Neighborhood investment fund issues

(Disclosure: I am part of bidding teams for a couple of projects that have been submitted in response to NIF request for proposals.)

The Washington Post today reports that funds from a program that was created to support neighborhood revitalization efforts in specific areas of the city are instead to be directed to large institutional actors in other parts of the city, on non-revitalization efforts. See "CITY BUDGET: Awarding of Neighborhood Funds to Large Nonprofits Draws Criticism."

I am the first to say that there are issues with the Neighborhood Investment Fund. First, many of neighborhoods don't have organizations with solid capacity, and the program hasn't built into the process capacity development activities. Second, the Ward Councilmembers can get too involved with regard to grantmaking in their Ward, so issues of worthiness and merit can get swept up in politics, and good projects may get kicked to the curb in favor of considerations other than merit. Third, the review process is opaque.

That being said, generally, while DC funds a lot of culture-related projects, and such projects are often worthy, there is not a standard, open and transparent set of procedures ("a process") where these projects are reviewed generally, and against a set of stated priorities specifically.

And rather than deal with this for legislative earmarks (see "D.C. Earmarks: The city embraces a questionable budgetary practice" a 2008 editorial from the Post and "D.C. Council hardens line on handouts to nonprofits"from January 2009 in the Examiner) a few months back, the Council just voted to not allow groups to get grants two years in a row, which was a particularly stupid thing to do, at least for successful projects, because rather than having successful projects be continued forward in a new grant cycle, they have to sit out for a year.

I have a couple iterations of a memo on cultural planning in DC. The full memo is in this past entry, "Cultural resources planning in DC: In the land of the blind, the one-eyed man is king." These are the recommendations from that memo:

1. That DC develop a comprehensive cultural development, management, and funding plan, setting priorities for the development, harvesting, and funding of cultural resources assets;

2. And consider the development of an allied tourism management and development plan, either separately or within the same framework;

3. create a comprehensive Cultural Resources Management office, likely merging a variety of programs and assets currently spread around various agencies

4. Provide funding, both for capital improvements and operations, that that also considers providing significant ongoing funding to cultural resources deemed important.

5. Develop an open and transparent grant process.

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With regard to an open and transparent grant process, I didn't detail recommendations, but elsewhere I have written about the process for awarding arts and heritage grants in Maryland, from the State Arts Program and from the Heritage Areas program.

These are the eligibility requirements for Maryland Heritage Area grants:

A. Eligibility Generally. The Authority may provide grants from the Fund to eligible grantees to:
(1) Develop management plans for designating a recognized heritage area as a certified heritage area by the Authority;
(2) Assist noncapital projects which:
(a) Are located within certified heritage areas; and
(b) Address or complete priority activities which are:
(i) Identified in the management plan approved for the certified heritage
area, and
(ii) Consistent with the goals, objectives, strategies, and actions outlined in
the management plan; or
(3) Assist capital projects which:
(a) Are located within target investment zones identified in the management plan
approved for the certified heritage area; and
(b) Address or complete priority activities which are:
(i) Identified in the management plan approved for the certified heritage
area, and
(ii) Consistent with the goals, objectives, strategies, and actions outlined in
the management plan.

Note that grants have to address priorities as laid out in management plans for the heritage areas.

We don't have this kind of straightforward priority based criteria for cultural funding from the city government.

This could be easily rectified.

But I don't think the powers that be want to regularize the system. Instead they prefer the "loosey goosey way" because that gives everyone more ability to game the system and for elected officials to overly shape the process and reward supporters.

Note that with the Neighborhood Investment Plans, priority plans were developed. The problem is that most neighborhoods don't have organizations with deep capacity and that in my opinion the priorities, if truly oriented to auguring revitalization, were still too diffuse.

For example, murals... not to mention mural topics that have little to do with an area, such as a proposal by Byron Peck to do a mural on the "Underground Railroad" in the H Street neighborhood, when the H Street neighborhood has absolutely no connection to that history. Instead, the H Street neighborhood has a connection, historically, to "above-ground" railroads such as streetcars and trolleys, passenger and freight railroads, and even to civil rights organization by organizers for the Brotherhood of Sleeping Car Porters.

Funding

The other issue is regularized funding. Earlier in the week, Tim Lemke wrote in the Washington Times about the proposed merger of the Washington Convention Center Authority and the DC Sports and Entertainment Commission. See "Sports Commission, Convention Center Authority to merge" from the Washington Times. From the article:

Both the convention center authority and the sports commission were quasi-public groups created by the city to perform specific functions but designed to operate as self-sufficient entities. While the groups generally do not rely on District funds on an annual basis, the sports commission in the last two years received $2.5 million in subsidy from the District government to help offset the loss of revenue when the Nationals moved from RFK Stadium to Nationals Park.

