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Posted: January 23, 2009

The Ka-ching of culture

Arts impact in Denver approaches $1.7 Billion

Cathie Beck—The Wine Wench

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When Denver Mayor John Hickenlooper opened the Colorado Business Committee for the Arts breakfast in November, he jumped straight to the largest number arrived at in the CBCA’s 2008 Economic Study:  $1.691 billion. That’s right — nine zeroes.

The CBCA 2008 Economic Activity Study of Denver Metro Culture, conducted biennially, measures the economic impact of arts and culture in the Denver metro area. Beyond the nearly $1.7 billion in activity reported in 2007, the study also states that more than 16.4 million Coloradans and other visitors attended cultural events in 2007, and that tourism at arts, cultural and scientific institutions generated $331 million.

Even Hickenlooper appeared to work to wrap the numbers around his brain and into his opening remarks.

“What’s remarkable is not just that number but that the number has roughly doubled in 10 years,” he said.

“Other cities look at us as an example,” he added. “Not only does this study show that arts is very serious business in Colorado, the study actually measures the economic value of our arts and cultural scene.”

CBCA members already think the arts are serious Colorado business. The organization is built of more than 125 companies and individuals committed to the arts and to the link between cultural vitality and business success. For perspective, in 1997, arts and cultural activity generated $823 million.

Ten years ago, the metro arts scene employed 4,688. In 2007, that number leapt to 8,244. Moreover, in 2007, more than 1.1 million residents — the equivalent of half of the metropolitan area’s population — attended educational classes at arts and cultural institutions, a 44 percent increase over 2005.

The critical number, however, is the one that shows the amount of “new money” infused into Colorado’s economy: $392 million, says Tom Clark, executive vice president of the Metro Denver Economic Development Corp.

“What matters to me is how much money comes in from outside – that’s primary income,” Clark says. “In 2007 that was nearly $400 million. For any business that’s big money. Any company with that kind of infusion would be dancing in the streets if they landed it.”

It isn’t just about selling tickets to “Jersey Boys.” As businesses, Colorado’s arts, culture and scientific nonprofits employ professionals who include accountants, managers and artists, to name a few. Furthermore, cultural organizations purchase goods and services like any other, including office supplies, rent, retail goods and gasoline.

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Culture also creates jobs that impact entire industries. The study reports that the beverage production industry, for example, employed 5,532 people, and the information technology hardware industry accounted for 7,819 metro area jobs — all of which generates tax revenue. The combined payroll, seat and sales taxes for 2007 that arts, cultural and scientific nonprofits paid were $21.3 million in 2007, up 31 percent over 2005.

Tim Davis, director at Deloitte Consulting, and Dan Prather of DualDraw LLC, make sense of the data inherent to the study. Davis has been at it since 1992 and Prather since 1999. They tackle the task of compiling and assessing by first collecting information from the nonprofits funded by the Scientific Cultural Facilities District, a novel approach to art support all its own.

The SCFD distributes funds from a one-tenth of 1 percent sales-and-use tax to cultural facilities throughout a seven-county Denver metropolitan area and has done so since 1989. The funds directly support cultural organizations whose primary purpose is to enlighten and entertain the public. It’s an organization communities across the country try to emulate.

“Other cities trying to pass an SCFD tax have yet to, though some are getting close,” says Holly Osgood, vice chair of the SCFD Board of Directors.  “We are very fortunate that our citizens value this type of funding and reaffirm that value every time we come up for reauthorization.”

In 2007, the SCFD funds represented a $42 million dollar boost to arts and culture, Prather says. To create the report, Prather and Davis collect data from the 300 SCFD nonprofits.

“They’re required on an annual basis to report financials to SCFD administration, and we use that data for the study,” he says. “That’s the current way it’s done, but it was not always done like that. There’s a large incentive for nonprofits to report accurate data because their grant from the SCFD looks to that data.”

This year, Prather and Davis were able to account for $40 million of the $42 million the SCFD distributed, Prather says.

Davis credits this detailed and accountable process to the legitimacy and “hard numbers” respectability of the study. “The study supports the fact that arts and culture really are a business in this state,” he says. “The numbers are not just a ‘feel good, go to the theater’ report. While the arts do provide those sorts of incredible benefits, the arts are, without doubt, a business with a huge impact on the economy.

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“In the study, we look at the economic importance as well as the social aspects of culture,” Davis says. “We’re the envy of other communities. Other communities have taxes that are levied, but they are not dedicated to cultural and scientific organizations. They’re dedicated to a stadium and sunset after two or three years. This model is very unique.”

Unique and lucrative, perhaps. But today’s business headlines beg the question: Can it last? With the stock market tanking, the auto industry caving and the U.S. unemployment rate predicted to hit as high as 9 percent this year, it stands to reason that arts and cultural endeavors may be the first line item veto, for consumers as well as cultural organizations.

Deborah Jordy, CBCA’s executive director, points out that the Colorado arts and culture scene is designed differently than other major metropolitan areas; that is, Colorado arts are not extraneous.

“Arts and culture in Colorado is really about economics,” Jordy says. “It’s new jobs, new tax base and new money. New money is important because it’s spending from people who come here and spend their money at the symphony, at the theater, at the museums.”

And the metro area has shown consistent growth for the arts, she says.

“One other thing that’s very positive: We’ve completed significant capital projects, including the Ellie Caulkins Opera House, the Museum of Contemporary Art, the Denver Art Museum Frederic C. Hamilton building, and the Newman Center at the University of Denver,” Jordy says. “Those are major projects that are open and functioning really well.”

Yet even Hickenlooper wrapped up his CBCA Economy Study talk with this pragmatic tenet:
“We are obligated to buy,” he said. “It’s critical, especially during these economically turbulent times, to keep spending, keep buying, keep feeding our economy.”

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Cathie Beck, a/k/a The Wine Wench, can be reached at: TheWineWench@comcast.net. Please forward any and all wine events, wine-related news items directly to her.

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