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F I S C A L I M P A C T R E P O R T

SPONSOR Taylor

ORIGINAL DATE

LAST UPDATED

1/28/08

HB 440

SHORT TITLE Expand Arts and Cultural Districts

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$300.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

House Bill 440 duplicates Senate Bill 343.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Economic Development Department (EDD)

Department of Cultural Affairs (DCA)

SUMMARY

Synopsis of Bill

House Bill 440 appropriates $300 thousand from the general fund to Economic Development

Department for the MainStreet program to expand the number of arts and cultural districts.

FISCAL IMPLICATIONS

The appropriation of $300 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year shall revert

to the general fund.

SIGNIFICANT ISSUES

Laws 2007, Chapter 160 (House Bill 606), created Arts and Cultural Districts as an economic

stimulus program for local communities. The Arts and Cultural District program is attached to

the Economic Development Department, which works in collaboration with Department of

Cultural Affairs, and is responsible for designating districts annually in New Mexico. The intent

House Bill 440 – Page

2

was to support arts- and culture-based economic development for businesses, individuals,

organizations, agencies and institutions to work collaboratively and to formally structure that

collaboration creating an economic market niche. The legislation established EDD’s MainStreet

Program Director as the coordinator of the state’s efforts and the New Mexico Arts Commission

as the authorizing body for such districts. The legislation did not include funding for the

administration and implementation of the initiative.

Without an appropriation in 2007, only two districts were designated to assist the local

communities and support technical assistance and resources to the local councils. EDD reports

that “there are 11 communities that have requested technical assistance associated with the Arts

and Culture Districts program. Without this funding the Economic Development will not have

the resources to continue the Arts and Culture Districts Program."

According to EDD:

An Arts and Culture District is a well-recognized, branded, mixed-use, compact area of a

town in which a high concentration of arts and cultural facilities serves as the anchor and

is not larger than one (1) square mile in area. Arts and Culture Districts can be found in

small rural communities or in large urban areas with the potential for more than one arts

and culture district.

More than 90 cities in the United States have planned or implemented an Arts and

Culture District – positioning the arts and culture as the center of revitalization and

community economic development efforts. The impact of Arts and Culture Districts is

measurable. The arts and areas with historic structures attract residents and tourists who

also support adjacent businesses such as restaurants, lodging, retail and entertainment.

The presence of arts and cultural opportunities enhances property values, the profitability

of surrounding businesses and the tax base of the region. These districts attract a diverse

and well-educated workforce – a key incentive for new and relocating businesses. And

these districts contribute to the creativity and innovation of a community.

The NM MainStreet budget for FY08 is about $1 million. This includes salaries and benefits,

travel and other operating expenses for 2 FTE. The bulk of the funding, $825 thousand, is for

contractors who provide the specialized services – e.g., architectural design, marketing, strategic

planning, economic analysis, etc – to the communities. The budget has grown significantly since

2003. The largest increase came in 2006 when the Legislature appropriated an additional $500

thousand specifically for the program.

The Legislature has appropriated another $4.5 million in capital outlay over the last three years

for MainStreet projects statewide.

PERFORMANCE IMPLICATIONS

According to DCA:

Technical advice and outreach are performance measures for DCA. The Cultural

Properties Act of 1978 outlined the responsibilities of the Historic Preservation Division,

including the preservation of cultural properties which contribute to the economic

development, quality of life and rich cultural heritage of the State of New Mexico and its

House Bill 440 – Page

3

communities through increased economic activity, community pride, tourism and

increase in gross receipts taxes. Projects in newly designated arts and cultural districts

that expect to see benefit of the raised historic tax credit cap will still need to comply

with existing program requirements for the DCA/Historic Preservation Divisions historic

tax credit program.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 440 duplicates Senate Bill 343.

OTHER SUBSTANTIVE ISSUES

According to EDD:

The legislation states that any New Mexico MainStreet community, whose MainStreet

organization chooses to apply with other partnering Arts and Culture organizations and

with their municipality, may apply for authorization of a MainStreet Arts and Culture

District.

The benefits offered to state authorized districts may include: enhanced historic tax

credits for rehabilitation of historic structures or other incentives which create live/work

space for cultural workers, space for cultural and entertainment enterprises and access to

financial assistance programs from state agencies and other funding partners such as:

-

Specialized technical assistance and support through professionals in the field of

planning and development for such districts through the New Mexico MainStreet

Program and New Mexico Arts

-

Tourism Department support in marketing and promoting the official state authorized

District

-

Access to the MainStreet Capital Outlay Fund, set aside annually by the State

Legislature

-

Access to New Mexico Historic Preservation Division (HPD) Federal Rehabilitation

Investment Tax Credits and New Mexico Historic Property Tax Credit (doubled

within Arts and Culture Districts)

-

Access to New Mexico Historic Preservation Loan Fund and the MainStreet

Revolving Loan Fund

-

Potential locating of a Museum of New Mexico Foundation New Mexico Creates

shop

-

Potential access by participating artists and craftspeople to sell their creations on the

Museum of New Mexico Foundation’s e-commerce site

www.NewMexicoCreates.org

-

NMEDD potential access to Cooperative Advertising funds and Certified

Communities Initiative funding with the passage of LEDA for Arts and Culture

Districts

-

New Mexico Finance Authority planning grants

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

EDD will be limited in the number of arts and cultural districts it can create or will have to pull

from existing resources.

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