This isn't entirely correct.

While "additional" DC Government revenues aren't going to the WCCA, the Authority is funded via public funds, in this case "tourism" taxes. I am not sure about what comprises the complete definition of the tourism tax revenue stream in DC, but it generally is constructed from at least five sources: (1) hotel occupancy taxes; (2) rental car taxes; (3) parking taxes; (4) a portion of sales taxes on restaurant meals; and (5) "amusement" taxes -- taxes assessed on tickets to sporting and other events.

Actually, here is the information, from ANNUAL INFORMATION STATEMENT FOR FISCAL YEAR ENDED SEPTEMBER 30, 2003 SENIOR LIEN DEDICATED TAX, a document of the Washington Convention Center Authority:

Pursuant to an Official Statement dated September 17, 1998, $524,460,000 Senior Lien Dedicated Tax Revenue Bonds, Series 1998 (the “1998 Bonds”) were issued by the Washington Convention Center Authority (“WCCA”). The 1998 Bonds were sold to finance a portion of the construction costs of a new convention center (the “New Convention Center”) in Washington D.C. (the “District”) in an area bounded by 7th and 9th Streets, Mount Vernon Place and N Street, NW.

The 1998 Bonds are special obligations of WCCA. These Bonds are without recourse to, not a debt of, nor a pledge of the District. The principal and interest on the 1998 Bonds are secured by and payable solely from dedicated tax receipts (the “Dedicated Taxes”) and pledged funds established under a trust agreement. The Dedicated Taxes consist of 4.45% of the 14.5% sales tax on hotel room charges and 1.0% of the 10% sales and use tax on restaurant meals, alcoholic beverages consumed on premises and rental vehicle charges.

So that does leave money from "tourism taxes" for other related tourism and cultural development activities.

I have argued for going on 5 years, that the tourism tax revenue stream should also fund arts and cultural activities. Some monies probably do come from that revenue source, such as for CulturalTourismDC. But again, the funding stream isn't transparent, and largely the monies go to pay for the Convention Center. I argue that within the context of broader tourism and cultural development plans, the tourism tax revenue stream should fund more than just the Convention Center, that otherwise the positive impact of tourism is inadequately leveraged.

The above-cited blog entry didn't go into detail about this idea, although it discussed various cultural asset management systems. It doesn't mention the Allegheny Regional Asset District in Allegheny County, Pennsylvania (Pittsburgh and the surrounding county), where 1/2 of the monies generated by the 1% Allegheny County Sales and Use Tax are directed to the financing of "regional assets in the areas of libraries, parks, cultural, sports and civic facilities and programs," recognizing in part that anchor institutions in the center city serve the entire region and shouldn't have to rely solely upon the center city for revenues. (The rest of the tax goes to the municipalities in the county, where the revenues are used to ease the reliance on property taxes to fund municipal functions.)

Note that while institutions such as the Smithsonian Museums, the Ford Theater (see "District to become largest donor to Ford’s Theatre" from the Examiner) and the Kennedy Center are "national" institutions funded in large part by the federal government, they are also regionally serving institutions, so that it can be justifiable, in the context of a broader cultural management and development plan and a tourism management and development plan to direct local funds to these institutions.

But this has to be done in the context of a plan, that the Kennedy Center provides some training for DC schoolchildren in and of itself isn't justification for providing monies to the Kennedy Center.

One could argue that such service is the equivalent of "payment in lieu of taxes" since federally-owned facilities such as the Kennedy Center don't generate local property tax revenue while commercially owned theaters such as the National Theater or Warner Theater are taxed and therefore generate property and income tax revenues for the city.

But this is what is in today's Post article:

Council member Jack Evans (D-Ward 2), who has supported the arts and earmarking for them, said, "They're good organizations." Although the Kennedy Center is considered a national organization, Evans said it has programs for D.C. public school students.

"We're both local and national," said Darrell Ayers, vice president for education at the Kennedy Center. "We are a D.C. organization, and we have to be responsive to the community here." The Kennedy Center has a special program that allows every public school fifth-grader to see a show there, including performances by the National Symphony Orchestra, Ayers said. "We pay for tickets and transportation," he added.

So what. Only in the context of a citywide cultural plan and a citywide tourism development and management plan should such funding decisions be made.

Plus, teaching DC schoolchildren isn't the same as funding neighborhood revitalization activities and the two shouldn't be conflated.

Furthermore, given that funding schoolchildren already takes up about $1 billion!!!!!!!!!!!!!!!! of the city's annual budget, it's reasonable to fund arts activities for DC schoolchildren from that giant firehose of a funding source, rather than from monies that are supposed to be directed to specific neighborhood revitalization activities.