Last year, Mayor Reed’s budget, which most of the councilmembers supported, gave warning to the city-funded “Art” groups that they would no longer receive funding from the city starting on July 1, 2012. As we know, the budget deficit continues.

Many of the art groups are in facilities partially or fully built by the Redevelopment Agency (RDA). These include the San Jose Museum of Art ($475K), The Tech ($1.1M), Children’s Discovery Museum ($285K), Mexican Heritage Plaza ($600K), San Jose Repertory Theater ($285K), History San Jose (775K), etc. The dollar amounts are how much money they received from the city this fiscal year (2010-2011).

Although valuable, art is not in the City Charter. However, there are other discretionary things the city spends millions of dollars on like health insurance for children, golf nets, etc. Art promotes San Jose and boosts the economy in ways that others items we spend millions on do not. This other spending does not have have the same return on investment.

These art groups, with some exceptions, have done a good job overall in fundraising and cutting costs. Most of the donors for these cultural facilities live outside of San Jose. Therefore, the good news is that these out-of-town donors bring money to support San Jose art groups. Besides providing exciting places to visit in San Jose, these facilities also generate an economic buzz through visitors parking, dining, drinking and some hotel room nights downtown.

Deloitte did a pro-bono study this summer for The Tech, The Rep, SJ Museum of Art and the Children’s Discovery museum. It showed an economic impact of $54 million to San Jose.

Still, money is needed to support the repair of the four facilities profiled in the Deloitte study, in the amount of $5.5 million. In the past, if a HVAC system needed replacement, the RDA would pay for it. But this is no longer the case.

There have been a few suggestions and options shared about how to financially help the arts moving forward. One option is to not cut city funding 100 percent but something less. A second option would be to charge a ticket surcharge of $1 on each ticket. A third idea was to create property tax based assessment district to fund the arts groups, however, there is already an assessment distrint in the downtown to pay for cleaning, which has been very successful. Another contemplation is to fund repairs with a Hotel Tax (TOT), but that would bump something else. Finally, the suggestion of providing validated parking for attendees was requested if entrance fees were raised.

Some of the art leaders pointed out it is difficult to raise funds for building repairs since they do not own the building. One idea discussed at the Economic Development Committee meeting was to simply give them the building in lieu of continued fiscal subsidies, allowing art groups the potential to increase fundraising. This would allow them the option to sell the naming rights to a company or a patron of the arts like the famous Medici family. Naming rights would be easier done privately than through the city.

While we are at it, I think all San Jose facilities should be on the table for paid naming rights, including the airport and Convention Center.

The fact is, downtown is a hub for cultural activities in Santa Clara County, and that art is a differentiator from other cities. Some arts groups have said they may leave downtown, but I believe that would be a huge undertaking to find another building that can house their needs.

The city has been a substantial “donor” in the past, but this “donor” is suffering and may not be able to do so at the same level for the foreseeable future. This “donor” may only be able to donate one more time by donating the building—as long as the art institution continues to operate in that specific building.

Looking back at the efforts of so many across all cities, we know it is much easier to support a downtown than create one. The arts are a major differentiator for downtown.