. The designation comes with tax incentives to attract and retain artists and arts-related businesses.

Recent figures show the Arts and Entertainment Districts are having a measurable impact on local economic growth. However, artists and arts organizers said the main benefit of the A&E districts is neighborhood branding and marketing, not the tax incentives, which are seldom used.

Tax credits and the impact

As part of the official designation, Arts and Entertainment Districts have three tax incentives available for those who live and work in them.

One allows artists who live in the city and who produce and sell their work in the arts district to subtract income from their state taxes. Another allows developers to be taxed at a lower city tax rate if they rehabilitate a building for an artistic use. The third waives the admissions and amusement tax, a tax on ticket sales for businesses like theaters, if the business operates within an Arts and Entertainment District.

The three A&E Districts in Baltimore are among 20 such districts throughout the state. Other such districts include Berlin on the Eastern Shore and Frostburg on the western panhandle.

No individual or business is taking advantage of the property tax incentive for renovating buildings, according to the Baltimore Department of Finance, and the waiver of the admission and amusement tax is being used by only one venue — the Charles Theater — because the benefits do not apply to nonprofits. According to the state comptroller, in tax year 2011, the most recent year for which data is available, 33 individuals claimed the income tax subtraction for doing business in the three A&E Districts in the city.

The tax incentives offered in the A&E Districts are of limited practicality for different reasons, artists and developers said.

Many local artists say the market for their art in the city is weak, for example, which makes the income tax subtraction of little value.

“It’s a city where people don’t buy much art,” said Gary Kachadourian, an artist, art instructor and board member of the Station North Arts and Entertainment District. “I don’t know that the tax incentives for the artists have been that beneficial.”

Tough market

Dan Schiavone, an artist who owns Schiavone Fine Art gallery in Highlandtown, said the market is a tough one because the collectors are just not here.

“The major collectors, they go up to New York,” Schiavone said. “If you want to get schmoozed and spend a lot of money, where would you want to be schmoozed? Chelsea, SoHo or Highlandtown?”

Others agree, like the street artist who goes by the pseudonym Gaia. A graduate of the Maryland Institute College of Art living in the Copycat Annex in Greenmount West, Gaia said he stays for the community, not the tax incentives.

“The funny thing about arts districts is … that no one takes advantage of the tax credits, except the businesses,” said Gaia. “Artists could ostensibly take advantage of them or cook the books to make it seem like we’re selling art out of here, but the [messed] up thing is none of my business comes from here.”

He said he sells mainly to a few wealthy collectors in the city and some in the surrounding county, but most of his business comes from outside of the area.

The tax credit for renovating properties remains untouched.

What attracts many young artists to the city is the relative affordability of property, but that doesn’t draw in people who want to put a lot of work into raising their property values, said Chris Ryer, president of the Southeast Community Development Corp., which works within the Highlandtown A&E District.

“You’re trying to take advantage of low property values, not increase them,” Ryer said.

The waiver of the admissions and amusement tax only applies to for-profit companies that sell tickets to events, which means few venues are eligible to use it. Many organizations that put on events and sell tickets are nonprofits, like the small theater companies in Station North.

One of the only entities that uses the waiver in the city is the Charles Theater. Owner and operator Kathleen Lyon said the incentive was an added benefit that made the theater more comfortable taking risks and expanding its  operation.

“Originally, it was a great incentive to expand and invest a lot of money and to borrow a lot of money,” she said. “Every little bit helps, as a small business owner.”

A changing population

Despite the limited use of the tax incentives, arts organizers said there has been a lot of revitalization in the A&E District areas because of the arts, and there is potential for more.

Pamela Dunne, program director for the Maryland State Arts Council, said the change that has occurred has given the districts exposure.

“There is a draw to these districts because of the vibrancy of the districts and the changes that take place because of revitalization,” she said.

Dunne concedes that the tax incentives her agency promotes aren’t the strongest factor driving economic growth within the A&E districts.

“While [the tax incentives] may be the draw for some people … what is more of a draw to the district is the vibrancy of the district and the changes that take place because of revitalization,” Dunne said.

Much of the revitalization effort has come as a result of the large and growing young artist population, many of whom stay or return to the area to make a career out of art.

“Artists are moving in, and many artists are moving back,” Dunne said. “People grow up here, they move away, they go to school and then they come back.”

A major factor in the recruitment and retention of young entrepreneurial artists in the city is MICA, the Maryland Institute College of Art, with buildings scattered in and near the southwest corner of the A&E District. Seven percent of the students at MICA are from the Baltimore metropolitan area, which means the school functions as a magnet for bringing a new creative population into the city. Furthermore, as of 2012, more than 2,000 MICA alumni were living in Baltimore, about 12.5 percent of all living MICA graduates.

“Artists are the Navy SEALs of neighborhood revitalization in Baltimore,” said Charlie Duff, president of Jubilee Baltimore, a nonprofit development group that has worked on a major artist housing project in Station North.

Duff said Baltimoreans need to change the way they think about the city and its artistic community.

“Clipper ships, railroads, steel, canned tomatoes, yes. Arts, no. Sorry, never,” he said. “We are now one of the rising second-tier arts centers in the country, and that’s a serious thing.”

City officials said art isn’t a panacea for urban blight. However, they say, one neighborhood at a time, the artistic community is driving renewal in several key areas, and the state designation does help unify their efforts.

“The biggest single value is promotion,” Kachadourian said. “There’s not much that’s super-beneficial in the legislation for artists. … But it made [the artist communities that] already existed seem more real because it now had a name.”

Ryer agrees.

“It’s more about marketing,” Ryer said. “The area now has a brand that’s built around the arts, and that’s really where the benefit lies.”

Read Part 2 of this series, on how the arts are changing the Station North area, by clicking here.